/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/120925.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, September 25, 2012, Vol. 16, No. 267 Headlines 15-35 HEMPSTEAD: Committee Says Dismissal is More Appropriate AAP ASSET: Case Summary & 6 Largest Unsecured Creditors AE BIOFUELS: Laird Cagan Discloses 12.9% Equity Stake AES EASTERN: Has Deal to Sell Closed Plants for $2.25 Million AFA FOODS: Yucaipa Settles on Asset Sharing With Creditors AIRBORNE HOLDINGS: S&P Assigns 'B' Corporate Credit Rating AMERICAN AIRLINES: May Pay Expenses of Potential Plan Investors AMERICAN AIRLINES: Bidding Held on Guggenheim Sale-Leaseback Deal AMERICAN AIRLINES: Objects to Pensioners' Bid for Payment of Fees AMERICAN AIRLINES: Facing Class Suit for AAdvantage Program AMERICAN AIRLINES: Cuts Flight, Seating Capacity AMERICAN AIRLINES: AMR, Skywest Ink Capacity Purchase Agreement AMERICAN AIRLINES: Court Approves Adequate Protection for NCC Key AMERICAN AIRLINES: APA Pilots Defend Maintenance Delays AMERICAN AIRLINES: Teamsters Mobilize Outreach Effort to Tulsa AMERICANWEST BANCORP: Ford Elsaesser OK'd as Assistant to Mediator AMERICANWEST BANCORP: Plan Outline Hearing Continued Until Oct. 25 ASPEN GROUP: Amends Annual Report to Correct Accounting Error ATLAS PIPELINE: S&P Withdraws 'BB' Sr. Secured Issue Rating AVANTAIR INC: To Restate Periodic Reports to Correct Errors AVENTINE RENEWABLE: Board Recommends Reverse Stock Split B.B. KING'S: Judge Permits Mirage's Deductions BLYTH INC: Moody's Affirms 'B2' CFR & Changes Outlook to Negative BROADVIEW NETWORKS: Wants Court to Approve $25-Mil. Exit Loan BROADWAY FINANCIAL: Incurs $132,000 Net Loss in First Quarter C & M RUSSEL: Factors for Ch. 11 Filing Absent, Wants Dismissal CALPINE CORP: Moody's Rates $615-Mil. Senior Secured Notes 'B1' CATASYS INC: David Smith Discloses 48.9% Equity Stake CATASYS INC: Terren Peizer Discloses 61.84% Equity Stake CCI FUNDING I: Lawsuit Against Trico Goes to Trial CHERYL PEREZ: Lacks Standing to Challenge Chapter 7 Trustee's Fees CHICKEN OUT: Joseph Marinucci Buys Six Store Locations CHRIST HOSPITAL: Suzanne Koenig Discharged as P. Care Ombudsman CITY OF BRIDGEPORT: Moody's Upgrades G.O. Debt Rating From 'Ba1' CITY OF BURLINGTON: Moody's Maintains 'Ba2' Rating on $8.5MM COPs COMMUNICATION INTELLIGENCE: Obtains $2.2 Million in Financing COMMUNITY FIRST: Franklin Branch to be Sold to First Citizens CONVERTED ORGANICS: Has 536.8 Million Common Shares Outstanding COPYTELE INC: Adds Former Acacia Executives to Team COSTA BONITA: Asociacion de Condomines Seeks Ch. 11 Case Dismissal CUMULUS MEDIA: S&P Affirms 'B' Corp. Credit Rating; Outlook Stable CYCLONE POWER: Closes $150,000 Debt Financing with Gemini Master DEWEY & LEBOEUF: No Ruling Yet on Partner Contribution Plan DIGITAL DOMAIN: Chinese-Indian Venture Wins Auction for $30.2MM DINEEQUITY INC: S&P Raises Rating on 9.5% Senior Notes to 'B-' DONALD CHARLES SCHWARTZ: Dismissal of Wasney Lawsuit Upheld DRIVETIME AUTOMOTIVE: Moody's Reviews 'B3' CFR for Downgrade E-DEBIT GLOBAL: Six Directors Elected to Board EDUCATION MANAGEMENT: S&P Cuts CCR to 'B' on Declining Enrollment ELEPHANT TALK: Mobile Telecom Contracts in Germany Put on Hold EMERGENCY MEDICAL: Moody's Affirms B2 CFR & Rates PIK Notes Caa1 EMMIS COMMUNICATIONS: Has 1.3-Mil. Preferred Shares Outstanding EXODUS COMMS: Calif. Court Revives Suit Over German Unit's Loan FLETCHER INTERNATIONAL: Employs Trott Duncan as Bermuda Counsel FLETCHER INTERNATIONAL: Can Employ Young Conaway as Counsel FORT LAUDERDALE BOATCLUB: Can Employ Barry Gruher as Counsel FORT LAUDERDALE BOATCLUB: Access to Cash Collateral Stops Sept. 28 FORT LAUDERDALE: Nov. 14 Hearing on Dismissal and Turnover Motions FUTURE GRAPHICS: Former Owner Wins Dismissal of All Points Suit GELT PROPERTIES: Plan Outline Hearing Continued Until Oct. 10 GMX RESOURCES: Completes Exchange Offers of Sr. Convertible Notes GMX RESOURCES: S&P Cuts Corp. Credit Rating From 'CC' to 'SD' GOSPEL RESCUE: Can Employ Yumkas Vidmar as Bankruptcy Counsel GOSPEL RESCUE: Has Final Nod to Use OBA Bank's Cash Collateral GOSPEL RESCUE: Has Court Nod to Employ CBRE as Real Estate Broker GOSPEL RESCUE: Files Schedules of Assets and Liabilities GUARANTY FINANCIAL: Court Trims Lawsuit Against Keefe Bruyette GUITAR CENTER: Sears Holdings Executive Named New CFO HAWKER BEECHCRAFT: Court Denies Key Employee Incentive Plan HICKORY FLAT: Case Summary & 9 Largest Unsecured Creditors HIGH PLAINS: Eide Bailly Resigns as Accountant HOVNANIAN ENTERPRISES: Prices Senior Notes and Units Offerings HW HEARTLAND: To Restructure Loan Terms in Chapter 11 INTELSAT SA: Subsidiary Wants to Amend Senior Credit Facilities INTERLEUKIN GENETICS: Signs Separation Agreement with Former CEO JEFFREY PROSSER: Faces $434K in Sanctions Over Missing Wines JONES GROUP: Moody's Affirms 'Ba2' CFR/PDR; Outlook Negative K-V PHARMACEUTICAL: Seeks to Stop Hologic From Reacquiring Drug KINETEK HOLDINGS: S&P Puts 'B-' CCR on Watch on Nidec Acquisition KRH INC: Files for Chapter 11 Bankruptcy in Minnesota KRYSTAL INFINITY: Sells Bus Business for $3.9 Million LEHMAN BROTHERS: Argues Against Barclays Sale in Appeals Court LEHMAN BROTHERS: Sells Stake in 8 Austin Office Buildings LEHMAN BROTHERS: Recovery From ADR Settlements Hits $1.3BB LEHMAN BROTHERS: Ross Wins Approval to Buy Navigator Shares LEHMAN BROTHERS: Creditors' $12.8-Million Fees Reduced LEHMAN BROTHERS: Committee Opposes Elliot Bid for Quick Payment LEHMAN BROTHERS: Sues to Reduce JPM, et al., Derivative Claims LIFECARE HOLDINGS: Gets Waivers from Senior Lenders, Noteholders LIGHTSQUARED INC: House Panel Probes FCC Approval LINC USA: S&P Assigns 'B-' Corporate Credit Rating; Outlook Neg. LINC USA: Moody's Assigns Caa2 CFR & Rates Sr. Sec. Notes Caa3 LINWOOD FURNITURE: Reports Losses for August 2012 LON MORRIS COLLEGE: Seeks to Probe Charitable Foundations LSP ENERGY: South Mississippi Electric Given Nod to Buy Plant MAMMOTH LAKES: Won't Proceed With Chapter 9 Bankruptcy Case MEDCATH CORPORATION: Files Certificate of Dissolution MEDIA GENERAL: Wyndham Robertson Rejoins as Director MEDICURE INC: Swings to C$23.4 Million Net Income in Fiscal 2012 MICHAELS STORES: Moody's Affirms B2 CFR & Rates $200MM Notes B3 MITEL NETWORKS: Moody's Rates $330-Mil. Credit Facilities 'B1' MORRIER RANCH: Restructures Bank Claims, Wants Case Dismissal MUSCLEPHARM CORP: Ehrhardt Keefe Replaces Berman as Accountant NATIVE WHOLESALE: Hearing on Case Dismissal Set for Sept. 26 NATIVE WHOLESALE: Meeting of Creditors Adjourned to Nov. 29 NEOGENIX ONCOLOGY: Sells Business to Existing Shareholder Group NEW PEOPLES: Converts $5.4-Mil. Debt to 3.8-Mil. Common Stock NEXTWAVE WIRELESS: OKs Settlement of "Weiss" Suit re AT&T Merger NORD RESOURCES: Four Directors Elected to Board O&G LEASING: First Security Wants Ch. 11 Trustee to Take Over ORAGENICS INC: OKs 2012 Performance Objectives for CEO and Pres. ORAGENICS INC: Amends 9.4 Million Common Shares Prospectus PAINT HORSE: Case Summary & 10 Unsecured Creditors PATRIOT COAL: Robbins Umeda Files Shareholders' Class Action Suit PEAK RESORTS: Has Final Authority to Obtain Financing from FDIC PEAK RESORTS: Has Access to FDIC Cash Collateral Until March 31 PENN TREATY: Broadbill Partners Discloses 6.8% Equity Stake PENN TREATY: Alan Parsow Resigns from Board of Directors PEP BOYS-MANNY: Moody's Rates $200-Mil. Senior Secured Loan 'Ba2' PEREGRINE FINANCIAL: Customers to Receive Initial $123 Million PERRY COUNTY: Plan Confirmed, Court Closes Reorganization Case PHIL'S CAKE: Access to Cash Collateral Expires Sept. 27 PHIL'S CAKE: Hiring Will Maloney as Chief Restructuring Advisor POLI-GOLD CORP: Chapter 11 Reorganization Case Dismissed PROELITE INC: Isaac Blech Discloses 81.3% Equity Stake RAAM GLOBAL: Moody's Confirms 'Caa1' Corporate Family Rating RADNET MANAGEMENT: Moody's Rates $330MM Sr. Sec. Term Loan Ba3 RESIDENTIAL CAPITAL: JPMorgan Objects to 'Lift Stay' Procedures RG STEEL: Frontier Plans to Restart Mingo Junction Facility ROCKWOOD SPECIALTIES: Moody's Lifts Sr. Sec. Ratings From 'Ba1' RYLAND GROUP: Completes Offering of $250 Million of Senior Notes SAAB CARS: Panel OK'd to Retain MBAF CPAs as Financial Advisor SABRE INC: Moody's Assigns 'B1' Rating to $250MM Sr. Sec. Notes SBA COMMUNICATIONS: Moody's Rates New $300-Mil. Senior Notes B2 SHERIDAN INVESTMENT: Moody's Rates $800MM Sr. Sec. Term Loan B1 SEALY CORP: Hayman Capital Discloses 5.9% Equity Stake SEARCHMEDIA HOLDINGS: Sells Additional 855,000 Common Shares SEARS HOLDINGS: Adopts New 2012 LTIP Performance Goals SPIRIT FINANCE: Offering 29 Million Common Shares SUMMIT MATERIALS: S&P Affirms 'BB-' CCR; Outlook Negative SUN RIVER: Incurs $3 Million Net Loss in July 31 Quarter SUNWEST MANAGEMENT: Faces Fraud Charges Over "Ponzi Scheme" SUSSER HOLDINGS: Moody's Says Unit's IPO Has No Impact on 'B1' CFR T3 MOTION: Obtains $250,000 Senior Bridge Loan Facility TAXMASTERS INC: Dist. Court Rules on Lawsuit for Unpaid Overtime THERMON INDUSTRIES: S&P Puts 'B+' CCR on CreditWatch Positive THOMPSON CREEK: Kevin Douglas Discloses 5% Equity Stake THUNDERBIRD TRUCKING: Case Summary & 20 Largest Unsec Creditors TRACY PRESS: Ralph Allredge Has $425,000 for Newspapers TRUE LIFE: Filing for Chapter 11 Bankruptcy Protection US CAPITAL HOLDINGS: Court Approves Bankruptcy Exit Plan US COATING: Mid State Dispute Referred to Bankruptcy Court VANITY EVENTS: IBC Swaps $21,500 Notes with Convertible Debenture VUANCE LTD: Reports $2.6 Million Net Income in Second Quarter WHITTON CORP: Continued Cash Collaterals Use OK'd Until Sept. 30 * S&P Takes Various Rating Actions on 41 US Life Insurers * More California Cities May Need Bankruptcy Protection * Large Companies With Insolvent Balance Sheets ********* 15-35 HEMPSTEAD: Committee Says Dismissal is More Appropriate ------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of 15-35 Hempstead Properties, LLC, et al., has asked the U.S. Bankruptcy Court for the District of New Jersey to deny the U.S. Trustee's cross motion to convert the Debtors' cases to Chapter 7 of the Bankruptcy Code. The U.S. Trustee for Region 3, in response to the motion seeking dismissal of the Debtors' cases filed by Karen L. Gilman, Esq., the Chapter 11 trustee, filed an objection, and a cross motion to have the case converted to Chapter 7. As reported in the Troubled Company Reporter on June 19, 2012, the Chapter 11 trustee sought: -- dismissal of the Debtors' chapter 11 cases; -- authority to transfer to Michael J. Viscount, as disbursing agent, those funds available for pro rata distribution to creditors holding allowed general unsecured claims; and -- for an order authorizing the Official Committee of Unsecured Creditors to prosecute objections to claims; and to provide for the disbursement of $82,695 on a pro rata basis to creditors holding allowed general unsecured claims. According to the Committee, nothing that the U.S. Trustee presented in her response has persuaded the Committee to change its view on the appropriateness of a structured dismissal for the case. New York Community Bank also objected to the cross motion of the U.S. Trustee. NYCB supported the motion of the Chapter 11 trustee to dismiss the case because NYCB believes that a structured dismissal most economically addresses all of the interests of the disparate parties and serves to preserve a return for the unsecured creditors. About 15-35 Hempstead Properties 15-35 Hempstead Properties LLC and affiliate Jackson 299 Hempstead LLC owned real property at 101 Boardwalk in Atlantic City, New Jersey. They filed for Chapter 11 bankruptcy protection (Bankr. D. N.J. Case Nos. 10-43178 and 10-43180) on Oct. 26, 2010. Albert A. Ciardi, III, Esq., at Ciardi Ciardi & Astin, serves as counsel to the Debtors. The Debtors each estimated assets and debts at $10 million to $50 million. AAP ASSET: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------- Debtor: AAP Asset Holdings, LLC 6389 Tower Lane Sarasota, FL 34240 Bankruptcy Case No.: 12-14267 Chapter 11 Petition Date: September 19, 2012 Court: United States Bankruptcy Court Middle District of Florida (Tampa) Debtor's Counsel: Timothy W. Gensmer, Esq. TIMOTHY W GENSMER, PA 2831 Ringling Blvd., Suite 202-A Sarasota, FL 34237 Tel: (941) 952-9377 Fax: (941) 954-5605 E-mail: timgensmer@aol.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its six unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/flmb12-14267.pdf The petition was signed by Anthony Deloach, managing member. Affiliate that filed separate Chapter 11 petition: Petition Debtor Case No. Date ------ -------- ---- HG & LL Holdings, LLC 12-05560 04/12/12 AE BIOFUELS: Laird Cagan Discloses 12.9% Equity Stake ----------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, Laird Q. Cagan disclosed that as of Dec. 12, 2007, he beneficially owns 22,014,496 shares of common stock of Aemetis, Inc., formerly known as AE Biofuels Inc., representing 12.9% of the shares outstanding. A copy of the filing is available for free at http://is.gd/7DXVUs About AE Biofuels AE Biofuels, Inc. (OTC BB: AEBF) -- http://www.aebiofuels.com/-- is a biofuels company based in Cupertino, California, developing sustainable solutions to address the world's renewable energy needs. The Company is commercializing its patent-pending next- generation cellulosic ethanol technology that enables the production of biofuels from both non-food and traditional feedstocks. Its wholly-owned Universal Biofuels subsidiary built and operates a nameplate 50 million gallon per year biodiesel production facility on the east coast of India. The Company reported a net loss of $1.72 million on $1.59 million of sales for the three months ended Sept. 30, 2010, compared with a net loss of $3.78 million on $4.05 million of sales for the same period a year earlier. BDO Seidman, LLP, in San Jose, Calif., expressed substantial doubt about AE Biofuels' ability to continue as a going concern, following the Company's 2009 results. The independent auditors noted that the Company has incurred recurring losses, and has a working capital deficit and total stockholders' deficit as of Dec. 31, 2009. The Company's balance sheet at Sept. 30, 2010, showed $20.23 million in total assets, $29.03 million in total liabilities, all current, and a stockholders' deficit of $8.80 million. The Company has not filed financial reports after filing its Form 10-Q for the quarter ended Sept. 30, 2010. AES EASTERN: Has Deal to Sell Closed Plants for $2.25 Million ------------------------------------------------------------- Jacqueline Palank at Dow Jones' Daily Bankruptcy Review reports that AES Eastern Energy LP, which slashed $240 million in debt off its books through a sale of its two operating power plants, now wants to sell its four non-operating power plants for less than $3 million. About AES Eastern Ithaca, New York-based AES Eastern Energy, L.P., either directly or indirectly, control six coal-fired electric generating plants located in New York State. Currently, the Debtors actively operate two of the six power plants and sell the electricity generated by those plants into the New York wholesale power market to utilities and other intermediaries under short-term agreements or directly in the spot market. AES Eastern Energy and 13 affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Case Nos. 11-14138 through 11-14151) on Dec. 30, 2011. Lawyers at Weil, Gotshal & Manges LLP and Richards, Layton & Finger, P.A., are legal counsel to AES Eastern Energy and affiliates. Barclays Capital is serving as investment banker and financial advisor. Kurtzman Carson Consultants is the claims and noticing agent. AES Eastern Energy estimated $100 million to $500 million in assets and $500 million to $1 billion in debts. The petition was signed by Peter Norgeot, general manager. Gregory A. Horowith, Esq., and Robert T. Schmidt, Esq., at Kramer, Levin, Naftalis & Frankel LLP; and William T. Bowden, Esq., Benjamin W. Keenan, Esq., and Karen B. Skomorucha, Esq., at Ashby & Geddes, P.A., serve as counsel to the Creditors Committee. FTI Consulting Inc. is the financial advisor. AES Eastern Energy prevailed over opposition and obtained authorization to hold a March 26 auction for the two operating power plants. Under a deal reached prepetition, the Debtor would turn the two operating facilities over to debt holders in exchange for debt, absent higher and better offers. AFA FOODS: Yucaipa Settles on Asset Sharing With Creditors ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Yucaipa Cos., the owner and junior lender to bankrupt AFA Foods Inc., agreed to a settlement generating cash for payment of unsecured creditors' claims under a liquidating Chapter 11 plan. In return, Yucaipa will receive release from claims and lawsuits the creditors might otherwise bring. AFA had plants in California, Georgia, Pennsylvania, New York and Texas. The report relates that AFA, in its Chapter 11 case, sold plants and paid off the first-lien lenders and the loan financing the Chapter 11 effort. Remaining assets are $14 million cash and the right to file lawsuits. An affiliate of Yucaipa has a $71.6 million second lien and would claim the remaining assets absent settlement. To avoid a challenge by the official unsecured creditors' committee to the validity of its lien, Yucaipa agreed to settle by carving up the $14 million and additional assets. The settlement comes up for approval at an October 11 hearing in U.S. Bankruptcy Court in Delaware. Assuming the judge approves, Yucaipa will receive $11.2 million from the $14 million, with the remainder earmarked for unsecured creditors under a Chapter 11 plan. Asset recoveries above $14 million will be split with Yucaipa receiving 90% and creditors 10%. Proceeds from lawsuits will be divided roughly 50-50. According to the report, the Chapter 11 case was financed with a loan of about $60 million provided by existing lenders General Electric Capital Corp. and Bank of America Corp. The loan was paid off in July. About AFA Foods King of Prussia, Pennsylvania-based AFA Foods Inc. was one of the largest processors of ground beef products in the United States. The Company had five processing facilities and two ancillary facilities across the country with annual processing capacity of 800 million pounds. AFA had seven facilities capable of producing 800 million pound of ground beef annually. Revenue in 2011 was $958 million. Yucaipa Cos. acquired the business in 2008 and currently owns 92% of the common stock and all of the preferred stock. AFA Foods, AFA Investment Inc. and other affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-11127) on April 2, 2012, after recent changes in the market for its ground beef products and the impact of negative media coverage related to boneless lean beef trimmings -- BLBT -- affected sales. Judge Mary Walrath presides over the case. Lawyers at Jones Day and Pachulski Stang Ziehl & Jones LLP serve as the Debtors' counsel. FTI Consulting Inc. serves as financial advisors and Imperial Capital LLC serves as marketing consultants. Kurtzman Carson Consultants LLC serves as noticing and claims agent. As of Feb. 29, 2012, on a consolidated basis, the Debtors' books and records reflected approximately $219 million in assets and $197 million in liabilities. AFA Foods, Inc., disclosed $615,859,574 in assets and $544,499,689 in liabilities as of the Petition Date. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven members to the official committee of unsecured creditors in the Chapter 11 cases of AFA Investment Inc., AFA Foods and their debtor-affiliates. The Committee has obtained approval to hire McDonald Hopkins LLC as lead counsel and Potter Anderson & Corroon LLP serves as co-counsel. The Committee also obtained approval to retain J.H. Cohn LLP as its financial advisor, nunc pro tunc to April 13, 2012. AIRBORNE HOLDINGS: S&P Assigns 'B' Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Airborne Holdings Inc. The outlook is stable. "At the same time, we assigned a 'B' issue rating to the proposed $155 million senior secured credit facility, which consists of a $130 million term loan and $25 million revolver. We assigned the facility a recovery rating of '3', reflecting our expectation of meaningful (50%-70%) recovery in a default scenario," S&P said. "The ratings on Airborne reflect the company's 'vulnerable' business risk profile, which includes its limited product diversity, the firm's relatively small scale and scope of operations, and pressure on U.S. and U.K. defense budgets," said Standard & Poor's credit analyst Chris Mooney. "Positive factors include leading, often dominant market positions, albeit in small, niche markets, and good profit margins. We assess the company's financial risk profile as 'aggressive,' based on the company's high leverage and aggressive financial policy." "Airborne plans to pay its private equity sponsor, Metalmark Capital LLC (not rated), a $49 million dividend and repay $87 million in existing debt, using proceeds from $130 million in new debt and cash on hand. As a result of the proposed transaction, debt to EBITDA will increase to about 4x from about 3x before the transaction, and funds from operations (FFO) to debt will decline to about 15% from about 25%. We expect these measures to remain relatively stable over the next year, with modest improvement possible if Airborne chooses to use free cash flow to pay down debt. However, we believe significant uncertainty surrounds near- term U.S. defense spending, and the cancellation or a material reduction in funding for one of Airborne's key products could result in credit ratios worse than our current expectations," S&P said. "Airborne has relatively few product offerings because of the small size of the markets it participates in, which include military personnel parachutes (about 40% of sales), advanced products and support services, including aerospace parachutes (30%), precision guided cargo parachutes (15%), and related products (15%). As a result, the company has significant revenue concentration in certain products, such as the T-11 personnel parachute and Joint Precision Aerial Delivery System (JPADS) 2K cargo parachute, which each accounted for roughly 15% of total sales in fiscal 2012 (ended June 30, 2012). Typical for the industry, customer diversity is not particularly broad, with the U.S. Department of Defense accounting for roughly 50% of sales, most of which is to the Army. The company also sells products to the U.K. (about 20% of sales), which is also suffering from reduced defense spending, as well as NASA (10%) and other foreign militaries," S&P said. "Airborne is the technology leader in the markets that it participates in, allowing the company to enjoy leading, and often dominant market shares. Generally, Airborne develops the parachutes for the U.S. government, who then purchases the intellectual property (IP) from Airborne and initiates competition for production. The company competes with divisions of larger companies, as well as some smaller companies, but only one competitor competes with Airborne across every product line," S&P said. "We believe defense budget uncertainty could disrupt near-term orders. Given partisan disagreement over how to handle the federal budget deficit, the government will likely operate under a continuing resolution (CR) to start fiscal 2013 (beginning Oct. 1, 2012). A CR limits funding to prior-year levels and restricts the start of new programs until a budget is passed. This could result in delayed orders for programs funded incrementally, such as parachutes," S&P said. "Over the long-term, we believe the government will continue to purchase Airborne's products, which consist mostly of upgrades to existing technology. However, U.S. defense spending is budgeted to fall by $487 billion over the next decade from previously planned levels, with the potential to fall to $1 trillion if automatic across-the-board cuts triggered by sequestration take effect as scheduled beginning Jan. 2, 2013. Although we do not anticipate Congress will implement the full amount of cuts that sequestration mandates, we believe additional cuts are likely. This could result in fewer parachutes ordered per year, as the government aims to stretch production over a longer period of time," S&P said. "We believe increased training for future missions will partially offset the negative impact of a smaller Army and troop withdrawals in Afghanistan. President Obama has announced plans to reduce the size of the Army over the next five years, choosing to abandon the capability to fight two large-scale wars at once. Although there will be fewer troops, the new U.S. military strategy calls for a more agile force structure, shifting focus toward Asia and away from the Middle East. This could require the use of more air mobility missions, supporting demand for Airborne's next- generation parachutes," S&P said. "We believe Airborne will expand its foreign sales, for which the company retains the IP on. This results in much higher profit margins on these sales. Currently, Airborne's EBITDA margins compare favorably with most defense contractors but the company does not release its financial statements publically," S&P said. "The outlook is stable. We expect Airborne's profitable operations to enable the company to generate relatively steady earnings and cash flow over the next year, with debt to EBITDA between 4x and 4.5x. Despite defense spending reductions, we believe the nature of the company's products will largely remain protected. However, we could lower the rating if debt to EBITDA rises above 5x for a sustained period of time. We believe this would most likely be a result of defense budget cuts to key programs, causing sales to fall by at least 15%, but debt-financed dividends or acquisitions could also increase leverage. While unlikely, we could raise the rating over the next year if the company adopts a more conservative financial policy, such that debt to EBITDA declines below 3x for an extended period," S&P said. AMERICAN AIRLINES: May Pay Expenses of Potential Plan Investors --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that AMR Corp. received permission from the bankruptcy judge at a hearing Sept. 20 to pay the professional expense of a group of 10 investors negotiating to provide the airline with "equity and other financings." According to the report, the investments would assist the parent of American Airlines Inc. in formulating a Chapter 11 plan and emerging from bankruptcy reorganization. There were no objections. The lawyer for the creditors' committee said the arrangement was a "highly desirable step forward." Outside financing could give AMR an alternative to merger sought by US Airways Group Inc. The report relates that AMR is being allowed pay the standard hourly fees for Milbank Tweed Hadley & McCloy LLP, the potential investor group's lawyers. The airline would give Houlihan Lokey, the financial advisers, a $150,000 monthly fee and a success fee if the work results in a transaction. The potential investors include J.P. Morgan Securities, Claren Road Asset Management LLC and King Street Capital Management LP. AMR said the investors are already "substantial creditors." About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Bidding Held on Guggenheim Sale-Leaseback Deal ----------------------------------------------------------------- Matthew Landes, managing director at SkyWorks Capital, LLC, the aircraft restructuring advisor to AMR Corp., filed a declaration in support of the Debtors' motion to purchase from The Boeing Company, and enter into sale leaseback transactions with Guggenheim Aviation Partners, LLC, for two Boeing 777-300 aircraft. Mr. Landes related that a bidding process was conducted for the sale leaseback transactions and Guggenheim was selected as the best bid based on the net proceeds to be received for the Aircraft, the proposed lease terms and other economic terms. Mr. Landes added that Guggenheim's bid was also attractive because of the availability of documentation largely negotiated in connection with its prior financings with the Debtors. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Objects to Pensioners' Bid for Payment of Fees ----------------------------------------------------------------- AMR Corp. asked Judge Sean Lane to deny AMR Retirees Pension Protection Corp.'s application for payment of fees and expenses. ARPPC, a group formed by AMR pensioners who were not members of any union, seeks payment of $134,470 in fees and $919 in expenses for its "substantial contribution" in the company's bankruptcy case. The group claimed it was involved in the formation of the committee representing AMR's retired workers. AMR lawyer Alfredo Perez argued the group failed to show any benefit to the company's estate or creditors that was derived as a result of its participation in the company's bankruptcy case or the appointment of the retirees committee. "Assisting in the formation or appointment of a committee alone is insufficient to warrant a substantial contribution award where there is no tangible or direct benefit to creditors or the debtor's estate," Mr. Perez said in a court filing. The application also drew flak from the committee of AMR unsecured creditors and the U.S. Trustee, a Justice Department agency that oversees bankruptcy cases. Both also argued that the group failed to show that it made a "substantial contribution" to the AMR estate. A court hearing to consider approval of the application was scheduled for Sept. 20. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Facing Class Suit for AAdvantage Program ----------------------------------------------------------- AMR Corp. and American Airlines Inc. are facing a class action lawsuit filed by members of their frequent-flier reward program called AAdvantage. In a 15-page complaint filed with the U.S. Bankruptcy Court in Manhattan, Karen Ross and Steven Edelman accused the companies of unlawful conduct regarding frequent-flier airline miles. According to the complaint, loyal customers of the companies were made to believe that valuable miles earned in the 1980s would remain valuable. The companies, however, "radically" reduced the value of these miles by unilaterally changing the terms of the program to make all miles earned prior to July 1, 1989 subject to expiration. Customers also are no longer allowed to redeem their old miles under the structure that was in place when they earned those miles. The miles will have to be redeemed under a "newer, far more restrictive award structure," according to the complaint. "These actions make the miles significantly less valuable and injure customers," said Jeffrey Traurig, Esq., at Diconza Traurig Magaliff LLP, in New York. "The breach of these promises and reduction of the value of miles earned prior to July 1, 1989 is unlawful," the lawyer said in the complaint filed last week. The complainants asked the bankruptcy court to certify a class, which is composed of "all persons or entities in the United States who possess AAdvantage Miles With No Expiration earned before July 1, 1989." The lawsuit is Karen Ross, Steven Edelman, et al., v. AMR Corp. and American Airlines Inc., 12-01865, U.S. Bankruptcy Court, Southern District of New York. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Cuts Flight, Seating Capacity ------------------------------------------------ American Airlines Inc. reduced U.S. capacity by as much as 2% for the rest of this month and October, according to a Sept. 18 report by Bloomberg News. AMR spokesman Bruce Hicks said the reductions of flight and seating capacity take effect immediately and will occur "selectively across our system." AMR is reducing capacity for at least the fourth time in the past 12 months because of a pilot shortage, Bloomberg News noted. American Airlines accounted for 92 of 157 U.S. flight cancellations on September 18, and 414 of 2,092 delays, data on FlightStats' Web site showed. The data doesn't indicate the cause of a cancellation or delay, according to the Bloomberg report. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: AMR, Skywest Ink Capacity Purchase Agreement --------------------------------------------------------------- SkyWest, Inc. said it has signed a Capacity Purchase Agreement with American Airlines, Inc. to operate 23 Bombardier CRJ200 regional jet aircraft under the American Eagle designation. SkyWest currently anticipates that it will commence its American flights on November 15, 2012, with all 23 aircraft being placed in service prior to end of the first quarter 2013. SkyWest intends to source the aircraft from its existing fleet where they have previously been operated in behalf of another major partner and anticipates that 12 of the aircraft will be flown by SkyWest Airlines, Inc. and 11 aircraft will be flown by ExpressJet Airlines, Inc. SkyWest also anticipates that the American aircraft will be primarily operated out of Los Angeles International Airport and Dallas/Fort Worth International Airport. The CPA, which has a term of four years, provides for SkyWest, through its operating airlines SkyWest Airlines and ExpressJet Airlines, to be compensated in similar fashion to existing capacity purchase agreements with SkyWest's other major partners. "This agreement is indicative of the credibility of the people and the operational quality of SkyWest, Inc.," said Bradford R. Rich, President-SkyWest, Inc. He continued, "We look forward to operating under the American Eagle designation and establishing ourselves as a trusted and valuable long-term partner for American." SkyWest is the holding company for two scheduled passenger airline operations and an aircraft leasing company and is headquartered in St. George, Utah. SkyWest's scheduled passenger airline operations consist of SkyWest Airlines, also based in St. George, Utah, and ExpressJet Airlines, based in Atlanta, Georgia. SkyWest Airlines operates as United Express and Delta Connection carriers under contractual agreements with United Airlines, Inc. and Delta Air Lines, Inc. SkyWest Airlines also operates as US Airways Express under a contractual agreement with US Airways, Inc., and operates flights for Alaska Airlines under a contractual agreement. ExpressJet Airlines operates as United Express and Delta Connection carriers under contractual agreements with United and Delta. System-wide, SkyWest serves markets in the United States, Canada, Mexico and the Caribbean with approximately 4,000 daily departures and a fleet of approximately 725 regional aircraft. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Court Approves Adequate Protection for NCC Key ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved a stipulation concerning adequate protection between AMR Corp. and NCC Key Company. NCC Key has rights and interests in airframes, engines, related equipment and other equipment, documents and records with respect to the aircraft finance and lease transaction relating to the aircraft bearing FAA Reg. No. N7508. In exchange for NCC Key's forbearance, the Debtors agreed that any motion by NCC for adequate protection, if subsequently filed, will be treated as if filed on the Petition Date. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: APA Pilots Defend Maintenance Delays ------------------------------------------------------- The Allied Pilots Association (APA), certified collective bargaining agent for the 10,000 pilots of American Airlines, issued the following response regarding recent media reports that pilots were disrupting flight schedules with trivial maintenance requests. "American Airlines pilots are trained professionals who are responsible for flying their passengers safely around the world every day. The list of unresolved maintenance issues grows every day on each of the aging aircraft we operate, and we can't ignore serious maintenance issues that could easily turn into safety risks. Our pilots will not compromise safety, ever," said APA President Keith Wilson. "American Airlines chose to reject our contract and the operational procedures and protections that go with it. Understandably, our pilots are taking a prudent and cautious approach in their operational decision-making process," Wilson added. Here's a sampling of the substantive maintenance-related issues our pilots have documented in the past several days: * A left engine generator failed in flight * An aircraft sustained a lightning strike * The ground proximity warning system failed in flight * A partial flight control failure * Weather radar test inoperative * A fuel leak on right wing main tank * The left landing light was damaged * A wind shear warning failure * A brake anti-skid failure * The engine start valve failed to close "During the past year, American Airlines has sustained record FAA fines totaling $162 million for improper aircraft maintenance procedures, a strong indication that management's maintenance practices have raised concerns with regulators," Wilson noted. "In addition, companies that own and lease American Airlines aircraft have formally complained to the bankruptcy court that AA management has neglected to perform routine maintenance on their aircraft. "The maintenance situation is not going to get any better any time soon, since management announced plans to outsource many maintenance operations," Wilson said. "When maintenance operations are shipped overseas, quality control and FAA oversight only become more difficult." Founded in 1963, the Allied Pilots Association -- the largest independent pilot union in the United States -- is headquartered in Fort Worth, Texas. APA represents the 10,000 pilots of American Airlines, including 649 pilots not yet offered recall from furlough. The furlough s began shortly after the Sept. 11, 2001 attacks. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Teamsters Mobilize Outreach Effort to Tulsa -------------------------------------------------------------- United Airlines (UA) mechanics represented by the Teamsters Union are joining Teamster organizers and American Airlines (AA) mechanics in Tulsa discloses for an outreach program in support of a campaign by AA mechanics to change their current union representation. Dozens of mechanics and related employees from both airlines gathered at a local hotel this morning near Tulsa International Airport where American Airlines has its largest maintenance facility. The workers are meeting with Teamster representatives in preparation for an afternoon of door-to-door outreach to AA mechanics throughout the Tulsa area. "This is part of a major push by AA mechanics and related workers who are unhappy with their current union representation and want to reach out to their coworkers to build support for a new union," said Chris Moore, a representative of the Teamsters Airline Division. "With all the difficulties that American is going through right now, we believe these workers want the strong representative that the Teamsters provide to thousands of other aviation mechanics throughout the industry." Teamster organizers conducting house visits with AA workers will be accompanied by UA mechanics who organized with the Teamsters back in 2008 and ratified a strong contract last year. "Becoming Teamsters was the best choice we made at United and I think we have a lot to share with AA mechanics," said Rich Petrovsky, a UA mechanic in San Francisco, Calif. and a business agent with Teamsters Local 986. "American Airlines is threatening mass layoffs and outsourcing maintenance work so it can get out of bankruptcy and, as we saw firsthand at United, the Teamsters are the only union with a proven record when it comes to fighting outsourcing." About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICANWEST BANCORP: Ford Elsaesser OK'd as Assistant to Mediator ------------------------------------------------------------------ The U.S. bankruptcy Court for the Eastern District of Washington authorized AmericanWest Bancorporation to employ Ford Elsaesser as assistant to Judge Michael Hogan, court-appointed mediator. At the request of Judge Hogan, Mr. Elsaesser will be compensated at $450 per hour. To the best of Judge Hogan's knowledge, Mr. Elsaesser has no conflicts in regard to representation of other clients as required by any code or rules of professional conduct. About AmericanWest Bancorporation Headquartered in Spokane, Washington, AmericanWest Bancorporation (OTC BB: AWBC) -- http://www.awbank.net/-- was a bank holding company whose principal subsidiary was AmericanWest Bank, which included Far West Bank in Utah operating as an integrated division of AmericanWest Bank. AmericanWest Bank was a community bank with 58 financial centers located in Washington, Northern Idaho and Utah. AmericanWest Bancorporation filed for Chapter 11 protection (Bankr. E.D. Wash. Case No. 10-06097) on Oct. 28, 2010. The banking subsidiary was not included in the Chapter 11 filing. Christopher M. Alston, Esq., and Dillon E. Jackson, Esq., at Foster Pepper Shefelman PLLC, in Seattle, Washington, serve as bankruptcy counsel. G. Larry Engel, Esq., at Morrison & Foerster LLP, also serves as counsel. The Debtor estimated assets of $1 million to $10 million and debts of $10 million to $50 million in its Chapter 11 petition. AmericanWest Bancorporation's estimates exclude its banking unit's assets and debts. In its Form 10-Q filed with the Securities and Exchange Commission before the Petition Date, AmericanWest Bancorporation reported consolidated assets -- including its bank unit's -- of $1.536 billion and consolidated debts of $1.538 billion as of Sept. 30, 2010. In December 2010, AmericanWest completed the sale of all outstanding shares of AmericanWest Bank to a wholly owned subsidiary of SKBHC Holdings LLC, in a transaction approved by the U.S. Bankruptcy Court. American West filed a Chapter 11 plan hammered out with secured lenders owed $177.5 million. The lenders will take ownership and receive a new $49.6 million mortgage in return for existing debt. They will invest $10 million to be used as working capital to make payments under the plan. AMERICANWEST BANCORP: Plan Outline Hearing Continued Until Oct. 25 ------------------------------------------------------------------ The U.S. bankruptcy Court for the Eastern District of Washington, according to AmericanWest Bancorporation's case docket, has continued until Oct. 25, 2012, at 10 a.m., the hearing to consider adequacy of the disclosure statements explaining the Debtor's and Holdco Advisors, L.P.'s proposed Chapter 11 plans. In this relation, Dillon E. Jackson, Esq., at Foster Pepper Shefelman PLLC, the Debtor's counsel filed a withdrawal of Amended Disclosure Statement and Plan. The parties are moving forward with mediation. The Debtor's Plan As reported in the Troubled Company Reporter on June 7, 2012, Bill Rochelle, the bankruptcy columnist for Bloomberg News, reported that the Debtor filed a Chapter 11 plan hammered out with secured lenders owed $177.5 million. The lenders will take ownership and receive a new $49.6 million mortgage in return for existing debt. They will invest $10 million to be used as working capital to make payments under the plan. Unsecured creditors with $18 million or less in claims will share a pot of $1.5 million. If the class of unsecured creditors accepts the plan by the requisite percentage, the secured lenders won't assert their $128 million deficiency claim as an unsecured claim. Purchasers with claims for alleged construction defects will share $1.5 million plus proceeds of insurance. The disclosure statement estimates that defect claims aren't likely to exceed $20 million. A copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/AMERICAN_WEST_May29plan.pdf In a separate filing, the Debtor notified the Court that pursuant to the terms of the mediation agreement and the entry of the order appointing mediator entered on June 22, 2012, the Debtor has withdrawn its Amended Plan and Disclosure Statement filed on May 24, 2012. The Debtor's case docket also reflected that on May 25, 2012, Bruce K. Medeiros on behalf of HoldCo Advisors LP filed a Second Disclosure Statement. Holdco's Plan As reported in the TCR on June 14, 2012, Holdco filed a first amended disclosure statement in support of its plan of reorganization for AmericanWest Bancorporation dated May 25, 2012. Holdco's Plan provides for the reorganization of the Debtor and for Holders of certain Allowed Claims to receive equity in the Reorganized Debtor, with the option for each Holder of Unsecured Claims on account of Trust Originated Preferred Securities and General Unsecured Claims to receive instead a "cash out" right of payment and/or a security that results in cash from certain of the Debtor's assets, including Cash held by the Reorganized Debtor as of the Effective Date. Holdco believes the Plan will maximize the value of the Estate. About AmericanWest Bancorporation Headquartered in Spokane, Washington, AmericanWest Bancorporation (OTC BB: AWBC) -- http://www.awbank.net/-- was a bank holding company whose principal subsidiary was AmericanWest Bank, which included Far West Bank in Utah operating as an integrated division of AmericanWest Bank. AmericanWest Bank was a community bank with 58 financial centers located in Washington, Northern Idaho and Utah. AmericanWest Bancorporation filed for Chapter 11 protection (Bankr. E.D. Wash. Case No. 10-06097) on Oct. 28, 2010. The banking subsidiary was not included in the Chapter 11 filing. Christopher M. Alston, Esq., and Dillon E. Jackson, Esq., at Foster Pepper Shefelman PLLC, in Seattle, Washington, serve as bankruptcy counsel. G. Larry Engel, Esq., at Morrison & Foerster LLP, also serves as counsel. The Debtor estimated assets of $1 million to $10 million and debts of $10 million to $50 million in its Chapter 11 petition. AmericanWest Bancorporation's estimates exclude its banking unit's assets and debts. In its Form 10-Q filed with the Securities and Exchange Commission before the Petition Date, AmericanWest Bancorporation reported consolidated assets -- including its bank unit's -- of $1.536 billion and consolidated debts of $1.538 billion as of Sept. 30, 2010. In December 2010, AmericanWest completed the sale of all outstanding shares of AmericanWest Bank to a wholly owned subsidiary of SKBHC Holdings LLC, in a transaction approved by the U.S. Bankruptcy Court. American West filed a Chapter 11 plan hammered out with secured lenders owed $177.5 million. The lenders will take ownership and receive a new $49.6 million mortgage in return for existing debt. They will invest $10 million to be used as working capital to make payments under the plan. ASPEN GROUP: Amends Annual Report to Correct Accounting Error ------------------------------------------------------------- ASPEN Group, Inc., amended its audited consolidated financial statements for the years ended Dec. 31, 2011, and 2010 to reflect a restatement relating to an error in the accounting for a loan receivable of approximately $2.2 million owed by a corporation which is believed to still be controlled by Aspen's former Chairman. Aspen's management determined that they should have expensed these amounts rather than report them as a secured receivable. Aspen University Inc.'s consolidated statements of operations, as restated, reflect a net loss of $2.13 million on $4.47 million of total revenues for the year ended Dec. 31, 2011. Aspen Group previously reported a net loss of $28,078 on $0 of revenue for the year ended Feb. 29, 2012. Aspen University's restated balance sheet at Dec. 31, 2011, showed $4.01 million in total assets, $2.57 million in total liabilities, $3.46 million in temporary equity, and a $2.02 million total stockholders' deficiency. A copy of the filing is available for free at: http://is.gd/ixd7jV About Aspen Group Denver, Colo.-based Aspen Group, Inc., was founded in Colorado in 1987 as the International School of Information Management. On Sept. 30, 2004, it was acquired by Higher Education Management Group, Inc., and changed its name to Aspen University Inc. On May 13, 2011, the Company formed in Colorado a subsidiary, Aspen University Marketing, LLC, which is currently inactive. On March 13, 2012, the Company was recapitalized in a reverse merger. Aspen's mission is to become an institution of choice for adult learners by offering cost-effective, comprehensive, and relevant online education. Approximately 88% of the Company's degree- seeking students (as of June 30, 2012) were enrolled in graduate degree programs (Master or Doctorate degree program). Since 1993, the Company has been nationally accredited by the Distance Education and Training Council, a national accrediting agency recognized by the U.S. Department of Education. The Company's balance sheet at June 30, 2012, showed $3.7 million in total assets, $5.6 million in total liabilities, and a stockholders' deficit of $1.9 million. The Company had a net loss allocable to common stockholders of $3.5 million and negative cash flows from operations of $2.0 million for the six months ended June 30, 2012. "The Company's ability to continue as a going concern is contingent on securing additional debt or equity financing from outside investors. These matters raise substantial doubt about the Company's ability to continue as a going concern." ATLAS PIPELINE: S&P Withdraws 'BB' Sr. Secured Issue Rating ----------------------------------------------------------- Standard & Poor's Ratings Services withdrew its senior secured issue rating and recovery rating on U.S. midstream partnership Atlas Pipeline Partners L.P. at the company's request. The issue rating was 'BB' and the recovery score was '1' at the time of the withdrawal. RATINGS LIST Atlas Pipeline Partners L.P. Corp. credit rating B+/Stable/-- To From Ratings Withdrawn Senior secured NR BB Recovery rating NR 1 AVANTAIR INC: To Restate Periodic Reports to Correct Errors ----------------------------------------------------------- The Audit Committee of the Board of Directors of Avantair, Inc., concluded that the Company's previously filed consolidated financial statements and other financial information, the reports of its independent registered public accounting firm regarding the audits of its financial statements and internal control over financial reporting, as contained in its annual reports on Form 10-K for the fiscal year ended June 30, 2011, and its condensed consolidated financial statements contained in its quarterly reports on Form 10-Q for the quarters ended March 31, 2012, and 2011, Dec. 31, 2011, and 2010, and Sept. 30, 2011 and 2010, should no longer be relied upon and those financial statements should be restated. The following reflects a summary of the errors identified: * Although there is no impact to income (loss) from operations during any periods, billings to program participants for flight activity and other ancillary fees that were previously classified as offsets to cost of fuel and cost of flight operations should have been recognized as revenue based on the Company's examination of Accounting Standards Codification. * Fuel expense was understated and correspondingly prepaid fuel was overstated due to use of incomplete information for credit card fuel purchases and recording accruals for fuel invoices. * Property and equipment was understated and other assets were overstated as costs incurred for engine overhauls and other refurbishments on core aircraft were included in other assets. The Company is evaluating the impact of the errors relative to its internal control over financial reporting and disclosure controls. The Company has concluded that the effects of the restatement of the financial statements will be reflected in its 2012 annual report on Form 10-K, for the year ended June 30, 2012, expected to be filed by Sept. 28, 2012. A copy of the Form 8-K filing is available for free at: http://is.gd/cA7Aje About Avantair Inc. Headquartered in Clearwater, Fla., Avantair, Inc. (OTC BB: AAIR) -- http://www.avantair.com/-- sells fractional ownership interests in, and flight hour card usage of, professionally piloted aircraft for personal and business use, and the management of its aircraft fleet. According to AvData, Avantair is the fifth largest company in the North American fractional aircraft industry. Avantair also operates fixed flight based operations (FBO) in Camarillo, California and in Caldwell, New Jersey. Through these FBOs and its headquarters in Clearwater, Florida, Avantair provides aircraft maintenance, concierge and other services to its customers as well as to the Avantair fleet. The Company's balance sheet at March 31, 2012, showed $98.86 million in total assets, $132 million in total liabilities, $14.77 million in series A convertible preferred stock, and a $47.91 million total stockholders' deficit. AVENTINE RENEWABLE: Board Recommends Reverse Stock Split -------------------------------------------------------- Aventine Renewable Energy Holdings, Inc., along with each of its subsidiaries, previously entered into a Restructuring Agreement with 100% of the lenders under the Senior Secured Term Loan Credit Agreement dated as of Dec. 22, 2010, as amended, with Citibank, N.A., as administrative agent and collateral agent, and certain stockholders of the Company beneficially holding 5,331,835 shares of the Company's common stock, representing a majority of the Company's issued and outstanding common stock. Pursuant to the Restructuring Agreement, the existing lenders, the Aventine Companies and the Majority Stockholders agreed to a restructuring of the indebtedness and capital stock of the Company and the other Aventine Companies, subject to certain terms and conditions. In connection with the Restructuring, the Company's Board of Directors adopted resolutions approving the amendment and restatement of the Company's Third Amended and Restated Certificate of Incorporation to: (a) effect the reverse stock split resulting in one new share being issued for each 50 existing shares of the Company's issued and outstanding common stock, in which stockholders that would otherwise be entitled to fractional shares would receive cash in lieu of stock for those fractional shares in an amount equal to $6.15 multiplied by that fractional amount; and (b) make other changes necessary for the Restructuring. The Amended Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on Sept. 20, 2012. Deregisters Securities with SEC The Company filed a post-effective amendment No. 3 to the Registration Statement on Form S-1 filed on March 31, 2006, as amended, to deregister the securities remaining unsold under the Registration Statement. A total of 20,881,025 shares of common stock, par value $0.001 per share, of Aventine Renewable Energy Holdings, Inc., were registered by the Registration Statement for sale by the selling stockholders named in the Registration Statement, which Selling Stockholders acquired those shares of Common Stock in private equity placements. The Company registered the offer and sale of the shares of Common Stock held by the Selling Stockholders to satisfy registration rights the Company granted to the Selling Stockholders. As contemplated by the Bankruptcy Plan, all then existing shares of Common Stock, including the shares of Common Stock held by the Selling Stockholders, were cancelled as of the effective date of the Bankruptcy Plan. About Aventine Renewable Pekin, Illinois-based Aventine Renewable Energy Holdings, Inc. (OTC BB: AVRW) -- http://www.aventinerei.com/-- markets and distributes ethanol to many of the leading energy companies in the U.S. In addition to producing ethanol, its facilities also produce several by-products, such as distillers grain, corn gluten meal and feed, corn germ and grain distillers dried yeast, which generate revenue and allow the Company to help offset a significant portion of its corn costs. The Company and all of its direct and indirect subsidiaries filed for Chapter 11 (Bankr. D. Del. Lead Case No. 09-11214) on April 7, 2009. The Debtors filed their First Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code on Jan. 13, 201. The Plan was confirmed by order entered by the Bankruptcy Court on Feb. 24, 2010, and became effective on March 15, 2010. The Company reported a net loss of $43.39 million for the year ended Dec. 31, 2011, compared with a net loss of $25.46 million for the ten months ended Dec. 31, 2010. The Company's balance sheet at March 31, 2012, showed $384.90 million in total assets, $248.91 million in total liabilities and $135.98 million in total stockholders' equity. * * * As reported by the TCR on July 20, 2012, Standard & Poor's Ratings Services lowered its corporate credit rating on Aventine Renewable Energy Holdings Inc. to 'CC' from 'CCC+'. "The downgrade reflects the company's uncertain liquidity following its announcement that on July 6, 2012, it entered into an amendment to its credit agreement that could effectively prevent it from drawing on its revolving credit facility and letters of credit," said Standard & Poor's credit analyst Matthew Hobby. In the Aug. 8, 2012, edition of the TCR, Moody's Investors Service lowered Aventine Renewable Energy Holdings Inc.'s Corporate Family Rating (CFR) to Ca from Caa3 and Probability of Default Rating to Ca/LD from Caa3. The CFR downgrade and Ca/LD probability of default rating reflect Moody's understanding that Aventine did not make its scheduled July 31, 2012, term loan interest payment. B.B. KING'S: Judge Permits Mirage's Deductions ---------------------------------------------- Tim O'Reiley at Las Vegas Review-Journal reports that B.B. King's Blues Restaurant & Club has lost its attempt to stop The Mirage from repaying pre-bankruptcy debt by keeping tabs charged to rooms. According to the report, U.S. Bankruptcy Court Judge Mike Nakagawa has ruled that under a legal doctrine known as recoupment, The Mirage could make the deductions because they arise from the same lease that also allowed for room charges. Typically, pre-bankruptcy debts are frozen in Chapter 11 while the debtor tries to devise a repayment plan. The report relates, for months, The Mirage has been keeping a portion of the tabs to cover current rent. In June, the hotel started keeping money to reduce the $635,000 in unpaid rent and other charges accumulated prior to B.B. King's Chapter 11 filing in February 2011. The report says, unless the deduction was eliminated, B.B. King's manager said in court, the restaurant would run out of cash in mid-November. B.B. King's has said in court papers that the parent company, Memphis-based Beale Street Blues Co., had the financial depth to keep the outlet going. Closing the doors, Judge Nakagawa concluded, would be a choice of the company, not forced by his ruling. The report adds the dispute between B.B. King's and The Mirage stems from the eatery's contention of being overcharged for stewarding, its part of the common utility area shared by several restaurants. In one key point, Judge Nakagawa said B.B. King's had a strong case: Its lease is still valid. The Mirage has claimed it ended the lease the day before bankruptcy, so it should be able to remove B.B. King's. Beale Street Blues Company Las Vegas LLC owns the B.B. King's Blues Club restaurant and live music club at the Mirage hotel- casino in Las Vegas. Beale Street filed a Chapter 11 petition (Bankr. W.D. Tenn. Case No. 11-21619) in Memphis, Tennessee, on Feb. 16, 2011. Jonathan E. Scharff, Esq., at Harris Shelton Hanover Walsh, PLLC, in Memphis, serves as counsel to the Debtor. Beale Street disclosed assets of $2.5 million and liabilities of $3.8 million. The Las Vegas club and restaurant is part of a Memphis-based group of B.B. King's clubs named for the music legend. The other B.B. King's -- which are not part of the bankruptcy -- are in Memphis, Nashville, Orlando and West Palm Beach, Fla. BLYTH INC: Moody's Affirms 'B2' CFR & Changes Outlook to Negative ----------------------------------------------------------------- Moody's Investors Service affirmed the B2 Corporate Family Rating and other ratings for Blyth, Inc. and changed the rating outlook to negative from stable. Moody's also assigned Speculative Grade Liquidity ratings SGL-4 (weak liquidity). The outlook change and SGL-4 reflect the company's constrained liquidity profile in 2013, continued weakness in its core direct selling candle and home fragrance business, as well as uncertainty stemming from the recent announcement that it filed a registration statement for a potential initial public offering ("IPO") of ViSalus, the weight management product business in which the company currently holds a 73% stake. The outlook also reflects the growing reliance upon its ViSalus weight management products business and the heightened risk profile associated with its business model and the weight management product category generally in comparison to candles and fragrance products. Blyth's liquidity in 2013 will be constrained by both the November 2013 maturity of its $100 million senior unsecured notes and the potential purchase obligation related to ViSalus. Blyth is required to purchase the remaining 27% stake of that business for approximately $271 million if that operation meets certain performance hurdles. As of June 30, 2012, Blyth publicly stated that it anticipates the operating target requiring the additional purchase to be met. At this time it is unclear how Blyth will fund these upcoming obligations, as cash on hand is not sufficient. RATINGS RATIONALE Blyth's B2 corporate family rating reflects Moody's expectation that the company's direct selling candle business will continue to experience weakness due to the highly discretionary nature of the majority of its home expressions products that are sold through catalog, internet and wholesale channels of distribution. The rating also reflects the increasingly important role of ViSalus, its weight management product business, in offsetting the weakness in its core business. ViSalus has posted extraordinary revenue growth over the last year, with the number of sales representatives growing to over 114,000 as of June 30, 2012 from 28,000 in the year earlier period, a revenue growth rate which Moody's views is unsustainable as the business matures. Moody's believes that ViSalus' business model and the weight management product category carry inherently more risk than its candle and home fragrance product lines. Moody's expects that consumer discretionary spending (even on relatively low priced home products goods) will remain subdued as the economy remains sluggish and competition for sales consultants by other direct sellers remains high. Furthermore, Moody's expects the company's financial policies to favor shareholders given the large concentration of ownership by the Goergen family. The negative outlook also reflects Moody's uncertainty related to the company's possible IPO of ViSalus, given the implications that it may have for the company's liquidity profile for 2013, in particular as it relates to the $271 million obligation to purchase the remaining 27% of ViSalus in the first half of 2013. These risks are partially mitigated by Blyth's modest leverage and current strong cash position. Blyth's ratings could be downgraded if the 2013 liquidity concerns are not addressed in the near term. The rating could also be downgraded if sales meaningfully decline or credit metrics deteriorate such that debt-to-EBITDA approaches 4.5 times or free cash flow-to-debt is sustained in the low single digit range. Blyth's ratings could be upgraded if sales meaningfully grow at a sustainable rate and ViSalus establishes a stable track record for growing its sales and profitability across all major geographic markets and product categories. In addition, Blyth would need to address is 2013 liquidity concerns, and maintain moderately conservative financial policies with respect to share repurchases, dividends and acquisitions. The principal methodology used in rating Blyth was the Global Packaged Goods Industry Methodology published in July 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. BROADVIEW NETWORKS: Wants Court to Approve $25-Mil. Exit Loan ------------------------------------------------------------- Stephanie Gleason at Dow Jones Daily Bankruptcy Review reports that Broadview Networks Holdings Inc. is asking the bankruptcy court to approve a new $25 million loan that the company needs to fulfill cash payouts required by its plan of reorganization and provide capital to the restructured company. According to the report, the loan is in addition to the $25 million in bankruptcy financing that the U.S. Bankruptcy Court in Manhattan approved last week. That $25 million is funding the company during its Chapter 11 case. The report relates calling the financing a "key component" of its reorganization, Broadview said in court documents that CIT Finance LLC had agreed to provide it a $25 million loan that could be increased by up to $10 million if necessary. The report adds Broadview's plan of reorganization has already been approved by note holders and doesn't require much in the way of cash payments. The bankruptcy-exit financing will mainly cover administrative expenses associated with the case, in addition to providing working capital to the company after it exits Chapter 11 protection. The report notes the plan would pay senior secured note holders owed $317 million with $150 million in new notes and new stock. Note holders would hold 97.5% of the reorganized company's equity. The report adds unsecured debt would be carried over in full, and most existing equity is being canceled. According to the report, CIT Group Inc. is owed $13.9 million and is being paid in full through a roll-up loan that is part of the other $25 million loan, which CIT is providing. About Broadview Networks Rye Brook, N.Y.-based Broadview Networks Holdings, Inc., is a communications and IT solutions provider to small and medium sized business ("SMB") and large business, or enterprise, customers nationwide, with a historical focus on markets across 10 states throughout the Northeast and Mid-Atlantic United States, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. Broadview Networks and 27 affiliates on Aug. 22, 2012, sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-13579) with a plan that will eliminate half of the debt under the Company's existing senior secured notes and lower interest expense by roughly $17 million annually. The company plans to complete the restructuring in the fourth quarter. The Company's restructuring counsel is Willkie Farr & Gallagher LLP and its financial advisor is Evercore Group, L.L.C. Kurtzman Carson Consultants is the claims and notice agent. The restructuring counsel for the ad hoc group of noteholders is Dechert LLP and their financial advisor is FTI Consulting. BROADWAY FINANCIAL: Incurs $132,000 Net Loss in First Quarter ------------------------------------------------------------- Broadway Financial Corporation filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a loss available to common shareholders of $132,000 on $5.49 million of total interest income for the three months ended March 31, 2012, compared with a loss available to common shareholders of $412,000 on $6.57 million of total interest income for the same period during the prior year. The Company's balance sheet at March 31, 2012, showed $408.86 million in total assets, $390.59 million in total liabilities and $18.27 million in total shareholders' equity. Going Concern The Company has a tax sharing liability to the Bank which exceeds operating cash at the Company level. The Company used its cash available at the holding company level to pay a substantial portion of this liability pursuant to the terms of the Tax Allocation Agreement between the Bank and the Company on March 30, 2012, and does not have cash available to pay its operating expenses. Additionally, the Company is in default under the terms of a $5.0 million line of credit with another financial institution lender. "Due to the current regulatory order that is in effect, the Bank is not allowed to make distributions to the Company without regulatory approval, and such approval is not likely to be given," the Company said in its quarterly report for the period ended March 31, 2012. "In that event, the Company would not be able to meet its payment obligations within the foreseeable future unless the Company is able to secure new capital and/or obtain requisite forbearances from its lender. These conditions raise substantial doubt about the Company's ability to continue as a going concern." Crowe Horwath LLP, in Costa Mesa, California, expressed substantial doubt about the Company's ability to continue as a going concern following the annual results for the year ended Dec. 31, 2011. Bankruptcy Warning "There can be no assurance our recapitalization plan will be achieved on the currently contemplated terms, or at all. If we are unable to raise capital, we plan to continue to shrink assets and implement other strategies to increase earnings. Failure to maintain capital sufficient to meet the higher capital requirements could result in further regulatory action, which could include the appointment of a conservator or receiver for the Bank. The Company or its creditors could also initiate bankruptcy proceedings." A copy of the Form 10-Q is available for free at: http://is.gd/DLckPA About Broadway Financial Los Angeles, Calif.-based Broadway Financial Corporation was incorporated under Delaware law in 1995 for the purpose of acquiring and holding all of the outstanding capital stock of Broadway Federal Savings and Loan Association as part of the Bank's conversion from a federally chartered mutual savings association to a federally chartered stock savings bank. In connection with the conversion, the Bank's name was changed to Broadway Federal Bank, f.s.b. The conversion was completed, and the Bank became a wholly owned subsidiary of the Company, in January 1996. The Company is currently regulated by the Board of Governors of the Federal Reserve System ("FRB"). The Bank is currently regulated by the Office of the Comptroller of the Currency ("OCC") and the Federal Deposit Insurance Corporation ("FDIC"). C & M RUSSEL: Factors for Ch. 11 Filing Absent, Wants Dismissal --------------------------------------------------------------- C & M Russell, LLC, asks the U.S. Bankruptcy Court for the Central District of California, to dismiss its Chapter 11 case. According to the Debtor, among other things: -- a dismissal of the case is in the best interests of the creditors and the Debtor; -- factors precipitating the bankruptcy filing no longer exist; and -- the remaining issues in the Bankruptcy Case can be resolved outside of the bankruptcy case. The Debtor also seeks authorization to pay in full of all general unsecured creditors holding undisputed claims; and continue to hold the net proceeds from sale of the property located at 302 West Imperial Avenue, El Segundo California, in the client trust account until resolution of the State Court Action. The State Court Action is pending before the Superior Court for the County of Los Angeles. Among other things, Homer H. Blomberg, Russell's father, and Vearl Sneed Family Properties, Inc., alleged in the State Court Action that the 302 property, must have remained with the corporation, rather than have been transferred to the Debtor. The Debtor relates that it was the owner of five multifamily apartment buildings, all located in either Redondo Beach or El Segundo, California. The properties were transferred to the Debtor as a result of a Division Agreement and separate Mutual Release of Claims, entered into by and between Christina A. Russell, the Debtor's largest equity holder, and Homer H. Blomberg, Russell's father. While the settlement agreement was intended to resolve all disputes between Russell and Blomberg, Blomberg, individually and in his capacity as a trustee, and his wholly owned corporation, VSFP caused to be commenced a state court lawsuit, challenging the settlement agreement and the division of assets effectuated thereby. The U.S. Trustee, in its limited objection to the Debtor's motion, requested that any outstanding U.S. Trustee quarterly fees be remitted as a condition of the requested dismissal. About C&M Russell Los Angeles, California-based C & M Russell LLC owns five multifamily apartment buildings all located in either Redondo Beach or El Segundo, California. The Company first made a pro se Chapter 11 bankruptcy filing (Bankr. C.D. Calif. Case No. 11-49889) on Sept. 21, 2011. C & M Russell filed for another Chapter 11 petition (Bankr. C.D. Case No. 11-53845) on Oct. 20, 2011. Judge Sandra R. Klein presides over the case. Alan G. Tippie, Esq., and Avi E. Muhtar, Esq., at SulmeyerKupetz, serve as the Debtor's counsel. In the second petition, the Debtor scheduled assets of $17.5 million and debts of $9.30 million. The petition was signed by Mattie B. Evans, chief executive member. Kenneth Blake, CPA, acts as accountant. CALPINE CORP: Moody's Rates $615-Mil. Senior Secured Notes 'B1' --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Calpine Corporation's planned issuance of new $615 million senior secured notes due 2022. Concurrent with this rating assignment, Moody's affirmed Calpine's B1 Corporate Family Rating (CFR) and B1 Probability of Default Rating, along with the B1 rating assigned to the company's five series of senior secured notes that mature between 2017 and 2023. Moody's also affirmed the B1 rating assigned to Calpine's $1.64 billion in secured term loans due 2018 and its $1.0 billion secured revolver due 2015, the Speculative Grade Liquidity Rating of SGL-2, and the Ba3 rating assigned to the secured notes issued by subsidiary, Calpine Construction Finance Company, LLC. (CCFC). The rating outlook for Calpine and CCFC is stable. RATINGS RATIONALE Calpine's B1 CFR incorporates the steady strengthening of key financial metrics since the company's February 2008 emergence from bankruptcy, and the likelihood of continued improved financial performance in the future based upon the incremental earnings and cash flow contributions from the recently acquired Mid-Atlantic fleet and from incremental contributions from new projects and contracts entered into with a number of end-use customers. The rating considers the company's hedging program, a favorable environmental profile, substantially reduced refinancing risk, and sustained operating performance of the generation fleet, all of which are offset by continued high leverage. At year-end 2011, Moody's calculates the ratio of Calpine's consolidated cash flow (CFO-pre W/C) to debt at 6.4%, its consolidated cash flow coverage of interest at 1.9x and its free cash flow to debt at 0.8%. Unlike its peers, Calpine's ongoing capital requirements for maintenance are fairly modest given the newness of the natural gas fired fleet and the very limited environmental requirements associated with the fleet. Moreover, Calpine has experienced a substantial increase in generation production as its capacity factor for the first half of 2012 was 53% as compared to 37% for the same period in 2011, representing an 45% increase in kilowatthour production. Management has reaffirmed EBITDA guidance for 2012 at the $1.7 - $1.8 billion range similar to the levels reached in each of the past three years. As such, Moody's believes Calpine's financial performance will continue to position it reasonably well as a strong "B" rated unregulated power company. Proceeds from the secured note offering, along with cash on hand, will be used to redeem 10% of the company's original $5.9 billion in senior notes or $590 million of senior notes. Specifically, Section 3.07 (c) of the indenture allows Calpine to redeem up to 10% of each of the five series of senior secured notes at a price of 103%. As such, Calpine will use the proceeds of the financing along with cash on hand to complete the repurchase, pay the call premium ($17.7 million) and associated closing costs. Calpine's primary motivation for completing the transaction is the expected annual interest savings from the refinancing. The B1 (LGD4, 50%) rating for the secured notes incorporates the fact that all of the Calpine corporate debt is first lien debt and as such, should carry the same rating as the company's CFR. The collateral securing the term loan consists of a first priority lien on a material percentage of all assets, including equity in subsidiaries of Calpine and the guarantors to the extent permitted by existing contractual arrangements. Key components of the collateral package include a direct first lien on the Geysers, a 725 MW base load geothermal collection of plants in California, as well as a first lien on the majority of the company's natural gas- fired power generation facilities throughout the US. The collateral package also includes a first lien on the equity interests in virtually all of the remaining plants. The Calpine secured note holders will share in this collateral package with existing lenders in the company's $1 billion revolver, existing senior note holders, and existing holders of $1.64 billion term loans (all rated B1). The SGL-2 liquidity rating reflects Moody's view that Calpine will have good liquidity over the next 12 months based upon internal cash flow generation, balance sheet liquidity, and headroom under the company's covenants. At June 30, 2012, Calpine's unrestricted cash balance of $587 million was negatively impacted by $290 million of share repurchases during the quarter and the settling of non-interest rate hedges for $156 million. Internal cash resources are expected to be aided by the completion of the Riverside Energy Center sale to Wisconsin Power & Light for $392 million anticipated to close in December 2012. As such, internal cash balances are expected to exceed $1 billion at year-end 2012. At June 30, 2012, Calpine had access to $615 million of revolver capacity under its $1 billion secured credit facility due December 2015 as well as $44 million under a separate letter of credit facility. The next large debt maturity occurs in 2016 when the CCFC senior notes mature. Moody's expects the company to be able to satisfy any project level maturing debt requirements over the next 12 months from internal sources, while also remaining in compliance with the financial covenants in its credit facilities. In addition to Riverside, Moody's anticipates Calpine continuing to monetize certain of its less core assets over the next several years which will continue to be a regular source of alternate liquidity. The stable rating outlook reflects Moody's expectation for continued execution of the company's strategy through strong plant performance and a carefully implemented hedging strategy which is expected to result in continued free cash flow generation. In light of Moody's belief that future debt reduction will occur at a slower pace, reduced prospects exist for the CFR to be upgraded in the near-term. However, Calpine's CFR could be upgraded if the company's ratio of free cash flow to debt reaches the high single digits, its cash flow to debt exceeds 12%, and cash coverage of interest expense is above 2.3x with all on a sustained basis. The rating could be downgraded if the company is not able to execute on its current operating plan through strong plant performance and its regular hedging strategy leading to the company's cash flow to debt declining below 7%, and its cash coverage of interest expense falling below 1.8x on a sustained basis. The methodologies used in this rating were Unregulated Utilities and Power Companies published in August 2009, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Houston, Texas, Calpine is a major U.S. independent power company that owns 93 power plants with an aggregate generation capacity that exceed 28,000 MW. During 2011, Calpine had operating revenues of $6.8 billion. CATASYS INC: David Smith Discloses 48.9% Equity Stake ----------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, David E. Smith disclosed that as of Sept. 13, 2012, he beneficially owns 46,746,851 shares of common stock of Catasys, Inc., representing 48.9% of the shares outstanding. Mr. Smith previously reported beneficial ownership of 33,446,851 common shares or a 47% equity stake as of April 18, 2012. A copy of the amended filing is available for free at: http://is.gd/hegfXB About Hythiam, Inc. Based in Los Angeles, California, Hythiam, Inc., n/k/a Catasys, Inc., is a healthcare services management company, providing through its Catasys(R) subsidiary specialized behavioral health management services for substance abuse to health plans. In its auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Rose, Snyder & Jacobs LLP, in Encino, California, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred significant operating losses and negative cash flows from operations during the year ended Dec. 31, 2011. The Company reported a net loss of $8.12 million in 2011, compared with a net loss of $19.99 million in 2010. The Company's balance sheet at June 30, 2012, showed $3.47 million in total assets, $11.95 million in total liabilities and a $8.47 million total stockholders' deficit. Bankruptcy Warning As of Aug. 13, 2012, the Company had a balance of approximately $500,000 cash on hand. The Company had working capital deficit of approximately $2.2 million at June 30, 2012. The Company has incurred significant net losses and negative operating cash flows since its inception. The Company could continue to incur negative cash flows and net losses for the next twelve months. The Company's current cash burn rate is approximately $450,000 per month, excluding non-current accrued liability payments. The Company expects its current cash resources to cover expenses into September 2012, however delays in cash collections, revenue, or unforeseen expenditures, could impact this estimate. The Company will need to immediately obtain additional capital and there is no assurance that additional capital can be raised in an amount which is sufficient for the Company or on terms favorable to its stockholders, if at all. "If we do not immediately obtain additional capital, there is a significant doubt as to whether we can continue to operate as a going concern and we will need to curtail or cease operations or seek bankruptcy relief. If we discontinue operations, we may not have sufficient funds to pay any amounts to stockholders," the Company said in its quarterly report for the period ended June 30, 2012. CATASYS INC: Terren Peizer Discloses 61.84% Equity Stake -------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Terren S. Peizer and his affiliates disclosed that as of Sept. 13, 2012, they beneficially own 66,655,379 shares of common stock of Catasys, Inc., representing 61.84% of the shares outstanding. Mr. Peizer previously reported beneficial ownership of 17,524,773 common shares or a 53.37% equity stake as of Aug. 17, 2011. A copy of the amended filing is available for free at http://is.gd/3mI8TL About Hythiam, Inc. Based in Los Angeles, California, Hythiam, Inc., n/k/a Catasys, Inc., is a healthcare services management company, providing through its Catasys(R) subsidiary specialized behavioral health management services for substance abuse to health plans. In its auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Rose, Snyder & Jacobs LLP, in Encino, California, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred significant operating losses and negative cash flows from operations during the year ended Dec. 31, 2011. The Company reported a net loss of $8.12 million in 2011, compared with a net loss of $19.99 million in 2010. The Company's balance sheet at June 30, 2012, showed $3.47 million in total assets, $11.95 million in total liabilities and a $8.47 million total stockholders' deficit. Bankruptcy Warning As of Aug. 13, 2012, the Company had a balance of approximately $500,000 cash on hand. The Company had working capital deficit of approximately $2.2 million at June 30, 2012. The Company has incurred significant net losses and negative operating cash flows since its inception. The Company could continue to incur negative cash flows and net losses for the next twelve months. The Company's current cash burn rate is approximately $450,000 per month, excluding non-current accrued liability payments. The Company expects its current cash resources to cover expenses into September 2012, however delays in cash collections, revenue, or unforeseen expenditures, could impact this estimate. The Company will need to immediately obtain additional capital and there is no assurance that additional capital can be raised in an amount which is sufficient for the Company or on terms favorable to its stockholders, if at all. "If we do not immediately obtain additional capital, there is a significant doubt as to whether we can continue to operate as a going concern and we will need to curtail or cease operations or seek bankruptcy relief. If we discontinue operations, we may not have sufficient funds to pay any amounts to stockholders," the Company said in its quarterly report for the period ended June 30, 2012. CCI FUNDING I: Lawsuit Against Trico Goes to Trial -------------------------------------------------- The lawsuit commenced by Janice Steinle, the Chapter 11 trustee of CCI Funding I LLC, against Trico Real Estate, L.P., will go to trial after the bankruptcy judge denied Trico's Motion for Partial Summary Judgment and Memorandum in Support; and the trustee's Cross-Motion for Summary Judgment and Response in Opposition to Trico Real Estate, L.P.'s Motion for Partial Summary Judgment. Prior to the bankruptcy filing, CCI made three loans to Trico in the total face amount of $9,175,000 pursuant to three separate promissory notes dated Sept. 28, 2007, and three separate loan agreements dated Sept. 28, 2007, between Trico, as Borrower, and CCI, as Lender. Charles Snider, III, in his capacity as president of Trico, executed each of the Promissory Notes and Loan Agreements. Each Promissory Note provided its principal outstanding balance would bear interest at the one-month LIBOR rate plus 4%, and all amounts outstanding under each Promissory Note would be due and payable on Dec. 28, 2008. The purpose of the Loans was funding to purchase certain real property and related improvements located in Kingwood, Harris County, Texas including certain condominium units, service units and related real property interests, in the Westminster House Condominiums, a 134-unit senior independent living facility. On June 4, 2010, Ms. Steinle commenced the adversary proceeding against Trico and James T. Markus as Chapter 11 trustee of the CCI estate. In an Amended Complaint, Ms. Steinle asserts two claims for relief: (1) judgment against Trico on the Promissory Notes in the principal amount of $8,470,102 plus accrued interest, late charges, attorneys' fees and costs; and (2) disallowance of Trico's proofs of claim in the CCIF and CCI cases. Trico denied any default on the Loans. Bankruptcy Judge Michael E. Romero said both Ms. Steinle's and Trico's motions must be denied because of the presence of genuine issues of material fact. Specifically, there has been no evidence provided as to whether CCI's failure to fund the requests it did not fund was reasonable or whether parole evidence should be allowed to indicate the parties' understanding of Trico's and CCI's obligations. As reported by the Troubled Company Reporter on Aug. 22, Judge Romero said the Bankruptcy Court has constitutional authority to hear and render a final decision on all claims for relief as alleged in the lawsuit, JANICE A. STEINLE, Chapter 11 Trustee for the bankruptcy estate of CCI FUNDING I, LLC, a Delaware limited liability company, Plaintiff, v. TRICO REAL ESTATE, L.P., Defendant, Adv. Proc. No. 10-1418 (Bankr. D. Colo.). A copy of the Court's Sept. 18, 2012 Order is available at http://is.gd/JhVP4nfrom Leagle.com. About Commercial Capital Greenwood Village, Colorado-based Commercial Capital, Inc. -- http://www.commercialcapitalinc.com/-- and its affiliate, CCI Funding I LLC, were commercial real estate lenders and investment partners engaged in short-term commercial mortgage. Commercial Capital and CCI Funding filed separate petitions for Chapter 11 protection on April 22, 2009, and April 24, 2009, respectively (Bankr. D. Colo. Lead Case No. 09-17238). The cases were jointly administered. Robert Padjen, Esq., at Laufer and Padjen LLC, assists Commercial Capital in its restructuring efforts. In its bankruptcy petition, Commercial Capital estimated between $100 million and $500 million in assets, and between $50 million and $100 million in debts. CCI Funding estimated between $100 million and $500 million each in assets and debts. On Nov. 10, 2009, in the CCIF bankruptcy case, the Court approved the U.S. Trustee's appointment of Janice Steinle as the Chapter 11 Trustee for CCIF. On Dec. 7, 2011, in the CCIF bankruptcy case, the Court confirmed the Fourth Amended Plan of Liquidation Under Chapter 11 Filed by WestLB, New York Branch. Ms. Steinle is the Responsible Officer of CCIF pursuant to the confirmed plan. CHERYL PEREZ: Lacks Standing to Challenge Chapter 7 Trustee's Fees ------------------------------------------------------------------ The District Court agreed with the Bankruptcy Court that Chapter 7 debtor Cheryl L. Perez lacked standing to raise any objections to the Application for Compensation filed by Kevin P. Kubie, the Chapter 7 trustee. In 2005, Ms. Perez and others lost a Louisiana state-court action brought by a man named S. Stewart Farnet. Ms. Perez appealed the judgment in Louisiana and, while the appeal was pending, filed for Chapter 11 relief (Bankr. D. Colo. Case No. 05-25535). Mr. Farnet submitted a claim against Ms. Perez in the bankruptcy proceeding, and the court found that Mr. Farnet had an allowed claim of $710,269. Ms. Perez did not appeal the bankruptcy court's order allowing Mr. Farnet's claim. Instead, she subsequently converted her Chapter 11 case to one under Chapter 7. On Aug. 29, 2006, Mr. Kubie was appointed the Chapter 7 Trustee. Over the next few years, the Trustee actively administered the estate. Meanwhile, Ms. Perez's appeal of the state-court action was dismissed by a Louisiana appellate court and, by at least February 2010, the bankruptcy court was aware that Ms. Perez's estate no longer maintained an interest in the state-court appeal. On Aug. 2, 2011, the Chapter 7 Trustee filed both his Final Report and his Application for Compensation. The Final Report showed an amount in allowed claims well in excess of the amount collected from liquidating the estate's property. In his Application for Compensation, the Trustee sought compensation of $40,529 and reimbursement for expenses of $5,848. Thereafter, Ms. Perez filed an adversary complaint against the Trustee, as well as Objections to the Trustee's Application for Compensation and Final Report. The case before the District Court is, CHERYL L. PEREZ, Appellant, v. KEVIN P. KUBIE, Individually and in his Official Capacity as the Chapter 7 Trustee of the bankruptcy Estate of Cheryl L. Perez, Civil Action No. 11-cv-02743-CMA (D. Colo.). A copy of District Judge Christine M. Arguello's Sept. 17 order is available at http://is.gd/PKGAJ7from Leagle.com. CHICKEN OUT: Joseph Marinucci Buys Six Store Locations ------------------------------------------------------ Missy Frederick at Washington Business Journal reports that Joseph Marinucci has acquired the six remaining locations of Chicken Out Inc. and plans to keep them up and running. The report notes financial terms were not disclosed, but Chicken Out will continue as a privately run company. According to the report, new locations are already on the way. Mr. Marinucci signed a lease for about 2,000 square feet at 1386 Chain Bridge Road in the Langley Shopping Center in McLean. That spot will be open by the end of October. Chicken Out has 10 restaurant locations in D.C., Maryland and Virginia. The chain recently closed its Pikesville location in the Festival at Woodholme and still operates a store in Columbia. The Company filed a Chapter 11 petition (Bankr. D. Md. Case No. 11-24557) on July 14, 2011. Robert K. Goren, Esq., at Goren, Wolff & Orenstein, LLC, in Rockville, Maryland, serves as counsel to the Debtor. The Debtor estimated up to $10 million in assets and $10 million to $50 million in debts as of the Chapter 11 filing. CHRIST HOSPITAL: Suzanne Koenig Discharged as P. Care Ombudsman --------------------------------------------------------------- The Hon. Morris Stern of the U.S. Bankruptcy Court for the District of New Jersey discharged Suzanne Koenig as patient care ombudsman in the Chapter 11 case of Christ Hospital. The Court also ordered that her duties and responsibilities as ombudsman are terminated effective as of July 20, 2012. About Christ Hospital Christ Hospital filed for Chapter 11 bankruptcy (Bankr. D. N.J. Case No. 12-12906) on Feb. 6, 2012. Christ Hospital, founded in 1872 by an Episcopalian priest, is a 367-bed acute care hospital located in Jersey City, New Jersey at 176 Palisade Avenue, serving the community of Hudson County. The Debtor is well-known for its broad range of services from primary angioplasty for cardiac patients to intensity modulated radiation therapy for those battling cancer. Christ Hospital is the only facility in Hudson County to offer IMRT therapy, which is the most significant breakthrough in cancer treatment in recent years. Christ Hospital filed for Chapter 11 after an attempt to sell the assets fell through. Judge Morris Stern presides over the case. Lawyers at Porzio, Bromberg & Newman, P.C., serve as the Debtor's counsel. Alvarez & Marsal North America LLC serves as financial advisor. Logan & Company Inc. serves as the Debtor's claim and noticing agent. The Health Professional and Allied Employees AFT/AFI-CIO is represented in the case by Mitchell Malzberg, Esq., at Mitnick & Malzberg P.C. DIP lender HFG is represented in the Debtor's case by Benjamin Mintz, Esq., at Kaye Scholer LLP and Paul R. De Filippo, Esq., at Wollmuth Maher & Deutsch LLP. Andrew H. Sherman, Esq., at Sills, Cummis & Gross, serves as counsel to the Official Committee of Unsecured Creditors. J.H. Cohn LLP serves as financial advisor to the committee. Suzanne Koenig of SAK Management Services, LLC, has been appointed as patient care ombudsman. She is represented by Greenberg Traurig as counsel. Hudson Hospital Holdco is represented in the case by McElroy, Deutsch, Mulvaney & Carpenter, LLP. Community Healthcare Associates is represented in the case by Lowenstein Sandler PC. Liberty Healthcare System, Inc., d/b/a Jersey City Medical Center, which joined in CHA's bid, is represented by Duane Morris LLP. CITY OF BRIDGEPORT: Moody's Upgrades G.O. Debt Rating From 'Ba1' ---------------------------------------------------------------- Moody's Investors Service has upgraded to Baa2 from Ba1 the rating of the City of Bridgeport's (TX) General Obligation Limited Tax debt. The upgrade affects roughly $11.3 million in Moody's rated debt. The rating also takes into consideration roughly $3.0 million in parity debt outstanding which is not rated by Moody's. SUMMARY RATINGS RATIONALE The Bonds are payable from the levy and collection of a continuing, direct, annual ad valorem tax, within the limits prescribed by law, on all taxable property located within the city. The upgrade to Baa2 reflects improvement in the city's financial performance and reserve position which is partly the result of new management practices and conservative budgeting. The upgrade also reflects better than expected sales tax collections, modest growth in the city's small tax base, and an above average debt burden. The rating also reflects finalized restructuring of a $3.0 million liability associated with the local hospital. STRENGTHS * New management team with two years of demonstrated cuts in expenditures and newly installed management practices * Better than expected fiscal 2012 sales tax collections and projected solid financial performance in 2012 * Finalized restructuring of $3.0 million liability associated with the local hospital * Anticipated significant growth in General Fund balance CHALLENGES * Above average debt burden * Significant reliance on economically sensitive sales tax revenues WHAT COULD MAKE THE RATING GO UP: * Significant growth and diversification in assessed valuation * Continued structurally balanced operations bolstering city's liquidity WHAT COULD MAKE THE RATING GO DOWN: * Contraction of assessed valuation * Inability to produce structurally balanced operations resulting in narrowing of reserve position * Significant increase in debt profile RATING METHODOLOGY The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. CITY OF BURLINGTON: Moody's Maintains 'Ba2' Rating on $8.5MM COPs ----------------------------------------------------------------- Moody's Investors Service has assigned a Baa3 rating with a negative outlook to the City of Burlington's (VT) $10 million of General Obligation Public Improvement Bonds, Series 2012 A and $1.3 million of General Obligation Public Improvement Bonds, Series 2012 B (taxable). The bonds are secured by an unlimited tax pledge. Moody's maintains a Baa3 rating on $79 million of outstanding general obligation debt, a Ba1 on $3 million in certificates of participation, Series 2000 and 2002 (Police Facility), and a Ba2 on $8.5 million of certificates of participation, Series 1999A, 1999B, and 2007 (Parking). The outlook on the general obligation debt and the certificates of participation remains negative. Proceeds from the current issue will be used to permanently finance maturing notes and finance city, school, and electric projects. Issue: General Obligation Public Improvement Bonds, Series 2012A; Rating: Baa3; Sale Amount: $10,000,000; Expected Sale Date: 09-28- 2012; Rating Description: General Obligation Issue: Taxable General Obligation Public Improvement Bonds, Series 2012B; Rating: Baa3; Sale Amount: $1,300,000; Expected Sale Date: 09-28-2012; Rating Description: General Obligation SUMMARY RATINGS RATIONALE Burlington's Baa3 general obligation rating reflects the additional strains on the city's pooled cash from non-self- supporting enterprise funds, compounding the prior year draws used for the expansion of Burlington Telecom (BT). These draws greatly reduced the city's liquidity to narrow levels, resulting in a high reliance on cash flow borrowing to maintain financial operations and continue to meet debt service obligations. The city's cash balance at the end of fiscal 2011, net of cash flow borrowing, is significantly negative. The general obligation rating also factors in the city's strength as the economic center of Vermont (G.O. rated Aaa/stable outlook), as well as its manageable debt profile. The Ba1 and Ba2 ratings on the COPs reflect the city's general credit profile while incorporating appropriation and essentiality risks of the projects. The negative outlook reflects the potential for additional liquidity strain given the uncertainty surrounding the outcome of the recent lawsuit regarding the BT lease and the potential repayment of an interfund loan to BT. On September 2, 2011, Citibank (rated A3/stable) filed a lawsuit against the city following the non-appropriation and subsequent termination of the BT lease. While the impact of this lawsuit on the city's General Fund is unclear, given the current regulatory environment and city charter provisions, Moody's expects that any obligation borne by the General Fund may adversely affect the city's credit profile. Additionally, the lawsuit is likely to hamper any plans by the city to formulate a viable long-term solution for BT and the repayment of funds owed to the city's pooled cash account. The outlook also reflects significant challenges as the city attempts to reduce the reliance of its other enterprise funds on pooled cash and return to self-supporting operations. STRENGTHS - Stable underlying economy and tax base serving as the economic center of the state - Manageable debt profile CHALLENGES - Potential exposure of the General Fund to any judgment or settlement resulting from the recent lawsuit - Long-term viability of BT which would ultimately result in the repayment of funds - Operating deficits in the city's Water and Wastewater Funds resulting on additional drains on pooled cash Outlook The negative outlook reflects the city's considerable reliance on cash flow borrowing, ongoing strain related to its various enterprise funds, and the potential negative effect on the city's financial position from the Citibank lawsuit. Moody's will continue to monitor the city's cash position, its ability to address weakened positions of its enterprise funds, and its ability to meet day-to-day operating requirements and General Fund debt service payments. In addition, Moody's will continue to monitor the city's status of pooled cash and ability to manage its array of short-term debt instruments to meet near-term liquidity. WHAT WOULD MAKE THE RATING GO UP - Reduction or elimination of the amount due from BT to the pooled cash account - City prevailing in the lawsuit - Significant reduction of enterprise fund exposure to the General Fund and reduced reliance on pooled cash - Reduced reliance on short-term cash flow instruments WHAT WOULD MAKE THE RATING GO DOWN - Increased exposure of the General Fund to BT losses and obligations stemming from the lawsuit for changes in the statutory environment - Inability to make meaningful progress towards repayment of the interfund loan - Lack of a viable plan to place the telecommunications system on a more sustainable path Growth of the negative net asset position of the Telecom Fund - Lack of, or challenges attaining, market access to fund operations via renewals on its lines of credit - Structurally imbalanced General or School Fund operations, reducing the city's financial flexibility - Increased exposure to losses the city's various enterprises PRINCIPAL METHODOLOGIES USED The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. COMMUNICATION INTELLIGENCE: Obtains $2.2 Million in Financing ------------------------------------------------------------- Communication Intelligence Corporation has closed a new round of funding for working capital with a number of existing and new investors. Pursuant to the closing, investors subscribed to provide CIC with approximately $2.2 million in cash, one-half of which was delivered on Sept. 14, 2012, in exchange for unsecured promissory notes, and the remaining one-half is scheduled to be delivered in exchange for Series D-2 Preferred Stock following receipt of requisite stockholder approval and satisfaction of customary closing conditions. The Series D-2 Preferred Stock will be convertible into shares of common stock at a price of $0.05 per share. Upon issuance of the Series D-2 Preferred stock, all outstanding CIC unsecured promissory notes will automatically convert into Series D-1 and D-2 Preferred Stock, creating a combined pool of approximately $4.5 million in Series D Preferred Stock that will be senior to all other classes of preferred stock. "We elected to postpone until now our Series D equity round in an effort to limit dilution," stated Philip Sassower, CIC's Chairman and Chief Executive Officer. "We believe we have succeeded in this effort as, on average, the Series D will have a conversion price of $0.0435 per share, which is almost twice the Series C conversion price of $0.0225. Also, the Series D will have only 12% warrant coverage in the aggregate, as compared to 100% warrant coverage issued with the Series C. We believe the improvement in financing terms is a strong reflection of the Company's positive traction in the market and of our investor group's ongoing commitment to support CIC." "Assuming no significant changes in our revenue run rate and operating expenses, this round of funding is expected to sustain CIC through the middle of 2013," stated William Keiper, CIC's President and Chief Operating Officer. "It provides the support required to drive ongoing integrations of our high security electronic and biometric signature solutions with additional partners and clients and to add to our transaction-based and recurring revenue." A copy of the Form 8-K filing is available for free at: http://is.gd/Y01K4Z About Communication Intelligence Redwood Shores, California-based Communication Intelligence Corporation is a supplier of electronic signature products and the recognized leader in biometric signature verification. In its audit report accompanying the financial statements for 2011, PMB Helin Donovan, LLP, in San Francisco, Calif., expressed substantial doubt about Communication Intelligence's ability to continue as a going concern. The independent auditors noted that of the Company's significant recurring losses and accumulated deficit. The Company reported a net loss of $4.50 million for 2011, compared with a net loss of $4.16 million for 2010. The Company's balance sheet at June 30, 2012, showed $2.76 million in total assets, $4.09 million in total liabilities and a $1.33 million total stockholders' deficit. COMMUNITY FIRST: Franklin Branch to be Sold to First Citizens ------------------------------------------------------------- First Citizens National Bank and Columbia, TN-based Community First Bank have entered into a purchase and assumption agreement whereby First Citizens will acquire a branch from Community First Bank. The branch to be sold is located at 9045 Carothers Parkway in Franklin. The transaction, which includes approximately $55 million in deposits and $26 million in loans, is subject to regulatory approval and is expected to be completed in the fourth quarter of 2012. "We're excited for the opportunity to expand our customer base and demonstrate our commitment to the Williamson County community which we already serve," said Jeff Agee, President & CEO of First Citizens National Bank. First Citizens National Bank currently operates a full-service branch at 1304 Murfreesboro Road in Franklin and 18 other full-service locations in Tennessee. "Our strong capital position allows First Citizens National Bank to seek growth opportunities to enhance shareholder value and provide exemplary customer service. We believe the addition of a second full-service branch in Franklin will broaden our ability to effectively serve new and existing customers. We are confident that our new customers will be pleased with our comprehensive banking products and services and commitment to customer service," Agee said. Louis Holloway, President & CEO of Community First, stated, "The sale of this branch is part of our ongoing effort to improve our overall efficiency and profitability." "The transaction with First Citizens fits our strategic plan, which is to concentrate on our core markets. We believe that having First Citizens as our successor in Cool Springs places our employees with a good company and our clients with a banking organization that will serve them well." Mr. Holloway continued, "Between now and the closing date, the Community First and First Citizens teams will work closely with each other to assure a smooth transition for customers and employees." Following the transaction, Community First will continue to operate 8 branches throughout Middle Tennessee. There will be no changes to any of Community First's customer accounts until after the transaction is completed, and the banks will collaborate to ensure a smooth transition for the businesses and individuals they serve. Employees of Community First that are associated with the branch to be sold will be invited to join First Citizens upon completion of the transaction. Over the next several weeks, Community First and First Citizens will be communicating directly with customers and the affected employees to guide them through the process and assist with any questions. First Citizens National Bank is a $1.1 billion FDIC-insured financial institution established in 1889. It strives for excellence achieved with integrity, trust and innovation to create long-term shareholder value, attract and retain high performance employees, and provide superior customer service. For information about First Citizens National Bank, visit http://www.firstcitizens-bank.comor call 800-321-3176. About Community First Columbia, Tennessee-based Community First, Inc., is a registered bank holding company under the Bank Holding Company Act of 1956, as amended, and became so upon the acquisition of all the voting shares of Community First Bank & Trust on Aug. 30, 2002. An application for the bank holding company was approved by the Federal Reserve Bank of Atlanta (the "FRB") on Aug. 6, 2002. The Company was incorporated under the laws of the State of Tennessee as a Tennessee corporation on April 9, 2002. After auditing the Company's 2011 results, Crowe Horwath LLP, in Brentwood, Tennessee, expressed substantial doubt about Community First's ability to continue as a going concern. The independent auditors noted that the Company's bank subsidiary, Community First Bank & Trust, is not in compliance with a regulatory enforcement action issued by its primary federal regulator requiring, among other things, a minimum Tier 1 Leverage capital ratio at the Bank of not less than 8.5%, a minimum Tier 1 capital to risk-weighted assets ratio of not less than 10.0% and a minimum Total capital to risk-weighted assets ratio of not less than 12.0%. "The Bank's Tier 1 Leverage capital ratio was 4.92%, its Tier 1 capital to risk-weighted assets ratio was 7.22% and its Total-capital to risk weighted assets ratio was 8.51% at Dec. 31, 2011. Continued failure to comply with the regulatory enforcement action may result in additional adverse regulatory action." The Company reported a net loss of $15.0 million on $19.6 million of net interest income (before provision for loan losses) in 2011, compared with a net loss of $18.2 million on $21.0 million of net interest income (before provision for loan losses) in 2010. Total non-interest income was $3.4 million for 2011, compared with $4.7 million for 2010. The Company's balance sheet at June 30, 2012, showed $573.69 million in total assets, $563.03 million in total liabilities and $10.65 million in total shareholders' equity. CONVERTED ORGANICS: Has 536.8 Million Common Shares Outstanding --------------------------------------------------------------- On Jan. 3, 2012, Converted Organics entered into an agreement with an institutional investor whereby the Company agreed to sell to the investor 12 senior secured convertible notes. The initial January Note was issued on Jan. 3, 2012, in an original principal amount of $247,500. The remaining 11 January Notes will each have an original principal amount of up to $237,600. Each January Note matures eight months after issuance. The total face value of the 12 notes under this agreement will be $2,861,100, assuming each note is sold for the full face value, to the investor, of which there is no assurance. The January Notes are convertible into shares of the Company's common stock at a conversion price equal to 80% of lowest bid price of our common stock on the date of conversion. Also, as previously reported on March 12, 2012, the Company entered into an agreement with two investors, pursuant to which the Company agreed to effect an additional closing under the Jan. 12, 2012, convertible note in which the Company issued the buyers new notes having an aggregate original principal amount of $550,000. As of Sept. 14, 2012, the total principal outstanding on these notes was $1,541,960. As of Sept. 21, 2012, the principal amount of the Notes is $1,481,960. From Sept. 17, 2012, until Sept. 21, 2012, a total of $60,000 in principal had been converted into 66,844,920 shares of common stock. Since the issuance of the Original Note and the addtional closing, a total of $635,100 in principal has been converted into 356,305,809 shares of common stock (after effect of the November 2011 and March 2012 reverse stock splits). The Note holders are accredited investors and the shares of common stock were issued in reliance on Section 3(a)(9) under the Securities Act of 1933, as amended. As of Sept. 21,2012, the Company had 536,836,281 shares of common stock outstanding. About Converted Organics Boston, Mass.-based Converted Organics Inc. utilizes innovative clean technologies to establish and operate environmentally friendly businesses. Converted Organics currently operates in three business areas, namely organic fertilizer, industrial wastewater treatment and vertical farming. After auditing the 2011 results, Moody, Famiglietti & Andronico, LLP, noted that the Company has suffered recurring losses and negative cash flows from operations and has an accumulated deficit that raises substantial doubt about its ability to continue as a going concern. Converted Organics reported a net loss of $17.98 million in 2011, compared with a net loss of $47.81 million in 2010. The Company's balance sheet at June 30, 2012, showed $7.05 million in total assets, $6.91 million in total liabilities and $140,006 in total stockholders' equity. COPYTELE INC: Adds Former Acacia Executives to Team --------------------------------------------------- CopyTele, Inc., appointed three former executives from Acacia Research Corporation, a premier publicly traded patent monetization company, to its executive team. Robert Berman will be CopyTele's President and CEO, John Roop will be a Senior Vice President of Engineering, and Dr. Amit Kumar will be a strategic advisor to CopyTele. The new team brings extensive experience in turnarounds and intellectual property monetization to CopyTele. Dr. Kumar was a member of the Board of Directors of Acacia from 2002-2008. Mr. Berman, who was at Acacia from 2000-2007, started Acacia's patent assertion business, and as COO and General Counsel, had responsibility for managing all patent monetization activities and related personnel. Mr. Roop, who was at Acacia from 2001-2008, was Senior Vice President of Engineering, where he built and managed the technical group responsible for the evaluation and monetization of patents. Lew Titterton, CopyTele's current Chairman and interim CEO stated, "We are pleased that Mr. Berman, Mr. Roop and Dr. Kumar have agreed to join the company. Their interest in joining CopyTele confirms our belief in the potential value of our patents and patent related technologies. This team has the skills, knowledge, and experience necessary to maximize the value of these assets for our shareholders." Mr. Berman stated, "Since its inception 30 years ago, CopyTele has invented and developed technologies resulting in the issuance of more than 100 U.S. Patents. We have already begun the process of evaluating CopyTele's patents and meeting with CopyTele's technical staff. We are excited about the prospects of unlocking the value of CopyTele's patents and in the coming weeks and months, will investigate and consider all options for the monetization of these assets." Mr. Berman has experience in a broad variety of areas including finance, acquisitions, marketing, and the development, licensing, and monetization of intellectual property. He was recently the CEO of IP Dispute Resolution Corporation, a consulting company focused on patent monetization. Prior to IPDR, Mr. Berman was the Chief Operating Officer and General Counsel of Acacia Research Corporation. Mr. Berman has been quoted in numerous articles on patent monetization and is a frequent speaker on patent licensing and enforcement including programs at Harvard Law School, and UCLA's Anderson School of Business. Mr. Berman received a B.S. from the University of Pennsylvania's Wharton School, and a J. D. from Northwestern Law School. Mr. Roop has 18 years of experience analyzing and evaluating patents for acquisition and licensing, and over 20 years of experience as a Silicon Valley design engineer and engineering executive. He was Sr. Vice President of Engineering at Acacia Research and was instrumental in developing Acacia's patent acquisition operations. Previously, Mr. Roop was a co-founder and Sr. Vice President of Engineering at StarSight Telecast, a pioneering developer of electronic program guides, and Vice President of Engineering at VSAT Systems, Inc., a satellite telecommunications systems developer. He received his BS in Electrical Engineering from the University of California at Berkeley. Dr. Kumar has been an investor, founder, Director and CEO of several technology enterprises, both public and private. As CEO, he took CombiMatrix Corporation public and ran it for a decade while listed on the NASDAQ Global Market. He has worked in venture capital with OAK investment Partners, and has been an advisor to investment funds, venture capital firms, and Fortune 500 companies. Highly relevant to the engagement at CopyTele, he was on the Board of Directors of Acacia Research Corporation from 2002-2008. Dr. Kumar is currently CEO of Geo Fossil Fuels, an energy company, and he sits on the Board of other public and private companies. He received his AB in Chemistry from Occidental College. After graduate studies at Stanford University and Caltech, he received his Ph.D. from Caltech and followed that with a post-doctoral fellowship at Harvard. About CopyTele Melville, N.Y.-based CopyTele, Inc.'s principal operations include the development, production and marketing of thin flat display technologies, including low-voltage phosphor color displays and low-power passive E-Paper(R) displays, and the development, production and marketing of multi-functional encryption products that provide information security for domestic and international users over several communications media. The Company's balance sheet at July 31, 2012, showed $5.9 million in total assets, $6.8 million in total liabilities, and a shareholders' deficit of $893,071. According to the Company's quarterly report for the period ended July 31, 2012, based on information presently available, the Company does not believe that its existing cash, cash equivalents, and investments in certificates of deposit, together with cash flows from expected sales of its encryption products and revenue relating to its display technologies, and other potential sources of cash flows or necessary expense reductions including employee compensation, will be sufficient to enable it to continue its marketing, production, and research and development activities for 12 months from the end of this reporting period. "Accordingly, there is substantial doubt about our ability to continue as a going concern. COSTA BONITA: Asociacion de Condomines Seeks Ch. 11 Case Dismissal ------------------------------------------------------------------ Creditor Asociacion de Condomines de Costa Bonita Beach Resort asks the U.S. Bankruptcy Court for the District of Puerto Rico to dismiss the Chapter 11 case of Costa Bonita Beach Resort Inc. Asociacion de Condomines relates that on April 23, 2012, it requested for the payment of $16,028 administrative expenses. The Court granted the motion on May 31, however, the Debtor failed to pay the administrative expenses, moreover past petition administrative expenses have accrued, and as of Sept. 4, expenses amount to $103,197. According to Asociacion de Condomines, the failure to comply with the order has provoked irreparable damages; several governmental agencies have made several remarks related to the lack of maintenance of the septic tanks, possible contamination with sewer water to in the premises; the Debtor does not own the means to keep maintaining the premises and irreparable deterioration will be unstoppable; and the Debtor's failure to comply with the order caused the constant deterioration of the premises, and if continued will be cause state and federal agencies to close the premises for lack of healthy conditions in the land and air. Asociacion de Condomines is represented by: Jose M. Prieto Carballo, Esq. JPC LAW OFFICE P.O. Box 363565 San Juan, P.R. 00936-3565 Tel: (787) 607-2066 (787) 607-2166 E-mail: jpc@jpclawpr.com Previously, DF Servicing LLC also requested for dismissal of the Debtor's case. But the motion was denied. A copy of the Court's Aug. 27, 2012 Opinion and Order is available at http://is.gd/HjUPe3from Leagle.com. About Costa Bonita Beach Resort Costa Bonita Beach Resort, Inc., owns 50 apartments at the Costa Bonita Beach Resort in Culebra, Puerto Rico. It filed a bankruptcy petition under Chapter 11 of the Bankruptcy Code for the first time (Bankr. D.P.R. Case No. 09-00699) on Feb. 3, 2009. During this case, the Court entered an Opinion and Order finding that the Debtor satisfied all three (3) prongs of the Single Asset Real Estate, and, as such is a SARE case subject to 11 U.S.C. Sec. 362(d)(3). The Court also entered an Order modifying the automatic stay to allow creditor DEV, S.E., to continue in state court proceedings for the removal of the illegal easement and the restoration of DEV, S.E.'s land to its original condition by the Debtor. The first bankruptcy petition was dismissed on May 10, 2011 on the grounds that the Debtor failed to comply with an April 21, 2011 Order and the Debtor's failure to maintain adequate insurance. The case was subsequently closed on Oct. 11, 2011. Costa Bonita Beach Resort filed a second bankruptcy petition (Bankr. D. P.R. Case No. 12-00778) on Feb. 2, 2012, in Old San Juan, Puerto Rico. In the 2012 petition, the Debtor said assets are worth $15.1 million with debt totaling $14.2 million, including secured debt of $7.8 million. The apartments are valued at $9.6 million while a restaurant and some commercial spaces at the resort are valued at $3.67 million. The apartments serve as collateral for the $7.8 million while the commercial property is unencumbered. Bankruptcy Judge Enrique S. Lamoutte presides over the 2012 case. Charles Alfred Cuprill, Esq., serves as counsel in the 2012 case. The petition was signed by Carlos Escribano Miro, president. CUMULUS MEDIA: S&P Affirms 'B' Corp. Credit Rating; Outlook Stable ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its rating outlook on Atlanta, Ga.-based radio broadcaster Cumulus Media Inc. to stable from positive. All ratings on the company, including the 'B' corporate credit rating, were affirmed. "The outlook revision to stable reflects Cumulus' still high debt leverage, underperformance across several markets, weak long-term fundamentals in radio advertising, and a thin margin of compliance with its total debt leverage financial covenant," explained Standard & Poor's credit analyst Jeanne Shoesmith. "As of June 30, 2012, the company had a 7% EBITDA margin of compliance against its leverage covenant, which is only applied if the company draws on its revolving or swing-line loans or issues letters of credit. The covenant tightens progressively through 2015 and the company's access to its revolving credit facility could become severely limited in the second half of 2013 if it is unable to grow its EBITDA base beyond the already identified acquisition synergies. As of Aug. 9, 2012, the company had no outstanding balance on the revolving credit facility." "The 'B' corporate credit rating reflects the company's very high leverage following the August 2011 acquisition of the remaining stake in Cumulus Media Partners LLC and the September 2011 acquisition of Citadel Broadcasting Corp. We consider the company's business risk profile as 'fair' (as per our criteria), because of the company's healthy EBITDA margin and discretionary cash flow generation. The company's 'highly leveraged' financial risk profile is characterized by very high post-acquisition adjusted leverage of about 7.4x (including preferred stock), pro forma for synergies anticipated in the third quarter of 2012. We see the potential for weak industry fundamentals to result in revenue erosion over the intermediate-to-long term," S&P said. "The stable rating outlook reflects our expectation that Cumulus will maintain adequate liquidity despite the potential for little to no access to its revolver starting in 2013, risks surrounding longer-term secular trends in radio, and fewer opportunities to reduce expenses in 2013. We believe that either an upgrade or downgrade is unlikely over the near term," S&P said. "Still, we could raise our rating if Cumulus reduces leverage below 6.0x, while maintaining liquidity of at least $150 million and a 15% EBITDA margin of compliance with covenants. Upgrade potential likely would be linked to the radio industry stabilizing and returning to some modest pace of growth, the company amending its revolver covenant, and directing the majority of discretionary cash flow to debt repayment. Conversely, we could lower our rating if revenue and EBITDA decline by 13% and 35%, causing leverage to increase to nearly 10x and EBITDA coverage of interest expense to decline to the low-1x area, which we view as unlikely over the near term. This could occur as a result of continued secular pressure on radio advertising revenue, deterioration in the ratings and profitability of acquired stations, and debt-financed acquisitions that underperform expectations," S&P said. CYCLONE POWER: Closes $150,000 Debt Financing with Gemini Master ---------------------------------------------------------------- Cyclone Power Technologies, Inc., closed a $150,000 debt financing with Gemini Master Fund, Ltd., comprised of a Securities Purchase Agreement, Secured Promissory Note and Warrant. The 12-month Note bears a 9% Original Issuance Discount (OID), making the principal payable at maturity $163,500. There is no other interest payable under the Note, unless the Company is in default. The Note is convertible into shares of the Company's common stock at a price floor of $.15 per share, subject to standard anti- dilution and price protection provisions should the Company issue shares at a lower price, except for certain issuance exemptions specifically set forth in the Note. The Company has a pre-payment obligation upon: (1) receipt of future payments from the U.S. Army under the Company's development contract, provided that no more than 50% of those payments will be applied to the early re-payment of the Notes; and (2) the closing of at least $500,000 in equity funding, provided that no more than 10% of that financing will be applied to the early re-payment of the Notes. The Warrant attached to the Note allows the investor to purchase a number of shares of common stock of the Company equal to 40% of the Note amount, at a an exercise price equal to $.20 per share for five years from issuance. Gemini received a Warrant to purchase 436,000 shares in this deal. The Warrant may be exercised on a "cashless" basis, and is subject to the same price protection as the Note, provided however, any revised exercise price of the Warrant will be 125% of any revised conversion price of the Note. The Warrant and underlying common stock are restricted under Rule 144. The securities were issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933. All other terms of this deal are identical to those provided to Brio Capital LP, in a $250,000 Note that closed Aug. 24, 2012. About Cyclone Power Pompano Beach, Fla.-based Cyclone Power Technologies, Inc. (Pink Sheets: CYPW) is a clean-tech engineering company, whose business is to develop, commercialize and license its patented Rankine cycle engine technology for applications ranging from renewable power generation to transportation. The Company is the successor entity to the business of Cyclone Technologies LLLP, a limited liability limited partnership formed in Florida in June 2004. Cyclone Technologies LLLP was the original developer and intellectual property holder of the Cyclone engine technology. The Company reported a net loss of $23.70 million in 2011, compared with a net loss of $2.02 million in 2010. The Company's balance sheet at June 30, 2012, showed $1.68 million in total assets, $3.79 million in total liabilities and a $2.11 million total stockholders' deficit. In its audit report for the year ended Dec. 31, 2011, results, Mallah Furman, in Fort Lauderdale, FL, noted that the Company's dependence on outside financing, lack of sufficient working capital, and recurring losses raises substantial doubt about its ability to continue as a going concern. DEWEY & LEBOEUF: No Ruling Yet on Partner Contribution Plan ----------------------------------------------------------- Bankruptcy Judge Martin Glenn has yet to rule on the $71.5 million partner contribution plan in the Chapter 11 case of Dewey & LeBoeuf LLP. Jennifer Smith, writing for The Wall Street Journal's Law Blog, reports that former Dewey lawyers and its many creditors took a spin down memory lane at the day-and-a-half long hearing last week over the proposed settlement with ex-partners. At issue was whether the judge should approve the "clawback" plan, which would grant some 440 participants immunity from future lawsuits in exchange for a portion of their 2011 and 2012 earnings. The settlement represents about 17% of the roughly $400 million those partners got in compensation or other benefits during that time, as the firm headed toward bankruptcy. According to WSJ Law Blog, on Friday witnesses who helped devise the plan said they thought the firm could likely have been declared insolvent at the end of 2011. Law Blog notes that about one-third of Dewey's partners had special pay deals that guaranteed them set amounts of money no matter how well or poorly the firm fared; disclosure of those deals and fights over compensation helped trigger a partner exodus in 2012. According to the Blog, David Pauker, a restructuring consultant who also worked out a partner settlement for the defunct law firm Coudert Brothers LLP, assigned ultimate responsibility for the pay deals to former firm chairman Steven Davis, former executive director Stephen DiCarmine and former chief financial officer Joel Sanders. The Blog notes the triumvirate's names came up regularly on the subject of who sunk Dewey -- and therefore who could be liable for mismanagement suits. The triumvirate is represented by Ned Bassen, Esq., at Hughes Hubbard & Reed LLP. Mr. Davis is also represented by Paul Basta, Esq., at Kirkland & Ellis LLP. Law Blog relates that lawyers for two groups of former partners, many of them retirees who say they are owed tens of millions in promised pension benefits, object to the settlement, calling it a cheap deal -- "20 cents on the dollar," at best -- that doesn't maximize the value of the estate and was designed at the behest of Dewey insiders. According to the report, those groups want the court to appoint an independent examiner to investigate potential tort claims against partners. But Dewey's bankruptcy advisers say the plan is the best, and most cost-efficient, way to settle up quickly and avoid a quagmire of future litigation. The partner contribution plan or PCP has the backing of Dewey?s secured lenders, who are funding the Chapter 11 proceedings, and of its unsecured creditors. Law Blog says those groups have agreed to share any proceeds of the settlement, which at this point represents the largest single recovery they are likely to get. Law Blog notes Dewey's estate owes about $260 million to its secured lenders, who are first in line to get paid back. The firm also faces hundreds of millions more in claims submitted by the unsecured group, which includes federal pension regulators, landlords and trade creditors. They typically only get paid after the secured lenders have been made whole. About Dewey & LeBoeuf New York-based law firm Dewey & LeBoeuf LLP sought Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the wind-down of its operations. The firm had struggled with high debt and partner defections. Dewey disclosed debt of $245 million and assets of $193 million in its chapter 11 filing late evening on May 29, 2012. Dewey & LeBoeuf was formed by the 2007 merger of Dewey Ballantine LLP and LeBoeuf, Lamb, Greene & MacRae LLP. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for $6 million. The Pension benefit Guaranty Corp. took $2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The creditors committee hired Brown Rudnick LLP led by Edward S. Weisfelner, Esq., as counsel. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. DIGITAL DOMAIN: Chinese-Indian Venture Wins Auction for $30.2MM --------------------------------------------------------------- The Associated Press reports Digital Domain will be sold to a joint venture formed between a Chinese media company and an Indian counterpart for $30.2 million. According to the report, a U.S. subsidiary of Beijing Galloping Horse Film & TV Co. and Mumbai-based Reliance MediaWorks teamed up to outbid other companies in a bankruptcy court auction on Sept. 21, 2012. The deal was announced by the companies on Sept. 23, 2012. The report notes Galloping Horse will own 70% of the joint venue, with Reliance owning the other 30%. The report says the sale is subject to approval by the bankruptcy court. A hearing was scheduled for Sept. 24, 2012. The report relates the joint venture, known as Galloping Horse_Reliance, will acquire all assets of Digital Domain including its feature film and advertising visual effects, commercial production and "virtual humans," in addition to studios in California and Vancouver, Canada. It will also take a co- production stake in the feature film Ender's Game. Quick Sale Jacqueline Palank, writing for Dow Jones' Daily Bankruptcy Review, recounts that at a prior hearing on Sept. 12, Delaware Bankruptcy Judge Brendan Shannon expressed his frustration with Digital Domain's sale timeline at the outset of the Chapter 11 case. However, he approved a sale timeline of less than two weeks after the film studios upon which Digital Domain's business depends threatened to walk away if its bankruptcy dragged on. According to DBR, at the sale hearing Monday afternoon, Judge Shannon again remarked on the "unprecedented" sale timeline yet expressed his satisfaction that the $30.2 million offer is more than double what the bidding started at. The Court also noted that Digital Domain's unsecured creditors, a group whose recoveries are often at stake in a sale situation, overcame their concerns about the "hyper aggressive" timeline to support the winning bid from Beijing Galloping Horse Film Co. and Reliance MediaWorks Ltd. "While I am pleased with the result . . . I will tell you I regret it," Judge Shannon said, according to DBR. "While I'm delighted with the opportunity to provide for the continued viability of this company and its employees, institutionally I am concerned with the timeline." DBR says Judge Shannon closed with a rebuke that could be taken as a warning to other would-be debtors looking to do a quick-rinse Chapter 11 sale. "I would not anticipate that I would undertake this" again, Judge Shannon said, according to the DBR report. "And I am confident that from what I?ve heard from my colleagues that they would not do so either." Digital Domain intends to close the deal by the end of the week. About Digital Domain Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/ -- engages in the creation of original content animation feature films, and development of computer-generated imagery for feature films and transmedia advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11 to sell its business for $15 million to Searchlight Capital Partners LP. The Debtors have also sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. Port St. Lucie, Florida-based Digital Domain disclosed assets of $205 million and liabilities totaling $214 million. DDMG also announced that it has entered into a purchase agreement with Searchlight Capital Partners L.P. to acquire Digital Domain Productions Inc. and its operating subsidiaries in the United States and Canada, including Mothership Media, subject to the receipt of higher and better offers and Court approval. DDPI and Mothership, with studios in California and Vancouver, are focused on creating digital visual effects, CG animation and digital production for the entertainment and advertising industries and are led by recently promoted Chief Executive Officer Ed Ulbrich. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. DINEEQUITY INC: S&P Raises Rating on 9.5% Senior Notes to 'B-' -------------------------------------------------------------- Standard & Poor's Ratings Services raised the issue-level rating on Glendale, Calif.-based DineEquity Inc.'s 9.5% senior notes due 2018 to 'B-' from 'CCC+'. "At the same time, we revised our recovery rating to '5' from '6'. The '5' recovery rating indicates that lenders should receive a modest (10%-30%) recovery of principal in the event of a default," S&P said. "The change in our recovery analysis reflects our revised expectation of the recovery prospects because of the company's repayment of principal under the term loan," S&P said. "Our 'B' corporate credit rating on DineEquity and 'BB-' issue- level rating on its senior secured credit facility due 2017 remain unchanged. The outlook remains stable," S&P said. RATINGS LIST DineEquity Inc. Corporate Credit Rating B/Stable/-- Upgraded; Recovery Rating Revised To From DineEquity Inc. Senior 9.5% nts due 2018 B- CCC+ Recovery Rating 5 6 DONALD CHARLES SCHWARTZ: Dismissal of Wasney Lawsuit Upheld ----------------------------------------------------------- District Judge Edward J. Davila in San Jose, Calif., affirmed a bankruptcy court decision dismissing an adversary complaint filed by David A. Wasney, Sr., against Donald Charles Schwartz alleging that certain debts were non-dischargeable. The lawsuit was commenced one day after the filing deadline. Mr. Schwartz objected to the lawsuit as untimely. The lawsuit is, David A. Wasney, Sr., Appellant(s), v. Donald Charles Schwartz, Respondent(s), Case No. 5:09-cv-05831 (N.D. Calif.). A copy of the District Court's Sept. 20, 2012 Order is available at http://is.gd/SSMEJ9from Leagle.com. Mr. Schwartz commenced a Chapter 11 proceeding on Sept. 11, 2008. The Chapter 11 case was converted to a Chapter 7 case on May 8, 2009. DRIVETIME AUTOMOTIVE: Moody's Reviews 'B3' CFR for Downgrade ------------------------------------------------------------ Moody's Investors Service placed under review for possible downgrade the B3 Corporate Family Rating ("CFR") of DriveTime Automotive Group, Inc. and the B3 rating on the $200M Senior Secured Notes ("Senior Notes"), co-issued by DriveTime and DT Acceptance Corporation. On 11 September 2012, DriveTime announced that it has entered into definitive agreements to sell the company in two separate transactions. DriveTime will sell its finance receivables portfolio, certificates representing its residual interests in securitizations of finance receivables and certain other assets to Santander Consumer USA Inc. The company will sell all outstanding stock of DriveTime and DT Acceptance Corporation, which consist primarily of used vehicle dealership operations, to a group of third party investors. DriveTime also announced its intent to tender for the Senior Notes outstanding. Finance receivables, which DriveTime intends to sell to Santander Consumer USA, constitute the majority of the collateral securing the Senior Notes. As per the indenture, the release of collateral liens requires the consent of noteholders. RATINGS RATIONALE The rating action reflects uncertainty regarding the post-tender Senior Notes terms and protections provided to the noteholders who choose not to participate in the tender offer. Moody's review will focus on the progress of the proposed tender offer as well as the ultimate Senior Notes terms for the noteholders who choose not to tender. The principal methodology used in this rating was Finance Company Global Rating Methodology published March 2012. DriveTime is a used car dealership and finance company, headquartered in Phoenix, Arizona. E-DEBIT GLOBAL: Six Directors Elected to Board ---------------------------------------------- E-Debit Global Corporation held its 2012 annual meeting of stockholders on Sept. 12, 2012, at which six directors were elected to serve until the next annual meeting of stockholders or until their successors are elected and qualified, namely: (1) Douglas N. Mac Donald; (2) Robert L. Robins; (3) Kim Law; (4) Dr. Roy Queen; (5) Bernd Reuscher; and (6) Jack (John) Thomson. At the Meeting, the shareholders unanimously approved an ordinary resolution to appoint qualified auditors Schumacher & Associates, Inc., as the U.S. auditors of the Corporation, for the fiscal year ending Dec. 31, 2013, and to authorize the directors to fix their remuneration. The shareholders unanimously approved an ordinary resolution to appoint Sam Yeung as the Canadian auditor for the Corporation for the next year and to authorize the directors to fix their remuneration. In addition, the shareholders unanimously approved an amendment to Article II of the Company's Articles of Incorporation, authorizing that the maximum number of shares outstanding at any time will be 10,000,000,000 shares of common stock with no preemptive rights, no par value, and 200,000,000 shares of preferred stock, no par value. Each share of common and preferred stock is entitled to one vote. About E-Debit Global Corporation E-Debit Global Corporation (WSHE) is a financial holding company in Canada at the forefront of debit, credit and online computer banking. Currently, the Company has established a strong presence in the privately owned Canadian banking sector including Automated Banking Machines (ABM), Point of Sale Machines (POS), Online Computer Banking (OCB) and E-Commerce Transaction security and payment. E-Debit maintains and services a national ABM network across Canada and is a full participating member of the Canadian INTERAC Banking System. Following the 2011 results, Schumacher & Associates, Inc., in Littleton, Colorado, noted that the Company has incurred net losses for the years ended Dec. 31, 2011, and 2010, and had a working capital deficit and a stockholders' deficit at Dec. 31, 2011, and 2010, which raise substantial doubt about its ability to continue as a going concern. The Company reported a net loss of $1.09 million in 2011, compared with a net loss of $1.15 million in 2010. The Company's balance sheet at June 30, 2012, showed $1.46 million in total assets, $3.13 million in total liabilities and a $1.66 million total stockholders' deficit. EDUCATION MANAGEMENT: S&P Cuts CCR to 'B' on Declining Enrollment ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Pittsburgh, Pa.-based for-profit post-secondary school operator Education Management LLC to 'B' from 'BB-'. The rating outlook is negative. "At the same time, we revised our recovery rating on the company's senior secured credit facilities to '3', reflecting our expectation for meaningful (50% to 70%) recovery for lenders in the event of default, from '2' (70% to 90% recovery expectation). We lowered our issue-level rating on this debt to 'B' (at the same level as the 'B' corporate credit rating on the company), from 'BB', in accordance with our notching criteria for a '3' recovery rating," S&P said. "We also lowered our issue-level rating on the company's senior unsecured and subordinated notes to 'CCC+' from 'B', in conjunction with the corporate credit rating change. The recovery rating on this debt remains at '6' (0% to 10% recovery expectation)," S&P said. "The downgrade reflects our expectation that tough economic conditions and new business practices mandated by tighter regulation will cause ongoing enrollment declines over the near term," said Standard & Poor's credit analyst Chris Valentine. "We lowered our previous expectations for revenue, EBITDA, and cash flow after the company recently provided public guidance for fiscal-year 2013 ending June 30. Given the fixed costs of the business, we expect enrollment declines will lead to weaker credit metrics, lower cash flow generation, and tight financial covenants over the next 12 to 18 months. There is also a springing maturity to the senior secured credit facilities, which would be accelerated to March 1, 2014, if the company does not refinance or repay the $375 million notes due June 2014 prior to this date," S&P said. "Our 'B' rating reflects Education Management's dependence on Title IV federal student loan programs and students' willingness to take on debt despite weak economic conditions and high unemployment. We expect the company's revenue and EBITDA trends to remain under significant pressure in fiscal-year 2013 and potentially beyond, as changes in marketing practices, negative publicity, and increased disclosure requirements to potential students hurt enrollments," S&P said. ELEPHANT TALK: Mobile Telecom Contracts in Germany Put on Hold -------------------------------------------------------------- Elephant Talk Communications, Corp., has been informed that, due to an evaluation of internal procedures and practices within a group of German MVNOs, all mobile telecom contracts recently signed between the group and all external providers have been temporarily placed on hold. "We look forward to a favorable and quick resolution so we may resume delivering services," stated Steven van der Velden, CEO of Elephant Talk Communications. "Despite the change, we remain on track to report our first month of operational cash flow positive, excluding non-cash expenses and capital expenditures, by early 2013. It is important to stress that the evaluation is not directed at Elephant Talk, but it has been applied to all contracts that provide mobile services to the MVNOs. Management would like to emphasize that this internal evaluation is not in any way related to the services Elephant Talk provides in Germany in cooperation with Telekom Deutschland." Elephant Talk expected this contract to generate over $30 million of total revenue in the initial two year contract period. This estimate included approximately $8 million of total revenue in 2012, with about half of that revenue recognized on the Company's income statement and the remainder recorded as deferred revenue on the balance sheet. Based on this development, the Company does not expect to record any revenue from this contract in 2012 and until the hold has been removed the Company is not able to estimate the impact, if any, on the full contract. About Elephant Talk Lutz, Fla.-based Elephant Talk Communications, Inc. (OTC BB: ETAK) -- http://www.elephanttalk.com/-- is an international provider of business software and services to the telecommunications and financial services industry. The Company's balance sheet at June 30, 2012, showed $44.63 million in total assets, $17.30 million in total liabilities, and $27.32 million in total stockholders' equity. Elephant Talk reported a net loss of $25.31 million in 2011, a net loss of $92.48 million in 2010, and a net loss of $17.29 million in 2009. The Company reported a net loss of $10.99 million for the six months ended June 30, 2012. EMERGENCY MEDICAL: Moody's Affirms B2 CFR & Rates PIK Notes Caa1 ---------------------------------------------------------------- Moody's Investors Service affirmed Emergency Medical Services Corporation's ("EMSC") B2 Corporate Family and Probability of Default Ratings. Concurrently, Moody's assigned a Caa1 rating to CDRT Holding Corporation's ("CDRT") $450 million senior PIK-Toggle notes due 2017. CDRT is the issuing entity and ultimate parent company of EMSC. At the same time, the ratings outlook was changed to negative from stable. The change in the outlook to negative reflects the company's move towards a more aggressive financial policy as evidenced by a $428 million dividend payment at the holding company level. Moody's had previously expected EMSC to continue deleveraging, following its LBO last year by Clayton, Dubilier & Rice, LLC, to about 6 times debt to EBITDA for the fiscal period ending December 31, 2012. Moody's estimates that pro forma leverage for fiscal 2012, following the debt-financed dividend will be about 6.6 times debt to EBITDA. Moody's raised its ratings on both the senior secured term loan and senior unsecured notes that reside at the operating company to reflect changes in the debt capital structure, namely the addition of $450 million of CDRT debt that is structurally subordinated to the operating company debt. Following is a summary of rating actions: Rating assigned: CDRT Holding Corporation $450 million senior PIK-Toggle notes due 2017 at Caa1 (LGD 6, 93%) Ratings upgraded: EMSC $1,440 million senior secured term loan due 2018 to Ba3 (LGD 2, 26%) from B1 (LGD 3, 34%) $950 million senior unsecured notes due 2019 to B3 (LGD 5, 71%) from Caa1 (LGD 5, 84%) Ratings affirmed: Corporate Family Rating, B2 Probability of Default Rating, B2 Speculative Grade Liquidity Rating, SGL-1 RATINGS RATIONALE The B2 Corporate Family Rating reflects weak credit metrics due to the company's considerable increase in debt associated with its 2011 leveraged buyout and subsequent debt-financed dividend. Pro forma leverage including debt at CDRT is estimated to be 7.0 times, as of June 30, 2012; which is very high and even high for the single B rating category -- leaving only a modest equity cushion for the company. Moody's believes that EMSC will focus on reducing debt with available free cash flow as capital spending is expected to remain modest. The company's rating also benefits from its significant scale in both of its segments, which are otherwise very fragmented among other providers. EMSC's negative outlook considers the company's heightened debt leverage resulting from its aggressive financial policy. To stabilize the outlook, Moody's would be looking for EMSC to show improving leverage metrics over the next 12 months. The likelihood of an upgrade of the rating is somewhat limited in the near term given the company's high leverage. However, if the company improves operating results or repays debt such that debt to EBITDA is sustained around 5.0 times and free cash flow to debt is expected to be sustained above 5%, Moody's could upgrade the ratings. The ratings could be downgraded if retained cash flow-to-debt declines below 5.0% and debt leverage is sustained above 6 times. Further, if EMSC pursues additional acquisitions that are not de- leveraging or shareholder friendly initiatives, the ratings could be downgraded. Additionally, if government reimbursement levels are significantly reduced in either segment of the company's business, professional liability claims rise materially above current levels, or if payor mix shifts materially impacting pricing, such that the company is expected to have negative free cash flow for a sustained period, Moody's could downgrade the ratings. The principal methodology used in rating Emergency Medical Services Corporation was the Global Business & Consumer Service Industry Rating Methodology, published October 2010. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published June 2009. Emergency Medical Services Corporation (EMSC) is a leading provider of emergency medical services in the U.S. EMSC operates through two business segments: EmCare is the company's emergency department and hospital physician outsourcing segment and AMR is a leading provider of medical transport in the U.S. EMSC is owned by financial sponsor Clayton, Dubilier and Rice, LLC. The company reported revenues for the twelve months ending June 30, 2012 of $3.2 billion. EMMIS COMMUNICATIONS: Has 1.3-Mil. Preferred Shares Outstanding --------------------------------------------------------------- In order to comply with the terms of its senior credit agreement, Emmis Communications Corporation exercised its early termination option under the total return swap transactions that it had entered into with certain holders of 1,484,679 shares of its 6.25% Series A Non-Cumulative Convertible Preferred Stock. The termination was effective on Sept. 19, 2012. As a result, the 1,484,679 shares of Preferred Stock return to the status of authorized but unissued shares, leaving 1,337,641 shares of Preferred Stock outstanding. About Emmis Communications Headquartered in Indianapolis, Indiana, Emmis Communications Corporation -- http://www.emmis.com/-- owns and operates 22 radio stations serving New York, Los Angeles, Chicago, St. Louis, Austin, Indianapolis, and Terre Haute, as well as national radio networks in Slovakia and Bulgaria. The company also publishes six regional and two specialty magazines. The Company's balance sheet at May 31, 2012, showed $350.94 million in total assets, $360.51 million in total liabilities, $46.88 million in series A cumulative convertible preferred stock, and a $56.45 million total deficit. * * * Emmis carries Caa2 corporate family rating and a Caa3 probability of default rating from Moody's. In July 2011, Moody's Investors Service placed the ratings of Emmis on review for possible upgrade following the company's earnings release for 1Q12 (ended May 31, 2011) including additional disclosure related to the pending sale of controlling interests in three radio stations. The sale of the majority ownership to GCTR will generate estimated net proceeds of approximately $100 million to $120 million, after taxes, fees and related expenses. Emmis will retain a minority equity interest in the operations of the three stations and Moody's expects senior secured debt to be reduced resulting in improved credit metrics. EXODUS COMMS: Calif. Court Revives Suit Over German Unit's Loan --------------------------------------------------------------- District Judge Lucy H. Koh in San Jose, California, granted the request of Dr. Holger Lessing, the insolvency administrator in charge of the assets of Exodus Communications GmbH, to set aside a default judgment in the lawsuit, Oak Point Partners, Inc., Plaintiff, v. Dr. Holger Lessing, not individually, but only in his capacity as the Insolvency Administrator in charge of the assets of Exodus Communications GmbH, Defendant, Case No. 11-CV- 03328-LHK (N.D. Calif.). The case arises from Oak Point's attempt to collect on a debt it believes it is owed by German company Exodus GmnH. The debt in question is a loan of roughly $23 million made to Exodus by an American company called EXDS. In September 2001, EXDS filed for relief under Chapter 11 of the Bankruptcy Code. In 2007, Oak Point purchased all of EXDS's remaining assets from the Bankruptcy Plan Administrator, including all rights in that loan. The lawsuit relates to Oak Point's attempt to collect on the loan from Exodus. Complications arise because Exodus is itself in insolvency proceedings in Germany. Oak Point filed a claim in the German insolvency proceedings, but Dr. Lessing, as administrator, challenged the claim. Oak Point then did what it asserts is required by German law, that is, Oak Point filed the lawsuit to establish the validity of its claim and obtain an order directing Dr. Lessing to include the claim in the distribution of Exodus's property. Dr. Lessing did not make an appearance at any time to defend the lawsuit, and in November 2011, the clerk entered a default and default judgment against him. On May 1, 2012, the Defendant sought to set aside the default judgment on two grounds: that the judgment is invalid because the Defendant was not properly served, pursuant to Fed. R. Civ. P. 60(b)(4), and in the alternative, that the default judgment should be set aside on grounds of excusable neglect, pursuant to Fed. R. Civ. P. 60(b)(1). The Plaintiff opposed. A copy of the District Court's Sept. 18, 2012 Order is available at http://is.gd/t4ZUW9from Leagle.com. Exodus Communications filed for chapter 11 protection (Bankr. D. Del. Case No. 01-10539) on September 26, 2001, and the Debtors' Second Amended Joint Plan of Reorganization was confirmed on June 5, 2002. The company's liquidating plan provided for a change of the company's name to EXDS, Inc. FLETCHER INTERNATIONAL: Employs Trott Duncan as Bermuda Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has granted Fletcher International, Ltd., authorization to employ Trott & Duncan Limited as special Bermuda Counsel to the Debtor, effective as of Aug. 13, 2012. Trott & Duncan succeeds Appleby (Bermuda) as the Debtor's special Bermuda counsel. The firm's standard hourly rates care: $650 per hour for partners; $550 per hour for senior attorneys; $375 per hour for junior attorneys; and $150 per hour for paralegal Trott & Duncan is being retained in relation to the provision of advice on Bermuda corporate, insolvency and litigation issues, including the the Winding Up Petition filed against the Debtor in the Supreme Court of Bermuda (the "Bermuda Petition"). The firm will work at the direction of the Debtor and its proposed general bankruptcy counsel, Young Conaway Stargatt & Taylor, LLP, and Young Conaway and Trott & Duncan will work to avoid any duplication of efforts. The Debtor believes that Trott & Duncan does not hold or represent any interest adverse to the Debtor or its estate with respect to matters for which Trott & Duncan is being retained. About Fletcher International Fletcher International, Ltd., filed a bare-bones Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-12796) on June 29, 2012, in Manhattan. The Bermuda exempted company estimated assets and debts of $10 million to $50 million. The bankruptcy documents were signed by its president and director, Floyd Saunders. David R. Hurst, Esq., at Young Conaway Stargatt & Taylor, LLP, in New York, serves as counsel. Fletcher International Ltd. is managed by the investment firm of Alphonse "Buddy" Fletcher Jr. Fletcher Asset Management was founded in 1991. During its initial four years, FAM operated as a broker dealer trading various debt and equity securities and making long-term equity investments. Then, in 1995, FAM began creating and managing a family of private investment funds. The Debtor is a master fund in the Fletcher Fund structure. As a master fund, it engages in proprietary trading of various financial instruments, including complex, long-term, illiquid investments. The Debtor is directly owned by Fletcher Income Arbitrage Fund and Fletcher International Inc., which own roughly 83% and 17% of the Debtor's common shares, respectively. Arbitrage's direct parent entities are Fletcher Fixed Income Alpha Fund and FIA Leveraged Fund, both of which are incorporated in the Cayman Islands and are subject to liquidation proceedings in that jurisdiction, and which own roughly 76% and 22% of Arbitrage's common stock, respectively. The Debtor currently has a single subsidiary, The Aesop Fund Ltd. FLETCHER INTERNATIONAL: Can Employ Young Conaway as Counsel ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Fletcher International, Ltd., to employ Young Conaway Stargatt & Taylor, LLP as counsel to the Debtor, nunc pro tunc to June 29, 2012. Young Conaway will perform these professional services: a) providing legal advice with respect to the Debtor's powers and duties as a debtor-in-possession in the continued operation of its businesses and management of its properties; b) representing the Debtor in contested matters and adversary proceedings that may arise in the Chapter 11 case; c) pursuit of confirmation of a Chapter 11 plan and approval of the corresponding solicitation procedures and disclosure statement; d) preparing on behalf of the Debtor necessary applications, motions, answers, orders, reports and other legal papers; e) appearing in Court and otherwise protecting the interests of the Debtor before the Court; and f) performing all other legal services for the Debtor that may be necessary and proper in the Debtor's case. The firm's standard hourly rates currently range from $270 to $950 per hour for attorneys and from $140 to $245 per hour for paralegals. The Debtor believes that Young Conaway does not hold or represent any interest adverse to the Debtor's estate, and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Fletcher International Fletcher International, Ltd., filed a bare-bones Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-12796) on June 29, 2012, in Manhattan. The Bermuda exempted company estimated assets and debts of $10 million to $50 million. The bankruptcy documents were signed by its president and director, Floyd Saunders. David R. Hurst, Esq., at Young Conaway Stargatt & Taylor, LLP, in New York, serves as counsel. Fletcher International Ltd. is managed by the investment firm of Alphonse "Buddy" Fletcher Jr. Fletcher Asset Management was founded in 1991. During its initial four years, FAM operated as a broker dealer trading various debt and equity securities and making long-term equity investments. Then, in 1995, FAM began creating and managing a family of private investment funds. The Debtor is a master fund in the Fletcher Fund structure. As a master fund, it engages in proprietary trading of various financial instruments, including complex, long-term, illiquid investments. The Debtor is directly owned by Fletcher Income Arbitrage Fund and Fletcher International Inc., which own roughly 83% and 17% of the Debtor's common shares, respectively. Arbitrage's direct parent entities are Fletcher Fixed Income Alpha Fund and FIA Leveraged Fund, both of which are incorporated in the Cayman Islands and are subject to liquidation proceedings in that jurisdiction, and which own roughly 76% and 22% of Arbitrage's common stock, respectively. The Debtor currently has a single subsidiary, The Aesop Fund Ltd. FORT LAUDERDALE BOATCLUB: Can Employ Barry Gruher as Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Florida authorized Fort Lauderdale BoatClub, Ltd., to employ Barry P. Gruher, Esq., and the law firm of Genovese Joblove & Battista, P.A., as general bankruptcy counsel for the Debtor-in-Possession, nunc pro tunc to the Petition Date. GJB will render these services: a) advise the Debtor with respect to its powers and duties as debtor and debtor-in-possession in the continued management and operation of its business and properties. b) attend meetings and negotiate with representatives of creditors and other parties-in-interest and advise and consult on the conduct of the case, including all of the legal and administrative requirements of operating in Chapter 11; c) advise the Debtor in connection with any contemplated sales of assets or business combinations, including the negotiation of sales promotion, liquidation, stock purchase, merger or joint venture agreements, formulate and implement bidding procedures, evaluate competing offers, draft appropriate corporate documents with respect to the proposed sales, and counsel the Debtor in connection with the closing of such sales; d) advise the Debtor in connection with post-petition financing and cash collateral arrangements, provide advice and counsel with respect to prepetition financing arrangements, and provide advice to the Debtor in connection with the emergence financing and capital structure, and negotiate and draft documents relating thereto; e) advise the Debtor on matters relating to the evaluation of the assumption, rejection or assignment of unexpired leases and executory contracts; f) provide advice to the Debtor with respect to legal issues arising in or relating to the Debtor's ordinary course of business including attendance at senior management meetings, meetings with the Debtor's financial and turnaround advisors and meetings of the board of directors, and advice on employee, workers' compensation, employee benefits, labor, tax, insurance, securities, corporate, business operation, contracts, joint ventures, real property, press/public affairs and regulatory matters; g) take all necessary action to protect and preserve the Debtor's estate, including the prosecution of actions on its behalf, the defense of any actions commenced against the estate, negotiations concerning all litigation in which the Debtor may be involved and objections to claims filed against the estate; h) prepare on behalf of the Debtor all motions, applications, answers, orders, reports and papers necessary to the administration of the estate; i) negotiate and prepare on the Debtor's behalf a plan of reorganization, disclosure statement and all related agreements and/or documents, and take any necessary action on behalf of the Debtor to obtain confirmation of such plan; j) attend meetings with third parties and participate in negotiations with respect to the above matters; k) appear before the Court, any appellate courts, and the U.S. Trustee, and protect the interests of the Debtor's estate before such courts and the U.S. Trustee; and l) perform all other necessary legal services and provide all other necessary legal advice to the Debtor in connection with this Chapter 11 case, The hourly rates for the attorneys at GJB range from $195 to $595 per hour. The hourly rates of Barry P. Gruher, Mariaelena Gayo- Guitian and Robert F. Elgidely, the attorneys who will be principally working on this case are $435, respectively. The hourly rates for paralegals at GJB range from $160 to $185. Naples, Florida-based Fort Lauderdale BoatClub, Ltd., owns a fully developed and operational marina facility formerly known as Jackson Marine Center in Fort Lauderdale. The marina, which has a 12-acre prime intracoastal waterway real estate, is being leased to G. Robert Toney & Associates Inc. doing business as National Liquidators, for $75,000 per month (reduced from the previous rate $160,000 per month). The Company filed for Chapter 11 protection (Bankr. S.D. Fla. Case No. 12-28776) on Aug. 2, 2012. Bankruptcy Judge Raymond B. Ray presides over the cases. Barry P. Gruher, Esq., at Genovese Joblove & Battista, P.A., represents the Debtor in its restructuring effort. The Debtor has scheduled assets of $13,483,209 and liabilities of $10,340,756. The petition was signed by Edward J. Ruff, president. No creditors' committee has yet been appointed in this case. FORT LAUDERDALE BOATCLUB: Access to Cash Collateral Stops Sept. 28 ------------------------------------------------------------------ In a second agreed order dated Sept. 17, 2012, the U.S. Bankruptcy Court for the District of Florida granted Fort Lauderdale BoatClub, Ltd., to use cash collateral of EverBank on an interim basis. For purposes of the second interim order, and until further order of the Court, Maggie Smith will pursuant to 11 U.S.C. Section 543 continue to act as custodian under the Receivership Order limited to the following the duties: a) collect and hold pre- and post-petition rents from the tenant, National Liquidators; b) collect and hold any pre and post-petition insurance refunds that may be due to the Debtor; c) deposit and hold the funds specified in items 3(a) & (b) above in the Revenue Account established and maintained by the Receiver under the Receivership Order; d) hold for the benefit of creditors and equity security holders of the Debtor's estate all other funds and/or property of the Debtor in the possession, custody and control of the Receiver, including such funds held in the Reserve Account under the Receivership Order; and e) the Debtor will collect and hold all rents (pre and post- petition) derived and received from the billboard signage at the Marina in the DIP Account; but may not use such funds unless agreed to by the Debtor, Receiver, EverBank and BoatClubsAmerica, LLC ("BCA") and/or until further order of the Court. The Receiver will only be authorized to disburse from the Revenue Account those amounts necessary for the daily operations, preservation and maintenance of the Marina in accordance with the co-managerial responsibilities and protocols set forth in the Receivership Order as between the Parties in accordance with the Budget. The Receiver is further authorized to pay the $5,000 in monthly receivership fees set forth in the Budget, which amounts are deemed allowed. As adequate protection, EverBank will continue to have nunc pro tunc as of the Petition Date a replacement lien on all property acquired or generate post-petition by the Debtor and an administrative expense claim pursuant to Sections 503(b) and 507(a)(2) of the Bankruptcy Code. The continued use of cash collateral by the Debtor and custodial duties of the Receiver will be through Sept. 28, 2012. A further hearing on the use of cash collateral will be held on Sept. 28, 2012, at 9:30 a.m. Any party-in-interest objecting to the permanent relief requested in the motion will file a written objection or response no later than three calendar days before the hearing. A copy of the second agreed order and cash budget is available for free at http://bankrupt.com/misc/fortlauderdale.doc57.pdf About Fort Lauderdale BoatClub Naples, Florida-based Fort Lauderdale BoatClub, Ltd., owns a fully developed and operational marina facility formerly known as Jackson Marine Center in Fort Lauderdale. The marina, which has a 12-acre prime intracoastal waterway real estate, is being leased to G. Robert Toney & Associates Inc. doing business as National Liquidators, for $75,000 per month (reduced from the previous rate $160,000 per month). The Company filed for Chapter 11 protection (Bankr. S.D. Fla. Case No. 12-28776) on Aug. 2, 2012. Bankruptcy Judge Raymond B. Ray presides over the cases. Barry P. Gruher, Esq., at Genovese Joblove & Battista, P.A., represents the Debtor in its restructuring effort. The Debtor has scheduled assets of $13,483,209 and liabilities of $10,340,756. The petition was signed by Edward J. Ruff, president. No creditors' committee has yet been appointed in this case. FORT LAUDERDALE: Nov. 14 Hearing on Dismissal and Turnover Motions ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Florida has continued to Nov. 14, 2012, at 1:30 p.m. the evidential hearing on EverBank's motion to dismiss Fort Lauderdale BoatClub, Ltd.'s Chapter 11 case as a bad faith filing, motion of the Debtor for turnover of property from the receiver, and EverBank's motion to excuse the receiver from the 11 U.S.C. Sec. 543 turnover requirement, and incorporated memorandum of law. A. EverBank's Motion to Dismiss On Aug. 29, 2011, EverBank, owed $10,800,000, commenced a foreclosure action against the Debtor, and certain guarantors, in the Circuit Court in and for Broward County, Florida, Case No. 11- 020179. In said action, the state court has appointed a Receiver pursuant to the terms of an agreed order on EverBank's verified emergency motion for appointment of a receiver or, in the alternative, sequestration of rents. Since its appointment, the receiver has been in charge of collecting the rents and other revenues of the business and paying appropriate expenses. EverBank said that the Debtor's Chapter 1l case should be dismissed on these grounds: a) The Chapter 11 case was filed in bad faith; b) This is a two party dispute between the Debtor and the Bank, which should be resolved in State Court; c) There are no significant unsecured creditors of the Debtor. Pursuant to the Receivership Order, the Receiver has been paying all monthly expenses in the ordinary course. The Debtor's Schedules reflect very few unsecured creditors; d) The Debtor has few if any employees; e) The Debtor does not have its own management, but instead relies on management services provided by its general partner; f) Any alleged defenses to the Bank's claim can be resolved by the Circuit Court; and g) Additional factors exist which evidence lack of good faith and support dismissal. The Debtor opposes the dismissal motion, citing: i) EverBank's motion cites no statutory basis in support of its assertion that this case should be dismissed. Instead, EverBank simply asserts that the case should be dismissed for "cause." ii) The Debtor filed its bankruptcy petition in good faith to maximize the value of its assets and confirm a plan of reorganization that is in the best interest of all creditors and parties in interest. The motion to dismiss, according to the Debtor, comes nowhere close to satisfying EverBank's burden under 11 U.S.C. Section 1112 (which supplies the applicable standard, notwithstanding EverBank's failure to cite same) of demonstrating cause to dismiss this Chapter 11 case. B. Debtor's Motion for Turnover of Property from Receiver The Debtor cited that without the immediate turnover from a custodian (Receiver) of estate property, the Debtor will be irreparably harmed because the Debtor will not be able to meet its day-to-day operations, pay its ordinary and necessary operating expenses or generally maintain and preserve the going concern, enterprise value of its business. According to the Debtor, given the filing of the Petition and commencement of the Chapter 11 proceeding, the administrative expenses of the Receiver are no longer necessary or required by the Debtor and EverBank is adequately protected in the Marina and its collateral. Further, there has been no determination by the state court in the Foreclosure Action or within the plain language of the Receivership Order that divests the Debtor of its right, title and interest in the Current Rents and/or August Rents, and other prepetition property of the Debtor. C. EverBank's Motion to Excuse Receiver from Turnover Requirement EverBank should excuse the Receiver from the turnover requirements of Section 543 and should allow the Receiver to remain in possession, custody and control of the Property, until further of the Court, because: (A) the Receiver is properly managing the Property pursuant to the supervision of the Circuit Court, (B) the instant case was filed in bad faith and should be dismissed; (C) the interests of creditors will be best served if turnover is excused, and (D) there is no business justification for a turnover. The Debtor opposes the motion to excuse the Receiver from turning over the Property. The Debtor cited that the Debtor and BCA (the Debtor's managing partner that oversaw management of the Marina with the Debtor prior to the entry of the Receivership Order), have not been in agreement as to all of the business decisions made by the Receiver. "As a primary example, the Debtor and BCA disagreed with the Receiver and EverBank's decision that Rents from National Liquidator, the Marina's sole tenant, should be reduced from $160,000 to $75,000 per month upon the renewal of Lease on the Marina. The Debtor and BCA capitulated to these terms for various reasons that will be discussed during the administration of this estate, after insisting on a triple net lease for payment by the Tenant of real estate taxes, insurance and utilities." About Fort Lauderdale BoatClub Naples, Florida-based Fort Lauderdale BoatClub, Ltd., owns a fully developed and operational marina facility formerly known as Jackson Marine Center in Fort Lauderdale. The marina, which has a 12-acre prime intracoastal waterway real estate, is being leased to G. Robert Toney & Associates Inc. doing business as National Liquidators, for $75,000 per month (reduced from the previous rate $160,000 per month). The Company filed for Chapter 11 protection (Bankr. S.D. Fla. Case No. 12-28776) on Aug. 2, 2012. Bankruptcy Judge Raymond B. Ray presides over the cases. Barry P. Gruher, Esq., at Genovese Joblove & Battista, P.A., represents the Debtor in its restructuring effort. The Debtor has scheduled assets of $13,483,209 and liabilities of $10,340,756. The petition was signed by Edward J. Ruff, president. No creditors' committee has yet been appointed in this case. FUTURE GRAPHICS: Former Owner Wins Dismissal of All Points Suit --------------------------------------------------------------- In the lawsuit, All Points Capital Corporation, Plaintiff, v. Kenneth M. Stancil, Defendant, Adv. Proc. No. 11-00351 (Bankr. E.D.N.C.), Bankruptcy Judge J. Rich Leonard granted the motion for summary judgment of Kenneth M. Stancil on the grounds that the complaint filed by All Points Capital Corporation fails to state a claim upon which relief can be granted and no material issue of facts exists entitling the debtor to judgment as a matter of law. Kenneth M. Stancil filed a voluntary Chapter 7 petition (Bankr. E.D.N.C. Case No. 10-04095) on May 20, 2010. As of the petition date, Mr. Stancil was the vice president and owned 45% of Future Graphics, Inc. On Nov. 5, 2010, the Court entered an order granting Mr. Stancil a discharge pursuant to Sec. 727 of the Bankruptcy Code. Future Graphics, based in Zebulon, North Carolina, filed a voluntary chapter 11 petition (Bankr. E.D.N.C. Case No. 09-09272) on Oct. 23, 2009. Bankruptcy Judge J. Rich Leonard presides over the case. J.M. Cook, Esq., at Attorney at Law -- JM_Cook@jmcookesq.com -- served as counsel to Future Graphics. In its petition, Future Graphics estimated $1 million to $10 million in assets and debts. A full-text copy of the Debtor's petition, including a list of its 16 largest unsecured creditors, is available for free at http://bankrupt.com/misc/nceb09-09272.pdf The petition was signed by Phillip Killette, president of the Company. According to the statements and schedules filed by Future Graphics with its petition, it held equipment totaling $2,953,716. After proposing two plans of reorganization, the court converted Future Graphics' case from a chapter 11 to a chapter 7 on Nov. 3, 2010. At the first meeting of creditors held on Dec. 12, 2010, Mr. Stancil appeared as a representative of Future Graphics. He testified that certain business equipment belonging to Future Graphics, including three printing presses, were sold during the course of the ongoing chapter 11 case and prior to its conversion to chapter 7. All Points filed the lawsuit on Nov. 7, 2011, seeking to revoke the discharge granted to Mr. Stancil, pursuant to Sec. 727(a)(7), or in the alternative, Sec. 727(d)(2) of the Bankruptcy Code and asserted a claim against Mr. Stancil for conversion of certain property of the estate in Future Graphics bankruptcy case for his own personal use. On Nov. 11, 2011, All Points filed an amended complaint alleging that Mr. Stancil sold, without obtaining permission, certain printing press equipment belonging to Future Graphics during the course of its chapter 11 case. Specifically, the plaintiff contends that Mr. Stancil was the recipient of the proceeds of the sale or personally directed their use or disposal. After learning of the alleged sale of the printing presses, the plaintiff took a 2004 examination of the debtor, which was attached and incorporated by reference to the allegations asserted in the complaint. On Jan. 7, 2011, Mr. Stancil filed his answer asserting that the allegations in the complaint fail to state a claim upon which relief may be granted pursuant to Bankruptcy Rule 7012 and Rule 12(b)(6) of the Federal Rules of Civil Procedure. On June 6, 2012, Mr. Stancil filed the motion for summary judgment. In granting Mr. Stancil's request, the Court ruled that its order will not operate to bar All Points from commencing an action under state law against Mr. Stancil for alleged personal conversion and retention of collateral belonging to the bankruptcy estate in the Future Graphics bankruptcy case. A copy of the Court's Sept. 18, 2012 Order is available at http://is.gd/vdhIr0from Leagle.com. GELT PROPERTIES: Plan Outline Hearing Continued Until Oct. 10 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Pennsylvania, according to Gelt Properties, LLC's case docket, continued until Oct. 10, 2012, at 11 a.m., the hearing to consider adequacy of the Disclosure Statement explaining the proposed Chapter 11 Plan. As reported in the Troubled Company Reporter on April 18, 2012, according to the Amended Disclosure Statement for the proposed First Amended Plan of Reorganization dated March 16, 2012, all assets of the Debtors will be sold and liquidated, rented or leased, developed and maintained, in the ordinary course of the Debtors' business. The Debtors note that the proposed Plan envisions the utilization of management talents, commitment and an existing infrastructure to restructure existing debt, liquidate unprofitable properties and meaningfully shift focus to its growing REO portfolio. Specifically, the Debtors project that they will increase rental income, decrease carrying costs for unprofitable properties, decrease maintenance costs for unprofitable properties and emerge leaner, more focused reorganized Debtors. The Debtors also expect fewer foreclosures moving forward and thus reduce annual foreclosure costs line item in its projections. Under the Plan, Class 15 General unsecured Creditors will receive a pro rata share of the Debtors' assets after payment of claims having priority over Class 15 allowed claims. Distributions to holders of Class 15 will come from one of the following: (a) cash on hand; or (b) funds received by the Debtors from the Lender Liability Litigation. A full-text copy of the First Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/GELT_PROPERITIES_ds_firstamended.pdf About Gelt Properties Based in Huntington Valley, Pennsylvania, Gelt Properties, LLC, and affiliate Gelt Financial Corporation borrow money from traditional lenders and make loans to commercial borrowers. They also acquire and manage real estate. Gelt Properties and Gelt Financial filed for (Bankr. E.D. Pa. Case Nos. 11-15826 and 11- 15826) on July 25, 2011. Judge Magdeline D. Coleman presides over the cases. Albert A. Ciardi, III, Esq., Jennifer E. Cranston, Esq., and Thomas Daniel Bielli, Esq., at Ciardi Ciardi & Astin, P.C., in Philadelphia, Pa., serve as the Debtors' bankruptcy counsel. The petitions were signed by Uri Shoham, the Debtors' chief financial officer. The Debtors' other professionals include: Eisenberg, Gold & Cettei P.C. as its special counsel to provide proper legal counsel to the Debtors with regard to defending against certain actions, Cohen and Forman as their special counsel to advise them upon all matters which may arise or which may be incident to the bankruptcy proceedings. Gelt Properties disclosed $4.73 million in assets and $4.84 million in liabilities as of the Chapter 11 filing. Its affiliate, Gelt Financial has scheduled $20.3 million in assets and $17.05 million in liabilities as of the Chapter 11 filing. On Sept. 15, 2011, a committee of unsecured creditors was appointed. Schoff McCabe, P.C. represents the Committee. Craig Howe, CPA, and Howe, Keller & Hunter, P.C., serve as the Committee's accountants. GMX RESOURCES: Completes Exchange Offers of Sr. Convertible Notes ----------------------------------------------------------------- GMX Resources Inc., on Sept. 19, 2012, consummated its exchange offers for the Company's outstanding 5.00% Senior Convertible Notes due 2013 and the Company's 4.50% Senior Convertible Notes due 2015, pursuant to which holders tendering 2013 Notes in the Exchange Offer received new Senior Secured Second-Priority Notes due 2018 and shares of the Company's common stock, and holders tendering 2015 Notes in the Exchange Offers received New Notes. On Sept. 19, 2012, the Company executed an Indenture, dated as of Sept. 19, 2012, among the Company and U.S. Bank National Association, as trustee and collateral agent. Pursuant to the New Notes Indenture, the Company issued $51,458,000 aggregate principal amount of New Notes. The Company may redeem any of the New Notes, in whole or in part, at any time. The Company will give not less than 30 nor more than 60 days notice of any such redemption. On Sept. 19, 2012, in connection with the consummation of the exchange offers, the Company issued an aggregate of 7,176,384 shares of the Company's common stock. Pursuant to the terms of the Exchange Offers, on Sept. 19, 2012, the Company issued (i) in exchange for $24,918,000 aggregate principal amount of 2013 Notes, $24,918,000 aggregate principal amount of New Notes and an aggregate 7,136,384 shares of common stock, and (ii) in exchange for $37,954,000 aggregate principal amount of 2015 Notes, $26,540,000 aggregate principal amount of New Notes. A copy of the Form 8-K is available for free at: http://is.gd/tVf7RZ About GMX Resources GMX Resources Inc. -- http://www.gmxresources.com/-- is an independent natural gas production company headquartered in Oklahoma City, Oklahoma. GMXR has 53 producing wells in Texas & Louisiana, 24 proved developed non-producing reservoirs, 48 proved undeveloped locations and several hundred other development locations. GMXR has 9,000 net acres on the Sabine Uplift of East Texas. GMXR has 7 producing wells in New Mexico. The Company's strategy is to significantly increase production, revenues and reinvest in increasing production. GMXR's goal is to grow and build shareholder value every day. GMX Resources' balance sheet at June 30, 2012, showed $394.79 million in total assets, $462.46 million in total liabilities and a $67.67 million total deficit. The Company reported net losses of $206.44 million in 2011, $138.29 million in 2010, and $181.08 million in 2009. * * * As reported by the Troubled Company Reporter on Aug. 16, 2012, Standard & Poor's Ratings Services lowered its corporate credit rating on GMX Resources to 'CC' from 'CCC+'. "The downgrade to 'CC' reflects the potential for a selective default on GMX's 4.5% senior convertible notes due 2015 -- $86.3 million outstanding as of June 30, 2012 -- due to certain aspects of GMX's exchange offer that would constitute a distressed exchange under our criteria," said Standard & poor's credit analyst Paul B. Harvey. "As part of the exchange offer for its 2013 and 2015 convertible notes, holders of the 2015 notes have the right to exchange $1,000 principle of existing notes for $700 principle of new senior secured second-priority notes due 2018. We view this as a distressed exchange." Holders of the existing 2015 notes, regardless of when purchased, would receive significantly less than the original face value that was promised, S&P said. GMX RESOURCES: S&P Cuts Corp. Credit Rating From 'CC' to 'SD' ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on GMX Resources Inc. to 'SD' (selective default) from 'CC', reflecting its completion of an exchange offer for a portion of its 5.0% convertible notes due 2013 and 4.5% convertible notes due 2015. "At the same time, we placed the company's $288.6 million senior secured notes due 2017 on CreditWatch with negative Implications," S&P said. "The rating actions follow the company's announcement that it has completed an exchange offer for its 5.0% convertible notes due 2013 and 4.5% convertible notes due 2015," said Standard & Poor's credit analyst Paul B. Harvey. "The exchange offer included $38 million principle of 4.5% convertible notes due 2015 that accepted an exchange of $1,000 principle for $700 principle of new senior secured second-priority notes due 2018. We consider the completion of such an exchange, at a material discount to par, to be a distressed exchange and, as such, tantamount to a default under our criteria (see related research). In addition, about $24.9 million principal of 5.0% convertible notes due 2013 were tendered at an exchange rate of $1,000 principal for $1,000 principal new senior secured second-priority notes due 2018 and about 7.2 million shares of common stock. GMX currently expects to issue a total of $51.5 million principle of new second-priority notes. GMX expects about $27.1 million of 2013 notes and $48.3 million of 2015 notes will remain outstanding at the end of the transaction." "The CreditWatch negative listing on the $283.5 million secured notes due 2017 reflects the potential for a downgrade if our reassessment of GMX's corporate credit rating is 'CCC' or lower. In our opinion, the remaining $27.1 million of 5% convertible notes due February 2013 poses a significant risk of default for GMX given its very limited liquidity at this time. As a result, the corporate credit rating may not return to the 'CCC+' level when reassessed, absent a liquidity event in the intervening period," S&P said. "We expect to assign a new corporate credit rating on GMX as well as resolve the CreditWatch listing in the near future. We will base the new ratings on our assessment of the company's new capital structure and projected near-term liquidity, including the February 2013 maturity of the remaining $27.1 million 5.0% convertible notes. In addition, we will incorporate the company's success to date in the Bakken and Niobrara plays, as well as our outlook on the North American exploration and production industry," S&P said. GOSPEL RESCUE: Can Employ Yumkas Vidmar as Bankruptcy Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Columbia has authorized Gospel Rescue Ministries of Washington, D.C. Inc., to employ Yumkas, Vidmar and Sweeney, LLC, as counsel to the Debtor. As reported in the TCR on June 7, 2012, the Debtor said it needs the assistance of counsel to pursue a successful reorganization of its debts and to assist the Debtor with the performance of its duties. The Debtor also requires counsel to, among other things, assist it in fulfilling its duties under state and federal laws, advise it on the legal aspects of contracts, financing, and other business matters. YVS received $35,000 from the Debtor of which $7,500 has been applied to the payment of pre-petition legal services and $1,046 has been applied to the Chapter 11 filing fee. YVS presently holds the balance of $26,454 as a retainer toward the services to be rendered and expenses to be incurred during the Chapter 11 case to secure the representation of YVS. Payment of the $35,000 was made from the Debtor's operating funds. The firm's hourly rates are: Partners $325 to $395 Associates $225 to $320 Paralegals $95 to $155 Paul Sweeney, Esq., will lead the engagement. He charges $395 an hour. About Gospel Rescue Ministries Gospel Rescue Ministries of Washington, D.C. Inc., filed a Chapter 11 petition (Bankr. D.C. Case No. 12-00405) on May 30, 2012, estimating assets of $10 million to $50 million and debts of up to $10 million. Judge S. Martin Teel, Jr. presides over the case. Paul Sweeney and the law firm of Yumkas, Vidmar & Sweeney LLC serve as bankruptcy counsel. According to the Web site http://www.grm.org, in the heart of Washington D.C., Gospel Rescue Ministries strives to be a shelter in the storm of substance abuse, hunger, and homelessness. GRM is a non-denominational Christian social service agency that provides hope, help, and healing to men and women in a variety of ways, from sheltering the homeless and feeding the hungry, to educating men and women, healing them from addictions, and providing them with the vocational skills and spiritual strength to change their lives. Michael J. Corttese, the CEO and president, worked at World Bank Group and International Finance Corp. for 30 years, before joining GRM as volunteer in 1998. GOSPEL RESCUE: Has Final Nod to Use OBA Bank's Cash Collateral -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Columbia has entered a final order granting Gospel Rescue Ministries of Washington, D.C. Inc., authorization to use cash collateral for the postpetition period after July 9, 2012, subject to the terms of an acceptable final budget for ordinary course expenses. Debtor and OBA Bank can negotiate the terms of the final budget without the necessity of filing the same with the Court. As adequate protection, OBA is granted a replacement security interest in all of the Prepetition Collateral. OBA will also have allowed super-priority claim as provided in Section 507(b)of the Bankruptcy Code. About Gospel Rescue Ministries Gospel Rescue Ministries of Washington, D.C. Inc., filed a Chapter 11 petition (Bankr. D.C. Case No. 12-00405) on May 30, 2012, estimating assets of $10 million to $50 million and debts of up to $10 million. Judge S. Martin Teel, Jr. presides over the case. Paul Sweeney and the law firm of Yumkas, Vidmar & Sweeney LLC serve as bankruptcy counsel. According to the Web site http://www.grm.org, in the heart of Washington D.C., Gospel Rescue Ministries strives to be a shelter in the storm of substance abuse, hunger, and homelessness. GRM is a non-denominational Christian social service agency that provides hope, help, and healing to men and women in a variety of ways, from sheltering the homeless and feeding the hungry, to educating men and women, healing them from addictions, and providing them with the vocational skills and spiritual strength to change their lives. Michael J. Corttese, the CEO and president, worked at World Bank Group and International Finance Corp. for 30 years, before joining GRM as volunteer in 1998. GOSPEL RESCUE: Has Court Nod to Employ CBRE as Real Estate Broker ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Columbia authorized Gospel Rescue Ministries of Washington, D.C. Inc., to employ CBRE, Inc., as commercial real Estate broker to the Debtor. CBRE will serve as the Debtor's exclusive agent to market and sell the Fifth Street Property pursuant to Code Section 363 or under a plan of reorganization pursuant to Section 1123(a)(5)(D) of the Code. Among the assets of the Debtor's estate are parcels of real property located at 810 Fifth Street, NW, Washington, D.C. (the "Fifth Street Property"). The Debtor is seeking a buyer for the Fifth Street Property as it believes that a sale will fund the Debtor's reorganization and exit from Chapter 11. Subject to Court approval, CBRE has agreed to accept a commission upon closing. About Gospel Rescue Ministries Gospel Rescue Ministries of Washington, D.C. Inc., filed a Chapter 11 petition (Bankr. D.C. Case No. 12-00405) on May 30, 2012, estimating assets of $10 million to $50 million and debts of up to $10 million. Judge S. Martin Teel, Jr. presides over the case. Paul Sweeney and the law firm of Yumkas, Vidmar & Sweeney LLC serve as bankruptcy counsel. According to the Web site http://www.grm.org/,in the heart of Washington D.C., Gospel Rescue Ministries strives to be a shelter in the storm of substance abuse, hunger, and homelessness. GRM is a non-denominational Christian social service agency that provides hope, help, and healing to men and women in a variety of ways, from sheltering the homeless and feeding the hungry, to educating men and women, healing them from addictions, and providing them with the vocational skills and spiritual strength to change their lives. Michael J. Corttese, the CEO and president, worked at World Bank Group and International Finance Corp. for 30 years, before joining GRM as volunteer in 1998. GOSPEL RESCUE: Files Schedules of Assets and Liabilities -------------------------------------------------------- The Gospel Rescue Ministries of Washington, D.C. Inc., filed with the U.S. Bankruptcy Court for the District of Columbia schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $8,744,930 B. Personal Property $817,519 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $1,915,327 E. Creditors Holding Unsecured Priority Claims $700,882 F. Creditors Holding Unsecured Non-priority Claims $1,237,394 ----------- ----------- TOTAL $9,562,449 $3,853,603 The Debtor also filed a statement of financial affairs, a copy of which is available at http://bankrupt.com/misc/gospel.doc35.pdf About Gospel Rescue Ministries Gospel Rescue Ministries of Washington, D.C. Inc., filed a Chapter 11 petition (Bankr. D.C. Case No. 12-00405) on May 30, 2012, estimating assets of $10 million to $50 million and debts of up to $10 million. Judge S. Martin Teel, Jr. presides over the case. Paul Sweeney and the law firm of Yumkas, Vidmar & Sweeney LLC serve as bankruptcy counsel. According to the Web site http://www.grm.org, in the heart of Washington D.C., Gospel Rescue Ministries strives to be a shelter in the storm of substance abuse, hunger, and homelessness. GRM is a non-denominational Christian social service agency that provides hope, help, and healing to men and women in a variety of ways, from sheltering the homeless and feeding the hungry, to educating men and women, healing them from addictions, and providing them with the vocational skills and spiritual strength to change their lives. Michael J. Corttese, the CEO and president, worked at World Bank Group and International Finance Corp. for 30 years, before joining GRM as volunteer in 1998. GUARANTY FINANCIAL: Court Trims Lawsuit Against Keefe Bruyette -------------------------------------------------------------- Keefe Bruyette & Woods, Inc. and KBW, Inc., won partial victory in the avoidance lawsuit filed against it by Kenneth Tepper, the Liquidation Trustee for the Guaranty Financial Group, Inc. Liquidation Trust. District Judge Sam A. Lindsay in Dallas ruled that Magistrate Judge Renee Harris Toliver's findings and conclusions are correct with respect to Mr. Tepper's standing to pursue a fraudulent transfer claim under the Bankruptcy Code and contract claim and Mr. Tepper's lack of standing to pursue a claim for breach of the duty of good faith and fair dealing, and they are accepted as those of the court. The Court rejects the magistrate judge's findings and conclusions that Mr. Tepper has standing to pursue a fraudulent transfer claim under New York and Texas law but does not have standing to pursue his alleged securities fraud claims under 15 U.S.C. Sections 78i, 78j, and 78t-1, and 17 C.F.R. Sec. 240.10b-5. Accordingly, the court grants Keefe's Motion to Dismiss Mr. Tepper's lawsuit with respect to the fraudulent transfer claim under New York and Texas law and breach of the duty of good faith and fair dealing claim for lack of standing and dismisses them with prejudice. The Motion to Dismiss is denied in all other respects. Mr. Tepper brought this action on Aug. 22, 2011, asserting these claims against Keefe: (1) fraudulent transfer under 11 U.S.C. Sections 544, 548, and 550, Texas Business Commerce Code Section 24.001 et seq., and New York Debtor and Creditor Law 271, et seq. (Count I); (2) violations of United States Securities Laws 11 U.S.C. Section 541; sections 9, 10(b), and 20A of the Securities Exchange Act of 1934; 15 U.S.C. Sections 78i, 78j, and 78t-1; and Rule 10b-5 and C.F.R. Section 240.10b-5 based on, among other things, Keefe's alleged fraudulent short selling of Guaranty Financial Group, Inc. stock (Count II); (3) breach of contract under 11 U.S.C. Section 541 and applicable state law (Count III); and (4) breach of the duty of good faith and fair dealing under 11 U.S.C. Section 541 and applicable state law (Count IV). Prior to filing bankruptcy, Guaranty Financial engaged Keefe as a financial or investment advisor in January 2008. The Plaintiff contends that at the same time Keefe was advising Guaranty Financial and purporting to help it raise capital, the firm was also betting against the Debtor in the public marketplace and using confidential information provided to it to "short" the stock of Guaranty Financial and profit at Guaranty Financial's expense. The Plaintiff maintains that Keefe's shortselling of Guaranty Financial's stock undermined the Debtor's efforts to raise capital by sending a negative message to the market from the Debtor's own investment banker and negatively impacted the price of the Debtor's stock. Although some capital was raised by Keefe, the Plaintiff argues that the $20 million in compensation paid by Guaranty Financial was grossly disproportionate to Keefe's efforts. The Plaintiff asserts that at the time the $20 million was transferred to Keefe in 2008, Guaranty Financial was insolvent or became insolvent as a result of the transfers. The Plaintiff seeks to recover the $20 million that Guaranty Financial paid to Keefe. The case is KENNETH TEPPER, in his capacity as the Liquidation Trustee for the GFGI Liquidation Trust, Plaintiff, v. KEEFE BRUYETTE & WOODS, INC., and KBW, INC., Defendants, Civil Action No. 3:11-CV-2087-L-BK (N.D. Tex.). A copy of the District Court's Sept. 19, 2012 Memorandum Opinion and Order is available at http://is.gd/FvxFH5from Leagle.com. About Guaranty Financial Guaranty Financial, based in Austin, Texas, and its affiliates filed for chapter 11 bankruptcy protection (Bankr. N.D. Tex. Case No. 09-35582) on Aug. 27, 2009, after its bank subsidiary was taken over by regulators. Attorneys at Haynes & Boone, LLP, served as the Debtors' bankruptcy counsel. According to the schedules attached to its petition, Guaranty Financial disclosed $24.3 million in total assets and $323.4 million in total debts, including $305.0 million in trust preferred securities. The bulk of Guaranty's remains were acquired by BBVA Compass, the U.S. division of Banco Bilbao Vizcaya Argentaria SA of Spain. Guaranty Financial received approval of its Second Amended Joint Plan of Liquidation on May 11, 2011. The Plan was declared effective later that month. The Plan is based on a settlement with the FDIC and the indenture trustee for the noteholders. The Plan calls for the FDIC to receive some of the remaining cash and all of the tax refunds, which are estimated at $3.49 million. Unsecured creditors with $382 million in claims stand to recover between 1% and 3%, from proceeds generated from lawsuits. GUITAR CENTER: Sears Holdings Executive Named New CFO ----------------------------------------------------- Guitar Center, Inc., on Sept. 17, 2012, announced that Erick Mason, chief financial officer, accepted a new role in the Company as Chief Strategic Officer effective Oct. 1, 2012. As Chief Strategic Officer, Mr. Mason will oversee strategic planning, supply chain, real estate, legal and information technology operations. The Company also announced that Tim Martin has been hired to assume the role of Chief Financial Officer of the Company effective Oct. 1, 2012. Mr. Martin, age 43, was Chief Financial Officer of Land's End, a division of Sears Holdings Corporation and a leading direct merchant of family apparel and accessories and home products, from December 2009 to July 2012. Previously, Mr. Martin served as Chief Financial Officer of Coldwater Creek, Inc., a leading specialty retailer of women's apparel, gifts, jewelry and accessories, from August 2006 to November 2009. Mr. Martin will receive an annual base salary of $425,000 and will be eligible to participate in the Company's executive bonus plan. In addition, the Company and Mr. Martin will enter into an executive severance benefits agreement in a form consistent with those provided to other executives. Mr. Martin is eligible to receive a grant of options to purchase 85,000 shares of common stock of Guitar Center Holdings, Inc., subject to approval by the compensation committee of Guitar Center Holdings, Inc. About Guitar Center Guitar Center, Inc., headquartered in Westlake Village, Calif., is the largest musical instrument retailer with 312 stores and a direct response segment, which operates its Web sites. It operates three distinct musical retail business - Guitar Center (about 70% of revenue), Music & Arts (about 7% of revenue), and Musician's Friend (its direct response subsidiary with 24% of revenue). Total revenue is about $2 billion. The Company reported a net loss of $236.94 million in 2011, a net loss of $56.37 million in 2010, and a net loss of $189.85 million in 2009. The Company's balance sheet at June 30, 2012, showed $1.82 billion in total assets, $1.94 billion in total liabilities and a $122.39 million total stockholders' deficit. Bankruptcy Warning The Company said in its annual report for the year ended Dec. 31, 2011, that its ability to make scheduled payments or to refinance its debt obligations depends on the Company and Holdings' financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond its control. The Company cannot provide any assurance that it will maintain a level of cash flows from operating activities sufficient to permit it to pay the principal, premium, if any, and interest on its indebtedness. If the Company cannot make scheduled payments on its debt, the Company will be in default and, as a result: * its debt holders could declare all outstanding principal and interest to be due and payable; * the lenders under the Company's senior secured credit facilities could terminate their commitments to lend the Company money and foreclose against the assets securing their borrowings; and * the Company could be forced into bankruptcy or liquidation. * * * As reported in the Troubled Company Reporter on Feb. 28, 2011, Moody's Investors Service affirmed Guitar Center, Inc.'s Caa2 Corporate Family Rating and the $622 million existing term loan rating of Caa1 due October 2014. The Probability of Default Rating was revised to Caa2/LD from Caa2 while the Speculative Grade Liquidity assessment was changed to SGL-2 from SGL-3. The rating outlook remains stable. The Caa2/LD Probability of Default rating reflects Moody's view that the extended deferral of interest on the Holdco notes constitutes a distressed exchange under Moody's definition and also anticipates that additional exchanges of this nature are possible over the near term. The Limited Default designation was prompted by the company's executed amendment of the HoldCo notes, which allows for a deferral of 50% of the interest payments for 18 months. Moody's views this as a distressed exchange that provides default avoidance. This LD designation applies to the proposed follow-on amendment to defer the HoldCo note interest payments by another six months. Subsequent to the actions, Moody's will remove the LD designation and the PDR will be Caa2 going forward. HAWKER BEECHCRAFT: Court Denies Key Employee Incentive Plan ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York denied Hawker Beechcraft, Inc., et al.'s request for approval of (1) a Key Employee Incentive Plan and a Key Employee Retention Plan; and (2) payments to certain management employees under the KEIP and certain non-insider employees under the KERP. The Office of the U.S. Trustee and the International Association of Machinists and Aerospace Workers, AFL-CIO, had filed objections to the Debtors' motion. Under the KEIP, the Debtors proposed two potential (but exclusive) methods for providing bonuses to the KEIP executives: either (i) consummation of the standalone transaction, which is the consensual restructuring plan that was agreed to by a majority of the prepetition lenders and bondholders prior to the Petition Date; or (ii) approval and consummation of a third-party transaction. About Hawker Beechcraft Hawker Beechcraft Inc., a designer and manufacturer of light and medium-sized jet, turboprop and piston aircraft, filed for Chapter 11 reorganization together with 17 affiliates (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan, to be filed by June 30, will give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit. Other claims include pensions underfunded by $493 million. Hawker Beechcraft disclosed assets of $1,831,097 plus undetermined amounts, and liabilities of $1,704,736,958 plus undetermined amounts. Hawker's legal representative is Kirkland & Ellis LLP, its financial advisor is Perella Weinberg Partners LP and its restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Sidley Austin LLP serves as legal counsel and Houlihan Lokey Howard & Zukin Capital Inc. serves as financial advisor to the DIP Agent and the Prepetition Agent. Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of senior secured prepetition lenders holding 70% of the loans. Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee of holders of the 8.500% Senior Fixed Rate Notes due 2015 and 8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company. The members of the Ad Hoc Committee -- GSO Capital Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims or manage accounts that hold claims against the Debtors' estates arising from the purchase of the Senior Notes. Deutsche Bank National Trust Company, the indenture trustee for senior fixed rate notes and the senior PIK-election notes, is represented by Foley & Lardner LLP. An Official Committee of Unsecured Creditors appointed in the case has selected Daniel H. Golden, Esq., and the law firm of Akin Gump Strauss Hauer & Feld LLP as legal counsel. The Committee tapped FTI Consulting, Inc., as its financial advisor. HICKORY FLAT: Case Summary & 9 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Hickory Flat Investments, LLC 1300 Shiloh Road Kennesaw, GA 30144 Bankruptcy Case No.: 12-73448 Chapter 11 Petition Date: September 19, 2012 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Debtor's Counsel: Frank B. Wilensky, Esq. MACEY, WILENSKY, KESSLER & HENNINGS, LLC Suite 2700 230 Peachtree Street, NW Atlanta, GA 30303-1561 Tel: (404) 584-1200 Fax: (404) 681-4355 E-mail: smcconnell@maceywilensky.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 A copy of the Company's list of its nine unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ganb12-73448.pdf The petition was signed by Margret V. Sapp, sole member and manager. HIGH PLAINS: Eide Bailly Resigns as Accountant ---------------------------------------------- Eide Bailly LLP resigned as the independent registered public accounting firm of High Plains Gas, Inc, on Sept. 18, 2012. The audit reports of Eide Bailly on the consolidated financial statements of the Company as of and for the years ended Dec. 31, 2011, and 2010 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles, except that Eide Bailly's report contained a separate paragraph stating, "The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not yet engaged a new independent registered public accounting firm. About High Plains Houston, Texas-based High Plains Gas, Inc., is a provider of goods and services to regional end markets serving the energy industry. It produces natural gas in the Powder River Basin located in Northeast Wyoming. It provides construction and repair and maintenance services primarily to the energy and energy related industries mainly located in Wyoming and North Dakota. The Company reported a net loss of $57.48 million on $17.15 million of revenues for 2011, compared with a net loss of $5.48 million on $2.61 million of revenues for 2010. The Company's balance sheet at June 30, 2012, showed $10.26 million in total assets, $40.42 million in total liabilities and a $30.16 million total stockholders' deficit. Eide Bailly LLP, in Greenwood Village, Colorado, issued a "going concern" qualification on the financial statements for the year ending Dec. 31 2011, citing significant operating losses which raised substantial doubt about High Plains Gas' ability to continue as a going concern. HOVNANIAN ENTERPRISES: Prices Senior Notes and Units Offerings -------------------------------------------------------------- Hovnanian Enterprises, Inc.'s its wholly-owned subsidiary, K. Hovnanian Enterprises, Inc., priced $577.0 million aggregate principal amount of 7.250% senior secured first lien notes due 2020 and $220.0 million aggregate principal amount of 9.125% senior secured second lien notes due 2020 in a private placement. K. Hovnanian also priced its previously announced underwritten public offering of senior exchangeable note units. The Notes will be guaranteed by the Company and substantially all of its subsidiaries. The First Lien Notes and the guarantees thereof will be secured on a first-priority basis by substantially all the assets owned by K. Hovnanian and the guarantors and the Second Lien Notes and the guarantees thereof will be secured on a second-priority basis by substantially all the assets owned by K. Hovnanian and the guarantors, in each case, subject to permitted liens and certain exceptions. In a separate press release, K. Hovnanian priced its previously announced underwritten public offering of 6.00% senior exchangeable note units. The Units Offering consists of the issuance of 90,000 Units, each with a stated amount of $1,000 and each comprised of a zero-coupon senior exchangeable note due Dec. 1, 2017, and a senior amortizing note due Dec. 1, 2017. The notes comprising the Units will be guaranteed by the Company and certain of its subsidiaries. In addition, K. Hovnanian granted the underwriters a 13-day option to purchase up to an additional 10,000 Units sold to cover over-allotments. Each exchangeable note has an initial principal amount of $768.51. The exchange rate will initially be 185.5288 shares of Class A common stock per $1,000 principal amount at maturity of exchangeable notes. The exchange rate will be subject to adjustment. J. P. Morgan Securities LLC, Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC are serving as the joint book- running managers for the Units Offering. K. Hovnanian intends to use the net proceeds from the Units Offering and the Notes Offering to fund its previously announced tender offer and consent solicitation for any and all of its outstanding 10.625% Senior Secured Notes Due 2016 and redemption to the extent those notes are not purchased in the tender offer. About Hovnanian Enterprises Red Bank, New Jersey-based Hovnanian Enterprises, Inc. (NYSE: HOV) -- http://www.khov.com/-- founded in 1959 by Kevork S. Hovnanian, is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Brighton Homes, Parkwood Builders, Town & Country Homes, Oster Homes and CraftBuilt Homes. As the developer of K. Hovnanian's Four Seasons communities, the Company is also one of the nation's largest builders of active adult homes. The Company reported a net loss of $286.08 million for the fiscal year ended Oct. 31, 2011, compared with net income of $2.58 million during the prior fiscal year. The Company's balance sheet at July 31, 2012, showed $1.62 billion in total assets, $2.02 billion in total liabilities and a $404.20 million total deficit. * * * Hovnanian carries 'Caa2' corporate family and probability of default ratings from Moody's. Moody's said in April 2012 that the Caa2 corporate family rating reflects Hovnanian's elevated debt leverage weak gross margins, continued operating losses, negative cash flow generation, and Moody's expectation that the conditions in the homebuilding industry over the next one to two yeas will provide limited opportunities for improvement in the company's operating and financial metrics. In addition, the ratings consider Hovnanian's negative net worth position, which Moody's anticipates will be further weakened by continuing operating losses and impairment charges. As a result, adjusted debt leverage, currently standing at 149%, is likely to increase further. Hovnanian carries a 'CCC-' credit rating from Standard & Poor's and a 'CCC' issuer default rating from Fitch. HW HEARTLAND: To Restructure Loan Terms in Chapter 11 ----------------------------------------------------- Lloyd Cook at The Kaufman Herald reported that HW Heartland L.P. filed for Chapter 11 bankruptcy protection in an attempt to reorganize the Company's finances and reach more agreeable terms with its lenders. According to the report, two of the original banks involved in the original Heartland financing are in receivership with the Federal Deposit Insurance Corporation. "Although Heartland has performed well over the past years, the owner's loan matured in May, and the owner has been unable to reach an agreement with its lenders on terms for an extension," the report quoted James Fuller of Hillwood Community, the master planning company, as saying. According to the report, Crandall City Council members were curious about the impact of the bankruptcy filing on the city's police department. The Heartland homeowners Association, including vehicles and other expenses, funds four of the city's 10 officers. Council member Shannon Barnes, asked Crandall Police Chief Dean Winters about those positions after City Manager Scott Walls informed the council of the bankruptcy filing, the report added. HW Heartland, L.P., filed a 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. Judge Barbara J. Houser oversees the case. The Debtor tapped Stephen M. Pezanosky, Esq., at Haynes and Boone, LLP, in Dallas, as counsel. The petition was signed by Lance Fair, authorized signatory, HW Heartland GP, LLC, the sole general partner of the Debtor. INTELSAT SA: Subsidiary Wants to Amend Senior Credit Facilities --------------------------------------------------------------- Intelsat S.A.'s indirect wholly-owned subsidiary, Intelsat Jackson Holdings S.A., is seeking an amendment of its senior secured credit facilities to, among other things, reduce the LIBOR floor, the ABR floor and the applicable margin with respect to the loans thereunder. The proposed amendment of Intelsat Jackson's senior secured credit facilities is subject to market and other conditions, and there can be no assurance that Intelsat Jackson will be able to enter into the amendment as described or at all. About Intelsat Intelsat S.A., formerly Intelsat, Ltd., provides fixed-satellite communications services worldwide through a global communications network of 54 satellites in orbit as of Dec. 31, 2009, and ground facilities related to the satellite operations and control, and teleport services. It had US$2.5 billion in revenue in 2009. Washington D.C.-based Intelsat Corporation, formerly known as PanAmSat Corporation, is a fully integrated subsidiary of Intelsat S.A., its indirect parent. Intelsat Corp. had US$7.70 billion in assets against US$4.86 billion in debts as of Dec. 31, 2010. The Company reported a net loss of $433.99 million in 2011, a net loss of $507.77 million in 2010, and a net loss of $782.06 million in 2009. The Company's balance sheet at June 30, 2012, showed $17.46 billion in total assets, $18.66 billion in total liabilities, $48 million in noncontrolling interest, and a $1.24 billion total Intelsat S.A. shareholders' deficit. * * * Luxembourg-based Intelsat S.A. carries 'B' issuer credit ratings from Standard & Poor's. It has 'Caa1' corporate family and probability of default ratings from Moody's Investors Service. INTERLEUKIN GENETICS: Signs Separation Agreement with Former CEO ---------------------------------------------------------------- Lewis H. Bender, notified the Board of Directors of Interleukin Genetics, Inc., of his intention to resign as the Chief Executive Officer and as a member of the Board of Directors of Interleukin, effective immediately. In connection with Mr. Bender's resignation, on Sept. 14, 2012, Interleukin entered into a Separation Agreement with Mr. Bender. Pursuant to the terms and conditions of the Separation Agreement, Mr. Bender will receive: (i) seven months of base salary, (ii) continuation of health insurance benefits through Feb. 28, 2013, and (iii) extension of the date until Sept. 14, 2013, to exercise options vested as of Aug. 23, 2012. About Interleukin Waltham, Mass.-based Interleukin Genetics, Inc., is a personalized health company that develops unique genetic tests to provide information to better manage health and specific health risks. The Company reported a net loss of $5.0 million for 2011, compared with a net loss of $6.0 million for 2010. The Company's balance sheet at June 30, 2012, showed $4.87 million in total assets, $16.09 million in total liabilities, all current, and a $11.21 million total stockholders' deficit. Following the Company's financial results for the year ended Dec. 31, 2011, Grant Thornton LLP, in Boston, Massachusetts, expressed substantial doubt about Interleukin Genetics' ability to continue as a going concern. The independent auditors noted that the Company incurred a net loss of $5.02 million during the year ended Dec. 31, 2011, and, as of that date, the Company's current liabilities exceeded its current assets by $12.27 million and its total liabilities exceeded total assets by $11.4 million. JEFFREY PROSSER: Faces $434K in Sanctions Over Missing Wines ------------------------------------------------------------ Bankruptcy Judge Judith K. Fitzgerald, sitting on the bench in the United States Bankruptcy Court, District of Virgin Islands, St. Thomas and St. John Division, ruled that the Chapter 7 trustee liquidating the estate of Jeffrey J. Prosser established that the Chapter 7 Estate suffered damages in the amount of the value of missing and unmarketable wines plus the fees and cost of litigation, including the Chapter 7 Estate's retention of experts. The Court ruled that at the Prossers' Palm Beach Property, 471 bottles of Wine, with a value of $83,579, were missing in March 2011. At the Prossers' Shoys Estate 453 bottles of Wine, with a value of $139,412, were missing in December 2011. An additional 527 bottles of Wine worth $211,884 were considered unmarketable, bringing the amount of damages from the Shoys Estate to $351,296. The Court also held that the Prossers have violated prior orders and are in civil contempt of court. The Chapter 7 Estate is awarded sanctions against the Prossers, jointly and severally, in the amount of $434,875, less any net proceeds recovered from the auction of the Wines from the Shoys Estate, plus an as yet undetermined amount in fees and costs, for Trustee's counsel and experts. A copy of the Court's Sept. 18, 2012 Memorandum Opinion is available at http://is.gd/p1EY0Kfrom Leagle.com. About Prosser & Innovative Communication Headquartered in St. Thomas, Virgin Islands, Innovative Communication Company, LLC -- http://www.iccvi.com/-- and Emerging Communications, Inc., are diversified telecommunications and media companies operating mainly in the U.S. Virgin Islands. Jeffrey J. Prosser owns Emerging Communications and Innovative Communications. Innovative and Emerging filed for Chapter 11 protection (D.V.I. Case Nos. 06-30007 and 06-30008) on July 31, 2006. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. Mr. Prosser and his wife, Dawn Prosser, each claimed an interest in wines, eventually valued at over $2 million, located at a number of locations including 252 El Bravo Way, Palm Beach, Florida; the Shoys Estate, St. Croix, Plots 4, 4A, 5, 10A, and 10AA, Christiansted, St. Croix, U.S. Virgin Islands; 89 Victor Herbert Road, Lake Placid, New York; Park Avenue Liquor Shop, 292 Madison Avenue, New York; Zachy's Wine and Liquor, Inc.; and a storage facility called The Store Room. Mr. Prosser filed for personal chapter 11 protection (D. V.I. Case No. 06-10006) on July 31, 2006. According to The (Virgin Islands) Source, he was fired in October 2007 for failing to make payments into the company pension funds. The case was later converted to Chapter 7 liquidation. James P. Carroll was named Chapter 7 Trustee. Greenlight Capital Qualified, L.P., Greenlight Capital, L.P., and Greenlight Capital Offshore, Ltd. -- which held an $18,780,614 claim against Mr. Prosser -- had filed an involuntary chapter 11 against Innovative Communication, Emerging Communications, and Mr. Prosser on Feb. 10, 2006 (Bankr. D. Del. Case Nos. 06-10133, 06-10134, and 06-10135). Mr. Prosser argued that the Greenlight entities, the former shareholders of Innovative Communications, and Rural Telephone Finance Cooperative, Mr. Prosser's lender, conspired to take down his companies into bankruptcy and collect millions in claims. The U.S. District Court of the Virgin Islands, Bankruptcy Division, approved the U.S. Trustee for Region 21's appointment of Stan Springel of Alvarez & Marsal as Chapter 11 Trustee of Innovative and Emerging Communications. JONES GROUP: Moody's Affirms 'Ba2' CFR/PDR; Outlook Negative ------------------------------------------------------------ Moody's Investors Service affirmed Jones Group, Inc.'s Ba2 Corporate Family and Probability of Default Ratings and SGL-2 Speculative Grade Liquidity Rating. Moody's also assigned a Ba3 rating to the company's proposed $100 million in aggregate principal amount of its 6.875% Senior Notes due 2019. The rating outlook was revised to negative from stable. The following ratings were affirmed, and LGD assessments revised: Corporate Family Rating at Ba2 Probability of Default Rating at Ba2 $250 million senior unsecured notes due 2014 at Ba3 (LGD 4, 66% from LGD 4, 68%) $300 million senior unsecured notes due 2019 at Ba3 (LGD 4, 66% from LGD 4, 68%) $250 million senior unsecured notes due 2034 at Ba3 (LG4, 66% from LGD 4, 68%) Senior Unsecured shelf rating at (P) Ba3 Speculative Grade Liquidity Rating at SGL-2 The following ratings were assigned: $100 million of new senior unsecured notes due 2019 at Ba3 (LGD 4, 66%) RATINGS RATIONALE The rating outlook revision to negative primarily reflects recent weak operating trends at Jones, with operating margins (excluding one- time items) falling by over 100 basis points in the first half of 2012. The company's operating losses at its domestic retail business remain meaningful and have not shown any signs of significant improvement despite the closure of a number of unprofitable stores in the past couple years. While the incremental debt financing will bolster Jones' liquidity position, it is increasing leverage at a time when performance has been weak, further pressuring Jones' credit metrics. As such ratings could be pressured if the company is unable to meaningfully reverse negative trends over the next few quarters. Jones' Ba2 Corporate Family Rating considers the company's meaningful scale in the apparel industry, its diverse portfolio of brands and increasing international business which Moody's views as a longer term positive for the company. The rating reflects Moody's view that the company will make some progress toward deleveraging after this proposed transaction as cash balances will be used to repay the company's deferred acquisition payable ($222 million as of June 30, 2012) by the end of the current fiscal year. The ratings remain constrained by the company's low absolute operating margins, which reflect continued operating losses in its domestic retail segment, and its high (though falling) reliance on the department store and mid-tier channels which on a combined basis currently account for almost 50% of total revenue. The Ba3 rating on the proposed notes -- one notch below the Corporate Family Rating -- reflects the notes' junior position to Jones' $650 million secured asset based revolving credit facility which has a security interest in the company's accounts receivable and inventory. Ratings could be lowered if the company is unable to reverse negative trends in operating profitability over the next few quarters, such that operating margins remain below 5.0%, debt/EBITDA is sustained above 4.25 times, or EBITA/interest is sustained below 2.5 times. Negative rating momentum would also build if Jones liquidity position were to erode or if the company undertook more aggressive financial policies, such as utilizing the significant portion of existing cash balances to fund share buybacks. The rating outlook could be stabilized if the company sees some recovery in operating earnings, such as through the benefits of lower input costs or reduced losses in its domestic retail business. Quantitatively the rating outlook could be stabilized if debt/EBITDA was below four times while maintaining a good overall liquidity profile. Over time ratings could be upgraded if Jones is able to continue to successfully grow recent acquisitions such as Kurt Geiger and Stuart Weitzman. In addition, the company would need to at a minimum achieve a modest profit in its domestic retail business. Quantitatively ratings could be upgraded if debt/EBITDA approached 3.0 times and EBITA/interest approached 3.5 times. The principal methodology used in rating The Jones Group, Inc. was the Global Apparel Industry Methodology published in May 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. The Jones Group, Inc., headquartered in Bristol, PA, is a designer, marketer and wholesaler of branded apparel, footwear, and accessories. The company also markets directly to consumers through various mall based specialty retail stores and outlet stores. Jones owns a number of recognized brands including Jones New York, Anne Klein, Nine West, Gloria Vanderbilt, Stuart Weitzman, and Kurt Geiger. The company generated approximately $3.7 billion of revenues for the LTM period ending June 2012. K-V PHARMACEUTICAL: Seeks to Stop Hologic From Reacquiring Drug --------------------------------------------------------------- Patrick Fitzgerald at Dow Jones' Daily Bankruptcy Review reports that K-V Pharmaceutical is protesting drug maker Hologic Inc.'s "brazen" attempt to circumvent bankruptcy law to get its hands on the rights to Makena, a drug that reduces the risk of premature births. About K-V Pharmaceutical KV Pharmaceutical Company (NYSE: KVa/KVb) -- http://www.kvpharmaceutical.com/-- is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. The Company markets its technology distinguished products through ETHEX Corporation, a subsidiary that competes with branded products, and Ther-Rx Corporation, the company's branded drug subsidiary. K-V Pharmaceutical Company and certain domestic subsidiaries on Aug. 4 filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-13346, under K-V Discovery Solutions Inc.) to restructure their financial obligations. K-V has retained the services of Willkie Farr & Gallagher LLP as bankruptcy counsel, Williams & Connolly LLP as special litigation counsel, and SNR Denton as special litigation counsel. In addition, K-V has retained Jefferies & Co., Inc., as financial advisor and investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. The U.S. Trustee appointed five persons to serve in the Official Committee of Unsecured Creditors. KINETEK HOLDINGS: S&P Puts 'B-' CCR on Watch on Nidec Acquisition ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Deerfield, Ill.-based Kinetek Holdings Corp., including the 'B-' corporate credit rating, on CreditWatch with positive implications. "The rating action follows Nidec Corp.'s (unrated) announcement that it plans to acquire Kinetek Group Inc. (parent entity of Kinetek Holdings Corp.). We expect the transaction to close in November, subject to the receipt of regulatory approvals," S&P said. "If the transaction is completed, we will likely withdraw our ratings on Kinetek if the rated debt is repaid as part of the transaction," said Standard & Poor's credit analyst Carol Hom. KRH INC: Files for Chapter 11 Bankruptcy in Minnesota ----------------------------------------------------- Star Tribune reports that KRH Inc. of Lindstrom, Minnesota, filed for Chapter 11 protection in the U.S. Bankruptcy Court in Minnesota (Case No. 12-35406) on Sept. 21, 2012. The Company has yet to file its schedules. Ronald Hofmann is the company's CEO. KRYSTAL INFINITY: Sells Bus Business for $3.9 Million ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Krystal Koach Inc. was authorized to sell the bus- manufacturing business for $3.1 million, plus the value of parts inventory ranging from $400,000 to $800,000. The report relates that the company brought a contract for the bus business to bankruptcy court for approval. The original contract had a base price of $2.1 million, plus the value of inventory. The ultimate purchaser was Thor Industries Inc., a bus manufacturer from Jackson Center, Ohio. Thor objected to the originally proposed sale, saying it would offer more. According to the report, U.S. Bankruptcy Judge Catherine E. Bauer in Santa Ana, California, conducted an auction where Thor raised the price by $1 million and won. The report recounts that in the first attempt at Chapter 11 reorganization, the bankruptcy court in Santa Ana authorized sale of the business in January 2011 for $9 million to Edward Grech, who was a principal in the business before the sale. Mr. Grech put the company back into Chapter 11 on Aug. 14, again in Santa Ana. The report notes the company said the new bankruptcy resulted from the decline in sales to China. In 2011, there were 30 export sales a month to China. In the second quarter of 2012, there were none. The principal secured creditor is East West Bank with a secured claim of $6.5 million on a revolving credit and equipment loan. Comerica Bank is owed another $1.4 million. About Krystal Infinity Krystal Infinity LLC filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-19701) on Aug. 14, 2012, in Santa Ana, California. Krystal Infinity manufactures and sells stretch limousines, limousine vans, shuttle buses, limousine busses and hearses. Roughly 85% of Krystal Infinity's vehicle manufacturing work is completed in Mexico through an affiliate Krystal International. The business was acquired by the Debtor through a 11 U.S.C. Sec. 363 sale conducted by Krystal Koach, Inc. (Case No. 10-26547) in January 2011. Krystal Infinity estimated assets and debts of $10 million to $50 million as of the Chapter 11 filing. Bankruptcy Judge Catherine E. Bauer presides over the case. The Debtor is represented by Ron Bender, Esq., at Levene, Neale, Bender, Yoo & Brill LLP, in Los Angeles. LEHMAN BROTHERS: Argues Against Barclays Sale in Appeals Court -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trustee for the brokerage unit of Lehman Brothers Holdings Inc. argued before the U.S. Court of Appeals in New York that there was denial of due process when the North American investment banking business was sold to Barclays Plc one week after the bankruptcy filing in Septembers 2008. According to the report, James W. Giddens, the Lehman brokerage trustee, contends notions of due process were violated because the parties changed material terms without bankruptcy court approval. The argument was set out in the brief Mr. Giddens filed in the Manhattan appeals court last week. He is seeking to overturn a ruling in June by U.S. District Judge Katherine B. Forrest who concluded that the bankruptcy judge was wrong in requiring Barclays to pay $1.5 billion. In addition to reinstating the $1.5 billion judgment in his favor, Mr. Giddens also wants the Second Circuit to award him $4 billion in cash representing so-called margin assets. When cases go to a circuit court on appeal, the focus often changes to more lofty issues, like due process, which sometimes have greater appeal to a circuit court less interested in the minutia of disputed, complicated facts. In this instance, Mr. Giddens's first argument rests on a denial of due process. The report relates that Mr. Giddens' argument is grounded on a clarification letter making up part of the sale contract. Judge Forrest concluded that the letter amendment unambiguously entitled Barclays to receive billions in cash margin assets even though the bankruptcy judge was told that Barclays would acquire no cash. The report notes that the Lehman brokerage trustee argues that by interpreting sale approval "to give the parties carte blanche to make material undisclosed transfers from the bankruptcy estate, the district court's decision undermines the integrity of the bankruptcy sale process." Mr. Barclays is taking its own appeal, contending Forrest erred by not awarding an additional $1.276 billion in the bank's favor. Mr. Giddens' appeal and Barclays' cross-appeal arise from a lawsuit the Lehman holding company and the brokerage trustee commenced against Barclays one year to the day after bankruptcy. The Lehman holding company lost on all its claims against Barclays and ultimately did not appeal. The Bloomberg report discloses that the Chapter 11 plan for the Lehman companies other than the broker was confirmed in December and implemented in March, with a first distribution in April. Lehman's brokerage subsidiary is under Mr. Giddens' control. He was appointed under the Securities Investor Protection Act. The Lehman brokerage has yet to make a first distribution to non- customers. The Barclays appeal in the court of appeals is Giddens v. Barclays Capital Inc. (In re Lehman Brothers Holdings Inc.), 12- 2328, 2nd U.S. Circuit Court of Appeals (Manhattan). The Barclays appeal in district court is Barclays Capital Inc. v. Giddens (In re Lehman Brothers Inc.), 11-6052, U.S. District Court, Southern District of New York. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. LEHMAN BROTHERS: Sells Stake in 8 Austin Office Buildings --------------------------------------------------------- Lehman Brothers Holdings Inc. sold its stake in eight office buildings in Austin, Texas, to Thomas Properties Group Inc. and the California State Teachers' Retirement System. Thomas Properties, a real estate investment trust, and CalSTRS bought the 3 million square feet of office properties from TPG- Austin Portfolio Syndication Partners as part of an $859 million deal. TPG-Austin is a venture among Lehman Brothers Holdings Inc., which had a 50% controlling stake, TPG/CalSTRS, and an unidentified offshore sovereign wealth fund. The buyers formed a new venture called TPG/CalSTRS Austin LLC, to own the Austin portfolio, with each company holding a 50% stake. As part of the deal, TPG/CalSTRS assumed five mortgage loans totaling $626 million. The deal also cut the existing leverage on the portfolio by repaying about $200 million owed to Lehman's commercial paper unit. James Thomas, chief executive officer of Thomas Properties, considers the Austin portfolio to be "crown jewels." "We are pleased with the opportunity to increase our investment in Austin and more particularly, in a group of assets that we consider to be crown jewels," Mr. Thomas said in a September 19 statement. "We are very encouraged by the continued strength in the Austin market and the prospects for future growth." The portfolio includes five downtown Austin properties -- Frost Bank Tower, 300 West 6th Street, One American Center, San Jacinto Center and One Congress Plaza -- and three suburban buildings -- Westech 360, Park Centre and Great Hills Plaza in Northwest Austin. Lehman is liquidating its real estate portfolio to recover as much as $12.9 billion from mortgages and assets around the globe. It has invested more than $5 billion in its real estate since its bankruptcy filing in 2008. The company was part of a restructuring of the Austin portfolio in March 2009, according to a September 19 report by Bloomberg News. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. LEHMAN BROTHERS: Recovery From ADR Settlements Hits $1.3BB ---------------------------------------------------------- Weil Gotshal & Manges LLP, Lehman Brothers Holdings Inc.'s legal counsel, filed a status report on the settlement of claims it negotiated through the alternative dispute resolution process. The status report noted that in the past month, Lehman served nine ADR notices, bringing the total number of notices served to 262. Lehman also reached settlement with counterparties in seven additional ADR matters, all as a result of mediation. Upon closing of those settlements, the company will recover a total of $1,288,387,373. Settlements have now been reached in 216 ADR matters involving 238 counterparties. As of September 19, 83 of the 88 ADR matters that reached the mediation stage and concluded were settled through mediation. Only five mediations were terminated without settlement. Nine more mediations are scheduled to be conducted for the period September 21 to November 27. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. LEHMAN BROTHERS: Ross Wins Approval to Buy Navigator Shares ----------------------------------------------------------- WL Ross & Co. received a go-signal to buy shares in Navigator Holdings Ltd., Bloomberg News reported, citing a spokesman for Lehman Brothers Inc.'s trustee as its source. WL Ross offered about $110 million for the 34% stake in the shipping company owned by the Lehman brokerage. Jake Sargent, the trustee's spokesman, said the trustee "is pleased with the court's approval of the sale." "The sale maximizes the value of LBI's shares in Navigator for the benefit of customers and other creditors," Mr. Sargent said in a September 19 e-mail. Earlier, Elliott Management Corp., a creditor of the brokerage, objected that the buyer, which already owns shares in Navigator, would gain a controlling stake without paying a premium for control. WL Ross answered in a court filing that it bought most of its Navigator shares last year for the same $25 each that the brokerage will receive. The trustee also responded to Elliott's objection, saying the terms of the sale agreement "constitute the current optimal means of realizing maximum value from the shares." About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. LEHMAN BROTHERS: Creditors' $12.8-Million Fees Reduced ------------------------------------------------------ A group of Lehman Brothers Holdings Inc. creditors said it has agreed to reduce the amount of fees and expenses Lehman Brothers Holdings Inc. has to pay for the group's "substantial contribution" in the company's bankruptcy case. The move comes after the U.S. Trustee, a Justice Department agency that oversees bankruptcy cases, opposed the group's application for payment of about $12.8 million. The group said it agreed to cut the proposed amount of attorneys' fees and expenses by $455,837, and to remove an additional $115,000 from the amount in connection with its application for payment of expert fees and expenses. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. LEHMAN BROTHERS: Committee Opposes Elliot Bid for Quick Payment --------------------------------------------------------------- The Official Committee of Unsecured Creditors and an ad hoc group of Lehman Brothers creditors object to the motion of Elliot Management Corporation asking James W. Giddens, the trustee liquidating Lehman Brothers Inc. under the U.S. Securities Investor Protection Act to (i) liquidate all securities in the Trustee's possession or control, to the maximum extent practicable, (ii) satisfy customers' net equity claims through pro rata distributions of cash, and (iii) promptly make an initial distribution to the holders of allowed customer claims in the maximum amount that allows for reasonable reserves for disputed claims. The Creditors' Committee relates that it has reviewed Elliot's request, and based on that review, determined that the course of action advocated by Elliot would, ultimately, benefit those Debtors that hold substantial customer claims and general estate claims against LBI, and is, thus, in the best interest of the Debtors' estates and creditors, Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, tells the Court. Nevertheless, the Creditors' Committee believes compelling the SIPA Trustee to carry out the course of action proposed by Elliot at this time is premature in light of the ongoing settlement negotiations between LBI and Lehman Brothers International Europe with respect to their substantial mutual claims against one another. An ad hoc group of Lehman Brothers creditors tells the Court that it is sympathetic to Elliot's request and believes that all reasonable and practical avenues available to facilitate more timely distributions should be explored. The Group, however, believes a global settlement between the SIPA Trustee and LBIE would be beneficial. The Group, accordingly, asks the Court to adjourn Elliot's motion for a period of 60 days pending hopeful completion of the SIPA Trustee's settlement discussion. Elliot Management Talks Back Elliot maintains that the Court should direct the SIPA Trustee to (i) satisfy all securities customers' net equity claims through Pro Rata Cash Distribution of the securities and cash in the pool of customer property, without reference to the specific securities in any customer's account; and (ii) promptly make an initial distribution to holders of allowed customer claims in the maximum amount that will allow for reasonable reserves for customer property and disputed claims. Jeffrey E. Glen, Esq., at Anderson Kill & Olick, P.C., in New York explains that Elliot seeks to enforce the SIPA, not to modify it, as asserted by the SIPA Trustee and the Securities Investor Protection Corporation. Mr. Glen adds that the SIPA Trustee does not have the discretion to decide a statutory question that is before the Court. Elliot's Motion In its Motion, Elliott Management demanded that the trustee liquidating Lehman Brothers Holdings Inc.'s brokerage make an initial payment of $3.2 billion to creditors, Bloomberg News reported. Elliott, a hedge fund client of the Lehman brokerage, wants the biggest possible payout promptly after the trustee has sold securities owned by the brokerage, the report said. Shortly after Lehman filed for bankruptcy protection, the trustee transferred 110,000 mostly retail Lehman accounts containing $90 billion in assets largely to Barclays. Elliott and other customers, however, "were not fortunate enough to participate in that process," the hedge fund said. Elliot said the trustee could pay almost 26 cents on the dollar of allowed claims totaling $12.2 billion, while still reserving enough money for disputed claims. A 26% payout by the brokerage would dwarf Lehman parent's first distribution of 2 cents on the dollar to 6 cents excluding subordinated claims, the hedge fund said. The trustee had said in December that he planned to start paying the Lehman brokerage's remaining customers soon from available assets of $18.3 billion. He did not say how much money customers can expect only that his goal was to make "a significant" payment, Bloomberg News reported. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. LEHMAN BROTHERS: Sues to Reduce JPM, et al., Derivative Claims -------------------------------------------------------------- Lehman Brothers Holdings Inc. filed a lawsuit seeking to reduce or disallow derivatives claims by JPMorgan Chase Bank N.A. and seven other claimants. In a 22-page complaint, Lehman said the claims are "overstated" and that they were calculated based on "improper methodologies." "The JPMorgan entities' derivatives claims should be reduced or disallowed," the company said in the complaint filed on September 14 with the U.S. Bankruptcy Court in Manhattan. JPMorgan asserts a $2.2 million claim, which stemmed from a derivatives deal with Lehman's special financing unit. The lawsuit seeks unspecified damages and money owed to Lehman by JPMorgan under the derivatives deal. The case is Lehman Brothers Holdings Inc. v. JPMorgan Chase Bank NA, 12-01874, U.S. Bankruptcy Court, Southern District of New York (Manhattan). About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. LIFECARE HOLDINGS: Gets Waivers from Senior Lenders, Noteholders ---------------------------------------------------------------- LifeCare Holdings, Inc., has obtained loan waivers from its Senior Secured Lenders and more than a majority of its Senior Subordinated Noteholders. The waivers, which expire on Nov. 1, 2012, provide the Company additional time to continue discussions with its creditors, potential buyers and other interested parties as it pursues longer--term solutions for its debt structure. The Senior Secured Lenders waived cross-defaults arising from the failure to make the interest payment due Aug. 15, 2012, on its Senior Subordinated Notes. The Company also obtained a waiver from holders of more than 70 percent of its Senior Subordinated Notes due 2013 related to the failure to make the above-referenced interest payment. The terms of the waivers include additional reporting requirements to the lenders and their advisors and certain restrictions on non-ordinary course payments, among other terms. "We appreciate this action from our creditors as we continue discussions regarding our capital structure and the Company's strategic alternatives," said LifeCare Holdings Chairman and Chief Executive Officer Phillip B. Douglas. "We continue to evaluate various strategic options to restructure our debt and position the Company for future growth." No assurances can be given that a satisfactory resolution can be reached before the termination of the waivers. About LifeCare Holdings Plano, Tex.-based LifeCare Holdings, Inc. -- http://www.lifecare-hospitals.com/-- operates 19 hospitals located in nine states, consisting of eight "hospital within a hospital" facilities (27% of beds) and 11 freestanding facilities (73% of beds). Through these 19 long-term acute care hospitals, the Company operates a total of 1,057 licensed beds and employ approximately 3,200 people, the majority of whom are registered or licensed nurses and respiratory therapists. Additionally, the Company holds a 50% investment in a joint venture for a 51-bed LTAC hospital located in Muskegon, Michigan. The Company reported a net loss of $34.83 million in 2011, compared with net income of $2.63 million on $358.25 million in 2010. The Company's balance sheet at June 30, 2012, showed $510.03 million in total assets, $566.26 million in total liabilities, and a $56.22 million total stockholders' deficit. Bankruptcy Warning "We are continuing to work with our financial advisor and lenders under our senior secured credit facility and senior subordinated notes to develop a comprehensive strategy that will allow us to refinance or restructure our existing capital structure prior to the acceleration of any indebtedness," the Company said in its quarterly report for the period ended June 30, 2012. "There can be no assurance, however, that any of these efforts will prove successful or be on economically reasonable terms. In the event of a failure to obtain necessary waivers or forbearance agreements or otherwise achieve a restructuring of our financial obligations, we may be forced to seek reorganization under Chapter 11 of the United States Bankruptcy Code." * * * In November 2010, Standard & Poor's Ratings lowered its corporate credit rating on LifeCare Holdings to 'CCC-' from 'CCC+'. "The downgrade reflects the imminent difficulty the company may have in meeting its bank covenant requirements and the risk of it successfully refinancing significant debt maturing in 2011 and 2012," said Standard & Poor's credit analyst David Peknay. The likelihood of a debt covenant violation is heightened by the company's lack of appreciable operating improvement coupled with a large upcoming tightening of is debt covenant in the first quarter of 2011. Additional equity by the company's financial sponsor may be necessary to avoid a covenant violation. Accordingly, S&P believes the chances of bankruptcy have increased. As reported by the TCR on Aug. 23, 2012, Standard & Poor's Ratings Services lowered its corporate credit rating on Plano Texas-based LifeCare Holdings Inc to 'D' from 'CCC-', following the missed interest payment on the company's $119.3 million senior subordinated notes. In the June 6, 2012, edition of the TCR, Moody's downgraded LifeCare Holdings, Inc.'s corporate family rating to Caa3 and probability of default rating to Ca. The downgrade of the corporate family rating to Caa3 reflects heightened refinancing risk, an untenable capital structure, and interest burden that is not covered by cash flows generated from the company's ongoing operations. Moody's believes LifeCare will need to address its entire capital structure in the next twelve months which is reflected in the Ca probability of default rating. LIGHTSQUARED INC: House Panel Probes FCC Approval ------------------------------------------------- Joseph Checkler, writing for Dow Jones' Daily Bankruptcy Review, reports that the U.S. House Subcommittee on Oversight and Investigations on Friday looked into whether the Federal Communications Commission followed its own rules when it gave Phil Falcone's LightSquared Inc. approval for a wireless network in early 2011, a decision that has since been put on hold over global-positioning systems concerns. According to the report, the panel questioned an FCC bureau chief about whether the commission "rushed through" a process that led to an initial approval for LightSquared to use wireless spectrum. That decision is now in limbo because of concerns over whether the network interferes with global positioning systems. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, as the Company seeks to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties, prompting the bankruptcy filing. As of the Petition Date, the Debtors employed roughly 168 people in the United States and Canada. As of Feb. 29, 2012, the Debtors had $4.48 billion in assets (book value) and $2.29 billion in liabilities. LightSquared also sought ancillary relief in Canada on behalf of all of the Debtors, pursuant to the Companies' Creditors Arrangement Act (Canada) R.S.C. 1985, c. C-36 as amended, in the Ontario Superior Court of Justice (Commercial List) in Toronto, Ontario, Canada. The purpose of the ancillary proceedings is to request the Canadian Court to recognize the Chapter 11 cases as a "foreign main proceeding" under the applicable provisions of the CCAA to, among other things, protect the Debtors' assets and operations in Canada. The Debtors named affiliate LightSquared LP to act as the "foreign representative" on behalf of the Debtors' estates. Judge Shelley C. Chapman presides over the Chapter 11 case. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Kurtzman Carson Consultants LLC serves as claims and notice agent. Counsel to UBS AG as agent under the October 2010 facility is Melissa S. Alwang, Esq., at Latham & Watkins LLP. The ad hoc secured group of lenders under the Debtors' October 2010 facility was formed in April 2012 to negotiate an out-of- court restructuring. The members are Appaloosa Management L.P.; Capital Research and Management Company; Fortress Investment Group; Knighthead Capital Management LLC; and Redwood Capital Management. Counsel to the ad hoc secured group is Thomas E. Lauria, Esq., at White & Case LLP. Philip Falcone's Harbinger Capital Partners indirectly owns 96% of LightSquared's outstanding common stock. Harbinger and certain of its managed and affiliated funds and wholly owned subsidiaries, including HGW US Holding Company, L.P., Blue Line DZM Corp., and Harbinger Capital Partners SP, Inc., are represented in the case by Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP. The Office of the U.S. Trustee has not appointed a statutory committee of unsecured creditors. LINC USA: S&P Assigns 'B-' Corporate Credit Rating; Outlook Neg. ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to Houston, Texas-based Linc USA GP. The outlook is negative. "At the same time, we assigned a 'B-' issue rating to Linc's proposed $265 million senior secured notes due 2017. We assigned a '4' recovery rating to the notes, indicating our expectation of average (30% to 50%) recovery in the event of a payment default. Our expectation is that Linc USA GP will focus on their upstream operations, and will not upstream earnings to its parent company," S&P said. "The ratings on Linc reflect its very small reserve and production base, high concentration of current production in the Gulf Coast, aggressive capital spending plan that could significantly weaken its liquidity, and limited reserve replacement history," said Standard & Poor's credit analyst Stephen Scovotti. "The ratings also reflect the volatility and capital intensive nature of the oil and gas industry. These weaknesses are only partially buffered by an oil-weighted reserve profile and a decent reserve life as compared to other Gulf Coast E&P companies." "The company's vulnerable business risk profile reflects its very small reserve base of 13.5 million barrels of oil equivalent (MMBoe), which positions it as one of the smallest E&P companies in its rating category. Of this reserve base, 65% is proved developed. The cost structure of the company is relatively high, with production costs (lease operating expenses and general administrative costs) of over $43/bbl in full-year 2012 (ended June 30, 2012). However, we expect production costs to decline to approximately $28/bbl in full-year 2013 (ended June 30, 2013) as the company increases production. Despite these weaknesses, the company has a decent reserve life of 12 years on a total proved basis, based on current production. In addition, favorably priced crude oil accounted for 97% of reserves and the vast majority of recent production," S&P said. "The company has limited operating diversity, with the vast majority (94%) of the company's proved reserves located in the Gulf Coast, with the remaining proved reserves located in Wyoming (Powder River Basin). The Powder River Basin assets account for only about 5% of production and will require significant capital expenditures to further develop and increase production. Approximately one-third of recent production is concentrated in the Barbers Hill Field of the Gulf Coast. We expect that Linc will continue to focus on production from this same area in the near future," S&P said. "The negative outlook reflects our view of the company's relatively aggressive capital spending plans given Linc's very small production base. We would consider a negative rating action if the company fails to meet its production targets in the Gulf Coast (and thus negatively affecting FFO) or if capital spending is higher than anticipated, causing the company's liquidity (combination of cash and revolving credit facility availability) to fall below $25 million," S&P said. "A revision of the outlook to stable would require the company to develop a more consistent track record in production and reserve growth, while maintaining adequate liquidity," S&P said. LINC USA: Moody's Assigns Caa2 CFR & Rates Sr. Sec. Notes Caa3 -------------------------------------------------------------- Moody's Investors Service assigned first time ratings to Linc USA GP (Linc), including a Caa2 Corporate Family Rating (CFR) and a Caa3 rating to the proposed $265 million senior secured notes. Moody's also assigned an SGL-3 Speculative Grade Liquidity Rating reflecting adequate liquidity. The rating outlook is stable. Linc USA GP is an exploration and production company focused in the US and is a wholly-owned subsidiary of Linc Energy Ltd. (Parent) - a publicly traded energy company based in Brisbane, Australia with a market capitalization of roughly $400 million. Net proceeds from the secured note issue will be used to repay outstanding balances under Linc's existing credit facility, to repay the majority of the Parent's credit facility debt, and for general corporate purposes. The notes will not have a downstream guarantee from the Parent and will be secured solely by the oil and natural gas assets in the US. Assignments: Issuer: Linc USA GP Corporate Family Rating, Assigned Caa2 Probability of Default Rating, Assigned Caa2 Speculative Grade Liquidity Rating, Assigned SGL-3 Senior Unsecured Regular Bond/Debenture, Assigned Caa3 (LGD4, 62%) RATINGS RATIONALE Linc's Caa2 CFR reflects its small production and proved reserve base, limited drilling and development track record in its current corporate form, high leverage following the secured note issue, and limited financial flexibility. The rating also considers the company's cash flow concentration in one principal geographic area, focus on complex salt dome structures for primary growth, highly prospective nature of the Alaska North Slope and Wyoming Powder River Basin (PRB) assets, and the significant execution risk over the next few years as the company aggressively tries to grow production. The rating is favorably impacted by the high oil content of its reserves (97%) that generates strong revenues and high returns, low geological risks of its Gulf Coast properties that have long production history and provide manageable growth prospects through 2014, and high operated working interest that support better control of the pace, timing and costs of development. Linc's leverage in terms of debt to average net daily production (~$85,000 per boe/d) and debt to proved developed (PD) reserves (~$30.00 per boe) are among the highest within Moody's rated E&P universe. While the company has been able to grow production rapidly (by ~76% on a net basis) since acquiring the Gulf Coast assets in October 2011 demonstrating its technical capability to identify and drill into structural traps in subsurface salt formations, whether the company can repeat this performance consistently at a greater scale given its limited financial resources and operating history, remains to be seen. The company has an ambitious production target and plans to exceed 5,500 boe/d (net) by the end of fiscal 2013 (fiscal year ends at June 30) as it tries to establish critical mass. Linc should have adequate liquidity through the end of calendar 2013, which is captured in the SGL-3 rating. However, liquidity will start to tighten in the first half of calendar 2014 as expenditures continue to exceed cash flows and balance sheet cash is depleted. Therefore, the company may have to draw under its planned new revolving credit facility in the first half of calendar 2014. Any meaningful capital expenditures towards the PRB properties would also necessitate revolver borrowings. The notes indenture permits additional credit facility debt (including letters of credit) not to exceed the greater of $85 million or 15% of adjusted consolidated net tangible assets. Moody's has reviewed only a preliminary term sheet for the proposed credit facility and the company is still negotiating covenant levels with its banks. Moody's assigned SGL rating assume that the company will have adequate covenant cushion though calendar 2013 and are contingent on review of final documentation. The $265 million secured notes are rated Caa3, one notch below the Caa2 CFR, given their subordinated position to the first-lien secured revolving credit facility. Moody's expects the revolver borrowing base to grow with new reserve additions in the coming quarters. Hence, Moody's overrode its Loss Given Default (LGD) Methodology generated note rating because of the high likelihood of increased priority ranking revolver debt in the capital structure. For the ratings, Moody's also assumed that the Alaska asset will be pledged to secure the new credit facility and the notes. The Caa3 rating on the secured notes reflects both the overall probability of default of Linc, to which Moody's assigns a PDR of Caa2, and a loss given default of LGD4 (62%) under Moody's Loss Given Default Methodology. The stable outlook reflects Moody's view that Linc will maintain sufficient liquidity and hold production at or above (Sept. 20, 2012) Thursday's 3,100 boe/d level. High leverage is the biggest impediment to an upgrade. A clear deleveraging trend through organic reserve and production growth coupled with sufficient 12 month forward liquidity would lend positive rating momentum. An upgrade is possible if Linc can sustain a production level of at least 5,000 boe/d while maintaining its debt to average daily production ratio under $50,000 per boe/d. Tight liquidity would be the likely catalyst for a downgrade, If total liquidity (cash plus revolver availability) falls below $20 million, the rating could be downgraded. The principal methodology used in rating Linc 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. Linc USA GP is a Houston, Texas based private oil and gas exploration and production (E&P) company with primary producing assets in the onshore Gulf Coast region of Texas and Louisiana. LINWOOD FURNITURE: Reports Losses for August 2012 ------------------------------------------------- Richard Craver at Winston-Salem Journal reported that Linwood Furniture LLC disclosed in a bankruptcy filing on Sept. 10, 2012, that it lost $58,671 in August based on revenue of $344,481 and expenses of $403,152. The Company's Chapter 11 case has been converted to Chapter 7. A federal bankruptcy judge appointed Edwin Allman III as trustee. Winston-Salem Journal noted that bankruptcy administrator Michael West requested the Chapter 7 conversion, saying Linwood "is not in a position to continue operations and is not conducting any ongoing business. The conversion of this case is in the best interests of creditors and the estate." Winston-Salem Journal noted that Linwood's top secured creditor, D&S Legacy Vision LLC, was set to appear at a Sept. 19 hearing to seek foreclosure and the sale of assets. Based in Linwood, North Carolina, Linwood Furniture LLC was a maker of furniture for Bob Timberlake collections and others. The Company filed for Chapter 11 protection (Bankr. M.D.N.C. Case No. 12-50319) on March 5, 2012. Judge Catharine R. Aron presides over the case. John Paul H. Cournoyer, Esq., and John A. Northen, Esq., at Northen Blue LLP, represent the Debtor. The Debtor disclosed assets of $3,655,896, and liabilities of $6,894,292. LON MORRIS COLLEGE: Seeks to Probe Charitable Foundations --------------------------------------------------------- Rachel Feintzeig at Dow Jones' DBR Small Cap reports that Lon Morris College wants to launch an investigation into five charitable foundations that it says hold millions of dollars in which the college may have a stake. About Lon Morris College Lon Morris College was founded in 1854 as a not-for-profit religiously affiliated two-year degree granting institution. Over the past 158 years, the College has impacted the lives of countless members of the local Jacksonville community in Texas. Lon Morris College filed a Chapter 11 petition (Bankr. E.D. Tex. Case No. 12-60557) in Tyler, on July 2, 2012, after lacking enough endowments to pay teachers, vendors and creditors. In May 2012, the Debtor missed two payrolls and vendor payables, utilities, and long term debt were also past due. From a headcount of 1,070 in 2010, enrolments have been down to 547 in 2012. The president of the College has resigned, as have members of the board of trustees. Judge Bill Parker oversees the case. Bridgepoint Consulting LLC's Dawn Ragan took over management of the College as chief restructuring officer. Attorneys at McKool Smith P.C., and Webb and Associates serve as counsel to the Debtor. Capstone Partners serves as financial advisor. According to its books, on April 30, 2012, the College had roughly $35 million in assets, including $11 million in endowments and restricted funds, and $18 million in funded debt and $2 million in trade and other liabilities. The Debtor disclosed $29,957,488 in assets and $15,999,058 in liabilities as of the Chapter 11 filing. Amegy Bank is represented in the case by James Matthew Vaughn, Esq., at Porter Hedges LLP. LSP ENERGY: South Mississippi Electric Given Nod to Buy Plant ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that South Mississippi Electric Power Association soon will be the owner of a 837-megawatt combined-cycle natural gas- fired electric generating facility in Batesville, Mississippi. According to the report, the U.S. Bankruptcy Judge in Delaware presiding over the bankruptcy of LSP Energy LP approved the $285.9 million sale on Sept. 20. The buyer already was purchasing power from the plant. South Mississippi Electric already owns seven plants capable of producing 2,422 megawatts. The bankruptcy judge also extended LSP's exclusive right to propose a Chapter 11 plan until Oct. 22. About LSP Energy LSP Energy Limited Partnership, LSP Energy, Inc., LSP Batesville Holding, LLC, and LSP Batesville Funding Corporation filed separate Chapter 11 bankruptcy petitions (Bankr. D. Del. Lead Case No. 12-10460) on Feb. 10, 2012. LSP owns and operates an electric generation facility located in Batesville, Mississippi. The Facility consists of three gas-fired combined cycle electric generators with a total generating capacity of roughly 837 megawatts and is electrically interconnected into the Entergy and Tennessee Valley Authority transmission systems. LSP's principal assets are the Facility and the 58-acre parcel of real property on which it is located, as well as its rights under a tolling agreements. LSP filed bankruptcy to complete an orderly sale of its assets or the ownership interests of LSP Holding in LSP, LSP Energy and LSP Funding for the benefit of all stakeholders. The remaining three Debtors filed bankruptcy due to their relationship as affiliates of LSP and their ultimate obligations on a significant portion of LSP's secured bond debt. The Debtors also suffered losses due to a mechanical failure of a combustion turbine at their facility and resultant business interruption. LSP Energy is the general partner of LSP. LSP Holding is the limited partner of LSP and the 100% equity holder of LSP Energy and LSP Funding. LSP Funding is a co-obligor on the Debtors' bond debt, and each of LSP Energy and LSP Holding has pledged their equity interests in LSP and LSP Funding as collateral for the bond debt. No statutorily authorized creditors' committee has yet been appointed in the Debtors' cases by the United States Trustee. Judge Mary F. Walrath oversees the case. Lawyers at Whiteford Taylor & Preston LLC serve as the Debtors' counsel. MAMMOTH LAKES: Won't Proceed With Chapter 9 Bankruptcy Case ----------------------------------------------------------- Stephanie Gleason at Dow Jones' Daily Bankruptcy Review reports that the Town of Mammoth Lakes, Calif., said Thursday that it's not going to ask the court to rule on the eligibility of its Chapter 9 bankruptcy filing, which will eventually result in the dismissal of the town's case. About Mammoth Lakes The town of Mammoth Lakes, a small California resort community near Yosemite National Park, filed a Chapter 9 bankruptcy petition (Bankr. E.D. Calif. Case No. 12-32463) on July 3, 2012, estimating $100 million to $500 million in assets and $50 million to $100 million in debts. Bankruptcy Judge Thomas C. Holman oversees the case. Lawyers at Fulbright & Jaworski LLP and Klee, Tuchin, Bogdanoff & Stern, LLP, serve as the Debtor's counsel. The petition was signed by Dave Wilbrecht, town manager. According to the report, the bankruptcy judge in Sacramento, California, will hold a status conference on Aug. 29 regarding eligibility for Chapter 9. MEDCATH CORPORATION: Files Certificate of Dissolution ----------------------------------------------------- MedCath Corporation discloses that it has filed a certificate of dissolution with the Delaware Secretary of State. The filing was made pursuant to the plan of dissolution the Company's stockholders approved at a special meeting held Sept. 22, 2011. The Filing became effective as of 5.00 p.m., Eastern Time, Sept. 21, 2012. Upon the effectiveness of the Filing, the Company closed its stock transfer books and discontinued recording transfers of its common stock, except for transfers by will, intestate succession or operation of law. From and after the effectiveness of the Filing, the Company's stockholders shall have only such rights and obligations as are provided under the Delaware General Corporation Law for stockholders of a dissolved corporation. The Company's Common Stock is listed on the NASDAQ Global Select Market operated by The NASDAQ Stock Market LLC ("NASDAQ"). The Company has notified NASDAQ that the Company has made the Filing, and NASDAQ has advised the Company that NASDAQ will suspend trading of the Common Stock effective prior to market open on Monday, Sept. 24, 2012. NASDAQ has also advised the Company that it will file with the Securities and Exchange Commission (the "SEC") a Notice of Removal from Listing and/or Registration on Form 25 to delist the Common Stock from NASDAQ. The Company has filed a Current Report on Form 8-K with the SEC regarding the effect of the Filing upon the rights of the Company's stockholders, the suspension of trading and delisting of the Common Stock by NASDAQ and related matters, including the Company's intent to terminate the periodic reporting requirements the Company is currently subject to under the Securities Exchange Act of 1934, as amended. If the Company terminates its obligation to and ceases filing periodic and current reports with the SEC, the Company intends to post periodically on the Company's website a statement of net assets and a statement of changes in net assets and to post from time to time information about any material developments with respect to any significant transactions for disposing of the Company's remaining assets, any significant developments in claims, litigation, investigations and any other future events occurring that could materially impact the timing or amount of liquidating distributions, if any, to be made to the Company's stockholders of record as of the effectiveness of the Filing. About MedCath MedCath Corporation, headquartered in Charlotte, N.C., was a health care provider focused on high acuity services with the diagnosis and treatment of cardiovascular disease being a primary service offering. Having now divested all of its hospitals, MedCath is focused on fulfilling transition service obligations to the purchaser of one of its previously owned hospitals, realizing the value of its remaining immaterial assets; making tax and regulatory filings; winding down its business affairs, managing its known and unknown contingencies, and seeking to make distributions to its stockholders as part of its Plan of Dissolution. MEDIA GENERAL: Wyndham Robertson Rejoins as Director ---------------------------------------------------- Media General, Inc.'s Board of Directors has elected Wyndham Robertson as a new Class B director, effective immediately, returning to a position she held on Media General's board from 1996 to 2005. Miss Robertson served on the Audit Committee during her prior tenure on the Media General board. She was recommended for reelection to the board by Berkshire Hathaway. "Media General is delighted to welcome Wyndham back to the Board of Directors," said J. Stewart Bryan, chairman of the board. "Wyndham had a long and successful career as an executive in the media and communications businesses, including 25 years with Fortune magazine. She will provide valuable perspective as Media General moves ahead as a pure-play television broadcaster, with a significant commitment to increasing its presence on digital and mobile platforms," said Mr. Bryan. Miss Robertson has served as a director of three other public companies: Capital Cities/ABC, Inc., The Equitable Companies Inc. and Wachovia Corporation. From 1986-1995 she was vice president for communications at the University of North Carolina. Prior to that, she spent 25 years at Fortune Magazine, specializing in investment, financial and technology topics. She graduated from Hollins University and served on its Board of Trustees for more than 30 years, including a term as chair. The Wyndham Robertson Library at Hollins is named in her honor. Miss Robertson currently serves on a number of non-profit boards, including as a member of the investment committee for Hollins. She is a director of the Blanche and Julian Robertson Family Foundation and a trustee of The Robertson Foundation. About Media General Richmond, Virginia-based Media General Inc. (NYSE: MEG) -- http://www.mediageneral.com/-- is an independent communications company with interests in newspapers, television stations and interactive media in the United States. The Company reported a net loss of $74.32 million for the fiscal year ended Dec. 25, 2011, a net loss of $22.64 million for the fiscal year ended Dec. 26, 2010, and a net loss of $35.76 million for the fiscal year ended Dec. 27, 2009. The Company's balance sheet at June 24, 2012, showed $923.41 million in total assets, $1.05 billion in total liabilities and a $129.26 million total stockholders' deficit. * * * As reported by the Troubled Company Reporter on April 12, 2012, Moody's Investors Service downgraded, among other things, Media General's Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to Caa1 from B3, concluding the review for downgrade initiated on Feb. 13, 2012. The downgrade reflects the significant increase in interest expense associated with the company's credit facility amend and extend transaction and an assumed issuance of at least $225 million of new notes, which will result in limited free cash flow generation and constrain Media General's capacity to reduce its very high leverage. The weak free cash flow and high leverage create vulnerability to changes in the company's highly cyclical revenue and EBITDA generation. According to the May 23, 2012, edition of the TCR, Standard & Poor's Ratings Services placed its 'CCC+' corporate credit rating on Media General, along with its 'CCC+' issue-level rating on the company's senior secured notes, on CreditWatch with positive implications. "The CreditWatch placement is based on Media General's agreement to sell the majority of its newspaper assets to BH Media Group, a subsidiary of Berkshire Hathaway Inc. The CreditWatch also reflects the announcement that the company will refinance its existing bank debt due in March 2013. It expects to close the refinancing transaction next week and the newspaper sale by June 25, 2012," S&P said. MEDICURE INC: Swings to C$23.4 Million Net Income in Fiscal 2012 ---------------------------------------------------------------- Medicure Inc. filed with the U.S. Securities and Exchange Commission its annual report on Form 20-F disclosing net income of C$23.38 million on C$4.79 million of net product sales for the year ended May 31, 2012, in comparison with a net loss of C$1.63 million on C$3.62 million of net product sales during the prior fiscal year. The Company's balance sheet at May 31, 2012, showed C$4.74 million in total assets, C$6.56 million in total liabilities and a C$1.82 million total deficiency. KPMG LLP, in Winnipeg, Canada, issued a "going concern" qualification on the consolidated financial statements for the fiscal year ended May 31, 2012. The independent auditors noted that the Company has experienced operating losses and has accumulated a deficit of $123,303,052 that raises substantial doubt about its ability to continue as a going concern. A copy of the Form 20-F is available for free at: http://is.gd/82PvAr About Medicure Inc. Based in Winnipeg, Manitoba, Canada, Medicure Inc. (TSX/NEX: MPH.H) -- http://www.medicure.com/-- is a biopharmaceutical company engaged in the research, development and commercialization of human therapeutics. The Company has rights to the commercial product, AGGRASTAT(R) Injection (tirofiban hydrochloride) in the United States and its territories (Puerto Rico, U.S. Virgin Islands, and Guam). AGGRASTAT(R), a glycoprotein GP IIb/IIIa receptor antagonist, is used for the treatment of acute coronary syndrome (ACS) including unstable angina, which is characterized by chest pain when one is at rest, and non-Q-wave myocardial infarction. MICHAELS STORES: Moody's Affirms B2 CFR & Rates $200MM Notes B3 --------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Michaels Stores, Inc. proposed $200 million in aggregate principal amount of its 7.75% notes due 2018. All other ratings, including the B2 Corporate Family Rating, were affirmed. The rating outlook remains positive. Proceeds from the offering will be used to repay a portion of the company's $501 million B-1 term loans that are currently due on October 31, 2013 and to pay related fees and expenses. The following ratings were affirmed and LGD assessments amended: Corporate Family Rating at B2 Probability of Default Rating at B2 $1,996 million senior secured term loan due 2013/2016 at B1 (LGD 3, 32% from LGD 3, 37%) $800 million senior unsecured notes due 2018 at Caa1 (LGD 5, 77% from LGD 5, 78%) $393 million senior subordinated notes due 2016 at Caa1 (LGD 6, 91% from LGD 6, 93%) $180 million subordinated discount notes due 2016 at Caa1 (LGD 6, 95% from LGD 6, 96%) The following rating was assigned: $200 million additional senior unsecured notes due 2018 at B3 (LGD 5, 73%) RATINGS RATIONALE The B3 rating assigned to the proposed $200 million of additional unsecured notes reflects their junior ranking relative to the meaningful amount of secured debt in the company's capital structure. Moody's expects that if the transaction closes on the proposed terms, Moody's would likely upgrade the company's existing $800 million of unsecured notes due 2018 to B3 from Caa1. The positive rating momentum for the unsecured notes reflects that their recovery prospects would improve following the repayment of a meaningful amount of secured debt upon conclusion of the proposed transaction. Michaels' B2 Corporate Family Rating reflects the company's improving but very sizeable debt burden, with debt/EBITDA of 6.0 times as of July 28, 2012. It also recognizes Michaels' leadership position in the highly fragmented arts and crafts segment, its high operating margins and its good liquidity profile. The rating considers that Moody's believes operational initiatives, such as its direct sourcing initiatives and increasing private label brand penetration, will enable the company to sustain consistently high operating margins. The rating also takes into consideration the company's participation in some segments that have greater sensitivity to economic conditions, such as its custom framing business. The positive rating outlook reflects expectations that the ratings could be upgraded if the company is able to sustain positive trends in sales and maintain its high operating margins while utilizing cash flow to repay debt. Quantitatively, ratings could be upgraded if debt/EBITDA reached 5.25 times and EBITA/interest expense was sustained above 2.0 times. In view of the positive rating outlook, ratings are unlikely to be downgraded in the near term. If the company was unable to make further progress toward deleveraging over the next 12 to 18 months, or its financial policies became more aggressive (utilizing its cash balance to fund a distribution to shareholders, for example), the rating outlook could be revised to stable. Ratings could be lowered if the company were to see reversal of recent positive trends in sales. Quantitatively, ratings could be lowered if debt/EBITDA were to approach 6.5 times. The principal methodology used in rating Michaels Stores, Inc was the Global Retail Industry Methodology published in June 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. Michaels Stores, Inc. is the largest dedicated arts and crafts specialty retailer in North America. The company operated 1,074 Michaels stores in 49 states and Canada and 128 Aaron Brothers stores as of July 28, 2012. The company primarily sells general and children's crafts, home d�cor and seasonal items, framing and scrapbooking products. Total sales are in excess of $4 billion. MITEL NETWORKS: Moody's Rates $330-Mil. Credit Facilities 'B1' -------------------------------------------------------------- Moody's Investors Service rated Mitel Networks Corporation's (Mitel's) new $330 million credit facilities B1. The company's corporate family rating (CFR) was affirmed at B3, its speculative grade liquidity rating (SGL) was upgraded to SGL-2 from SGL-4 and its probability of default rating (PDR) was revised to Caa1 from B3. Ratings for the company's existing first and second lien credit facilities, which were affirmed, will be withdrawn in due course subsequent to the new credit facilities closing. The outlook remains stable. Together with cash on Mitel's balance sheet, proceeds from the new credit facilities will be used to refinance credit facilities that mature in 2014 (first lien) and 2015 (second lien). While the proposed transaction will modestly decrease debt, eliminate near- term refinance risks and restore third party liquidity, all of which are credit-positive, Moody's views the transaction as credit-neutral as leverage and coverage remain substantial unchanged and, accordingly, the transaction does not affect Mitel's B3 CFR. With third party liquidity restored, the company's SGL was upgraded to SGL-2 (good) from SGL-4 (weak). The new credit facilities benefit from a comprehensive security package that causes their rating to be notched-up from the B3 CFR. However, since the refinance transaction increases the proportion of liabilities that have a first-ranking security position while eliminating the loss absorption capacity provided by company's second lien loan, the benefit of the security package is limited to two notches, to B1. In cases in which all of a company's debts are provided by a single class of bank lenders, Moody's generally assumes an outsized company-wide average recovery rate of 65% along with an elevated probability of default that is one notch below the CFR. Use of this standard practice caused Mitel's PDR to be downgraded to Caa1 from B3. The following summarizes Mitel's ratings and the rating actions: Issuer: Mitel Networks Corporation Assignments: Senior Secured First Lien Bank Credit Facility, Rated B1 (LGD2, 23%) Other rating and outlook actions: Corporate Family Rating, Affirmed at B3 Probability of Default Rating, Downgraded to Caa1 Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-4 Outlook, Unchanged at Stable Senior Secured First Lien Bank Credit Facility, Unchanged at B1 (LGD2, 24%) and to be withdrawn in due course Senior Secured Second Lien Bank Credit Facility, Unchanged at (LGD4, 61%); to be withdrawn in due course RATINGS RATIONALE Mitel's B3 CFR is driven primarily by the company's potential vulnerability given that it competes with larger and, in many cases, better capitalized companies and Mitel's margin performance does not suggest that its product offering is sufficiently compelling to overcome the potential handicaps of relatively small scale. As well, neither the company nor its competitors report activity measures that can be used to interpret supply/demand balance or market positioning; the opacity is credit-negative. This is somewhat compounded as recent performance is difficult to interpret given discontinuities in financial statements resulting from restructuring initiatives. It is not certain whether these are truly complete or that they will have a sustainably positive impact. That being said, Mitel's core market, i.e. Internet protocol telephony-related communications for small to mid-sized companies, is sizeable and demand is sustainable. As well, operations are not capital intensive and even modest margin performance results in positive free cash flow that can be used to gradually reduce debt. Decisions to do so will be a key to future ratings migration. Rating Outlook Despite recently variable quarterly results and general macroeconomic uncertainty that may cause near-term results to also vary, with re-finance matters settled and since Moody's thinks that the company will generally be cash flow positive, the outlook is stable. What Could Change the Rating -- Up Given solid liquidity arrangements (which are a pre-requisite to positive ratings actions) and should Debt/EBITDA be expected to be sustained below 4.5x with free cash flow (FCF) being sustained above 5% of Debt, consideration for positive outlook and ratings actions would occur (all measures are inclusive of Moody's standard adjustments). What Could Change the Rating -- Down The ratings may be subject to downwards migration should free cash flow generation return to break-even or negative, or should adverse liquidity developments occur. The principal methodology used in rating Mitel Networks Corporation was the Global Communications Equipment Industry 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. MORRIER RANCH: Restructures Bank Claims, Wants Case Dismissal ------------------------------------------------------------- Morrier Ranch, Inc., asks the U.S. Bankruptcy Court for the Eastern District of Washington to dismiss its Chapter 11 cases. The Debtor relates that it has reached an agreement with the holder of the Key Bank claim regarding restructure of the claim and has reached a tentative agreement with Banner Bank restructuring the balance of their claim. The Debtor believes that all other claims listed in the schedules or filed with the Court are held by insiders or can and will be paid in the ordinary course of business after the dismissal of the case. About Morrier Ranch Yakima, Washington-based Morrier Ranch, Inc., aka Morrier Hop Storage, filed for Chapter 11 bankruptcy (Bankr. E.D. Wash. Case No. 12-00179) on Jan. 17, 2012. Judge Patricia C. Williams presides over the case, taking the assignment from Judge Frank L. Kurtz. James P. Hurley, Esq., at Hurley & Lara, serves as the Debtor's counsel. In its schedules, the Debtor disclosed $19.7 million in total assets and $6.02 million in total liabilities. Robert D. Miller Jr., U.S. Trustee for Region 18, has informed the U.S. Bankruptcy Court for the Eastern District of Washington that he is not appointing an unsecured creditors' committee in this case at the present time, due to lack of response to the request for notice of willingness to serve on the unsecured creditors' committee. MUSCLEPHARM CORP: Ehrhardt Keefe Replaces Berman as Accountant -------------------------------------------------------------- The audit committee of the board of directors of MusclePharm Corporation approved the engagement of Ehrhardt Keefe Steiner & Hottman PC, Certified Public Accountants, Denver, Colorado, as the Company's new independent registered public accounting firm. The Board dismissed Berman & Co., P.A., as the Company's independent registered public accounting firm on Sept. 18, 2012. Berman's report on the financial statements for the fiscal years ended Dec. 31, 2011, and 2010, contained no adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principle, except that the report contained a modification to the effect that there was substantial doubt as to the Company's ability to continue as a going concern. During the fiscal year ended Dec. 31, 2011, and the subsequent interim period prior to the engagement of Ehrhardt, the Company has not consulted Ehrhardt regarding the application of accounting principles to any specified transaction or the type of audit opinion that might be rendered on the Company's financial statements. About MusclePharm Headquartered in Denver, Colorado, MusclePharm Corporation (OTC BB: MSLP) -- http://www.muslepharm.com/-- is a healthy life- style company that develops and manufactures a full line of National Science Foundation approved nutritional supplements that are 100% free of banned substances. MusclePharm is sold in over 120 countries and available in over 5,000 U.S. retail outlets, including GNC and Vitamin Shoppe. MusclePharm products are also sold in over 100 online stores, including bodybuilding.com, Amazon.com and Vitacost.com. In the auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Berman & Company, P.A., in Boca Raton, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has a net loss of $23,280,950 and net cash used in operations of $5,801,761 for the year ended Dec. 31, 2011; and has a working capital deficit of $13,693,267, and a stockholders' deficit of $12,971,212 at Dec. 31, 2011. The Company reported a net loss of $23.28 million in 2011, compared with a net loss of $19.56 million in 2010. The Company's balance sheet at June 30, 2012, showed $4.72 million in total assets, $15.73 million in total liabilities, and a $11.01 million in total stockholders' deficit. NATIVE WHOLESALE: Hearing on Case Dismissal Set for Sept. 26 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of New York will convene a hearing on Sept. 26, 2012, at 10 a.m., to consider Native Wholesale Supply Company's motion to dismiss its Chapter 11 case. On Aug. 31, the Debtor requested for the dismissal of its case. The Debtor explained that its filing was triggered by a dispute with the U.S. Department of Agriculture regarding the $43,131,307 in assessments made by the USDA against the Debtor pursuant to the fair and equitable Tobacco Reform Act of 2004 and Tobacco Transition Payment Program. Recently, the Debtor and the U.S. have been negotiating the terms by which the U.S. would accept repayment of the USDA Claim outside of Chapter 11. The Debtor believes the settlement agreement with the U.S. and all attendant documents in connection therewith will finalized by the date scheduled for the hearing on the dismissal motion. In fact, the terms of the settlement will require dismissal of the case. The settlement provides for, among other things the $24,592,693 of the $43,131,307 total USDA prepetition claim will have priority under 507(a)(8)(E) and will be repaid as required under Section 1129(a)(9) of the Code within five years, or by Nov. 21, 2016. Specifically, the repayment plan would require that the Debtor make an initial down payment of $1,000,000 and monthly payments in the amount of $500,000 on the USDA Claim commencing Oct. 1, 2012 until the USDA Claim is paid in full. 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. NATIVE WHOLESALE: Meeting of Creditors Adjourned to Nov. 29 ----------------------------------------------------------- Tracy Hope Davis, U.S. Trustee for Region 2, adjourned the meeting of creditors in the Chapter 11 case of Native Wholesale Supply Company to Nov. 29, 2012, at 2 p.m. 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. NEOGENIX ONCOLOGY: Sells Business to Existing Shareholder Group --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Neogenix Oncology Inc. filed for Chapter 11 protection on July 23 and was given authority by the bankruptcy judge on Sept. 20 to sell the business to Precision Biologics Inc. for about $3.5 million in cash plus stock. According to the report, there were no competing bids, so an auction was canceled. The buyer is a company formed by some of the existing shareholders. Neogenix is a startup business developing technology to detect and treat cancer. In addition to the cash, the sale price includes 5 million shares of the buyer's stock, representing 20% to 25% of the equity. The buyer will also give warrants to purchase another 5 million shares of its stock for $1.50 a share. The Bloomberg report discloses that Neogenix expects that the stock will mostly go to existing shareholders because the company said it has "very few, if any unsecured creditors." Neogenix said it couldn't land additional financing to continue product development without filing bankruptcy and selling the business. The company listed the assets as having unknown value, while debt totals $924,000, including $652,000 in secured debt. About Neogenix Oncology Neogenix Oncology Inc. in Rockville, Maryland, filed a Chapter 11 petition (Bankr. D. Md. Case No. 12-23557) on July 23, 2012, in Greenbelt with a deal to sell the assets to Precision Biologics Inc., absent higher and better offers. Founded in December 2003, Neogenix is a clinical stage, pre- revenue generating, biotechnology company focused on developing therapeutic and diagnostic products for the early detection and treatment of cancer. Neogenix, which has 10 employees, says it its approach and portfolio of three unique monoclonal antibody therapeutics -- mAb -- hold the potential for novel and targeted therapeutics and diagnostics for the treatment of a broad range of tumor malignancies. Thomas J. McKee, Jr., Esq., at Greenberg Traurig, LLP, in McLean, Virginia, serves as counsel. Kurtzman Carson Consultants LLC is the claims and notice agent. The Debtor estimated assets of $10 million to $50 million and debts of $1 million to $10 million. NEW PEOPLES: Converts $5.4-Mil. Debt to 3.8-Mil. Common Stock ------------------------------------------------------------- New Peoples Bankshares, Inc., has converted a total $5.45 million of debt plus interest of $271.8 thousand to Directors B. Scott White and Harold Lynn Keene. The conversion results in a total of 3,814,519 additional issued shares of common stock and warrants to purchase 762,903 shares of common stock over the next five years. Mr. White received 1,959,880 shares of common stock and warrants to purchase 391,977 shares. Mr. Keene received 1,854,630 shares of common stock and warrants to purchase 370,926 shares of common stock. Both directors have been approved by regulators to own in excess of 10% of the company. Jonathan Mullins, President and CEO stated "We are very appreciative of these two directors' support of New Peoples Bankshares. At the time the notes were issued in 2011, both directors helped the company through a very challenging situation by making these loans. The conversion of the debt to common stock provides for our shareholders a safer and stronger company. In addition, the new capital strengthens our regulatory capital levels at the holding company in a time of continued economic uncertainty." About New Peoples Bankshares New Peoples Bankshares, Inc., is a Virginia bank holding company headquartered in Honaker, Virginia. New Peoples subsidiaries include: New Peoples Bank, Inc., a Virginia banking corporation (the Bank) and NPB Web Services, Inc., a web design and hosting company (NPB Web). The Bank is headquartered in Honaker, Virginia and operates 27 full service offices in the southwestern Virginia counties of Russell, Scott, Washington, Tazewell, Buchanan, Dickenson, Wise, Lee, Smyth, and Bland; Mercer County in southern West Virginia and the eastern Tennessee counties of Sullivan and Washington. The Company's balance sheet at June 30, 2012, showed $725.6 million in total assets, $701.9 million in total liabilities, and stockholders' equity of $23.7 million. According to the Company's quarterly report for the period ended June 30, 2012, the Company and the Bank are subject to various capital requirements administered by federal banking agencies. "The Bank was well capitalized as of June 30, 2012, as defined by the capital guidelines of bank regulations, however, the Company continued to be below the minimum capital requirements as a result of the Tier 1 leverage ratio decreasing to 3.72%, which was below the minimum requirement of 4.00%. Subject to the conversion of the director notes, we expect to return to well-capitalized status at the holding company level in 2012. The Company's capital as a percentage of total assets was 3.27% at June 30, 2012, compared to 3.70% at Dec. 31, 2011." NEXTWAVE WIRELESS: OKs Settlement of "Weiss" Suit re AT&T Merger ---------------------------------------------------------------- NextWave Wireless Inc. entered into a memorandum of understanding with Burt Weiss to settle a putative class action lawsuit pending before the Court of Chancery of the State of Delaware in connection with the proposed sale of the Company to AT&T, Inc., for $600 million. Mr. Weiss, on behalf of the pubic stockholders of Nextwave, filed the lawsuit against the members of the Company's Board of Directors alleging that the consideration for the transaction is inadequate and significantly undervalues the Company. The plaintiff alleged that the proposed transaction is intended to cure the massive debt owed by the Company to several of its officers and directors. The Company and the other defendants deny all liability with respect to the facts and claims alleged in the action. However, the Company and the other defendants considered it desirable that this matter be settled to avoid the substantial burden, expense, and risk of any delay to the closing of the merger. The Settlement is subject to Court approval. About Nextwave Wireless NextWave Wireless Inc. (PINK: WAVE) is a holding company for a significant wireless spectrum portfolio. Its continuing operations are focused on the management of its wireless spectrum interests. Total domestic spectrum holdings consist of approximately 3.9 billion MHz POPs. Its international spectrum included in continuing operations include 2.3 GHz licenses in Canada with 15 million POPs covered by 30 MHz of spectrum. In its report on the Company's consolidated financial statements for the year ended Dec. 31, 2011, Ernst & Young, said, "The Company has incurred recurring operating losses and has a working capital deficiency, primarily comprised of the current portion of long term obligations of $142.0 million at December 31, 2011, that is associated with the maturity dates of its debt. The Company currently does not have the ability to repay this debt at maturity. These conditions raise substantial doubt about the Company's ability to continue as a going concern." The Company's balance sheet at June 30, 2012, showed $451.16 million in total assets, $1.20 billion in total liabilities and a $754.57 million total stockholders' deficit. Bankruptcy Warning As of June 30, 2012, the aggregate principal amount of the Company's secured indebtedness was $1,103.1 million. This amount includes the Company's Senior Notes with an aggregate principal amount of $148.1 million, the Company's Second Lien Notes with an aggregate principal amount of $207.9 million and the Company's Third Lien Notes with an aggregate principal amount of $747.1 million. The Company's current cash reserves are not sufficient to meet its payment obligations under its secured notes at their current maturity dates. Additionally, the Company may not be able to consummate sales of the Company's wireless spectrum assets yielding sufficient proceeds to retire this indebtedness at the current scheduled maturity dates. If the Company is unable to further extend the maturity of its secured notes, or identify and successfully implement alternative financing to repay its secured notes, the holders of the Company's Notes could proceed against the assets pledged to collateralize these obligations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Insufficient capital to repay the Company's debt at maturity would significantly restrict the Company's ability to operate and could cause the Company to seek relief through a filing in the United States Bankruptcy Court. NORD RESOURCES: Four Directors Elected to Board ----------------------------------------------- The annual general meeting of shareholders of Nord Resources Corporation was held on Sept. 18, 2012, at which the shareholders elected Ronald A. Hirsch, Stephen D. Seymour, Douglas P. Hamilton and John F. Cook to Board of Directors. The selection of Mayer Hoffman McCann P.C. as the Company's independent registered public accounting firm for the fiscal year ending Dec. 31, 2012, was ratified. Immediately following the Annual Meeting, the Company's Board convened a meeting and reappointed Wayne Morrison as Chief Executive Officer, President, Chief Financial Officer and Corporate Secretary. Ronald Hirsch was reappointed as Chairman of the Board of Directors. About Nord Resources Based in Tuczon, Arizona, Nord Resources Corporation (TSX:NRD/OTCBB:NRDS.OB) -- http://www.nordresources.com/-- is a copper mining company whose primary asset is the Johnson Camp Mine, located approximately 65 miles east of Tucson, Arizona. Nord commenced mining new ore in February 2009. On June 2, 2010, Nord Resources appointed FTI Consulting to advise on refinancing structures and strategic alternatives. Nord Resources reported a net loss of $10.31 million on $14.48 million of net sales in 2011, compared with a net loss of $21.20 million on $28.64 million of net loss in 2010. The Company's balance sheet at June 30, 2012, showed $53.72 million in total assets, $66.41 million in total liabilities, and a $12.69 million total stockholders' deficit. O&G LEASING: First Security Wants Ch. 11 Trustee to Take Over ------------------------------------------------------------- Secured creditor First Security Bank, as indenture trustee, asks the U.S. Bankruptcy Court for the Southern District of Mississippi to appoint a Chapter 11 operating trustee for O&G Leasing, LLC, and Performance Drilling Company, LLC. According to First Security, cause exists for the appointment of an operating trustee because. It cites, among other things: 1. The Debtors have failed to demonstrate that they have the ability to obtain a confirmed plan within a reasonable period of time; 2. Past and present performance of the Debtors and little prospect for the Debtors' rehabilitation; and 3. The Debtors have failed to communicate with their primary secured creditor concerning the collateral, operations and other matters. First Security asserts that a Chapter 11 trustee is needed in the event neither of the pending Chapter 11 plans is confirmed, and for other general relief to which the Court deems it entitled. First Security relates that neither of the Disclosure Statements for Debtors' Initial Plan dated July 1, 2011, nor the indenture trustee's Initial Plan dated July 22, 2011, was ever approved. On July 19, 2012, the indenture trustee and the Debtors filed their their respective First Amended Plans. A confirmation hearing on the two competing Plans has been scheduled to be held on Nov. 7-9, 2012 and Nov. 28-30, 2012 (if necessary). About O&G Leasing Jackson, Mississippi-based O&G Leasing, LLC, was formed in 2006 to acquire and construct land drilling rigs that it would lease to its wholly owned subsidiary, Performance Drilling Company, LLC. Performance was formed to provide contract drilling services for ArkLaTex (Arkansas, Louisiana and Eastern Texas) region, as well as Alabama, Florida, Mississippi and Oklahoma. The Company filed for Chapter 11 bankruptcy protection (Bankr. S.D. Miss. Case No. 10-01851) on May 21, 2010. Douglas C. Noble, Esq., at McCraney Montagnet & Quin, PLLC, assists the Company in its restructuring effort. The Company estimated $10 million to $50 million in assets and $50 million to $100 million in liabilities. On the same day, Performance Drilling Company, LLC, filed for Chapter 11 bankruptcy protection. Performance Drilling estimated assets and debts of between $1 million to $10 million each. The Debtors' cases have been jointly administered. No official committee of unsecured creditors and no official committee of debenture holders have been appointed in the case by the U.S. Trustee. ORAGENICS INC: OKs 2012 Performance Objectives for CEO and Pres. ---------------------------------------------------------------- The Compensation Committee of Oragenics, Inc., approved the 2012 performance objectives for the Company's President and Chief Executive Officer, Dr. John Bonfiglio under his bonus plan. Dr. Bonfiglio's employment agreement with the Company required the adoption of a bonus plan to provide for a bonus target of up to 50% of his annual base salary. The Company put the bonus plan in place in the prior year when Dr. Bonfiglio joined the Company. The bonus payable to Dr. Bonfiglio for 2012 will be based on the achievement of the following objectives, which are substantially similar to those adopted by the Committee in the prior year: (i) up to 45% of the Bonus Target for Company performance objectives related to the Company's revenue, entering into strategic partnerships for development of a key pipeline product and other specified operational objectives; (ii) up to 25% of the Bonus Target for Company performance objectives related to raising capital; (iii) up to 10% of the Bonus Target for the achievement of short term strategic objectives; and (iv) up to 20% of the Bonus Target for meeting specified science objectives tied to licensing, validation testing, and trial enrollment. Achievement of each objective will be measured independently, and a minimum threshold for each objective must be met for any credit to be given to that factor. The Committee set a minimum threshold target objective for revenue. The bonuses earned for 2012, if any, could range from zero to 100% of Dr. Bonfiglio's Bonus Target and will vary depending on the extent to which actual performance meets, exceeds or falls short of the objectives approved by the Committee. The aggregate amount of bonus payable under the executive bonus plan to Dr. Bonfiglio for 2012 would be approximately $140,000 if all of the objectives were achieved by Dec. 31, 2012. About Oragenics Inc. Tampa, Fla.-based Oragenics, Inc. -- http://www.oragenics.com/-- is a biopharmaceutical company focused primarily on oral health products and novel antibiotics. Within oral health, Oragenics is developing its pharmaceutical product candidate, SMaRT Replacement Therapy, and also commercializing its oral probiotic product, ProBiora3. Within antibiotics, Oragenics is developing a pharmaceutical candidate, MU1140-S and intends to use its patented, novel organic chemistry platform to create additional antibiotics for therapeutic use. In its audit report on the Company's 2011 financial statements, Mayer Hoffman McCann P.C., in Clearwater, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring operating losses, negative operating cash flows and has an accumulated deficit. The Company reported a net loss of $7.67 million in 2011, compared with a net loss of $7.80 million in 2010. The Company's balance sheet at June 30, 2012, showed $1.98 million in total assets, $3.43 million in total liabilities and a $1.44 million total shareholders' deficit. Bankruptcy Warning The Company said in its annual report for the year ended Dec. 31, 2011, that its loan agreement with the Koski Family Limited Partnership matures in three years and select material assets of the Company relating to or connected with its ProBiora3, SMaRT Replacement Therapy, MU1140 and LPT3-04 technologies have been pledged as collateral to secure the Company's borrowings under the Loan Agreement. This secured indebtedness could impede the Company from raising the additional equity or debt capital the Company needs to continue its operations even though the amount borrowed under the Loan Agreement automatically converts into equity upon a qualified equity financing of at least $5 million. The Company's ability to repay the loan will depend largely upon the Company's future operating performance and the Company cannot assure that its business will generate sufficient cash flow or that the Company will be able to raise the additional capital necessary to repay the loan. If the Company is unable to generate sufficient cash flow or are otherwise unable to raise the funds necessary to repay the loan when it becomes due, the KFLP could institute foreclosure proceedings against the Company's material intellectual property assets and the Company could be forced into bankruptcy or liquidation. ORAGENICS INC: Amends 9.4 Million Common Shares Prospectus ---------------------------------------------------------- Oragenics, Inc., filed with the U.S. Securities and Exchange Commission amendment no. 1 to the Form S-1 relating to the resale by Fidelity Select Portfolios: Biotechnology Portfolio, MSD Credit Opportunity Master Fund, L.P., White Rock Capital Partners, L.P., et al., of up to 9,437,834 shares of the Company's Common Stock, par value $0.001 per share. The Common Stock was acquired by the Selling Shareholders in connection with a private placement offering the Company completed in July 2012. The Company will not receive any of the proceeds from the Common Stock sold by the Selling Shareholders. The Company's Common Stock is traded on the OTC Bulletin Board under the symbol "ORNI." On Aug. 30, 2012, the last reported sale price of the Company's Common Stock was $2.27 per share. A copy of the amended prospectus is available for free at: http://is.gd/pSEaI2 About Oragenics Inc. Tampa, Fla.-based Oragenics, Inc. -- http://www.oragenics.com/-- is a biopharmaceutical company focused primarily on oral health products and novel antibiotics. Within oral health, Oragenics is developing its pharmaceutical product candidate, SMaRT Replacement Therapy, and also commercializing its oral probiotic product, ProBiora3. Within antibiotics, Oragenics is developing a pharmaceutical candidate, MU1140-S and intends to use its patented, novel organic chemistry platform to create additional antibiotics for therapeutic use. In its audit report on the Company's 2011 financial statements, Mayer Hoffman McCann P.C., in Clearwater, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring operating losses, negative operating cash flows and has an accumulated deficit. The Company reported a net loss of $7.67 million in 2011, compared with a net loss of $7.80 million in 2010. The Company's balance sheet at June 30, 2012, showed $1.98 million in total assets, $3.43 million in total liabilities and a $1.44 million total shareholders' deficit. Bankruptcy Warning The Company said in its annual report for the year ended Dec. 31, 2011, that its loan agreement with the Koski Family Limited Partnership matures in three years and select material assets of the Company relating to or connected with its ProBiora3, SMaRT Replacement Therapy, MU1140 and LPT3-04 technologies have been pledged as collateral to secure the Company's borrowings under the Loan Agreement. This secured indebtedness could impede the Company from raising the additional equity or debt capital the Company needs to continue its operations even though the amount borrowed under the Loan Agreement automatically converts into equity upon a qualified equity financing of at least $5 million. The Company's ability to repay the loan will depend largely upon the Company's future operating performance and the Company cannot assure that its business will generate sufficient cash flow or that the Company will be able to raise the additional capital necessary to repay the loan. If the Company is unable to generate sufficient cash flow or are otherwise unable to raise the funds necessary to repay the loan when it becomes due, the KFLP could institute foreclosure proceedings against the Company's material intellectual property assets and the Company could be forced into bankruptcy or liquidation. PAINT HORSE: Case Summary & 10 Unsecured Creditors -------------------------------------------------- Debtor: Paint Horse, LLC 1300 Shiloh Road Kennesaw, GA 30144 Bankruptcy Case No.: 12-73446 Chapter 11 Petition Date: September 19, 2012 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Debtor's Counsel: Frank B. Wilensky, Esq. MACEY, WILENSKY, KESSLER & HENNINGS, LLC Suite 2700 230 Peachtree Street, NW Atlanta, GA 30303-1561 Tel: (404) 584-1200 Fax: (404) 681-4355 E-mail: smcconnell@maceywilensky.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 A copy of the Company's list of its 10 unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ganb12-73446.pdf The petition was signed by Margret V. Sapp, sole member and manager. PATRIOT COAL: Robbins Umeda Files Shareholders' Class Action Suit ----------------------------------------------------------------- Shareholder rights firm Robbins Umeda LLP discloses that it has commenced a federal securities class action in the U.S. District Court for the Eastern District of Missouri, on behalf of purchasers of Patriot Coal Corporation shares between Oct. 21, 2010 and July 6, 2012. Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Gregory E. Del Gaizo at (800) 350-6003, inquiry@robbinsumeda.com, or via the shareholder information form on the firm's website. The complaint alleges that during the Class Period, certain of Patriot Coal's officers issued materially false and misleading statements regarding the Company's business prospects. Specifically, the complaint alleges that defendants violated Generally Accepted Accounting Principles and U.S. Securities and Exchange Commission rules by failing to properly account for costs associated with Court-ordered remediation obligations related to the Company's selenium water treatment requirements. In particular, defendants improperly capitalized these costs instead of recording them as expenses, thereby overstating the Company's financial results. In response to comments received from the SEC regarding the Company's accounting for the court-ordered remediation costs, defendants were forced to reveal that the Company's previously issued consolidated financial statements for the years ended Dec. 31, 2011 and Dec. 31, 2010 should no longer be relied upon. Moreover, defendants admitted that it was necessary to restate the Company's previously issued consolidated financial statements to accrue a liability and recognize a loss for the estimated costs of installing the Court-ordered water treatment facilities. Further, the complaint alleges that the defendants were also making false and misleading statements about the Company's business health and continuing prospects. In particular, the defendants continuously touted that the Company's "operations are performing well" and that the Company is positioned for "future growth." Then, on July 9, 2012, Patriot Coal shocked the market when discloses that it and substantially all of its wholly owned subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code. When the true state of the Company's business health became public, Patriot Coal's shares dropped 72%, from a closing pricing of $2.19 on July 6, 2012, to a closing price of $0.61 at the end of the day on July 9, 2012. If you purchased or otherwise acquired Patriot stock during the Class Period and wish to serve as lead plaintiff, you must move the court no later than Nov. 20, 2012. To discuss your shareholder rights, please contact attorney Gregory E. Del Gaizo at 800-350-6003, via email at info@robbinsumeda.com, or via the shareholder information form. Robbins Umeda LLP is a nationally recognized leader in securities litigation and shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested. 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. PEAK RESORTS: Has Final Authority to Obtain Financing from FDIC --------------------------------------------------------------- On Sept. 21, 2012, the U.S. Bankruptcy Court for the Northern District of New York entered a final order authorizing Peak Resorts, Inc., et al., to obtain postpetition financing of up to $1.8 million on a senior secured superpriority basis from the Federal Deposit Insurance Corporation, in its capacity as Receiver for Tennessee Commerce Bank. A copy of the final DIP financing order is available at: http://bankrupt.com/misc/peakresorts.doc113.pdf About Peak Resorts Peak Resorts, Inc., dba Greek Peak Mountain Resort, and four affiliates filed for Chapter 11 bankruptcy (Bankr. N.D.N.Y. Case Nos. 12-31471 to 12-31473, 12-31475 and 12-31476) in Syracuse on Aug. 1, 2012. The affiliates are Hope Lake Investors LLC, V.R.P.D. II L.P., REDI LLC, and A.R.K. Enterprises Inc. Peak Resorts owns 888.5 acres of real estate, including the "Greek Peak Mountain Resort", a four-season resort development located in Virgil, New York. The 888.5-acre property is located 8 miles from Cortland, New York and has the largest day trip area in Central New York state. REDI LLC owns 402.7 acres of adjacent property. Hope Lake Investors owns the Hope Lake Lodge & Cascades Indoor Water Park, a 151-room hotel and resort facility in Virgil, Cortland County. The Debtors have a total of 264 employees. Chief Bankruptcy Judge Robert E. Littlefield Jr. presides over the case. Lawyers at Harris Beach PLLC serve as the Debtors' counsel. The Debtors scheduled these assets and debts: Scheduled Assets Scheduled Liabilities ---------------- --------------------- Hope Lake $27,180,635 $48,800,528 Peak Resorts $12,991,230 $26,558,438 REDI, LLC $1,298,401 $3,851,808 The petitions were signed by Allen R. Kryger, president. PEAK RESORTS: Has Access to FDIC Cash Collateral Until March 31 --------------------------------------------------------------- On Sept. 21, 2012, the U.S. Bankruptcy Court for the Northern District of New York entered a final order authorizing Peak Resorts, Inc., et al., to use cash collateral of the prepetition lender, the Federal Deposit Insurance Corporation, as receiver for Tennessee Commerce Bank, through and including the earlier of (a) March 31, 2013, or (b) termination of the Final Order, solely in accordance with a budget, with a 5% overage expense variance for the budgeted items. Prepetition, Tennessee Commerce Bank provided secured financing to the Debtors in the approximate amount of $47,000,000 secured by substantially all of the Debtor's assets. As adequate protection, the FDIC-Receiver is granted replacement security interests in the postpetition collateral. The FDIC- Receiver is also granted, subject to the Carve Outs for professional fees of the Debtors' attorneys and professional fees of the Committee's attorneys and other professionals, a superpriority claim as provided in Sections 503(b) and 507(b) of the Bankruptcy Code. As additional adequate protection, the FDIC-Receiver will receive reimbursement from the Debtors and their estates of all fees, costs and expenses incurred after the Petition Date payable to the FDIC-Receiver under the Prepetition Loan Documents. A copy of the Final Cash Collateral Order is available at: http://bankrupt.com/misc/peakresorts.doc114.pdf About Peak Resorts Peak Resorts, Inc., dba Greek Peak Mountain Resort, and four affiliates filed for Chapter 11 bankruptcy (Bankr. N.D.N.Y. Case Nos. 12-31471 to 12-31473, 12-31475 and 12-31476) in Syracuse on Aug. 1, 2012. The affiliates are Hope Lake Investors LLC, V.R.P.D. II L.P., REDI LLC, and A.R.K. Enterprises Inc. Peak Resorts owns 888.5 acres of real estate, including the "Greek Peak Mountain Resort", a four-season resort development located in Virgil, New York. The 888.5-acre property is located 8 miles from Cortland, New York and has the largest day trip area in Central New York state. REDI LLC owns 402.7 acres of adjacent property. Hope Lake Investors owns the Hope Lake Lodge & Cascades Indoor Water Park, a 151-room hotel and resort facility in Virgil, Cortland County. The Debtors have a total of 264 employees. Chief Bankruptcy Judge Robert E. Littlefield Jr. presides over the case. Lawyers at Harris Beach PLLC serve as the Debtors' counsel. The Debtors scheduled these assets and debts: Scheduled Assets Scheduled Liabilities ---------------- --------------------- Hope Lake $27,180,635 $48,800,528 Peak Resorts $12,991,230 $26,558,438 REDI, LLC $1,298,401 $3,851,808 The petitions were signed by Allen R. Kryger, president. PENN TREATY: Broadbill Partners Discloses 6.8% Equity Stake ----------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Broadbill Partners GP, LLC, and its affiliates disclosed that as of Sept. 18, 2012, they beneficially own 1,573,689 shares of common stock of Penn Treaty American Corporation representing 6.8% of the shares outstanding. Broadbill Partners previously reported beneficial ownership of 1,323,689 common shares or a 5.7% equity stake as of Aug. 10, 2012. A copy of the amended filing is available at http://is.gd/EFacH9 About Penn Treaty American Penn Treaty American Corporation -- https://www.penntreaty.com/ -- through its wholly owned direct and indirect subsidiaries, Penn Treaty Network America Insurance Company, American Network Insurance Company, American Independent Network Insurance Company of New York, Network Insurance Senior Health Division and Senior Financial Consultants Company, is engaged in the underwriting, marketing and sale of individual and group accident and health insurance products, principally covering long term nursing home and home health care. On Oct. 2, 2009, the Insurance Commissioner of the Commonwealth of Pennsylvania filed in the Commonwealth Court of Pennsylvania Petitions for Liquidation for PTNA and American Network Insurance Company. PTNA is a direct insurance company subsidiary of Penn Treaty American Corporation, and ANIC is a subsidiary of PTNA. PENN TREATY: Alan Parsow Resigns from Board of Directors -------------------------------------------------------- Alan Parsow resigned from the Board of Directors of Penn Treaty American Corporation on Sept. 17, 2012. At the time of his resignation, Mr. Parsow served on the Investment Committee and the Executive Committee. About Penn Treaty American Penn Treaty American Corporation -- https://www.penntreaty.com/ -- through its wholly owned direct and indirect subsidiaries, Penn Treaty Network America Insurance Company, American Network Insurance Company, American Independent Network Insurance Company of New York, Network Insurance Senior Health Division and Senior Financial Consultants Company, is engaged in the underwriting, marketing and sale of individual and group accident and health insurance products, principally covering long term nursing home and home health care. On Oct. 2, 2009, the Insurance Commissioner of the Commonwealth of Pennsylvania filed in the Commonwealth Court of Pennsylvania Petitions for Liquidation for PTNA and American Network Insurance Company. PTNA is a direct insurance company subsidiary of Penn Treaty American Corporation, and ANIC is a subsidiary of PTNA. PEP BOYS-MANNY: Moody's Rates $200-Mil. Senior Secured Loan 'Ba2' ----------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to The Pep Boys- Manny, Moe & Jack proposed new $200 million senior secured first mortgage loan, upgraded the Speculative Grade Liquidity Rating to SGL-1 from SGL-2, and affirmed the B1 corporate family rating. The outlook remains stable. New rating assigned: Proposed $200 million senior secured first mortgage loan maturing October 2018 at Ba2 (LGD2, 29%) Rating upgraded: Speculative grade liquidity rating to SGL-1 from SGL-2. Rating affirmed: Corporate family rating at B1 Probability of Default at B1 Ratings affirmed and to be withdrawn following closing of new senior secured first mortgage loan: $147 million senior secured first mortgage loan at Ba2 (LGD2, 27%) $148 million senior subordinated notes at B3 (LGD5, 79%) (assuming full repayment) The B1 rating continues to reflect the company's stable operating performance, as well as the reduction in absolute debt levels that will occur following closing of the proposed new financing. The proposed new $200 million first mortgage loan will be used to fully repay the existing $147 million first mortgage, with the remaining proceeds to be combined with existing cash balances and then utilized to fully repay the $148 million balance on the senior subordinated notes. "While debt/EBITDA of 4.8 times is high at the July 2012 LTM, this is mitigated by the company's $150 million in cash, which results in RCF/net debt of 21%. Upon closing of the new financing, and repayment of the $148 million in subordinated notes, debt/EBITDA will fall to closer to 4 times,'" stated Moody's Senior Analyst Charlie O'Shea. "While continuing to lag its rated peer group consisting of AutoZone, O'Reilly, and Advance Auto from an operating performance perspective as evidenced by its much weaker margins, Pep Boy's continues to benefit from the positive industry fundamentals that continue in the automotive parts and repair segment, which Moody's believes will continue as one of the top performing segments in retail for the next 12-18 months. The challenge for the company going forward will be to continue to generate additional traction on the revenue side, particularly its service component, which will in turn lead to improvements in interest coverage, which remains relatively weak for a B1 credit," Mr. O'Shea added. The Ba2 rating on the proposed new senior secured first mortgage loan reflects its solid collateral consisting of first mortgages on an initial pool of 142 stores, and an advance rate against appraised value of no more than 50% of the value of the pool. The upgrade to SGL-1 of the speculative grade liquidity rating, representing very good liquidity, reflects Pep Boy's improved ability to generally meet all of its operating cash flow requirements from internal sources over the next 4 quarters. This would include the October 2013 maturity of the existing $147 million first mortgage loan if necessary. The stable outlook reflects Moody's expectation that Pep Boy's performance will be maintained at least at present levels, that it will maintain good liquidity, and that financial policy will remain conservative. Ratings could be upgraded if operating performance continues to improve, which would demonstrate that management's strategy was generating continued traction as evidenced by improved levels of EBITA, and if financial policy remains conservative. Quantitatively, if debt/EBITDA is sustained below 4.25 times or if RCF/net debt is sustained above 20%, and EBITA/interest expense is sustained above 2 times, ratings could be upgraded. Ratings could be downgraded in the event operating performance deteriorates, which could indicate that management's strategy was losing traction, or if financial policy were to become aggressive. Quantitatively, ratings could be downgraded if debt/EBITDA increased above 5 times or RCF/net debt dropped below 12% or EBITA/interest remained around 1.5 times for a sustained period. Stagnating or falling sales and/or margins, which could indicate that the company's strategic execution was faltering, could lead to negative rating pressure. The principal methodology used in rating Pep Boys was the Global Retail Industry Methodology published in June 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. Pep Boys provides automotive parts and service for consumers and commercial businesses through approximately 700 locations in 35 states and Puerto Rico. Based in Philadelphia, Pennsylvania, its annual revenues are around $2 billion. PEREGRINE FINANCIAL: Customers to Receive Initial $123 Million -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trustee for Peregrine Financial Group Inc. will make a $123 million interim distribution to former customers. According to the report, the bankruptcy judge in Chicago approved the distribution at a hearing Sept. 20. The trustee is holding back $58 million from what he's recovered. The trustee's lawyer said there is an additional $44 million from which it's probable that foreign exchange and metals customers will be paid in full. The report relates that the trustee filed formal lists in bankruptcy court showing assets of $270 million and liabilities totaling $525.3 million, mostly owing to customers. About Peregrine Financial Peregrine Financial Group Inc. filed to liquidate under Chapter 7 of the U.S. Bankruptcy Code (Bankr. N.D. Ill. Case No. 12-27488) on July 10, 2012, disclosing between $500 million and $1 billion of assets, and between $100 million and $500 million of liabilities. Earlier that day, at the behest of the U.S. Commodity Futures Trading Commission, a U.S. district judge appointed a receiver and froze the firm's assets. The firm put itself into bankruptcy liquidation in Chicago later the same day. The CFTC had sued Peregrine, saying that more than $200 million of supposedly segregated customer funds had been "misappropriated." The CFTC case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-5383, U.S. District Court, Northern District of Illinois (Chicago). Peregrine's CEO Russell R. Wasendorf Sr. unsuccessfully attempted suicide outside a firm office in Cedar Falls, Iowa, on July 9. The bankruptcy petition was signed in his place by Russell R. Wasendorf Jr., the firm's chief operating officer. The resolution stated that Wasendorf Jr. was given a power of attorney on July 3 to exercise if Wasendorf Sr. became incapacitated. Peregrine Financial is the regulated unit of the brokerage PFGBest. At a quickly-convened hearing on July 13, the bankruptcy judge authorized the Chapter 7 trustee to operate Peregrine's business on a "limited basis" through Sept. 13. PERRY COUNTY: Plan Confirmed, Court Closes Reorganization Case -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Alabama entered a final decree closing the Chapter 11 cases of Perry County Associates, LLC, et al. The Court has confirmed the Chapter 11 Plan on Dec. 15, 2010. The Court, in its order, said that the estate of the Debtor has been fully administered. All quarterly fees have been paid. About Perry County Associates Atlanta, Georgia-based Perry County Associates, LLC, owns and operates the Arrowhead Landfill in Uniontown, Alabama (Perry County). It filed for Chapter 11 bankruptcy protection on Jan. 26, 2010 (Bankr. S.D. Ala. Case No. 10-00277). Affiliate Perry Uniontown Ventures I, LLC, filed a separate Chapter 11 bankruptcy petition (Bankr. S.D. Ala. Case No. 10-00276). Jeffery J. Hartley, Esq. at Helmsing, Leach, Herlon, Newman & Rouse, assists the Debtors in their restructuring effort. PCA disclosed $0 in assets and $10,793 in liabilities. Perry Uniontown disclosed $15,009,538 in assets and $67,489,007 in liabilities. On Aug. 16, 2010, the Debtors filed their Joint Plan of Reorganization and Disclosure Statement, as amended pursuant to the Court's Order approving the Disclosure Statement entered on Oct. 8, 2010. On Dec. 15, 2010, the Court entered an order confirming the Plan. The Court entered an amended order confirming the Plan on Dec. 22, 2010. On May 20, 2011, the Court entered an order approving certain modifications to the Plan and set May 21, 2011, as the Effective Date of the Plan Under the Plan, the Debtors were required to meet certain milestones including payment in full of the secured debt owed to the holders of the Notes by October 2011. In the event that those milestones were not met, the Plan provided that the assets of PUV and PCA would be placed into a Liquidating Trust and a Liquidating Trustee would be appointed. On Sept. 8, 2011, this Court entered an order approving a settlement agreement between the Debtors, the noteholders and certain other parties, which, among other things, provided for the transfer of PUV's assets into the Liquidating Trust and the appointment of the Liquidating Trustee. David J. Messina, Esq., and Fernand L. Laudumiey, IV, Esq., represent James M. Grady, the Liquidating Trustee of PUV and PCA, as counsel. PHIL'S CAKE: Access to Cash Collateral Expires Sept. 27 ------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida has authorized, on an interim basis, Phil's Cake Box Bakeries, Inc., to use cash collateral in which Southern Commerce Bank, N.A.; Zions First National Bank; Heritage Bank; and Colson, as successor interest to the United States Small Business Association and the Florida Business Development Corporation, may assert liens and security interests, until the date of the final hearing on Sept. 27, 2012, at 2:30 p.m., pursuant to a budget. The Court previously entered a cash collateral bridge order covering the time between the Petition Date and the Sept. 13, 2012 hearing. The Debtor will furnish to counsel for SCB a revised budget at least 2 business days in advance of the final hearing. As adequate protection, the Secured Creditors are granted replacement liens on all of the assets and property acquired by the Debtor or the estate on or after the Petition Date. About Alessi's Bakeries Phil's Cake Box Bakeries, Inc., dba Alessi's Bakeries, Inc., is a family-owned bakery and catering business owned and operated in Tampa, Fla., by four generations of the Alessi family. The operations have grown from a small bakery delivering bread by horse and wagon, to the current 100,000 square foot manufacturing facility serving retail customers nationwide, with a retail location maintaining and continuing its historic traditions in Tampa. Alessi's operates from two locations: a manufacturing facility and a retail bakery. The Eagle Trail manufacturing facility is located at 5202 Eagle Trail Drive, Tampa. The Eagle Trail Facility is a 100,000 sq. ft. building which houses various production lines including five ovens, 40,000 sq. ft. of refrigerated space with four walk-in freezers and two coolers, and 20,000 sq. ft. of raw material and packing supplies warehouse space. Alessi's also operates a retail bakery facility, located at 2909 West Cypress Street, Tampa. Alessi's owns both locations. As of the Petition Date, Alessi's estimates that it has assets of roughly $14.5 million and liabilities of roughly $14.7 million. Alessi's filed for bankruptcy to address the over-leveraging due to the Eagle Trail Facility acquisition and the inability fully and timely to service debt during the period in which sales dropped. Alessi's filed for Chapter 11 bankruptcy (Bankr. M.D. Fla. Case No. 12-13635) on Sept. 5, 2012. Bankruptcy Judge K. Rodney May oversees the case. Harley E. Riedel, Esq., at Stichter Riedel Blain & Prosser, P.A., serves as the Debtor's counsel. The petition was signed by Philip Alessi, Jr., president. PHIL'S CAKE: Hiring Will Maloney as Chief Restructuring Advisor --------------------------------------------------------------- Phil's Cake Box Bakeries, Inc., asks the U.S. Bankruptcy Court for the Middle District of Florida for authorization to employ William Maloney and Bill Maloney Consulting as chief restructuring advisor to the Debtor, nunc pro tunc to the Petition Date. Maloney will provide these services: a. Reviewing the Debtor's status and providing recommendations as to the restructuring strategy of the business; b. Assisting the Debtor and negotiating with creditors and meeting the custodial and reporting requirements of the lenders; c. Assisting in evaluating restructuring options; d. Assisting the Debtor in managing and complying with the requirements imposed by the Bankruptcy Code and the Bankruptcy Court; e. Providing advisory services to the senior management team in developing a plan of reorganization; and f. Performing such other tasks as may be agreed to by the Debtor and Maloney. Under the terms of the engagement agreement, Maloney will charge $325 per hour for its services. The Debtor believes that Maloney is disinterested as required by Section 327(a) of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure. The hearing to consider the motion to employ Maloney as chief restructuring advisor will be held on Sept. 27, 2012, at 2:30 p.m. About Alessi's Bakeries Phil's Cake Box Bakeries, Inc., dba Alessi's Bakeries, Inc., is a family-owned bakery and catering business owned and operated in Tampa, Fla., by four generations of the Alessi family. The operations have grown from a small bakery delivering bread by horse and wagon, to the current 100,000 square foot manufacturing facility serving retail customers nationwide, with a retail location maintaining and continuing its historic traditions in Tampa. Alessi's operates from two locations: a manufacturing facility and a retail bakery. The Eagle Trail manufacturing facility is located at 5202 Eagle Trail Drive, Tampa. The Eagle Trail Facility is a 100,000 sq. ft. building which houses various production lines including five ovens, 40,000 sq. ft. of refrigerated space with four walk-in freezers and two coolers, and 20,000 sq. ft. of raw material and packing supplies warehouse space. Alessi's also operates a retail bakery facility, located at 2909 West Cypress Street, Tampa. Alessi's owns both locations. As of the Petition Date, Alessi's estimates that it has assets of roughly $14.5 million and liabilities of roughly $14.7 million. Alessi's filed for bankruptcy to address the over-leveraging due to the Eagle Trail Facility acquisition and the inability fully and timely to service debt during the period in which sales dropped. Alessi's filed for Chapter 11 bankruptcy (Bankr. M.D. Fla. Case No. 12-13635) on Sept. 5, 2012. Bankruptcy Judge K. Rodney May oversees the case. Harley E. Riedel, Esq., at Stichter Riedel Blain & Prosser, P.A., serves as the Debtor's counsel. The petition was signed by Philip Alessi, Jr., president. POLI-GOLD CORP: Chapter 11 Reorganization Case Dismissed -------------------------------------------------------- The Hon. Randolph J. Haines of the U.S. Bankruptcy Court for the District of Arizona dismissed the Chapter 11 case of Poli-Gold, L.L.C. As reported in the Troubled Company Reporter on June 22, 2012, the Debtor related that it filed for bankruptcy protection to avoid foreclosure of certain of its real properties and to restructure its obligations with three major creditors including secured lenders Arizona Havasu, LLC and Horizon Community Bank and claims by the U.S. Environmental Protection Agency concerning the Debtor's development of its resort property in Panguitch Lake, Utah. Through this proceeding the Debtor has engaged with each of its major creditors and has received Court approval of arrangements with each creditor that resolved or restructured its obligations. The Debtor said that there is no further need for the Debtor to maintain its protection or to reorganize pursuant to Chapter 11 of the Bankruptcy Code. The Debtor said that it has filed its monthly operating reports. Thus, when the U.S. Trustee determines the final amount of quarterly fees, plus any interest and penalties owing to the U.S. Trustee, if any, the Debtor will pay the fees no later than Oct. 31, 2012. About Poli-Gold Fort Mohave, Arizona-based Poli-Gold, LLC, owns a cabin and RV resort in Panguitch, Utah. It also owns a commercial building/warehouse/storage facility in Fort Mohave, Arizona, as well as a commercial property in Lake Havasu City, Arizona, and some vacant lots in Kingman, Arizona. Poli-Gold filed for Chapter 11 bankruptcy protection (Bankr. D. Ariz. Case No. 10-37018) on Nov. 17, 2010. Attorneys at Engelman Berger, P.C., served as the Debtor's bankruptcy counsel. Keller Williams River Cities Specialists serves as real estate listing broker. In its schedules, the Debtor disclosed assets of $30,384,943 and liabilities of $14,401,515 as of the petition date. PROELITE INC: Isaac Blech Discloses 81.3% Equity Stake ------------------------------------------------------ In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Isaac Blech disclosed that as of Sept. 21, 2012, he beneficially owns 289,744,000 shares of common stock of ProElite, Inc., representing 81.3% of the shares outstanding. Mr. Blech previously reported beneficial ownership of 248,352,000 common shares or a 78.8% equity stake as of Aug. 22, 2012. A copy of the amended filing is available for free at http://is.gd/vFVoP5 About ProElite Inc. Los Angeles, Calif.-based ProElite, Inc., is a holding company for entities that (a) organize and promote mixed martial arts matches, and (b) create an internet community for martial arts enthusiasts and practitioners. On Oct. 20, 2008, management, with Board ratification, decided to close or sell all operations and began an extended period of restructuring its balance sheet, divesting itself of certain assets, settlement of contingent liabilities, and attempting to raise additional capital. Effective Oct. 12, 2009, the Company entered into a Strategic Investment Agreement with Stratus Media Group, Inc. ("SMGI") pursuant to which the Company agreed to sell to SMGI, shares of the Company's Series A Preferred Stock (the "Preferred Shares"). The Preferred Shares are convertible into the Common Stock of the Company. This transaction closed on June 14, 2011. Gumbiner Savett Inc., in Santa Monica, Calif., expressed substantial doubt about ProElite's ability to continue as a going concern, following its audit of the Company's financial statements as of and for the years ended Dec. 31, 2008, and 2007. The independent auditors noted that the Company has suffered losses from operations and negative cash flows from operations. The Company reported a net loss of $55.6 million for the fiscal year ended Dec. 31, 2008, compared with a net loss of $27.1 million for the fiscal year ended Dec. 31, 2007. As a result of the decision to discontinue operations, the Company did not have any revenues, cost of revenue, and gross profit for the fiscal years ended Dec. 31, 2008, and 2007. At Dec. 31, 2008, the Company's balance sheet showed $2.3 million in total assets, $11.8 million in total liabilities, and a shareholders' deficit of $9.5 million. ProElite notified the U.S. Securities and Exchange Commission that it requires additional time to complete the financial statements for the fiscal quarter ended Sept. 30, 2011, and cannot, without unreasonable effort and expense, file its Form 10- Q on or before the prescribed filing date. The Company also notified the SEC regarding the late filing of its annual report on Form 10-K for the period ended Dec. 31, 2011. RAAM GLOBAL: Moody's Confirms 'Caa1' Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service confirmed RAAM Global Energy Company's Corporate Family Rating (CFR) at Caa1 and its senior secured note rating at Caa2. This concludes the review for upgrade initiated on April 2, 2012. The outlook is stable. Issuer: RAAM Global Energy Company Confirmations: Corporate Family Rating, Caa1 Probability of Default Rating, Caa1 Senior Secured Rating, Caa2 RATINGS RATIONALE The Caa1 CFR reflects RAAM's modest scale and concentration in the GOM with its technical challenges including capital intensity, high decline rates and high finding and development (F&D) costs, particularly since it is operating from a relatively small asset base. Although RAAM has grown its reserves and annual production by 25% and 20%, respectively, since 2010, it remains comparatively small relative to the rated E&P peer group. Moreover, given its short 3.3 year proved developed (PD) reserve life, debt to PD reserves is a very high $18 per Boe at June 30, 2012, reflecting the need for high ongoing capital spending rates to address the high decline rates inherent in GOM production. The rating is supported by the reasonably sized and stable 26% oil component of RAAM's total production volumes in the current favorable price environment, a degree of diversification with onshore operations in several different areas, an experienced management team and an established operational track record over a series of industry cycles. The stable outlook is based on Moody's expectation that RAAM will continue to replace production and reserves at a pace consistent with 2012's operating performance while managing its liquidity without significantly raising its leverage from current levels. A rating upgrade could be considered if the company is able to maintain a sustained leveraged full cycle ratio above 1.0x and grow average daily production to at least 15 mBOE. Moody's could downgrade the ratings if debt to average daily production increases above $30,000 per BOE for a sustained period while evidencing a declining production trend despite steady or increasing capital spending. The Caa2 senior secured notes rating reflects both the overall probability of default of RAAM, to which Moody's assigns a PDR of Caa1, and a loss given default of LGD 4 (60%). The priority of the senior secured revolver's first lien claim relative to the senior secured notes' second lien claim results in the notes being rated one notch beneath the Caa1 CFR under Moody's Loss Given Default Methodology. The principal methodology used in rating RAAM Global Energy Company 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. RAAM Global Energy Company, headquartered in Lexington, Kentucky, is an independent exploration and production company. RADNET MANAGEMENT: Moody's Rates $330MM Sr. Sec. Term Loan Ba3 -------------------------------------------------------------- Moody's Investors Service assigned Ba3 ratings to RadNet Management, Inc.'s proposed $330 million senior secured term loan and $101.25 million revolving credit facility. Concurrently, Moody's affirmed all existing ratings including the B2 corporate family and probability of default ratings as well as Caa1 rating on the existing $200 million of senior unsecured notes. The outlook remains stable. Proceeds from the $330 million term loan are expected to be used to refinance the existing term loan and reduce revolver borrowings by $35 million. The proposed $101.25 million revolving credit facility that replaces the current $121.25 million revolver is anticipated to have $25 million of advances outstanding at the close of the transaction. Moody's notes that although interest expense will be largely unaffected, RadNet will benefit from increased covenant cushion and the extended debt maturity profile with the nearest maturity in 2017. The affirmation of existing ratings reflects Moody's expectation for stable credit metrics over the next 12 to 18 months. Additionally, Moody's ratings consider that the company will continue to drive scan volume via leverage neutral acquisitions. The following rating actions were taken (LGD point estimates are subject to change and all ratings are subject to review of final documentation): The follow ratings were assigned: $101.25 million senior secured revolving credit facility, due 2017, assigned Ba3 (LGD2, 28%); $330 million senior secured term loan, due 2018, assigned Ba3 (LGD2, 28%). The following ratings were affirmed: Corporate family rating, affirmed at B2; Probability of default rating, affirmed at B2; $200 million senior unsecured notes, due April 2018, affirmed at Caa1 (LGD5, 83%); Speculative grade liquidity rating, affirmed at SGL-2. The following ratings were affirmed and will be withdrawn at the close of the transaction: $121.25 million senior secured revolving credit facility, due April 2015, affirmed at Ba3 (LGD2, 28%); $285 million senior secured term loan, due April 2016, affirmed at Ba3 (LGD2, 28%). Rating Rationale The B2 corporate family rating incorporates the expectation that adjusted debt-to-EBITDA will remain in the 5 times range over the next 12 to 18 months as the majority of free cash flow is anticipated to be used for growth capital expenditures and acquisitions in existing markets. Further, the rating reflects the uncertain reimbursement environment. However, RadNet's leading position in certain states may increase its negotiating leverage with commercial payors. In addition, RadNet's strategy to become an all-encompassing provider of diagnostic imaging services allows the company to optimize efficiencies that support same center volume growth and margin stability. The stable outlook reflects Moody's expectation for organic revenue growth in the 1-2% range. The stable outlook also considers the expectation for disciplined acquisitions of imaging centers and related services that do not result in increased debt leverage. In addition, the outlook reflects the expectation that the company will maintain a good liquidity profile. The ratings could be upgraded if the company's expansion and growth initiatives result in a sustained increase in revenue and profitability. There could also be upward pressure on the ratings if adjusted free cash flow-to-debt was to be sustained above 5% on a projected basis and adjusted debt-to-EBITDA was to be sustained below 4.0 times on a projected basis. Furthermore, visibility in the reimbursement environment would be necessary in order for the ratings to be upgraded. The ratings would be downgraded if the company's liquidity position was to weaken significantly, continued acquisition activity resulted in a sustained increase in adjusted debt leverage above 6.0 times and/or decline in adjusted EBITA-to- interest expense to below 1.0 times. In addition, any adverse developments in the reimbursement environment that would materially impact RadNet's financial position could also be a cause for a downgrade. The principal methodology used in rating RadNet Management, Inc. was the Global Healthcare Service Providers Industry Methodology published in December 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. RadNet, headquartered in Los Angeles, California, provides diagnostic imaging services through a network of 237 diagnostic imaging facilities located in seven states, primarily in California, Maryland, and New York. Trailing twelve month revenues for the period ended June 30, 2012 were $663 million. RESIDENTIAL CAPITAL: JPMorgan Objects to 'Lift Stay' Procedures --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that no good deed goes unpunished, including the attempt by Residential Capital LLC to propose streamlined procedures allowing lenders to foreclosure mortgages coming ahead of ResCap's. According to the report, ResCap said in papers filed earlier this month that it owns or services about 200,000 mortgage loans with principal balances aggregating about $6.6 billion. With regard to those homes, other lenders have mortgages that come ahead of ResCap's. As a consequence of the automatic bankruptcy stay, the senior lenders are prohibited from foreclosing the homeowners and ResCap without permission from the bankruptcy judge. To avoid having the judge process hundreds of requests for permission to foreclose, ResCap arranged a Sept. 27 hearing for approval of procedures where senior lenders looking to foreclose would provide information about the property in default. The report relates that the senior lenders would be required to provide an appraisal of the property or a letter from a broker estimating value. If ResCap, the creditors' committee and ResCap's prospective buyers agree, bankruptcy court intervention wouldn't be required for the senior lender to foreclose. JPMorgan Chase Bank NA objected and proposed even more streamlined procedures. Notably, the senior lender wouldn't be required to produce evidence about value of the underlying property, thus putting the burden on ResCap to determine whether there could be equity for ResCap's junior mortgage. The report notes that at the Sept. 27 hearing, the bankruptcy judge might look at the dispute in terms of whether ResCap's proposal requires the senior lender to produce more or less information than would be necessary in a motion to lift the automatic stay. The Bloomberg report discloses that the $473.4 million of ResCap senior unsecured notes due April 2013 traded on Sept. 20 for 29.125 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 2015 traded on Sept. 21 for 100.5 cents on the dollar, 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). RG STEEL: Frontier Plans to Restart Mingo Junction Facility ----------------------------------------------------------- Linda Harris at The Herald Star reports that Frontier Industrial, the company that purchased the Mingo Junction works out of RG Steel's bankruptcy for $20 million, still is gauging the feasibility of restarting parts of the mill. According to the report, Frontier finalized the acquisition of the land itself for $2 million, listing it under the name "Mingo Junction Steel Works LLC." According to the report, Frontier Vice President Craig Slater reiterated the company is "seriously considering operating this facility again. We are talking to a number of folks, a number of capital funds, about restarting this facility." The report notes RG Steel had acquired the Mingo mill from Severstal NA. Prior to Severstal, it had been part of Esmark Steel and Wheeling-Pittsburgh Steel. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as it's financial advisor. ROCKWOOD SPECIALTIES: Moody's Lifts Sr. Sec. Ratings From 'Ba1' --------------------------------------------------------------- Moody's Investors Service upgraded the senior secured ratings of Rockwood Specialties Group, Inc.'s to Baa3 from Ba1. This action follows the decision by Rockwood to upsize the amount of senior unsecured notes due 2022 that it is issuing to $1.25 billion from $750 million. The additional $500 million of notes will be split between repaying existing term loan debt and cash to be retained on the balance sheet. The $250 million reduction in term loan debt reduces the proportion of secured debt in the capital structure enough to support a one notch upgrade from the Corporate Family Rating (CFR). Rockwood's Ba1 CFR and Ba2 senior unsecured rating remain unchanged. The outlook is stable. RATINGS RATIONALE Rockwood's Ba1 Corporate Family Rating assumes that this excess cash will be eventually used for additional acquisitions or to reduce the remaining term loan debt. In the short-term this excess cash will provide the company with additional liquidity at a time of slowing global growth and uncertainty. Ratings upgraded: Rockwood Specialties Group, Inc. Sr Sec Revolving Credit Facility due 2016 to Baa3 (LGD2, 20%) from Ba1 (LGD3, 38%) Sr Sec Term Loan A due 2017 to Baa3 (LGD2, 20%) from Ba1 (LGD3, 38%) Sr Sec Term Loan B due 2018 to Baa3 (LGD2, 20%) from Ba1 (LGD3, 38%) Ratings affirmed: Rockwood Specialties Group, Inc. Corporate Family Rating -- Ba1 Probability of Default Rating -- Ba1 Speculative Grade Liquidity Rating -- SGL1 Sr Unsecured Notes due 2020 -- Ba2 (LGD5, 75%) from (LGD5, 82%) Sr Unsecured Shelf Registration -- (P)Ba2 Outlook - Stable The principal methodology used in rating Rockwood was Global Chemical Industry rating methodology published in December 2009. Rockwood Specialties Group, Inc., headquartered in Princeton, New Jersey, is a wholly owned subsidiary of Rockwood Holdings, Inc. (Ticker: ROC). Rockwood produces of a variety of specialty chemicals and advanced materials, including pigments, additives, surface treatment chemicals, ceramics, and lithium. Kohlberg Kravis Roberts & Co. L.P., its former equity sponsor, owns approximately 9% of ROC's shares (the remainder are publicly held), and occupies two of the seven seats on the board of directors. Revenues were $3.6 billion for the twelve months ended June 30, 2012. RYLAND GROUP: Completes Offering of $250 Million of Senior Notes ---------------------------------------------------------------- The Ryland Group, Inc., completed its offering and sale of $250 million aggregate principal amount of 5.375% Senior Notes due 2022. The notes will be the Company's general unsecured senior obligations. The notes will pay interest semi-annually on April 1 and October 1, beginning on April 1, 2013, at a rate of 5.375% per year. The notes will mature on Oct. 1, 2022, and are redeemable, in whole or in part, at any time and from time to time under the terms provided in the indenture and supplemental indenture under which they are issued. The notes will be guaranteed by substantially all of the Company's direct and indirect wholly owned homebuilding subsidiaries. The Company intends to use the net proceeds from this offering for general corporate purposes, which may include repayment or repurchase of outstanding indebtedness. J.P. Morgan Securities LLC and Citigroup Global Markets Inc. acted as the joint-book running managers, and Deutsche Bank Securities Inc. and Wells Fargo Securities, LLC, acted as co-managers. The notes were issued pursuant to an effective shelf registration statement that was previously filed by the Company with the Securities and Exchange Commission and became effective immediately upon filing. The offering was made by means of a prospectus supplement and accompanying prospectus. Copies of the prospectus supplement and accompanying prospectus may be obtained from J.P. Morgan Securities LLC at 1-212-834-4533 or by mail to Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, Attention: Post-Sale Fulfillment; and Citigroup Global Markets Inc. toll free at 1-877-858-5407 or by mail to Citigroup Global Markets Inc., Attention: Prospectus Department, Brooklyn Army Terminal, 140 58th Street, 8th Floor, Brooklyn, New York 11220, (877) 858-5407. An electronic copy of the prospectus supplement and accompanying prospectus may also be obtained at no charge at the Securities and Exchange Commission's Web site at www.sec.gov. About Ryland Group Headquartered in Calabasas, California, The Ryland Group, Inc. (NYSE: RYL) -- http://www.ryland.com/-- is one of the nation's largest homebuilders and a leading mortgage-finance company. Since its founding in 1967, Ryland has built more than 285,000 homes and financed more than 240,000 mortgages. The Company currently operates in 15 states and 19 homebuilding divisions across the country and is listed on the New York Stock Exchange under the symbol "RYL." The Company reported a net loss of $50.75 million in 2011, a net loss of $85.14 million in 2010, and a net loss of $162.47 million in 2009. The Company's balance sheet at June 30, 2012, showed $1.80 billion in total assets, $1.32 billion in total liabilities, and $485.67 million in total equity. * * * Ryland Group carries 'B1' corporate family and probability of default ratings, with stable outlook, from Moody's. It has 'BB-' issuer credit ratings, with stable outlook, from Standard & Poor's. SAAB CARS: Panel OK'd to Retain MBAF CPAs as Financial Advisor -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized the Statutory Committee of Unsecured Creditors in the Chapter 11 cases of Saab Cars North America, Inc. to retain MBAF CPAs LLC as financial advisor. MBAF CPA is expected to, among other things: -- advise and assist the Committee with respect to any proposed financing and use of cash collateral that the Debtor may seek; -- advise and assist the Committee in identifying or reviewing any preference payments, fraudulent conveyances and other potential causes of action that the Debtor's estates may hold against insiders or third parties; and -- analyze the Debtor's assets and analyze possible recovery to the various creditor constituencies under various scenarios. About Saab Cars N.A. More than 40 U.S.-based Saab dealerships have signed an involuntary chapter 11 bankruptcy petition for Saab Cars North America, Inc., (Bankr. D. Del. Case No. 12-10344) on Jan. 30, 2012. The petitioners, represented by Wilk Auslander LLP, assert claims totaling $1.2 million on account of "unpaid warranty and incentive reimbursement and related obligations" and/or "parts and warranty reimbursement." Leonard A. Bellavia, Esq., at Bellavia Gentile & Associates, in New York, signed the Chapter 11 petition on behalf of the dealers. Donlin, Recano & Company, Inc. (DRC), has been retained to provide claims and noticing agent services to Saab Cars North America, Inc. in its Chapter 11 case. The dealers want the vehicle inventory and the parts business to be sold, free of liens from Ally Financial Inc. and Caterpillar Inc., and "to have an appropriate forum to address the claims of the dealers," Leonard A. Bellavia said in an e-mail to Bloomberg News. Saab Cars N.A. is the U.S. sales and distribution unit of Swedish car maker Saab Automobile AB. Saab Cars N.A. named in December an outside administrator, McTevia & Associates, to run the company as part of a plan to avoid immediate liquidation following its parent company's bankruptcy filing. Saab Automobile AB is a Swedish car manufacturer owned by Dutch automobile manufacturer Swedish Automobile NV, formerly Spyker Cars NV. Saab Automobile AB, Saab Automobile Tools AB and Saab Powertain AB filed for bankruptcy on Dec. 19, 2011, after running out of cash. On Feb. 24, 2012, the Court, inconsideration of the petition filed on Jan. 30, 2012, granted Saab Cars North America, Inc., relief under Chapter 11 of the Bankruptcy Code. On March 9, 2012, the U.S. Trustee formed an official Committee of Unsecured Creditors and appointed these members: Peter Mueller Inc., IFS Vehicle Distributors, Countryside Volkwagen, Saab of North Olmstead, Saab of Bedford, Whitcomb Motors Inc., and Delaware Motor Sales, Inc. The Committee tapped Wilk Auslander LLP as general bankruptcy counsel, and Polsinelli Shughart as its Delaware counsel. SABRE INC: Moody's Assigns 'B1' Rating to $250MM Sr. Sec. Notes --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to a $250 million senior secured notes add-on offered by Sabre, Inc., a wholly-owned subsidiary of Sabre Holdings Corporation. No other ratings were impacted, including Sabre's B2 Corporate Family Rating ("CFR") and stable ratings outlook. Rating assigned (and Loss Given Default assessment) to Sabre, Inc: -- Proposed $250 million add-on to Sabre, Inc.'s 8.5% first lien notes due 2019, B1 (LGD 3, 41%) Existing ratings (and Loss Given Default assessments): -- Corporate Family Rating, B2 -- Probability of Default Rating, B2 -- $216 million Sabre, Inc. first lien revolver due March 2013, B1 (LGD 3, 41%) -- $284 million Sabre, Inc. first lien revolver due September 2016, B1 (LGD 3, 41%) -- $645 million Sabre, Inc. first lien term loan due September 2014, B1 (LGD 3, 41%) -- $1.2 billion Sabre, Inc. first lien term loan due September 2017, B1 (LGD 3, 41%) -- $780 million Sabre, Inc. first lien term loans due December 2017, B1 (LGD 3, 41%) -- $400 million Sabre, Inc. 8.5% first lien notes due 2019, B1 (LGD 3, 41%) -- $400 million Sabre Holdings 8.35% senior unsecured notes due March 2016, Caa1 (LGD 6, 92%) RATINGS RATIONALE The refinancing has no ratings impact as it is leverage-neutral and improves Sabre's debt maturity wall. Interest expense and cash flow will be modestly impacted from a higher interest rate. Sabre has improved its financial leverage (debt / EBITDA) through steady debt reduction and earnings growth, and Moody's anticipates that leverage will fall below 5 times over the next 12-18 months. Sabre's B2 CFR reflects uncertainty regarding the global distribution system ("GDS") business model in light of disputes with certain airlines seeking to reduce distribution costs. Although Sabre's GDS segment continues to grow volumes, an unfavorable legal outcome could shift air travel bookings to a direct supply model from the airlines over time, or lead to pricing concessions. Nonetheless, Sabre's software and services are entrenched in the processes and systems of online and traditional travel agencies and provide efficiencies and pricing transparency that consumers demand. Travelocity, Sabre's online travel agency, continues to underperform compared to peers but this segment represents just 10% of consolidated earnings. Shortfalls have been mitigated by organic revenue growth in the software-as-a-service and GDS segments, which are larger contributors to profitability. The stable outlook reflects Moody's expectation that consolidated revenues will grow 3-5% annually over the next 12-18 months, driven primarily by organic expansion in the airline and hotel software-as-a-service segment. The ratings could be downgraded if volumes or pricing come under stress from the loss of significant customers or due to anticipated shifts in the distribution of travel supply throughout the industry, financial leverage is sustained above 6 times, or liquidity deteriorates. The ratings could be upgraded if Sabre were to favorably resolve the anti- trust lawsuits by American Airlines and U.S. Airways and the investigation by the DOJ, successfully renew its major supplier contracts, demonstrate organic revenue and earnings growth, improve its liquidity profile, and reduce debt so that financial leverage could be sustained below 5.5 times during a cyclical downturn. Headquartered in Southlake, Texas, Sabre owns one of the three largest global distribution systems, a leading software-as-a- service business that provides technology solutions to travel suppliers globally, and an online travel agency (Travelocity). Sabre is owned by TPG Partners, Silver Lake Partners and other co-investors. Annual revenues approximate $3 billion. SBA COMMUNICATIONS: Moody's Rates New $300-Mil. Senior Notes B2 --------------------------------------------------------------- Moody's Investors Service has assigned a B2 (LGD-6, 93%) rating to SBA Communications Corporation's ("SBAC" or "the company") proposed $300 million senior unsecured notes due 2019. Proceeds are expected to be used to fund a portion of the cash consideration in connection with the $1.45 billion TowerCo acquisition, anticipated to close later this year, and for general corporate purposes if the TowerCo acquisition does not close. In conjunction with this capital raise, SBAC intends to retire the unused TowerCo acquisition bridge facility. As part of this rating action, Moody's upgraded SBAC's speculative grade liquidity rating to SGL-2 from SGL-3 to reflect the company's improved liquidity profile following this note issuance and the string of financings earlier this year. Collectively, these financings provide more than sufficient liquidity to: (i) extinguish outstanding debt on the Mobilitie bridge loan, and retire it and the TowerCo bridge facility; (ii) pay down the entire outstanding debt under the $700 million revolving credit facility thus freeing up capacity for future funding needs; and (iii) fund the pending TowerCo purchase with permanent financing. Moody's also affirmed SBAC's Corporate Family Rating (CFR) and Probability of Default Rating (PDR), both at Ba3, as well as the ratings on the existing debt at SBA Senior Finance II LLC ("SBAF") and SBA Telecommunications, Inc. ("SBAT"), two indirect wholly-owned subsidiaries of SBAC. The rating outlook is negative. RATINGS RATIONALE SBAC's Ba3 CFR reflects the company's high adjusted debt to EBITDA leverage relative to peers, which is due in large part to debt- financed acquisitions, capital expenditures and increased stock buybacks. The rating does consider SBAC's scale as well as the stability of much of its revenue and cash flow generation, which are predominantly derived from contractual relationships with the largest wireless operators in the US. Moody's believes that the fundamentals of the wireless tower sector will remain favorable through the next several years. Finally, the rating reflects Moody's view that SBAC will likely temper its acquisition activity for the near term, as it gradually integrates the two large acquisitions of Mobilitie and TowerCo, both purchased this year. Moody's expects SBAC's adjusted debt to EBITDA leverage to remain above 9.0x (Moody's adjusted) levels at the end of 2012 due to the additional debt taken on as part of the TowerCo acquisition, before reducing to a range of 7.75x to 8.25x by 2014 through a combination of EBITDA growth and debt repayment. In addition, TowerCo has high exposure to the Sprint iDen towers which are scheduled to be decommissioned in 2015 and 2018. As a result, future revenue growth could be hampered if SBAC cannot offset the iDen revenue losses with revenue from new tenants or carriers augmenting their cell site equipment as they upgrade to fourth generation (4G) wireless networks. Moody's also notes that the individual debt instruments are subject to potential near-term variability especially if they are in close proximity to the expected loss assumptions underlying the rating breakpoints in Moody's Loss Given Default (LGD) rating framework for high-yield issuers, as well as dependent on the specific levels of debt at various legal entities. It is probable that further changes in the composition of the capital structure could lead to ratings volatility among the individual instruments depending on how the company refinances the unrated SBAC convertible debt maturing May 2013 ($535 million outstanding) and October 2014 ($500 million outstanding). The upgrade of the speculative grade liquidity rating to SGL-2 reflects Moody's expectation that SBAC will maintain good liquidity over the next twelve months. The proposed issuance of $300 million senior notes represents the final phase in a string of capital market financings orchestrated over the past several months to permanently fund the Mobilitie and TowerCo acquisitions, eliminate the two associated bridge loan facilities and restore full availability under the newly upsized $700 million revolving credit facility. Revolver capacity combined with expected free cash flow generation and asset sales proceeds should give SBAC more than sufficient liquidity to fund the $535 million 1.875% convertible notes maturing May 2013, if they are not converted to equity and SBAC is unable to tap the capital markets to repay the notes. Moody's expectation that SBAC will have ample cushion under its maintenance covenants also supports the SGL-2 liquidity rating. To the extent SBAC successfully refinances the convertible notes (or they are converted to equity) and the company maintains healthy cash levels following the TowerCo closing, the liquidity rating could be restored to its prior SGL-1 level. Rating Outlook The negative outlook reflects the additional risk that SBAC will face in restoring its financial profile that supports its Ba3 corporate family rating. Coming on the heels of the acquisition of Mobilitie in April, the pending purchase of TowerCo will raise SBAC's Moody's adjusted debt to EBITDA leverage above 9.0x. In addition, as the recently acquired properties have a lower tenancy ratio, the company's cash generation relative to debt will remain near the downgrade triggers until SBAC is able to add more wireless carriers on the newly acquired towers. What Could Change the Rating - Down Ratings could be downgraded if weakening industry fundamentals or SBAC's aggressive expansion plans result in the following Moody's adjusted key credit metrics on a sustained basis: debt to EBITDA over 8.5x, (EBITDA-Capex) to interest remaining in the 1x range and free cash flow to debt in the low single digits. What Could Change the Rating - Up While unlikely in the near-term, ratings may be considered for an upgrade if SBAC delivers the following Moody's adjusted key credit metrics on a sustained basis: debt to EBITDA of 7x, (EBITDA-Capex) to interest approaching 2x, and free cash flow to debt greater than 5%. Ratings Assigned: Issuer: SBA Communications Corporation $300 Million Senior Notes due 2019 - B2 (LGD-6, 93%) Ratings Upgraded: Issuer: SBA Communications Corporation Speculative Grade Liquidity, to SGL-2 from SGL-3 Ratings Affirmed: Issuer: SBA Communications Corporation Corporate Family Rating -- Ba3 Probability of Default -- Ba3 Issuer: SBA Senior Finance II, LLC $700 Million Senior Secured Revolving Credit Facility due April 2017 - Ba2 (LGD-3, 40%) $200 Million Senior Secured Term Loan A due May 2017 - Ba2 (LGD-3, 40%) $500 Million Senior Secured Term Loan B due June 2018 - Ba2 (LGD-3, 40%) $300 Million Senior Secured Incremental Term Loan B due September 2019 - Ba2 (LGD-3, 40%) Issuer: SBA Telecommunications, Inc. $244 Million 8.25% Senior Notes due August 2019 -- B1 (LGD-5, 79%) $800 Million 5.75% Senior Notes due July 2020 -- B1 (LGD-5, 79%) The assigned ratings are subject to review of final documentation and no material change in the terms and conditions of the transaction as advised to Moody's. The principal methodology used in rating SBA Communications Corporation was the Global Communications Infrastructure Industry Methodology published in June 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. With headquarters in Boca Raton, Florida, SBA Communications Corporation, through its wholly-owned operating subsidiaries, is the third largest independent operator of wireless tower assets in the US. The company derives its revenue by leasing site space on its 16,200 towers (pro forma for the Mobilitie LLC and TowerCo acquisitions) in the US, Canada, and Central America to wireless service providers, with the remaining revenue derived from its site development business, which provides network services relating to sites or wireless infrastructure for customers. Revenue was $781 million for the twelve months ended June 30, 2012. SHERIDAN INVESTMENT: Moody's Rates $800MM Sr. Sec. Term Loan B1 --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to the new $800 million senior secured term loan which will be split amongst Sheridan Investment Partners I, LLC, Sheridan Production Partners I-A, L.P., and Sheridan Production Partners I-M, L.P. (collectively Sheridan). The term loans are pari-passu with the partnerships' revolving credit facilities and the proceeds will be used to repay Sheridan's existing $584 million term loans and to reduce outstandings under its revolving credit facilities. Sheridan's existing ratings and outlooks are unchanged. "The possibility of a new $800 million term loan was incorporated into our thinking in May 2012 when we upgraded Sheridan's CFR to B1 from B2," said Stuart Miller, Moody's Vice President -- Senior Credit Officer. "Moody's continues to believe that Sheridan's long-life reserve position, its high cash margins, and the protection afforded by the credit facility's borrowing base mechanism support a B1 senior secured rating despite limited growth opportunities for the partnership." Assignments: Issuer: Sheridan Investment Partners I, LLC Senior Secured Term Loan, Assigned a rating of B1 (LGD3-34%) Issuer: Sheridan Production Partners I-A, LP Senior Secured Term Loan, Assigned a rating of B1 (LGD3-34%) Issuer: Sheridan Production Partners I-M, LP Senior Secured Term Loan, Assigned a rating of B1 (LGD3-34%) RATINGS RATIONALE Sheridan's reserve base is very low-risk with a very predictable decline curve as its portfolio of assets is dominated by older properties that have been on production for many years. In addition, compared to most traditional exploration and production companies, Sheridan's drilling risk is modest as its capital expenditures are primarily ear-marked for the drilling of infill and delineation wells in and around well-defined producing reservoirs. With approximately 55% of Sheridan's production comprised of oil and natural gas liquids, the partnership has been able to realize a robust unleveraged cash margin of about $46 per Boe for the last twelve months ending June 30, 2012. This high margin and an aggressive commodity hedging program provides protection from short term oil and natural gas price volatility. The high operating margin also helps to offset Sheridan's relatively high level of finding, development, and operating costs -- Sheridan's leveraged full cycle ratio was in excess of 2.8x at the end of June 2012. While limited in scale, Sheridan has relatively strong leverage metrics. At June 2012, debt to proved developed reserves was about $8.50 per Boe, a level more typical of a Ba rated exploration and production company. However, expectations for significant equity distributions and limited growth prospects in the future most likely preclude any future positive rating actions. Pro forma for the new term loan, Sheridan has good liquidity with positive free cash flow, a high degree of flexibility for capital expenditures and distributions, and about $150 million of borrowing capacity under its $500 million revolving credit facility that matures in March 2015. The financial covenant restrictions in its credit facility allow for significant business deterioration, however the semi-annually re-determined borrowing base, currently set at $1.3 billion, provides the most meaningful governor on leverage. Secondary liquidity is limited because the vast majority of the company's assets are pledged as security for the credit facility. Given the limited growth prospects for Sheridan and its business strategy, further ratings improvements are unlikely. However, if the company chooses to apply its free cash flow to debt reduction so that the ratio of debt to proved developed reserves is less than $5 per Boe or retained cash flow to debt exceeds 30%, it could signal a change in financial policies that could warrant an upgrade. A ratings downgrade could be appropriate if debt to proved developed reserves exceeds $10 per Boe. The principal methodologies used in this rating were Independent Exploration and Production (E&P) Industry published in December 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. SEALY CORP: Hayman Capital Discloses 5.9% Equity Stake ------------------------------------------------------ In a Schedule 13G filing with the U.S. Securities and Exchange Commission, Hayman Capital Management, L.P., and its affiliates disclosed that as of Sept. 10, 2012, they beneficially own 5,644,245 shares of common stock of Sealy Corporation representing 5.9% of the shares outstanding. A copy of the filing is available for free at http://is.gd/7CX3IA About Sealy Corp. Trinity, North Carolina-based Sealy Corp. (NYSE: ZZ) -- http://www.sealy.com/-- is the largest bedding manufacturer in the world with sales of $1.5 billion in fiscal 2008. The Company manufactures and markets a broad range of mattresses and foundations under the Sealy(R), Sealy Posturepedic(R), including SpringFree(TM), PurEmbrace(TM) and TrueForm(R); Stearns & Foster(R), and Bassett(R) brands. Sealy operates 25 plants in North America, and has the largest market share and highest consumer awareness of any bedding brand on the continent. In the United States, Sealy sells its products to approximately 3,000 customers with more than 7,000 retail outlets. The Company reported a net loss of $9.88 million for the 12 months ended Nov. 27, 2011, and a net loss of $13.74 million during the prior year. The Company reported a net loss of $15.20 million for the three months ended Nov. 27, 2011. The Company's balance sheet at May 27, 2012, showed $923.55 million in total assets, $988.20 million in total liabilities and a $64.64 million total stockholders' deficit. * * * Sealy carries 'B' local and issuer credit ratings, with stable outlook, from Standard & Poor's. SEARCHMEDIA HOLDINGS: Sells Additional 855,000 Common Shares ------------------------------------------------------------ SearchMedia Holdings Limited closed on the second tranche of its previously announced stock purchase agreement with certain accredited investors, pursuant to which the Company sold in a PIPE transaction an aggregate of an additional 855,000 shares of the Company's common stock, par value $0.0001 per share, at a price per share of $1.00. The Company previously closed on the first tranche of 6.1 million shares with a per share price of $1.00 per share on Aug. 17, 2012. The terms and conditions of the Stock Purchase Agreement include standard representations and warranties. About SearchMedia SearchMedia is a leading nationwide multi-platform media company and one of the largest operators of integrated outdoor billboard and in-elevator advertising networks in China. SearchMedia operates a network of high-impact billboards and one of China's largest networks of in-elevator advertisement panels in 50 cities throughout China. Additionally, SearchMedia operates a network of large-format light boxes in concourses of eleven major subway lines in Shanghai. SearchMedia's core outdoor billboard and in- elevator platforms are complemented by its subway advertising platform, which together enable it to provide a multi-platform, "one-stop shop" services for its local, national and international advertising clients. Marcum Bernstein & Pinchuk LLP, in New York, issued a "going concern" qualification on the consolidated financials statements for the year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses and has a working capital deficiency of approximately $31,000,000 at Dec. 31, 2011, which raises substantial doubt about its ability to continue as a going concern. Searchmedia Holdings reported a net loss of $13.45 million in 2011, a net loss of $46.63 million in 2010, and a net loss of $22.64 million in 2009. The Company's balance sheet at June 30, 2012, showed US$39.18 million in total assets, US$41.22 million in total liabilities and a US$2.04 million total shareholders' deficit. SEARS HOLDINGS: Adopts New 2012 LTIP Performance Goals ------------------------------------------------------ The Compensation Committee of the Board of Directors of Sears Holdings Corporation adopted new 2012-2014 performance goals and measures under the Sears Holdings Corporation Long-Term Incentive Program. The 2012 LTIP provides the opportunity for participating salaried employees who hold a position of divisional vice president or higher to receive a long-term incentive award equal to either a percentage of his or her base salary or a dollar amount subject to the attainment of performance goals in any one fiscal year in fiscal years 2012 through 2014. Awards under the 2012 LTIP represent the right to receive cash or, at the discretion of the Compensation Committee, shares of the Company's common stock in lieu of cash or a combination of cash and shares upon the achievement of certain performance goals. The issuance of common stock under the 2012 LTIP is contingent on the availability of shares of stock under a shareholder-approved plan of the Company providing for the issuance of shares in satisfaction of 2012 LTIP awards. The 2012 LTIP also provides that the Company will seek reimbursement from executives if the Company's financial statements or approved financial measures are subject to restatement due to error or misconduct, to the extent permitted by law. Opportunities for participants under the 2012 LTIP are based on either 100% SHC LTIP EBITDA or a combination of SHC LTIP EBITDA and Business Operating Profit for one or more business units. The Compensation Committee has determined which performance measure or measures applies to each participating executive officer. Dane A. Drobny, Senior Vice President, General Counsel and Corporate Secretary, and William K. Phelan, Senior Vice President, Finance, are the only executive officers named in the Company's 2012 proxy statement who participate in the 2012 LTIP. For each of Messrs. Drobny and Phelan, achievement of the SHC LTIP EBITDA performance goal accounts for 100% of their 2012 LTIP opportunity. The threshold level of performance for the SHC LTIP EBITDA measure is approximately 80% of SHC LTIP EBITDA target in any year of the three-year performance period. A threshold level of performance will generate a payout at 25% of the 2012 LTIP target opportunity and a target level of performance will generate a payout at 100% of the 2012 LTIP target opportunity. The maximum LTIP incentive opportunity under the 2012 LTIP is 200% of the participant's target award amount (which is reached at 150% of target performance). The target award percentage under the 2012 LTIP for each of Messrs. Drobny and Phelan is 150% of base salary. About Sears Hoffman Estates, Illinois-based Sears Holdings Corporation (Nasdaq: SHLD) -- http://www.searsholdings.com/-- is the nation's fourth largest broadline retailer with more than 4,000 full-line and specialty retail stores in the United States and Canada. Sears Holdings operates through its subsidiaries, including Sears, Roebuck and Co. and Kmart Corporation. Sears Holdings also owns a 94% stake in Sears Canada and an 80.1% stake in Orchard Supply Hardware. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has the Country Living collection, which is offered by Sears and Kmart. Kmart Corporation and 37 of its U.S. subsidiaries filed voluntary Chapter 11 petitions (Bankr. N.D. Ill. Lead Case No. 02-02474) on Jan. 22, 2002. Kmart emerged from chapter 11 protection on May 6, 2003, pursuant to the terms of an Amended Joint Plan of Reorganization. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. Kmart completed its merger with Sears on March 24, 2005. The Company's balance sheet at July 28, 2012, showed $21.18 billion in total assets, $16.68 billion in total liabilities and $4.49 billion in total equity. Negative Outlook Standard & Poor's Ratings Services in January 2012 lowered its corporate credit rating on Hoffman Estates, Ill.-based Sears Holdings Corp. to 'CCC+' from 'B'. "We removed the rating from CreditWatch, where we had placed it with negative implications on Dec. 28, 2011. We are also lowering the short-term and commercial paper rating to 'C' from 'B-2'. The rating outlook is negative," S&P said. "The corporate credit rating reflects our projection that Sears' EBITDA will be negative in 2012, given our expectations for continued sales and margin pressure," said Standard & Poor's credit analyst Ana Lai. She added, "We further expect that liquidity could be constrained in 2013 absent a turnaround or substantial asset sales to fund operating losses." Moody's Investors Service in January 2012 lowered Sears Holdings Family and Probability of Default Ratings to B3 from B1. The outlook remains negative. At the same time Moody's affirmed Sears' Speculative Grade Liquidity Rating at SGL-2. The rating action reflects Moody's expectations that Sears will report a significant operating loss in fiscal 2011. Moody's added that the rating action also reflects the company's persistent negative trends in sales, which continue to significantly underperform peers. SPIRIT FINANCE: Offering 29 Million Common Shares ------------------------------------------------- Spirit Realty Capital, Inc., formerly Spirit Finance Corp, filed with the U.S. Securities and Exchange Commission a free writing prospectus relating to the offering of 29 million shares of common stock. The underwriters have an option to sell additional 4.3 million shares. The Company estimates that the net proceeds from this offering will be approximately $394.6 million ($455.2 million if the underwriters exercise their over-allotment option in full). The Company intends to use these net proceeds plus available cash to repay its outstanding $399 million TLB, to pay $15.6 million of estimated costs and expenses associated with securing lenders' consents to this offering and the secured revolving credit facility the Company expects to enter into upon completion of this offering and any remainder for general business and working capital purposes, including potential future acquisitions. A copy of the FWP as filed with the SEC is available at: http://is.gd/rQC0k7 About Spirit Finance Spirit Finance Corporation, headquartered in Phoenix, Arizona, is a REIT that acquires single-tenant, operationally essential real estate throughout United States to be leased on a long-term, triple-net basis to retail, distribution and service-oriented companies. * * * As reported by the TCR on Feb. 16, 2012, Standard & Poor's Ratings Services affirmed its 'CCC+' corporate credit rating on Spirit Finance Corp and the Company's 'CCC+' issue-level rating on the company's term loan. In the Sept. 15, 2011, edition of the TCR, Moody's Investors Service affirmed the corporate family rating of Spirit Finance Corporation at Caa1. "This rating action reflects Spirit's consistent compliance with its term loan covenants throughout the downturn (despite relatively thin cushion at certain times), as well as the recent debt paydown which, in Moody's view, will help Spirit remain in compliance within the stated covenant limits going forward." SUMMIT MATERIALS: S&P Affirms 'BB-' CCR; Outlook Negative --------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Washington, D.C.-based Summit Materials LLC to negative from stable. "At the same time, we affirmed our ratings, including the 'BB-' corporate credit rating," S&P said. "The outlook revision reflects our assessment that Summit's operating results and credit measures for full-year 2012 will likely be weaker than our prior expectations because of flat to slightly lower aggregates demand in several of Summit's markets, a highly competitive highway construction market, and inconsistent (but improving) housing market recovery," said Standard & Poor's credit analyst Thomas J. Nadramia. "In our previous base case scenario, we expected Summit's 'same store' revenues for 2012 would be about the same when compared with 2011, due to highway spending that would be flat to slightly down but would be offset by increased demand from other sectors as commercial construction and housing start activity improved," S&P said. "Through the first six months of 2012, while sales results were close to expectations, operating earnings and EBITDA were about 15% behind our forecast. (Summit does not publicly disclose financial results.) Demand for aggregates in several of Summit's markets has been hampered by delayed highway construction, poor weather, and competitive pressures in highway construction businesses, which have reduced margins. As a result, we estimate total leverage, including operating lease and post-retirement obligations, is currently about 6x and expect it to remain above 5x during the next several quarters. In addition, we expect FFO to debt of about 11%, less than our previous estimate of 15%, a level we consider weak for the current rating," S&P said. "The potential remains that leverage can be reduced further and business volumes could recover more than expected in the third and fourth quarter. Also, company owners Blackstone Capital Partners V L.P. and Silverhawk Summit L.P. have the ability to contribute capital to refund debt previously used for acquisitions. We had previously expected leverage measures to improve to about 4.5x by the end of 2012 and remain at about 4.0x to 4.5x over the longer term," S&P said. "The ratings on Summit Materials, LLC reflects what Standard & Poor's views as the company's 'aggressive' financial risk and 'weak' business risk profiles. Summit Materials was formed to acquire and grow building materials companies which produce aggregates, asphalt, cement, and paving and construction products," S&P said. "The negative outlook reflects our expectation that due to a weaker-than-expected first half of 2012, credit measures will be weak for the rating over the next several quarters, exceeding 5x at year end. We expect end-market demand for Summit's existing asphalt, cement, and aggregates products will not change materially over the next 12 months because infrastructure spending and nonresidential construction will remain relatively flat and we expect further improvement in residential construction markets," S&P said. "We also expect the company to continue growing via acquisitions likely funded through a mix of debt and equity, with the potential to reduce leverage to under 5x in 2013. However, we could lower our rating if renewed recessionary pressures cause a decline in demand or margins resulting in a lack of progress in reducing leverage to below 5x over the next 12 months. This could occur if housing starts fail to increase to the forecasted 900,000-plus starts or if the economy experiences renewed recessionary pressures," S&P said. "For a higher rating, Summit would need to expand the size and scale of its businesses and increase its geographical diversity through additional acquisitions, such that we view its business risk improves to 'fair' from 'weak'. In addition, we would expect pro forma leverage to be maintained below 4x. This could occur if continued acquisitions bring total revenues well above $1 billion and EBITDA of $200 million or higher," S&P said. SUN RIVER: Incurs $3 Million Net Loss in July 31 Quarter -------------------------------------------------------- Sun River Energy, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss applicable to common stockholders of $3.05 million on $21,000 of revenue for the three months ended July 31, 2012, compared with a net loss applicable to common stockholders of $2.65 million on $111,000 of revenue for the same period during the prior year. The Company's balance sheet at July 31, 2012, showed $12.71 million in total assets, $14.23 million in total liabilities and a $1.52 million total stockholders' deficit. Going concern considerations The Company has negative working capital of $13,793,000 at July 31, 2012. Approximately $10,339,000 of the negative working capital position was comprised of amounts owed to significant stockholders, including Officers of the Company. The Company is attempting to raise capital to resolve the working capital requirements and develop the oil and gas assets. The Company has multiple options available to meet the current financial obligations when due: 1 * The Company is attempting to settlement of its $4,000,000 note payable - related party obligation with assignment of certain mineral rights that the Company was not anticipating to develop; and/or * Sun River has raised capital in a Preferred Stock offering, and the Company is currently attempting to raise additional equity through the sale of additional common stock and will utilize any proceeds to improve their working capital; and/or * The Company may sell a portion of its mineral rights to improve its working capital, in addition to other selected current liabilities of the Company which may be due. However, there can be no assurance that the Company will be able to execute any or all of the contemplated transactions, which raises substantial doubt about the Company's ability to continue as a going concern. A copy of the Form 10-Q is available for free at: http://is.gd/yd6a7A About Sun River Dallas, Tex.-based Sun River Energy, Inc., is an exploration and production company focused on oil and natural gas. Sun River has mineral interests in two major geological areas. Each area has a distinct development plan, and each area brings a different value matrix to the Company. The Company has mineral interests in the Raton Basin located in Colfax County, New Mexico, and in several counties in the highly prolific East Texas Basin. In the auditors' report accompanying the consolidated financial statements for the year ended April 30, 2012, LightfootGuestMoore&Co, P.C., in Dallas, Tex., expressed substantial doubt about Sun River's ability to continue as a going concern. The independent auditors noted that the Company has an accumulated earnings deficit of $41,027,526. The Company reported a net loss of $24.0 million on $293,000 of revenues for the year ended April 30, 2012, compared with a net loss of $7.4 million on $98,000 of revenues for the year ended April 30, 2011. SUNWEST MANAGEMENT: Faces Fraud Charges Over "Ponzi Scheme" ----------------------------------------------------------- StatesmanJournal.com reports that Michael Harder, 47, the founder of Sunwest Management Inc., faces a federal indictment for fraud charges. On Sept. 21, 2012, Mr. Harder was arraigned in Portland and entered a not guilty plea. According to the report, federal prosecutors accuse Mr. Harder of operating a "Ponzi scheme" that defrauded more than 1,000 investors out of about $130 million. The report notes, in May 2012, 17 properties, the last remnants of Sunwest's real estate holdings, were sold at auction. About Sunwest Management Founded in Oregon in 1991, Sunwest Management -- http://www.sunwestmanagement.com/-- was one of the largest private senior living providers in the U.S. In March 2009, U.S. District Judge Michael Hogan appointed Michael Grassmueck -- founder and principal of Portland, Oregon-based Grassmueck Group, a national firm that specializes in fiduciary and insolvency services -- as receiver for the Company after the Securities and Exchange Commission filed suit against Sunwest and former CEO Jon Harder, alleging securities fraud. Sunwest Management placed 10 assisted living centers -- two in Oregon -- into Chapter 11 bankruptcy. Briarwood Retirement and Assisted Living Community LLC, which owns a retirement center in Springfield, and Century Fields Retirement and Assisted Living Community LLC, which owns a center in Lebanon, filed for Chapter 11 protection on August 19, 2008. On Aug. 17, 2008, eight Sunwest-affiliated LLCs filed for Chapter 11 bankruptcy protection from creditors in Tennessee. Sunwest was later renamed Stayton SW Assisted Living. As reported by the Troubled Company Reporter on July 16, 2010, Judge Hogan confirmed the plan of reorganization in the Chapter 11 proceedings of Stayton. The plan provides for the sale of up to 149 senior living facilities to a joint venture formed by Blackstone Real Estate Advisors VI L.P., Emeritus Senior Living and Columbia Pacific Advisors. The Blackstone/Emeritus joint venture acquired the properties in exchange for cash, securities and debt valued at $1.3 billion in cash. Under the Plan, existing Sunwest investors were permitted to receive either cash or securities in the new company, with a choice between Class A preferred interests paying 6%, or up to 49% in common interests in the joint venture. The reorganization plan also provides for the creation of a Trustco entity to hold certain non-senior living assets, such as apartments, office buildings and bare land, and liquidate the assets over time for the benefit of the estate's investors and creditors. The Receiver oversees Trustco. In August 2010, Stayton completed the sale of 132 senior living facilities to the joint venture. The transaction was valued at $1.2 billion. In December 2010, the federal equity receiver in charge of former Oregon-based senior living provider Sunwest Management announced a 40% initial distribution to investors and other claimants in the Sunwest securities violation case and related Chapter 11 bankruptcy proceeding. Resources for the initial distribution total $228 million and derive from a $1.2 billion real estate transaction closed earlier this year, in which a joint venture led by Blackstone Real Estate Advisors VI LP and Emeritus Senior Living acquired 144 Sunwest properties in exchange for cash, securities and assumption of debt. SUSSER HOLDINGS: Moody's Says Unit's IPO Has No Impact on 'B1' CFR ------------------------------------------------------------------ Moody's Investors Service said that Susser Holdings Corporation's ("SHC") initial public offering of its wholesale fuel distribution business through a newly created Master Limited Partnership ("Susser Petroleum Partners LP" or "MLP") has no impact on Susser Holding LLC's ("Susser") B1 corporate family and probability of default rating or the B2 rating of its senior unsecured notes. Susser's outlook is stable and Speculative Grade Liquidity rating is SGL-2. The MLP will operate the company's wholesale fuel distribution business. Total net proceeds from the IPO will be about $180 million and will be distributed to Susser. The underwriters of the IPO have a 30 day option to purchase additional MLP common units which could result in additional net proceeds of about $25 million to $30 million that will also be distributed to Susser. SHC will own the General Partner of the MLP as well as the majority of the common units representing the limited partner interests and all of the MLP incentive distribution rights. The balance sheet and earnings of the MLP will be consolidated into SHC's financial statements. Moody's believes that the transaction will result in Susser losing the benefit of the direct earnings stream from the wholesale distribution business as a majority of these earnings will now be distributed to SHC the majority unit holder of the MLP and the public unitholders. It is also Moody's view that the IPO creates a financing arm to fund SHC's growth and over time will result in an increase in the leverage of the overall consolidated entity. Moody's conclusion that Susser's ratings and outlook are not impacted by the IPO is based on its view that Susser is well positioned within its current B1 ratings category to absorb any potential impact of the transaction. Susser's adjusted Debt/EBITDA has dropped to about 4.0 times at the end of second quarter 2012 from 5.3 times at the end of fiscal year 2010, and EBITA/Interest has improved to about 2.5.times from 1.1 times during that same period. Susser's senior secured notes are guaranteed by SHC which also partially mitigates the concern regarding the loss of the direct earnings stream from the wholesale distribution business. Moody's also believes that the debt at the MLP level is structurally subordinated and junior to Susser's existing debt obligations. Additionally, the proceeds from the IPO are primarily expected to be used to repay Susser's senior unsecured notes when they become callable in May 2013, although the company is not obligated to do so. The last rating action on Susser Holdings LLC was a change in outlook from negative to stable on October 3, 2011. The principal methodology used in rating Susser Holdings LLC was the Global Retail Industry Methodology published in June 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in U.S., Canada and EMEA published in June 2009. Susser Holdings LLC, headquartered in Corpus Christi, Texas, operates 545 convenience stores in Texas, Oklahoma, and New Mexico under the Stripes and Town & Country banners. The company is also the largest wholesale motor fuel distributor in Texas supplying approximately 567 independent retailers and over 1,300 other commercial customers, including unbranded convenience stores, other fuel distributors, school districts and municipalities. T3 MOTION: Obtains $250,000 Senior Bridge Loan Facility ------------------------------------------------------- T3 Motion, Inc., entered into a Securities Purchase Agreement with an accredited investor pursuant to which the Investor provided a senior secured bridge loan to the Company in the aggregate principal amount of $250,000. Pursuant to the terms of the Security Agreement, the Loan is secured by all assets of the Company. The Note was on Sept. 21, 2012. About T3 Motion Costa Mesa, Calif.-based T3 Motion, Inc., develops and manufactures T3 Series vehicles, which are electric three-wheel stand-up vehicles that are directly targeted to the public safety and private security markets. After auditing the 2011 results, KMJ Corbin & Company LLP, in Costa Mesa, California, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred significant operating losses and has had negative cash flows from operations since inception, and at Dec. 31, 2011, has an accumulated deficit of $54.9 million. The Company reported a net loss of $5.50 million in 2011, compared with a net loss of $8.32 million in 2010. The Company's balance sheet at June 30, 2012, showed $2.85 million in total assets, $3.31 million in total liabilities and a $451,781 total stockholders' deficit. TAXMASTERS INC: Dist. Court Rules on Lawsuit for Unpaid Overtime ---------------------------------------------------------------- District Judge Melinda Harmon in Houston, Texas, denied motions for summary judgment filed by plaintiffs in the lawsuit, Brandon Wells, et al, Plaintiffs, v. Tax Masters, Inc., et al, Defendants, Civil Action No. 4:10-CV-2373 (S.D. Tex.). Before the Court are four motions 1) Plaintiffs Otis Durrett and David Pesquera's motion for summary judgment; 2) Plaintiffs Adewole Adegbenro, James Balentine, Allison Ballard, Tamme Craft, John Michael Cruise, Jermaine Hill, Elie King, Francisco Lopez, Carlisle Mitchell, Monica Powell, Deaphalis Sample, Nicki Sample, Ronald Sample, Thelma Sample, Horace Sutterer, Feliciano Velazquez, Brandon Wells, and Kirk Williams' motion for summary judgment; and 3) Plaintiff Darryl de la Bastide's motion for summary judgment. The Plaintiffs moved for partial summary judgment as to the Defendants' liability on the grounds that the undisputed facts and the Plaintiffs' summary judgment evidence show that the Plaintiffs were non-exempt employees under the terms of the Fair Labor Standards Act and that the Plaintiffs therefore are entitled to judgment as a matter of law on the question of the Defendants' liability. The fourth motion is Defendants Tax Masters, Inc., TMIRS Enterprises, Ltd., TM GP Services, LLC d/b/a TaxMasters, Patrick R. Cox, and Alex Clamon's motion for summary judgment on the grounds that the Plaintiffs have failed to introduce any evidence that the Defendants violated the FLSA by not paying overtime and that the Plaintiffs were at all relevant times "exempt employees" under the "commissioned sales" exception to the FLSA. The Defendants additionally contend that the "Defendants Cox and Clamon do not qualify as Plaintiffs' 'employer' under the FLSA." After considering the motions, the facts of the case, and the relevant law, the Court finds that the Plaintiffs were exempt under the FLSA's "commissioned sales" exception. The Court therefore denies the Plaintiffs' motions for summary judgment and grants the Defendants' motion. Tax Masters employed "tax consultants" who "act[ed] as sales persons for [Defendants] and [sold] its tax services to potential clients." Tax consultants worked from an office and made telephone calls to potential clients. Tax consultants underwent a four to eight week training period when they were hired, during which Tax Masters paid the consultants a "training wage" of $11.50 per hour. After that period, Tax Masters compensated consultants entirely through commissions earned by selling Tax Masters' services to potential clients, or a base wage of $11.50 per hour, whichever was higher. If the consultants' commissions were sufficiently low that they earned the base wage, Tax Masters paid overtime in the amount of one and a half times the hourly base wage for all hours worked in excess of forty in a single week. When the consultants' commissions were sufficiently high, Tax Masters paid only those commissions and did not pay overtime for any hours worked in a single week in excess of forty. The Plaintiffs have introduced evidence indicating that they routinely worked more than 40 hours per week and were paid "straight commission" for all hours worked during that week. The parties agree that Tax Masters routinely paid consultants at least 50% of their wages in commissions, although the Plaintiffs contend that consultants earned "straight commissions," or 100% of their wages from commission, after the initial training period. The Plaintiffs and Tax Masters all have moved for summary judgment. The Plaintiffs have moved for partial summary judgment on the issue of liability, asserting that the undisputed facts in this case demonstrate Defendants' liability under the FLSA and the sole remaining issues pertain only to damages. Tax Masters have moved for summary judgment on the grounds that the undisputed facts demonstrate that the Plaintiffs have failed to introduce any evidence that Tax Masters violated the FLSA by not paying overtime, that the Plaintiffs were "exempt employees" under the "commissioned sales" exception to the FLSA and that Defendants Cox and Clamon do not qualify as the Plaintiffs' 'employer' under the FLSA. Because the Court finds that the Plaintiffs were exempt from FLSA's overtime provisions under the "commissioned sales" exemption, it does not reach the additional issue of Cox and Clamon's employer status under the Act. A copy of the District Court's Sept. 18, 2012 Opinion and Order is available at http://is.gd/IaJHHWfrom Leagle.com. About TaxMasters Inc. Tax Masters Inc. provided tax related services including "preparing taxpayers' federal income tax returns; representing taxpayers in responding to IRS audits of their income tax returns; negotiating releases or reduction in IRS wage garnishments proceedings of taxpayers; and representing taxpayers in various other IRS enforcement actions." Tax Masters filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-32064) on March 18, 2012. Johnie J. Patterson, Esq., at Walker & Patterson, P.C., in Houston, serves as counsel. The Debtor estimated up to $50,000 in assets and up to $10 million in liabilities. Tax Masters filed bankruptcy intending to forestall a lawsuit by the Texas Attorney General scheduled to go on trial the next day. The suit went ahead under the attorney general's exercise of regulatory powers that aren't halted by bankruptcy. After an eight-day trial, the jury on March 30, 2012, concluded that the company and its founder Patrick Cox should pay $195 million. The jury found 110,000 violations, assessing $113 million in restitution, $81 million in civil penalties and $1 million for attorneys' fees. The attorney general said Tax Masters "misled and defrauded their customers." In Aptil 2012, the bankruptcy court approved the appointment of W. Steven Smith to serve as Chapter 11 trustee. THERMON INDUSTRIES: S&P Puts 'B+' CCR on CreditWatch Positive ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit rating on San Marcos, Texas-based Thermon Industries Inc. on CreditWatch with positive implications. "The CreditWatch placement reflects the potential for less aggressive financial policies if Thermon's private equity sponsor reduces its stake in the company in line with terms of the secondary offering announcement," said Standard & Poor's credit analyst Sarah Wyeth. "Credit measures are currently better than our expectations for the rating as a result of good operating performance and debt reduction." "On closing of the transaction, and subject to our review of the terms and management's strategic and financial objectives, we could raise the ratings, including the corporate credit rating, one notch to 'BB-', remove the ratings from CreditWatch, and assign a stable outlook," S&P said. "The ratings reflect Thermon's 'weak' business risk profile, characterized by limited product and end market diversity, and its 'aggressive' financial risk profile. We expect the company to benefit from stable global demand for Thermon's products from industrial and energy end markets. We also expect the company to maintain an operating margin (before depreciation and amortization [D&A]) of at least 20%. This should result in debt to EBITDA of about 2x, better than the 4x to 5x we consider in line with the rating. Our fiscal 2013 forecast assumes good demand for Thermon's products and services in oil, gas, power and chemical markets, resulting in low-double-digit growth in revenue. The company should be able to reduce inventory now that its new manufacturing facility is complete. This, in addition to modest capital expenditures, should result in free cash flow generation of about $40 million," S&P said. "We expect Thermon to maintain a leading position in the roughly $1 billion market for industrial electric heat-tracing products and services. Heat tracing is the external application of heat to pipes, tanks, and instrumentation to maintain a certain temperature of the fluid or gas being processed. The company is likely to continue to manufacture heat-tracing cables and assemble ancillary components, representing minimal product diversity. It also is likely to continue to provide design and engineering services; turnkey solutions; and maintenance, repair, and overhaul services to heat-tracing systems. Thermon has limited end-market diversity; about two-thirds of its revenues come from the oil and gas industry. Other end markets include chemical, power, and commercial," S&P said. "We believe Thermon's revenues will continue to be tied to the cyclical capital expenditures of customers in these markets. The industrial electric heat-tracing industry is concentrated, with the top two players making up a large portion of the market. Thermon competes with larger, well-capitalized Tyco International Ltd., which has the most extensive installed base globally and is likely to keep its top position in the market. The integral nature of Thermon's recurring maintenance services for a facility's operation partly offsets these risks. This, along with the relatively small portion of total facility expense that a heat- tracing system makes up, insulates the company somewhat from end- market cyclicality," S&P said. "Global energy demands should enable Thermon to maintain its good geographic diversity; currently more than half of its revenues come from outside of the U.S. Increased energy exploration in arctic climates, such as northern Canada and Russia, could benefit the company. Thermon's cost structure is somewhat flexible, allowing it to maintain an operating margin of approximately 20% through the recent recession. We expect the company to maintain a operating margin greater than 20% over the next couple of years," S&P said. "We consider Thermon's financial risk profile 'aggressive' because of its April 2010 acquisition by Code Hennessy & Simmons LLC, which was partly financed through $210 million in senior secured notes. The company has since issued shares publicly and used part of the proceeds to redeem a portion of the notes. Subsequent debt redemptions have resulted in the ratio of total debt (including operating leases) to EBITDA decreasing to 1.7x and funds from operations (FFO) increasing to 34% of debt as of June 30, 2012. For the ratings, we expect total debt to EBITDA of 4x to 5x and FFO to total debt of 10% to 15%," S&P said. "Private-equity sponsors retain a controlling interest in the company, which in our view reflects an aggressive financial policy that partly offsets good credit measures. If the secondary offering is completed in line with terms the company announced, we believe the financial policy could become less aggressive. We expect the company to make bolt-on acquisitions using accumulated cash, proceeds from the IPO, and incremental debt, which could result in leverage returning to more than 4x," S&P said. "The CreditWatch positive placement reflects our expectation that the secondary offering would result in minority ownership by the company's private equity sponsors and, in turn, could imply a less aggressive financial policy. When the secondary offering is complete, subject to our review of the terms and management's strategic and financial policies, we could raise the corporate credit rating by one notch. We could remove the ratings from CreditWatch if the proposed offering is delayed, cancelled, or completed on materially different terms than currently proposed," S&P said. THOMPSON CREEK: Kevin Douglas Discloses 5% Equity Stake ------------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, Kevin Douglas and his affiliates disclosed that as of Sept. 12, 2012, they beneficially own 8,500,000 shares of common stock of Thompson Creek Metals Company Inc. representing 5% of the shares outstanding. A copy of the filing is available at: http://is.gd/OpEb2n About Thompson Creek Metals Thompson Creek Metals Company Inc. is a growing, diversified North American mining company. The Company produces molybdenum at its 100%-owned Thompson Creek Mine in Idaho and Langeloth Metallurgical Facility in Pennsylvania and its 75%-owned Endako Mine in northern British Columbia. The Company is also in the process of constructing the Mt. Milligan copper-gold mine in central British Columbia, which is expected to commence production in 2013. The Company's development projects include the Berg copper-molybdenum-silver property and the Davidson molybdenum property, both located in central British Columbia. Its principal executive office is in Denver, Colorado and its Canadian administrative office is in Vancouver, British Columbia. More information is available at http://www.thompsoncreekmetals.com The Company's balance sheet at June 30, 2012, showed $3.45 billion in total assets, $1.56 billion in total liabilities and $1.88 billion in shareholders' equity. * * * As reported by the TCR on Aug. 14, 2012, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Denver- based molybdenum miner Thompson Creek Metals Co. to 'CCC+' from 'B-'. "These rating actions follow Thompson Creek's announcement of weaker production and higher cost expectations through next year," said Standard & Poor's credit analyst Donald Marleau. In the May 9, 2012, edition of the TCR, Moody's Investors Service downgraded Thompson Creek Metals Company Inc.'s Corporate Family Rating (CFR) and probability of default rating to Caa1 from B3. Thompson Creek's Caa1 CFR reflects its concentration in molybdenum, relatively small size, heavy reliance currently on two mines, and the need for favorable volume and price trends in order to meet its increasingly aggressive capital expenditure requirements over the next several years. THUNDERBIRD TRUCKING: Case Summary & 20 Largest Unsec Creditors --------------------------------------------------------------- Debtor: Thunderbird Trucking, Inc. 801 Forest Kansas City, MO 64106 Bankruptcy Case No.: 12-43934 Chapter 11 Petition Date: September 19, 2012 Court: United States Bankruptcy Court Western District of Missouri (Kansas City) Judge: Arthur B. Federman Debtor's Counsel: Daniel L. Allen, Esq. ALLEN & ASSOCIATES 6506 N. Oak Trafficway Gladstone, MO 64118 Tel: (816) 842-3328 Fax: (816) 842-4489 E-mail: lawoffice@bankruptcylawyerkc.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/mowb12-43934.pdf The petition was signed by Joseph Palmentere, president. TRACY PRESS: Ralph Allredge Has $425,000 for Newspapers ------------------------------------------------------- Tracy Press reports that Ralph Alldredge has made an offer to purchase the Tracy Press, which is owned by the Matthews family. According to the report, court documents filed with the U.S. Bankruptcy Court for the Eastern District of California indicated Mr. Alldredge offered $425,000 to purchase the Tracy Press, Scotts Valley Banner and Patterson Irrigator, all weekly newspapers. Tracy Press Inc. directly runs the Press and Banner, and is sole owner of Patterson Irrigator LLC, which publishes the newspaper of the same name, the report notes. The report notes the sale could be approved during a hearing in Sacramento at 10 a.m. Oct. 10, 2012 The report relates a previous purchase offer by H. Lee Wilcox and Phoenix Publishing Co. fell through, according to the documents submitted to the court. "Despite all conditions being met by the Debtor (Tracy Press), Phoenix failed to complete the purchases and failed to pay any funds whatsoever to the Debtor" according to the report, citing a statement. The report notes Mr. Alldredge is the publisher of the Calaveras Enterprise newspaper and a member of the California Newspaper Publisher Association board of directors. About Tracy Press Based in Tracy, California, Tracy Press, Inc., is the publisher of the weekly Tracy Press and, in Santa Cruz County, the Press- Banner. It also has published the Patterson Irrigator since 2003, but that paper's own limited liability company -- which includes a print shop -- has not filed for bankruptcy. Tracy Press filed for Chapter 11 on July 2, 2010 (Bankr. E.D. Calif. Case No. 10-37525), estimating assets of $500,001 to $1 million and debts of $1 million to $10 million. TRUE LIFE: Filing for Chapter 11 Bankruptcy Protection ------------------------------------------------------ Alison Bauter at The Journal Times reports that Pastor Jeff Butler said True Life, a religious institution, is filing for bankruptcy under Chapter 11 protection. Pastor Butler broke the news after an ultimatum from True Life's bank asking the church to pay more than $4 million in debt or surrender its building. The report relates Pastor Butler announced Tri City National Bank's intent to foreclose on the church, and True Life's plan to file for bankruptcy under Chapter 11, which allows them to reorganize their finances over the next several years and avoid handing the church over to the bank. According to the report, at an August 15 meeting, Pastor Butler said Tri City seemed supportive when True Life proposed converting their construction loan to permanent financing. But after seeing True Life's proposal, Tri City declined the offer, saying in a Sept. 17 e-mail that it would not renew the church's loans because the bank "does not find the proposal to be an acceptable option." "(Tri City) continues to observe deterioration in the financial condition of True Life Ministries, Inc., and an inability for True Life Ministries, Inc., to service debt," the report says, citing an email. The report notes, nonetheless, Tri City froze True Life's accounts that same day and seized more than $15,000 "without warning," bouncing several staff pay-checks. Five days later, Tri City asked True Life to pay its $4 million-plus balance or turn over its building to the bank. US CAPITAL HOLDINGS: Court Approves Bankruptcy Exit Plan -------------------------------------------------------- Brian Bandell, senior reporter at South Florida Business Journal, reported that U.S. Capital Holdings/Fashion Mall LLC is exiting Chapter 11 with a $15 million cash infusion and new partners to redevelop the property. According to the report, on Sept. 11, 2012, U.S. Bankruptcy Judge John K. Olson approved the reorganization plan of U.S. Capital Holdings and U.S. Capital/Fashion Mall. The plan called for a $15 million capital infusion into the companies by Mapuche LLC, which state records show was incorporated in 2004 and managed by Chen. The report relates Forest City Real Estate Services, the developer of the Village at Gulfstream Park in Hallandale Beach, signed up as the primary development consultant for U.S. Capital Holdings, said Robert D'Amore, who the attorney for the mall's owner. It will also partner with BCEG International for construction services. The report notes Mr. D'Amore said the $15 million through Mapuche came from new investors in the project. Next, it will look for third-party construction financing and building permit approval from the city. The report relates, under the reorganization plan, U.S. Capital Holdings will repay the CanPartners mortgage and cover up to $25,000 of its legal expenses in exchange for the dismissal of its foreclosure lawsuit. Over the next six years, it will place the entire judgment owed to Cheeseburger South Florida and 25% of the judgment owed to OS Tropical into an escrow account. If U.S. Capital wins its appeals of those lawsuits, it could collect that money back. The report adds the Debtor also agreed to pay its taxes owed to the county and city. About US Capital Holdings US Capital Holdings, LLC, and an affiliate, US Capital/Fashion Mall, LLC, filed Chapter 11 petitions (Bankr. S.D. Fla. Case Nos. 12-14517 and 12-14519) in Forth Lauderdale, Florida, on Feb. 24, 2012. US Capital/Fashion Mall is the owner of the former "Fashion Mall at Plantation", now vacant, located at 321 N. University Drive, in Plantation, Florida. US Capital Holdings is the 100% owner of US Capital/Fashion Mall. The mall -- http://www.321north.com-- is presently dormant, in part, as a result of a redevelopment plan for the mall of a project called 321 North, which is intended to be a major, retail, office and residential project. The mall suffered extensive hurricane damage from Hurricane Wilma, and has yet to be paid on its insurance claim. Judge John K. Olson presides over the case. The Debtor listed assets of $11,496 and liabilities of $22,777,428. US COATING: Mid State Dispute Referred to Bankruptcy Court ---------------------------------------------------------- In the lawsuit, United States for the use and benefit of Mid State Construction Company, Inc. and Mid State Construction Company, Inc., Plaintiffs, v. Travelers Casualty and Surety Company of America; US Coating Specialties & Supplies, LLC; and Earl Washington, Defendants, Civil Action No. 5:11-cv-169(DCB)(S.D. Miss.), District Judge David Bramlette dismissed, without prejudice, Mid State's Motions for Confirmation of Arbitration Award and for a Temporary Restraining Order and/or Preliminary Injunction. The District Court finds it more appropriate for the bankruptcy court overseeing US Coating's Chapter 11 case to decide the motions for confirmation and injunctive relief in the first instance, since the bankruptcy judge is familiar with the issues which are already pending before him in an adversary proceeding. Mid State commenced the lawsuit on Nov. 30, 2011. According to the Complaint, US Coating was awarded a prime contract by the United States for the "ERDC Project" in Vicksburg, Mississippi. US Coating and Travelers provided a Payment Bond for the Project. Subsequently, Mid State entered into a Subcontract with US Coating, as well as several other contracts between Mid State, US Coating and/or Earl Washington, including an Original Credit Agreement, an Amended Credit Agreement, and an Escrow Agreement. The Complaint alleges that US Coating and Mr. Washington breached and defaulted as to their obligations owed to Mid State. The Complaint also alleges that the Subcontract, Original Credit Agreement, Amended Credit Agreement, and Escrow Agreement all provided for binding arbitration. Mid State demanded arbitration against US Coating and Mr. Washington, and arbitration proceeded under the administration of the American Arbitration Association. During the arbitration proceedings, Mid State sought preliminary injunctive relief enforcing the escrow agreements between the parties. The Arbitrator entered two preliminary orders or awards addressing preliminary injunctive relief as to the escrow agreements. Following a final hearing, the Arbitrator issued his Arbitration Award on Nov. 22, 2011, in favor of Mid State. Mid State alleges that neither US Coating nor Washington has complied with the Arbitration Award. Mid State seeks orders and/or judgments enforcing the arbitration agreements and awards, Complaint; awarding judgment for the sums awarded Mid State in the Arbitration Award; and awarding the injunctive relief provided for in the Arbitration Award. Mid State also alleges that it has submitted a claim to Travelers for the value of its work, which Travelers has not paid. Mid State asserts that it is entitled to judgment against Travelers and US Coating, jointly and severally, on their Payment Bond, pursuant to the Miller Act, for the monetary sums granted by the Arbitrator to Mid State. Mid State on Dec. 8, 2011, filed its Motion for Confirmation of Arbitration Award and for a Temporary Restraining Order and/or Preliminary Injunction with the District Court. Jackson, Mississippi-based U.S. Coating Specialties & Supplies, Inc., filed for Chapter 11 bankruptcy (Bankr. S.D. Miss. Case No. 11-04373) on Dec. 20, 2011. Bankruptcy Judge Edward Ellington oversaw the case. Herbert J. Irvin, Esq., at Irvin & Associates PLLC, served as the Debtor's counsel. In its petition, the Debtor estimated $1 million to $10 million in both assets and debts. The petition was signed by Earl Washington, president/CEO. The 2011 proceeding was subsequently closed and a new Chapter 11 voluntary petition was filed by U.S. Coating Specialties & Supplies, LLC (Bankr. S.D. Miss. Case No. 12-00121) on Jan. 13, 2012. Judge Ellington oversees the 2012 case. Irvin & Associates PLLC, also serves as counsel to the 2012 Debtor. The 2012 petition also estimated both the Debtor's assets and debts at $1 million to $10 million. Mr. Washington, as managing member, signed the petition. On Jan. 31, 2012, Mid State filed the adversary proceeding against US Coating in the Bankruptcy proceedings, seeking the same relief it seeks in the District Court. An Answer to the Adversary Complaint was filed by US Coating in the bankruptcy proceedings on Feb. 8, 2012. On July 18, 2012, U.S. Bankruptcy Judge Edward Ellington issued an Order Confirming Arbitration Award and Directing Entry of Judgment, Enforcing Escrow Requirements as to Future Payments, and Reserving Ruling on Other Issues, in Bankruptcy Petition # 12- 00121-EE. Judge Ellington has ruled on the motion to confirm arbitration award, and has reserved ruling on certain aspects of the motion for temporary restraining order and/or preliminary injunction. The District Court therefore finds that the motions pending before it should be dismissed without prejudice. A copy of the District Court's Sept. 18, 2012 Order is available at http://is.gd/Hp8Fanfrom Leagle.com. VANITY EVENTS: IBC Swaps $21,500 Notes with Convertible Debenture ----------------------------------------------------------------- Vanity Events Holding, Inc., entered into an Exchange Agreement with IBC Funds, LLC, on Sept. 18, 2012, pursuant to which the Company and IBC Funds agreed to exchange two promissory notes held by the Investor in the aggregate principal amount of $21,500 for an 8% convertible debenture in the aggregate principal amount of $21,500. The Debenture matures on the first anniversary of the date of issuance and bears interest a rate of 8% per annum, payable semi- annually and on the Maturity Date. The Investor may convert, at any time, the outstanding principal and accrued interest on the Debenture into shares of the Company's common stock, par value $0.001 per share at a conversion price per share equal to the lesser of: (i) a 90% discount of the average of the closing bid price of the Common Stock during the five trading days immediately preceding the date of conversion as quoted by Bloomberg, LP; or (ii) the average of the closing bid price per share during the five trading days prior to the date of any such conversion. The Investor has contractually agreed to restrict its ability to convert the Debenture such that the number of shares of the Company common stock held by each of the Investor and its affiliates after that conversion does not exceed 4.99% of the Company's then issued and outstanding shares of Common Stock. On Sept. 14, 2012, Gregory Pippo resigned as chief financial officer of the Company and as a director of the Company, effective immediately. There was no disagreement or dispute between Mr. Pippo and the Company which led to his resignation. About Vanity Events Based in New York, Vanity Events Holding, Inc. (OTC BB: VAEV) -- http://www.vanityeventsholding.com/-- is a holding company with two primary subsidiary companies. The subsidiaries are Vanity Events, Inc. and America's Cleaning Company. America's Cleaning Company(TM) is the Company's flagship division which provides cleaning services to residential and commercial clients. Vanity Events, Inc. seeks out, Licenses, develops, promotes, and brings to market various innovative consumer and commercial products. The Company reported net income of $330,705 in 2011 compared with a net loss of $544,831 in 2010. The Company's balance sheet at June 30, 2012, showed $3.29 million in total assets, $17.97 million in total liabilities, all current, and a $14.68 million total stockholders' deficit. RBSM LLPk, in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered losses since inception and is experiencing difficulty in generating sufficient cash flows to meet its obligations and sustain its operations, which raises substantial doubt about its ability to continue as a going concern. Bankruptcy Warning The Company said in its quarterly report on Form 10-Q for the period ended June 30, 2012, that its ability to implement its current business plan and continue as a going concern ultimately is dependent upon the Company's ability to obtain additional equity or debt financing, attain further operating efficiencies and to achieve profitable operations. "There can be no assurances that funds will be available to the Company when needed or, if available, that such funds would be available under favorable terms. In the event that the Company is unable to generate adequate revenues to cover expenses and cannot obtain additional funds in the near future, the Company may seek protection under bankruptcy laws. To date, management has not considered this alternative, nor does management view it as a likely occurrence, since the Company is progressing with various potential sources of new capital and we anticipate a successful outcome from these activities. However, capital markets remain difficult and there can be no certainty of a successful outcome from these activities." VUANCE LTD: Reports $2.6 Million Net Income in Second Quarter ------------------------------------------------------------- Vuance Ltd. reported net income of US$2.65 million on US$1.75 million of revenue for the three months ended June 30, 2012, compared with net income of US$419,000 on US$2.19 million of revenue for the same period during the prior year. For the six months ended June 30, 2012, the Company reported net income of US$2.75 million on US$3.94 million of revenue, in comparison with net income of US$246,000 on US$4.03 million of revenue for the same period a year ago. The Company's balance sheet at June 30, 2012, showed US$1.87 million in total assets, US$3.35 million in total liabilities and a US$1.47 million total shareholders' deficit. A copy of the press release is available for free at: http://is.gd/IsSukP About Vuance Ltd. Qadima, Israel-based Vuance Ltd. is a leading provider of Wireless Identification Solutions. The Company currently offers an Active RFID technology, a long, active radio frequency identification equipment that utilizes active radio frequency communications to track assets, people and objects for potential governmental agency and commercial customers. The Company reported net income of US$1.02 million on US$7.92 million of revenue in 2011, compared with a net loss of US$1.96 million on US$7.38 million of revenue in 2010. In the auditors report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Fahn Kanne & Co. Grant Thornton Israel expressed substantial doubt about the Company's ability to continue as a going concern. The indepdent auditors noted that the Company has incurred substantial recurring losses and negative cash flows from operations and, as of Dec. 31, 2011, the Company had a working capital deficit and total shareholders' deficit. WHITTON CORP: Continued Cash Collaterals Use OK'd Until Sept. 30 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada authorized Whitton Corporation's continued use of the cash collateral of 1. GSMS 2004-GG2 Sparks Industrial, LLC, 2. Bank of America, N.A. 3. Bank of Las Vegas for the Dean Martin/Mountain Vista Property; and 4. Bank of Las Vegas for the Cheyenne Property until Sept. 30, 2012, pursuant to various stipulations entered with the lenders. The original final cash collateral order was entered on Jan. 25, 2011, as amended by that certain stipulations. About Whitton Corporation Henderson, Nevada-based Whitton Corporation filed for Chapter 11 bankruptcy protection (Bankr. D. Nev. Case No. 10-32680) on Dec. 5, 2010. Hal L. Baume, Esq., Brett A. Axelrod, Esq., and Anne M. Loraditch, Esq., at Fox Rothschild LLP, in Las Vegas, Nev., serve as the Debtor's bankruptcy counsel. The Debtor disclosed $19,967,668 in assets and $37,949,426 in liabilities as of the Chapter 11 filing. South Tech Simmons 3040C, LLC, filed a separate petition (Bank. D. Nev. Case No. 10-32857) on Dec. 8, 2010. No request has been made for the appointment of a trustee or examiner, and no statutory committee has been appointed in the case. * S&P Takes Various Rating Actions on 41 US Life Insurers --------------------------------------------------------- Standard & Poor's Ratings Services took various rating actions on 41 U.S. life insurers with ratings bearing a 'pi' subscript, based on statutory financial data for the year ended Dec. 31, 2011. "We affirmed our ratings on 39 companies and raised our ratings on two companies. Including interactively rated companies, we rate insurers covering approximately 95% of the U.S. life insurance market (based on total assets) and 90% of the U.S. property/casualty insurance market (based on net earned premiums). Continuing our current practice, we will not assign ratings with a 'pi' subscript to U.S. subsidiaries or affiliates of interactively rated insurers, regardless of company size," S&P said. RATINGS LIST Ratings Affirmed American Public Life Insurance Co. (Unsolicited Ratings) Deseret Mutual Insurance Co. (Unsolicited Ratings) Equitable Life & Casualty Insurance Co. (Unsolicited Ratings) Guarantee Trust Life Insurance Co. (Unsolicited Ratings) New Era Life Insurance Co. (Unsolicited Ratings) New Era Life Insurance Co. of the Midwest (Unsolicited Ratings) Counterparty Credit Rating Local Currency Bpi Financial Strength Rating Local Currency Bpi Auto Club Life Insurance Co. (Unsolicited Ratings) Grange Life Insurance Co. (Unsolicited Ratings) Madison National Life Insurance Co. Inc. (Unsolicited Ratings) Motorists Life Insurance Co. (Unsolicited Ratings) Tower Life Insurance Co. (Unsolicited Ratings) Union Labor Life Insurance Co. (Unsolicited Ratings) WEA Insurance Corp. (Unsolicited Ratings) Counterparty Credit Rating Local Currency BBpi Financial Strength Ratings Local Currency BBpi Central States Health & Life Co. of Omaha (Unsolicited Ratings) Fidelity Security Life Insurance Co. (Unsolicited Ratings) First Investors Life Insurance Co. (Unsolicited Ratings) Government Personnel Mutual Life Insurance Co. (Unsolicited Ratings) Homesteaders Life Co. (Unsolicited Ratings) Lincoln Heritage Life Insurance Co. (Unsolicited Ratings) Pekin Life Insurance Co. (Unsolicited Ratings) Standard Security Life Insurance Co. of NY (Unsolicited Ratings) Vantis Life Insurance Co. (Unsolicited Ratings) Counterparty Credit Rating Local Currency BBBpi Financial Strength Rating Local Currency BBBpi American Fidelity Assurance Co. (Unsolicited Ratings) American Republic Insurance Co. (Unsolicited Ratings) Auto-Owners Life Insurance Co. (Unsolicited Ratings) Country Life Insurance Co. (Unsolicited Ratings) Erie Family Life Insurance Co. (Unsolicited Ratings) Farm Bureau Life Insurance Co. of MI (Unsolicited Ratings) Federated Life Insurance Co. (Unsolicited Ratings) Gerber Life Insurance Co. (Unsolicited Ratings) National Guardian Life Insurance Co. (Unsolicited Ratings) Sentry Life Insurance Co. (Unsolicited Ratings) Sentry Life Insurance Co. of NY (Unsolicited Ratings) Shelter Life Insurance Co. (Unsolicited Ratings) Southern Farm Bureau Life Insurance Co. (Unsolicited Ratings) Tennessee Farmers Life Insurance Co. (Unsolicited Ratings) Trustmark Insurance Co. (Unsolicited Ratings) Trustmark Life Insurance Co. (Unsolicited Ratings) United Farm Family Life Insurance Co. (Unsolicited Ratings) Counterparty Credit Rating Local Currency Api Financial Strength Rating Local Currency Api Upgraded To From AAA Life Insurance Co. (Unsolicited Ratings) Counterparty Credit Rating Local Currency BBBpi BBpi Financial Strength Rating Local Currency BBBpi BBpi Settlers Life Insurance Co. (Unsolicited Ratings) Counterparty Credit Rating Local Currency Api BBBpi Financial Strength Rating Local Currency Api BBBpi * More California Cities May Need Bankruptcy Protection ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that steps taken by California to solve the state's fiscal problems have taken revenue away from local governments and may cause some of them to file municipal bankruptcy. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Share Total Total Holders' Working Assets Equity Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------ -------- ------- ABSOLUTE SOFTWRE ABT CN 129.7 (4.8) 1.7 ADVANCED BIOMEDI ABMT US 0.2 (2.0) (1.6) AK STEEL HLDG AKS US 3,901.0 (360.6) 129.6 AMC NETWORKS-A AMCX US 2,173.4 (959.1) 542.5 AMER AXLE & MFG AXL US 2,441.2 (394.7) 169.7 AMER RESTAUR-LP ICTPU US 33.5 (4.0) (6.2) AMERISTAR CASINO ASCA US 2,058.5 (28.0) 42.5 AMYLIN PHARMACEU AMLN US 1,998.7 (42.4) 263.0 ARRAY BIOPHARMA ARRY US 108.1 (85.8) 17.2 ATLATSA RESOURCE ATL SJ 886.5 (270.4) 21.8 AUTOZONE INC AZO US 6,265.6 (1,548.0) (676.6) BOSTON PIZZA R-U BPF-U CN 162.9 (92.3) (0.3) CABLEVISION SY-A CVC US 6,991.7 (5,641.6) (286.1) CADIZ INC CDZI US 53.7 (6.9) 1.3 CAPMARK FINANCIA CPMK US 20,085.1 (933.1) - CENTENNIAL COMM CYCL US 1,480.9 (925.9) (52.1) CHENIERE ENERGY CQP US 1,873.0 (442.2) 117.0 CHOICE HOTELS CHH US 857.7 (11.2) 402.1 CIENA CORP CIEN US 1,915.3 (60.3) 710.4 CINCINNATI BELL CBB US 2,702.7 (696.2) (52.8) CLOROX CO CLX US 4,355.0 (135.0) (685.0) DEAN FOODS CO DF US 5,553.1 (3.1) 185.6 DELTA AIR LI DAL US 44,720.0 (1,135.0) (6,236.0) DENNY'S CORP DENN US 328.9 (2.8) (20.3) DIRECTV DTV US 19,632.0 (4,045.0) 520.0 DOMINO'S PIZZA DPZ US 424.6 (1,369.1) 52.9 DUN & BRADSTREET DNB US 1,795.6 (821.9) (655.6) E2OPEN INC EOPN US 29.7 (34.5) (32.5) ELOQUA INC ELOQ US 37.5 (9.6) (14.2) FAIRPOINT COMMUN FRP US 1,877.4 (184.4) 51.6 FIESTA RESTAURAN FRGI US 286.0 2.6 (14.7) FIFTH & PACIFIC FNP US 900.5 (175.5) 130.9 FREESCALE SEMICO FSL US 3,499.0 (4,498.0) 1,374.0 GENCORP INC GY US 874.0 (171.3) 47.3 GLG PARTNERS INC GLG US 400.0 (285.6) 156.9 GLG PARTNERS-UTS GLG/U US 400.0 (285.6) 156.9 GOLD RESERVE INC GRZ CN 78.3 (25.8) 56.9 GOLD RESERVE INC GRZ US 78.3 (25.8) 56.9 GRAHAM PACKAGING GRM US 2,947.5 (520.8) 298.5 GRAMERCY CAPITAL GKK US 2,223.0 (352.8) - HCA HOLDINGS INC HCA US 27,132.0 (6,943.0) 1,690.0 HOVNANIAN ENT-A HOV US 1,624.8 (404.2) 881.0 HUGHES TELEMATIC HUTC US 110.2 (101.6) (113.8) HUGHES TELEMATIC HUTCU US 110.2 (101.6) (113.8) HYPERION THERAPE HPTX US 9.6 (41.8) (31.4) INCYTE CORP INCY US 312.0 (217.2) 154.4 INFINITY PHARMAC INFI US 113.0 (3.4) 70.2 IPCS INC IPCS US 559.2 (33.0) 72.1 ISTA PHARMACEUTI ISTA US 124.7 (64.8) 2.2 JUST ENERGY GROU JE CN 1,583.6 (245.9) (227.2) JUST ENERGY GROU JE US 1,583.6 (245.9) (227.2) LIMITED BRANDS LTD US 6,589.0 (245.0) 1,316.0 LIN TV CORP-CL A TVL US 839.2 (51.8) 52.7 LORILLARD INC LO US 2,576.0 (1,568.0) 881.0 MARRIOTT INTL-A MAR US 6,007.0 (1,124.0) (1,287.0) MERITOR INC MTOR US 2,555.0 (933.0) 279.0 MONEYGRAM INTERN MGI US 5,185.1 (116.1) (35.3) MORGANS HOTEL GR MHGC US 545.9 (110.1) (7.0) MPG OFFICE TRUST MPG US 2,061.5 (827.9) - NATIONAL CINEMED NCMI US 794.2 (354.5) 95.8 NAVISTAR INTL NAV US 11,143.0 (358.0) 1,585.0 NB MANUFACTURING NBMF US 2.4 (0.0) (0.5) NEXSTAR BROADC-A NXST US 566.3 (170.6) 40.2 NPS PHARM INC NPSP US 186.9 (45.3) 130.3 NYMOX PHARMACEUT NYMX US 2.7 (7.7) (0.9) ODYSSEY MARINE OMEX US 22.4 (29.3) (26.9) OMEROS CORP OMER US 10.1 (20.5) (8.7) PALM INC PALM US 1,007.2 (6.2) 141.7 PDL BIOPHARMA IN PDLI US 259.8 (161.1) 144.3 PLAYBOY ENTERP-A PLA/A US 165.8 (54.4) (16.9) PLAYBOY ENTERP-B PLA US 165.8 (54.4) (16.9) PRIMEDIA INC PRM US 208.0 (91.7) 3.6 PROTECTION ONE PONE US 562.9 (61.8) (7.6) QUALITY DISTRIBU QLTY US 454.5 (29.8) 60.7 REGAL ENTERTAI-A RGC US 2,306.3 (542.3) 62.5 RENAISSANCE LEA RLRN US 57.0 (28.2) (31.4) REVLON INC-A REV US 1,173.9 (665.6) 177.8 RURAL/METRO CORP RURL US 303.7 (92.1) 72.4 SALLY BEAUTY HOL SBH US 1,813.5 (202.0) 449.5 SINCLAIR BROAD-A SBGI US 2,160.2 (66.3) (1.4) TAUBMAN CENTERS TCO US 3,096.1 (295.3) - TEMPUR-PEDIC INT TPX US 865.5 (12.1) 258.9 THERAPEUTICS MD TXMD US 4.9 (0.7) 1.0 THRESHOLD PHARMA THLD US 86.3 (51.4) 71.2 TRULIA INC TRLA US 27.6 (3.2) (4.9) UNISYS CORP UIS US 2,397.9 (1,190.0) 463.1 VECTOR GROUP LTD VGR US 885.7 (119.5) 248.2 VERISIGN INC VRSN US 1,942.0 (59.2) 858.0 VIRGIN MOBILE-A VM US 307.4 (244.2) (138.3) VRINGO INC VRNG US 3.7 (1.4) 2.1 WEIGHT WATCHERS WTW US 1,193.6 (1,784.6) (259.9) ZAZA ENERGY CORP ZAZA US 202.3 (77.9) (18.8) ********* 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, Carmel Paderog, Meriam Fernandez, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2012. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***