/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/121023.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, October 23, 2012, Vol. 16, No. 295 Headlines 11850 DEL PUEBLO: Lender Wants Receiver to Keep Control of Assets 11850 DEL PUEBLO: Sec. 341 Creditors' Meeting Set for Nov. 21 11850 DEL PUEBLO: Case Management Conference on Dec. 5 1570 SOUTH PERRY: Case Summary & Unsecured Creditor 1701 COMMERCE: Exclusivity Ends Nov. 24 Absent Plan Confirmation 3210 RIVERDALE: Chapter 11 Reorganization Case Dismissed A123 SYSTEMS: Receives Court Approval Of "First Day" Motions A & R PROPERTIES: Voluntary Chapter 11 Case Summary ACACIA AUTOMOTIVE: Files Form 10-Q for 2nd Quarter of 2010 ADVANCED MICRO: Moody's Cuts Corporate Family Rating to 'B1' AHERN RENTALS: Hearing on Plan Filing Extension Moved to Oct. 31 ARCAPITA BANK: Still Trying to Secure Financing From Silver Point ARCAPITA BANK: Court Approves Settlement with Standard Chartered BCE INC: Moody's Says Denial of Astral Acquisition Credit Pos. BERRY PLASTICS: Redeems Outstanding 11% Senior Subordinated Notes BHI EXCHANGE: S&P Withdraws 'B' Corp. Credit Rating on Request BOUNDARY BAY: EIF 1 Opposes Approval of Plan Disclosures BWAY PARENT: Moody's Confirms 'B2' CFR; Outlook Negative CAPABILITY RANCH: Hearing on Gordon Silver Hiring Nov. 13 CAESARS ENTERTAINMENT: Amends Q1 Results to Reflect Assets Sold CARGO ACQUISITION: Moody's Withdraws 'Ba2' Senior Rating CENTRAL ILLINOIS ENERGY: Coop Can't Pursue Ridgestone Bank CHINA PRECISION: Gets Another Non-Compliance Notice from NASDAQ CLEAR CHANNEL: Bank Debt Trades at 14% Off in Secondary Market CLEARWIRE CORP: Intel Corporation Owns 12.4% of Class A Shares COMMERCETEL CORP: Extends Due Date of $4.2MM Notes to April 15 DAFFY'S INC: Donlin Recano Approved as Administrative Agent DAFFY'S INC: Plan Confirmation Hearing Adjourned to Dec. 17 DELTA 2: Moody's Assigns 'B2' CFR/PDR; Outlook Stable DEVI LLC: Case Summary & 6 Largest Unsecured Creditors DEWEY & LEBOEUF: Stay Lifted to Allow XL to Pay Defense Expenses DEX MEDIA WEST: Bank Debt Trades at 34% Off in Secondary Market DIGITAL DOMAIN: Rosen Reminds of Nov. 19 Lead Plaintiff Deadline DIGITAL DOMAIN: CFO J. Nichols and Director J. Lunsford Resign EINSTEIN NOAH: Moody's Assigns 'B3' CFR; Rates Bank Facility 'B2' EMISPHERE TECHNOLOGIES: Obtains $1.4-Mil. Bridge Loan from MHR EMISPHERE TECHNOLOGIES: Mark Rachesky Holds 47.7% Equity Stake ENERGY FUTURE: Prices Offering of $252.7 Million Senior Notes ENERGY FUTURE: Fitch Rates $250 Million Secured Notes 'CCC+' ENERGY FUTURE: Moody's Rates $250MM Senior Secured Notes 'Caa3' ENERGY SOLUTIONS: Moody's Cuts Corp. Family Rating to 'Caa1' EPICEPT CORP: Has Until Nov. 15 to Ink Transaction with MidCap EVERGREEN INT'L: S&P Puts 'CCC' Corp Credit Rating on Watch Neg EXCEL BANK: Closed; Simmons First NB Assumes All Deposits FENTON SUB: Plan Confirmed; Settlement With Mulcahy Okayed FIRST EAST SIDE SB: Closed; Stearns Bank NA Assumes All Deposits FREESEAS INC: Had $20.8-Mil. Net Loss in 1st Half of 2012 G.S. ASSETS: Case Summary & 3 Unsecured Creditors GOD'S UNIVERSAL: Case Summary & 10 Unsecured Creditors GOLDEN STATE: Moody's Cuts Rating on Mortgage Notes to 'Caa1' GRACIA'S AMBULANCE: Case Summary & 11 Unsecured Creditors GULFSOUTH PRIVATE BANK: Closed; SmartBank Assumes All Deposits HANGER ORTHOPEDIC: Moody's Raises Sr. Secured Ratings to 'Ba2' HARBINGER GROUP: Fitch Affirms 'B' IDR; Outlook Stable HMX ACQUISITION: Files for Chapter 11 Protection HMX ACQUISITION: Salus Capital Provides $65 Million DIP Facility HMX ACQUISITION: No Plans to Lay Off Workers Despite Bankruptcy HMX ACQUISITION: Salus Providing $65-Mil. DIP Credit Loan HOA RESTAURANT: S&P Lowers CCR to 'B-' on Lower Profits HOTEL AIRPORT: Javier Scimeca Approved as Financial Consultant HOTEL AIRPORT: Plan Outline Hearing Continued until Nov. 27 HYLAND SOFTWARE: Moody's Affirms 'B2' Corp. Family Rating HYLAND SOFTWARE: S&P Affirms 'B' Corp. Credit Rating; Outlook Pos IGNITE RESTAURANT: Gets Sr. Sec. Credit Waiver Until Nov. 15 IMC HOME: Moody's Lowers Rating on Cl. M-2 Loans to 'B2' INDIANAPOLIS DOWNS: Clash Over Sale to Centaur Continues INNER CITY: Seeks Extension to File Creditor-Payment Plan ISTAR FINANCIAL: Has $1.8 Billion Credit Facility with JPMorgan JAYHAWK ENERGY: Had $30,500 Net Loss in June 30 Quarter K-V PHARMACEUTICAL: Has Access to Cash Collateral Until Nov. 21 KEOWEE FALLS: Says Sale Closed; Plan and Outline to be Filed KRONOS INC: Moody's Rates New Secured Revolver Debt 'Ba3' LEHMAN BROTHERS: Cantor Is Chief Gen. Counsel; Grossman to LBSF LEHMAN BROTHERS: Judge Dismisses Key Claims in Class Action LENCO MOBILE: Had Net Loss of $2.2-Mil. in First Quarter LENNAR: Moody's Lifts CFR to 'Ba3'; Sr. Notes Rating to 'B1' LEVER DEVELOPMENT: Loses Bid to Stop Involuntary Chapter 7 LIGHTSQUARED INC: Will Seek Approval of Revised KEIP on Oct. 23 LIONS GATE: Moody's Affirms 'B1' Corporate Family Rating LONGVIEW POWER: Bank Debt Trades at 17% Off in Secondary Market MARTIN PEMSTEIN: Brother Allowed $23K Claim for Lost Inventory MERCURY PAYMENT: Moody's Affirms 'B1' CFR; Outlook Negative MERIDIAN SHOPPING: Chapter 11 Reorganization Case Dismissed MERIDIAN SPORTS: Case Summary & 20 Largest Unsecured Creditors MERRILL CORP: Moody's Reviews 'Caa3' Corp. Rating for Upgrade MERRILL CORP: S&P Puts 'CCC-' CCR on Watch on Debt Refinancing MID-MOUNTAIN MACHINERY: Court Confirms 2nd Amended Plan MOSS FAMILY: Bankruptcy Court Approves Beachwalk Realty as Broker MOSS FAMILY: Taps Patrick Kepchar of PK Financial as Accountant MOTORS LIQUIDATION: Files GUC Trust Report as of Sept. 30 MUSCLEPHARM CORP: James Greenwell Named to Board of Directors NESBITT PORTLAND: Alvarez & Marsal Approved as Financial Advisors NEWPAGE CORP: Plan Outline Hearing Scheduled for Nov. 6 NIP COMPANY: Brenda T. Cubbage Serves as New Lead Bankr. Counsel ONEBEACON US: Moody's Affirms '(P)Ba1' Preferred Stock Rating PABELLON DE LA VICTORIA: Case Summary & 18 Unsecured Creditors PAR PHARMACEUTICALS: S&P Assigns 'B+' Corporate Credit Rating PATRIOT COAL: Notices of Transfers of Claims Made on Oct. 5 and 8 PATRIOT COAL: Wants Stay Lifted to Allow Payment of Defense Costs PATRIOT COAL: Wants Plan Filing Period Extended Until May 5 PATRIOT COAL: Fifth Third Agrees to Challenge Deadline Extension PENN VIRGINIA: S&P Affirms 'B' Corp. Credit Rating; Outlook Pos PCF SALECO: Wins More Time to Respond to Involuntary Bankruptcy POST APARTMENT: Moody's Raises Preferred Rating From 'Ba1' PREMIER DENTAL: Moody's Assigns 'B3' Corp. Family Rating RADLAX GATEWAY: Court Dismissed Chapter 11 Case RENAISSANCE LEARNING: Moody's Affirms 'B2' CFR; Outlook Stable RESIDENTIAL CAPITAL: Court OKs Amendments to DIP Loan Agreement RESIDENTIAL CAPITAL: Has Green Light to Pay Up to $7MM to Execs RESIDENTIAL CAPITAL: AFI Files Letter Supporting Sale RESIDENTIAL CAPITAL: Committee Retains EPIQ as Info Agent RESORT AT PIKES: Voluntary Chapter 11 Case Summary REVEL ENTERTAINMENT: Bank Debt Trades at 31% Off RICHFIELD EQUITIES: Hearing Today on Sale; Teamsters, Bank Object RICHFIELD EQUITIES: U.S. Trustee Appoints 4-Member Creditors Panel RICHFIELD EQUITIES: Sec. 341 Creditors' Meeting on Wednesday RICHFIELD EQUITIES: Has Final Approval of Comerica DIP Financing SAGAMORE PARTNERS: Gets 13th Interim OK to Use Cash Collateral SALUTARIS DIALYSIS: Judge Declines to Revive Chapter 11 Case SEARCHMEDIA HOLDINGS: 11.2-Mil. Warrants to Expire on Feb. 19 SHALE-INLAND HOLDINGS: Moody's Assigns 'B3' CFR; Outlook Stable SHUANEY IRREVOCABLE: Beach Community's Case Dismissal Plea Denied SIDEWINDER DRILLING: Moody's Rates $225-Mil. Senior Notes 'B3' SIDEWINDER DRILLING: S&P Assigns 'B-' Corp. Credit Rating SIGNATURE STATION: Wants to Use Rental Income SIGNATURE STATION: Sec. 341 Creditors' Meeting Set for Nov. 21 SIMMONS FOODS: Moody's Says Proposed Asset Sale Credit Positive SNO MOUNTAIN: Lender Casts Doubt on Involuntary Petition SNO MOUNTAIN: Petitioning Creditors Want Trustee Appointed SOLYNDRA LLC: Seeks $1.5-Bil. in Damages From Suntech et al. SONYA PORRETTO: Duty to Indemnify Not Based on Actual Payments SOUTHERN AIR: Chapter 11 Plan Hands Ownership to Lenders SPANISH BROADCASTING: Attiva Wants Class A Directors Appointed SPEEDWAY MOTORSPORTS: Rights Deal No Impact on Moody's 'Ba1' CFR SRA INT'L: S&P Affirms 'B' Corp. Credit Rating; Outlook Negative SPRINGHILL PARTNERS: Voluntary Chapter 11 Case Summary STEAK N SHAKE: S&P Withdraws 'B' Corp. Credit Rating on Request STEREOTAXIS INC: Franklin Resources Discloses 19.4% Equity Stake STODDARD STREET: Voluntary Chapter 11 Case Summary STORY BUILDING: Case Dismissal Hearing Continued Until Dec. 4 STORY BUILDING: Plan Outline Hearing Continued Until Nov. 30 SUNGARD DATA: Moody's Rates $500-Mil. Sr. Subordinated Notes Caa1 THOR INDUSTRIES: Hearing on Cash Collateral Continued Until Nov. 2 TOMKINS AIR: S&P Assigns Prelim. 'B' Corporate Credit Rating TOWNSEND CORP: Plan Filing Exclusivity Extended to Jan. 2 TRIBUNE CO: Bank Debt Trades at 24% Off in Secondary Market TSC SIEBER: Chapter 7 Trustee Can Recover $451K Against Ex-Manager TXU CORP: Bank Debt Trades at 31% Off in Secondary Market TXU CORP: Bank Debt Trades at 26% Off in Secondary Market UNIGENE LABORATORIES: Files Form S-1, Registers 161.7MM Shares VAREL INTERNATIONAL: Moody's Assigns 'B3' CFR; Outlook Stable WAVE2WAVE COMMS: Hearing on Case Conversion Set for Nov. 13 WESCO INT'L: Moody's Says EECOL Acquisition Credit Negative WEZBRA DAIRY: Files Schedules of Assets and Liabilities WILSONART LLC: Moody's Cuts Rating on Senior Secured Loans to B2 WILSONART LLC: S&P Cuts Rating on $900MM Secured Credit to 'B+' WINDSOR PETROLEUM: Moody's Cuts Rating on Sec. Notes to 'Caa2' XINERGY CORP: S&P Puts 'CCC+' Corp. Credit Rating on Watch Neg YNS ENTERPRISE: Files Schedules of Assets and Liabilities ZACKY FARMS: Lowenstein Retained as Creditors' Committee Counsel ZIONS BANCORPORATION: Moody's Corrects Oct. 3 Rating Release * Moody's Says US Credit Card Delinquencies Up 2.39% in Sept. * Moody's Says Liquidity-Stress Index Unchanged in Oct. at 3.5% * Epiq System Breaks Ground on Kansas City HQ Expansion * Large Companies With Insolvent Balance Sheets ********* 11850 DEL PUEBLO: Lender Wants Receiver to Keep Control of Assets ----------------------------------------------------------------- U.S. Bank National Association asks the Bankruptcy Court to excuse a receiver for 11850 Del Pueblo, LLC's shopping center assets from turning over the property to the bankruptcy estate. Under 11 U.S.C. Section 543(d), a custodian like the receiver may be excused from turning over property of the estate to the debtor if it is in the best interests of the estate's creditors to do so. U.S. Bank said the receiver should be excused from turning over the property because (a) the Debtor collected rents for over five months without making a single payment to the Lender, notwithstanding the Lender's senior security therein, (b) the Debtor failed to properly maintain the property thereby impairing its value, and (c) the Debtor failed to collect rents from one of the property's anchor tenants which is an affiliate of the Debtor. U.S. Bank said the Debtor's past actions and pattern of conduct demonstrate that the Debtor will not manage the property in a manner that is in the best interests of its creditors, and that continued mismanagement of the property by the Debtor will further impair the value of estate assets. U.S. Bank serves as Trustee, successor-in-interest to Bank America, N.A., as Trustee, as successor by merger to LaSalle Bank National Association, as Trustee, for the Registered Holders of Deutsche Mortgage & Asset Receiving Corporation Mortgage Pass- Through Certificates, Series CD2006-CD3. U.S. Bank is the current beneficiary under a deed of trust that encumbers a shopping center located in El Monte, California, that is owned by 11850 Del Pueblo. The deed of trust secures a $14 million loan originally made by German American Capital Corp. to the Debtor. U.S. Bank said the Debtor ceased making monthly payments on the loan in December 2011, and has not made any payments since then. In response to these defaults, U.S. Bank, among other things, sought and obtained the appointment of a receiver for its collateral in California state court in May 2012. Since May 1, the receiver has been in possession and control of the collateral property. According to U.S. Bank, upon his appointment, the receiver discovered that the Debtor had severely mismanaged the property. The Debtor had failed to maintain the property, requiring the receiver to, among other things, repair the roof and HVAC system, address irrigation issues, remove accumulated debris and bring the property into compliance with local municipal codes. U.S. Bank said under the Debtor's care, the property was cited by the City of El Monte with 10 different violations of the local municipal codes (including, deterioration of the building exterior and parking lot and accumulation of trash and other debris) all of which violations reflect ongoing neglect and long-overdue maintenance. The receiver also discovered that one of the property's anchor tenants, a grocery store affiliated with the Debtor, was seriously delinquent on its rent obligations. The receiver has undertaken to collect the amounts owed by the grocery store, but so far has only been able to collect a small portion of the rents the affiliate owes. U.S. Bank also asks the Court to authorize the receiver to use the Lender's cash collateral on a limited interim basis so that the receiver may continue to effectively manage the property and maximize its value for the benefit of all of the Debtor's creditors. There's a Nov. 13 hearing on U.S. Bank's request. U.S. Bank is represented in the case by: Alan M. Feld, Esq. M. Reed Mercado, Esq. Adam McNeile, Esq. SHEPPARD, MULLIN, RICHTER & HAMPTON LLP 333 South Hope Street, 43rd Floor Los Angeles, CA 90071-1422 Telephone: 213.620.1780 Facsimile: 213.620.1398 E-mail: afeld@sheppardmullin.com rmercado@sheppardmullin.com 11850 Del Pueblo, LLC, first filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-42819) in Los Angeles on Sept. 27, 2012. The Debtor, a Single Asset Real Estate under 11 Sec. 101(51B), owns property on 11850 Valley Boulevard, in El Monte, California. The property, according to the schedules filed together with the petition, is worth $9 million and secures a $17.5 million claim. The Law Offices of Levi Reuben Uku serves as counsel to the Debtor. The Court dismissed the bankruptcy case on Oct. 12, 2012, due to the Debtor's failure to timely file certain necessary documents. The Debtor filed a second petition (Bankr. C.D. Calif. 12-44726) on Oct. 15. Bankruptcy Judge Robert N. Kwan presides over the case. The Debtor is represented in the second case by: Chukwudum N. Emenike, Esq. 3255 Wilshire Blvd Ste 1032 Los Angeles, CA 90011 Tel: 213-487-0190 Fax: 213-487-7415 E-mail: chuckeme@yahoo.com - and - Levi Reuben Uku, Esq. LAW OFFICES OF LEVI REUBEN UKU 3540 Wilshire Blvd Ste 626 Los Angeles, CA 90010 Tel: 213-385-0193 Fax: 213-385-0576 E-mail: levireuben@gmail.com 11850 DEL PUEBLO: Sec. 341 Creditors' Meeting Set for Nov. 21 ------------------------------------------------------------- The U.S. Trustee in Los Angeles, California, will convene a Meeting of Creditors pursuant to 11 U.S.C. Sec. 341(a) in the Chapter 11 case of 11850 Del Pueblo, LLC, on Nov. 21, 2012, at 1:15 p.m. at RM 2610, 725 S Figueroa St., in Los Angeles. About 11850 Del Pueblo 11850 Del Pueblo, LLC, first filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-42819) in Los Angeles on Sept. 27, 2012. The Debtor, a Single Asset Real Estate under 11 Sec. 101(51B), owns property on 11850 Valley Boulevard, in El Monte, California. The property, according to the schedules filed together with the petition, is worth $9 million and secures a $17.5 million claim. The Law Offices of Levi Reuben Uku serves as counsel to the Debtor. The Court dismissed the bankruptcy case on Oct. 12, 2012, due to the Debtor's failure to timely file certain necessary documents. The Debtor filed a second petition (Bankr. C.D. Calif. 12-44726) on Oct. 15. Bankruptcy Judge Robert N. Kwan presides over the case. The Debtor is represented in the second case by Chukwudum N. Emenike, Esq., and the Law Offices of Levi Reuben Uku. U.S. Bank is represented in the case by lawyers at Sheppard, Mullin, Richter & Hampton LLP. 11850 DEL PUEBLO: Case Management Conference on Dec. 5 ------------------------------------------------------ The Bankruptcy Court set a Scheduling and Case Management Conference on Dec. 5, 2012, at 11:00 a.m., in courtroom 1675. 11850 Del Pueblo, LLC, first filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-42819) in Los Angeles on Sept. 27, 2012. The Debtor, a Single Asset Real Estate under 11 Sec. 101(51B), owns property on 11850 Valley Boulevard, in El Monte, California. The property, according to the schedules filed together with the petition, is worth $9 million and secures a $17.5 million claim. The Law Offices of Levi Reuben Uku serves as counsel to the Debtor. The Court dismissed the bankruptcy case on Oct. 12, 2012, due to the Debtor's failure to timely file certain necessary documents. The Debtor filed a second petition (Bankr. C.D. Calif. 12-44726) on Oct. 15. Bankruptcy Judge Robert N. Kwan presides over the case. The Debtor is represented in the second case by Chukwudum N. Emenike, Esq., and the Law Offices of Levi Reuben Uku. U.S. Bank is represented in the case by lawyers at Sheppard, Mullin, Richter & Hampton LLP. 1570 SOUTH PERRY: Case Summary & Unsecured Creditor --------------------------------------------------- Debtor: 1570 South Perry Road, LLC P.O. Box 421309 Indianapolis, IN 46242 Bankruptcy Case No.: 12-12296 Chapter 11 Petition Date: October 16, 2012 Court: U.S. Bankruptcy Court Southern District of Indiana (Indianapolis) Judge: Basil H. Lorch, III Debtor's Counsel: Jeffrey M. Hester, Esq. TUCKER HESTER, LLC 429 N Pennsylvania Street, Suite 100 Indianapolis, IN 46204-1816 Tel: (317) 833-3030 Fax: (317) 833-3031 E-mail: jeff@tucker-hester.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Carl E. Voigt, IV, managing member. The Company's list of its largest unsecured creditors filed with the petition contains only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ Hendricks County Treasurer Property Taxes $25,343 355 S. Washington Street, #215 Danville, IN 46122 1701 COMMERCE: Exclusivity Ends Nov. 24 Absent Plan Confirmation ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas denied Dougherty Funding, LLC's motion to (i) dismiss the Chapter 11 case of 1701 Commerce, LLC, or, in the alternative; (ii) grant Dougherty relief of the automatic stay. In 2007, Dougherty agreed to make a $39.6 million loan to non-party Presidio Hotel Forth Worth, L.P., to purchase and rehabilitate the property at 1701 Commerce Street, Fort Worth, Texas 76102, commonly known as the Sheraton Fort Worth Hotel and Spa. The senior loan was secured by a first mortgage on the property. The balance now due on the senior loan is $44.5 million. Dougherty, in its motion, argued that the Debtor filed the bankruptcy in bad faith. The Court also ordered that, among other things: i) the automatic stay will terminate pursuant to Section 362(d)(1) of the Code on Aug. 24, 2012, unless, prior to such time, Debtor deposits in the registry of the Court $1,000,000, in the form of cash; ii) The Debtor will have until Nov. 24, to confirm a plan, provided, however, the Debtor will pay to Dougherty by Sept. 5, Oct. 5, and Nov. 5, the additional sum of $241,000; and iii) if the Debtor has not obtained an order confirming a plan by Nov. 24, the stay and the exclusive right of Debtor to propose and solicit acceptances of a plan will terminate. About 1701 Commerce 1701 Commerce LLC, owner and operator of a full service "Sheraton Hotel" located at 1701 Commerce, Fort Worth, Texas, filed for Chapter 11 protection (Bankr. N.D. Tex. Case No. 12-41748) on March 26, 2012. The Debtor also was the former operator of a Shula's steakhouse at the Hotel. 1701 Commerce LLC was previously named Presidio Ft. Worth Hotel LLC, but changed its name to 1701 Commerce LLC, prior to the bankruptcy filing date to reduce and minimize any potential confusion relating to an entity named Presidio Fort Worth Hotel LP, an unrelated and unaffiliated partnership that was the former owner of the hotel property owned by the Debtor. 1701 Commerce is a Nevada limited liability company whose members are Vestin Realty Mortgage I, Inc., Vestin Mortgage Realty II, Inc., and Vestin Fund III, LLC. 1701 Commerce LLC's operations are managed by Richfield Hospitality Group, an independent management company that is not affiliated with the Debtor or any of its members. Judge D. Michael Lynn presides over the bankruptcy case. The Law Office of John P. Lewis, Jr., represents the Debtor. The Debtor disclosed $71,842,322 in assets and $44,936,697 in liabilities. The Plan co-proposed by the Debtor and Vestin Realty Mortgage I, Inc., Vestin Realty Mortgage II, Inc., and Vestin Fund III, LLC, provides that, among other things, Convenience Class of Unsecured Claims of $5,000 will be paid 100% in cash without interest within 30 days after Effective Date, and Unsecured Claims in Excess of $5,000 will be paid 100% with interest at 5% through 20 quarterly payments. 3210 RIVERDALE: Chapter 11 Reorganization Case Dismissed -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York dismissed the Chapter 11 case of 3210 Riverdale Development LLC. The Debtor sought the dismissal of the bankruptcy case. Earlier in the bankruptcy proceeding, senior lender 3210 Riverdale Avenue Partners LLC sought a dismissal. The senior lender said the case does not belong in bankruptcy court. It is a simple two- party dispute between a single asset real estate debtor and its secured lender, which, prior to the filing of the chapter 11 case, was being adjudicated in a foreclosure proceeding in the New York State Supreme Court. The senior lender said it is substantially under-secured and there is no equity in the Debtor's sole asset -- an uninhabited 46 unit condominium project in New York. If the Court declines to dismiss the Chapter 11 case, the senior lender said it is entitled, in the alternative, to relief from the automatic stay to allow it to proceed with the foreclosure action. The parties later reached a stipulation, under which, they agreed that: -- (i) As of the Petition Date, the Debtor is indebted to the senior lender in the aggregate amount of $22,626,043, plus fees, costs and expenses, (ii) the indebtedness is not subject to offset, defense or counterclaims, and (iii) the amount of the indebtedness exceeds the fair market value of the Property by no less than $5 million; -- The senior lender is granted relief from the automatic stay to continue the foreclosure action including, but not limited to, a foreclosure sale of the property; -- the Debtor's exclusive period to file a plan of reorganization is terminated and the senior lender and the Debtor may propose a qualified plan as set forth in the settlement agreement. About 3210 Riverdale Development LLC Bronx, New York-based 3210 Riverdale Development LLC filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-11109) on March 20, 2012. Judge James M. Peck is assigned to the Debtor's bankruptcy case. 3210 Riverdale owns certain real property and improvements located at 3210 Riverdale Ave., 3217 Irwin Ave., and 3219 Irwin Ave., in Bronx. The parties behind 3210 Riverdale Avenue Partners LLC are Michael Davis at Plymouth Group, and Laurence Rappaport, at KABR Group. The Debtor disclosed $30,000,000 in assets and $18,977,495 in liabilities as of the Chapter 11 filing. The property was in possession of a state court appointed receiver of rents, which receiver has been excused form compliance form turnover pursuant to an order of the Court dated May 11, 2012. The Debtor was represented by Jonathan S. Pasternak, Esq., at Rattet Pasternak, LLP. The senior lenders were represented by Andrew C. Gold, Esq. There was a Chapter 11 plan co-proposed by the Debtor and senior lender 3210 Riverdale Avenue Partners LLC. The Plan provides that the senior lender, owed $22.7 million would have a 78% recovery. In satisfaction of the claim, the Debtor has agreed to convey its property to the lender or its buyer designee. A123 SYSTEMS: Receives Court Approval Of "First Day" Motions ------------------------------------------------------------ A123 Systems, Inc. disclosed that the U.S. Bankruptcy Court for the District of Delaware granted the Company's request for certain "first day" orders that help support its business. The Court granted A123 interim approval to use $15.5 million of its $72.5 million Debtor-in Possession financing from Johnson Controls, Inc. to support the Company's operations throughout the transaction process. A court hearing for final approval of the DIP has been scheduled for Oct. 30, 2012. The Company also received approval to, among other things, continue paying employee wages, salaries, benefits and other employee obligations. A123 entered an asset purchase agreement with Johnson Controls, in which Johnson Controls expects to acquire A123's automotive business assets. A123 also continues to engage in active discussions regarding strategic alternatives for its grid, commercial, government and other operations, and has received several indications of interest for these businesses. To facilitate the transaction process, A123 and all of its U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The Company's subsidiaries located outside the U.S. were not included in the filings. About A123 Systems Based in Waltham, Massachusetts, A123 Systems Inc. designs, develops, manufactures and sells advanced rechargeable lithium-ion batteries and battery systems and provides research and development services to government agencies and commercial customers. A123 is the recipient of a $249 million federal grant from the Obama administration. Pre-bankruptcy, A123 had an agreement to sell an 80% stake to Chinese auto-parts maker Wanxiang Group Corp. U.S. lawmakers opposed the deal over concerns on the transfer of American taxpayer dollars and technology to China. A123 didn't make a $2.7 million payment due Oct. 15 on $143.75 million in 3.75% convertible subordinated notes due 2016. A123 and U.S. affiliates, A123 Securities Corporation and Grid Storage Holdings LLC, sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 12-12859 to 12-12861) on Oct. 16, 2012, with a deal to sell its auto-business assets to Johnson Controls Inc. The deal with JCI is valued at $125 million, and subject to higher offers at a bankruptcy auction. A123 disclosed assets of $459.8 million and liabilities totaling $376 million. Debt includes $143.8 million on 3.75% convertible subordinated notes. Other liabilities include $22.5 million on a bridge loan owing to Wanziang. About $33 million is owed to trade suppliers. The Hon. Kevin J. Carey presides over the case. Lawyers at Richards, Layton & Finger, P.A., and Latham & Watkins LLP serve as the Debtors' counsel. Lazard Freres & Co. LLC acts as the Debtors' financial advisors, while Alvarez & Marsal serves as restructuring advisors. Logan & Company Inc. serves as the Debtors' claims and noticing agent. The petitions were signed by David Prystash, chief financial officer. Wanxiang America Corporation and Wanxiang Clean Energy USA Corp. are represented in the case by lawyers at Young Conaway Stargatt & Taylor, LLP, and Sidley Austin LLP. A & R PROPERTIES: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: A & R Properties, LLC 601 Napoleon Street Baton Rouge, LA 70802 Bankruptcy Case No.: 12-11504 Chapter 11 Petition Date: October 16, 2012 Court: U.S. Bankruptcy Court Middle District of Louisiana (Baton Rouge) Debtor's Counsel: Alice Estill, Esq. G. ALLEN WALSH & ASSOCIATES 601 Napoleon Street Baton Rouge, LA 70802 Tel: (225) 381-9305 Fax: (225) 381-9317 E-mail: afestill@yahoo.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by G. Allen Walsh, managing member. ACACIA AUTOMOTIVE: Files Form 10-Q for 2nd Quarter of 2010 ---------------------------------------------------------- Acacia Diversified Holdings, Inc., formerly known as Acacia Automotive, Inc., filed on Oct. 19, 2012, its quarterly report on Form 10-Q for the three months ended June 30, 2010. The Company reported net income of $214,964 on $548,568 of revenues for the three months ended June 30, 2010, compared with net income of $7,367 on $476,366 of revenues for the three months ended June 30, 2009. For the six months ended June 30, 2010, the Company had net income of $97,090 on $956,626 of revenues, compared with a net loss of $30,077 on $798,016 of revenues for the six months ended June 30, 2009. "The Company discontinued operations at its Chattanooga auction location after Aug. 31, 2010, reporting a loss of $14,667 on those discontinued operations in the three months ended June 30, 2010, and $188,069 for the six months ended June 30, 2010. As a result of the required accounting, the Company gained $218,892 on discontinuation of operations at the Chattanooga subsidiary for the three month and six month period, resulting in a net consolidated gain of $204,225 and $30,823 in the three months and six months, respectively." For the six months ended June 30, 2010, the Company booked a profit from consolidated continuing operations of $66,267 for a net consolidated income of $97,090. The Company's balance sheet at June 30, 2010, showed $1.6 million in total assets, $1.2 million in total liabilities, and a shareholders' deficit of $394,941. As reported in the TCR on June 8, 2010, Killman, Murrell & Company, P.C., in Odessa, Texas, expressed substantial doubt about the Company's ability to continue as a going concern, following its audit of the Company's financial statements for the fiscal year ended Dec. 31, 2009. The independent auditors noted that the Company has suffered recurring losses from operations and has limited capital resources. A copy of the Form 10-Q is available at http://is.gd/SBdGBR Acacia Diversified Holdings, Inc., does not have significant operations. It intends to acquire and operate businesses. Previously, it was engaged in the auctioning of automobiles, trucks, boats, motor homes, RVs, and related products. The Company was formerly known as Acacia Automotive, Inc., and changed its name to Acacia Diversified Holdings, Inc., in July 2012. Acacia Diversified Holdings, Inc., was founded in 1984 and is based in Ocala, Florida. ADVANCED MICRO: Moody's Cuts Corporate Family Rating to 'B1' ------------------------------------------------------------ Moody's Investors Service lowered Advanced Micro Devices' ("AMD") corporate family rating to B1 from Ba3, and the ratings on the senior unsecured notes to B1 from Ba3. The ratings were also placed under review for further downgrade. The speculative grade liquidity rating was lowered to SGL-2 from SGL-1. The downgrade of the corporate family rating reflects prospects for significantly weaker than expected operating performance over the next year. The "increasingly challenging macro environment, weak demand conditions in the personal computer space, particularly among consumers and in the lower end segments where tablet devices continue to take wallet-share, are expected to persist well into 2013", said Moody's Richard Lane. AMD is reorienting its business model and implementing a cost realignment program that, with $450 million of quarterly operating costs, could achieve breakeven operating profit at $1.3 billion in sales. With Moody's forecast $1.15 billion of revenue in the December quarter, followed by typically lower sequential revenue in the first fiscal quarter and flat second quarter revenue, Moody's believes AMD will be challenged to achieve quarterly breakeven operating profit until at least one year from now. Driven by the outlook for operating losses, Moody's expects adjusted debt to EBITDA could double over the next year from approximately 4.0 times as of September 2012 (2.7 times at June 2012). As of September 2012, AMD had nearly $1.5 billion of cash and marketable securities. AMD does not maintain a committed revolving credit facility. Moody's now expects AMD will consume some cash over the next year. This view is driven by projected operational losses, cash payments of $225 million to AMD's foundry partner (Global Foundries) in December related to a previously negotiated wafer supply agreement, and approximately $80 million in cash outflows related to restructuring activities (headcount reduction) over the next two quarters. AMD's next debt maturity is a $580 million note (unrated) due May 2015. Ratings Rationale The review will focus on AMD's prospects to reorient its business to address markets beyond its core, legacy personal computer market to the faster growing server, embedded, and ultra low power segments. AMD is targeting to grow the latter segments from roughly 15% of revenue presently to 40%-50% of its revenue over time. Embedded computation for the gaming, industrial, and communications currently makes up about 5% of AMD's revenue, and management outlined a goal to increase that to about 20% by the end of 2013. While AMD has key design wins in the embedded space that Moody's believes makes this target reasonable, the rating agency is more skeptical of AMD's ability to drive server materially higher over the near term due to stiff competition from Intel and long design cycles for mission critical servers. The review will consider the time frame and financial implications of AMD's plans to use third party processor cores in future high-end server products to complement its Sea-Micro server fabric. Moody's will also assess AMD's prospects to compete in the ultra low power tablet market where incumbent producers of ARM-based processors have low power advantages. In addition to management's strategic reorientation, Moody's will also assess the ability to reduce AMD's operational cost structure ($80 million in fourth quarter restructuring charges followed by additional undisclosed restructuring charges next year) without diminishing the ability to consistently innovate. An additional element of the ratings review will address AMD's future wafer supply agreement with Global Foundries, including the existing take-or-pay contract under which AMD is currently scheduled to pay $500 million in the fourth quarter. In addition, Moody's is adding the LGD for the bonds due in 2020. The LGD was previously missing due to an internal administrative error. An LGD of LGD4-53 was assigned on July 26 2010 when the bonds were first rated and was changed to LGD4-54 on August 6 2012. Ratings downgraded: Corporate family rating to B1 from Ba3 Probability of default rating to B1 from Ba3 $500 million senior unsecured notes due 2017 to B1 (LGD4-54%) from Ba3 (LGD4-54%) $500 million senior unsecured notes due 2020 to B1 (LGD4- 54%)from Ba3 (LGD4-54%) $500 million senior unsecured notes due 2022 to B1 (LGD4- 54%)from Ba3 (LGD4-54%) Speculative grade liquidity rating to SGL-2 from SGL-1 The principal methodology used in rating Advanced Micro Devices was the Global Semiconductor Industry Methodology published in November 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. AHERN RENTALS: Hearing on Plan Filing Extension Moved to Oct. 31 ---------------------------------------------------------------- Rental Equipment Register reports that a court hearing to consider an extension of the exclusivity period for Ahern Rentals to propose a reorganization plan to exit bankruptcy has been postponed until Oct. 31, 2012. According to the report, Platinum Equity LLC, which also owns Maxim Crane Rental, is believed to be interested in a takeover using the portion of Ahern debt owned by Platinum. About Ahern Rentals Founded in 1953 with one location in Las Vegas, Nevada, Ahern Rentals Inc. -- http://www.ahern.com/-- now offers rental equipment to customers through its 74 locations in Arizona, Arkansas, California, Colorado, Georgia, Kansas, Maryland, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia and Washington. Ahern Rentals filed a voluntary Chapter 11 petition (Bankr. D. Nev. Case No. 11-53860) on Dec. 22, 2011, after failing to obtain an extension of the Aug. 21, 2011 maturity of its revolving credit facility. Judge Bruce T. Beesley presides over the case. Lawyers at Gordon Silver serve as the Debtor's counsel. The Debtor's financial advisors are Oppenheimer & Co. and The Seaport Group. Kurtzman Carson Consultants LLC serves as claims and notice agent. Counsel to Bank of America, as the DIP Agent and First Lien Agent, are Albert M. Fenster, Esq., and Marc D. Rosenberg, Esq., at Kaye Scholer LLP, and Robert R. Kinas, Esq., at Snell & Wilmer. Attorneys for the Majority Term Lenders are Paul Aronzon, Esq., and Robert Jay Moore, Esq., at Milbank, Tweed, Hadley & McCloy LLP. Counsel for the Majority Second Lienholder are Paul V. Shalhoub, Esq., Joseph G. Minias, Esq., and Ana M. Alfonso, Esq., at Willkie Farr & Gallagher LLP. Attorney for GE Capital is James E. Van Horn, Esq., at McGuirewoods LLP. Wells Fargo Bank is represented by Andrew M. Kramer, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C. Allan S. Brilliant, Esq., and Glenn E. Siegel, Esq., at Dechert LLP argue for certain revolving lenders. Attorneys for U.S. Bank National Association, as successor to Wells Fargo Bank, as collateral agent and trustee for the benefit of holders of the 9-1/4% Senior Secured Notes Due 2013 under the Indenture dated Aug. 18, 2005, is Kyle Mathews, Esq., at Sheppard, Mullin, Richter & Hampton LLP and Timothy Lukas, Esq., at Holland & Hart. In its schedules, the Debtor disclosed $485.8 million in assets and $649.9 million in liabilities. The Official Committee of Unsecured Creditors has tapped Covington & Burling LLP as counsel, Downey Brand LLP as local counsel, and FTI Consulting as financial advisor. ARCAPITA BANK: Still Trying to Secure Financing From Silver Point ----------------------------------------------------------------- Joseph Checkler at Dow Jones' Daily Bankruptcy Review reports that Arcapita Bank said it is slowly moving closer to securing $150 million in bankruptcy financing from Silver Point Capital but held off asking for court approval to pay Silver Point a fee that would move that loan forward. The U.S. Bankruptcy Court for the Southern District of New York has adjourned the hearing to consider Arcapita Bank B.S.C.(c), et al.'s motion for entry of an order authorizing the Debtors to enter into the Silver Point DIP facility, to Oct. 23, 2012, at 2:00 p.m. The hearing had been earlier scheduled on Oct. 19, 2012, at 11:00 a.m. About Arcapita Bank Arcapita Bank B.S.C., also known as First Islamic Investment Bank B.S.C., along with affiliates, filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-11076) in Manhattan on March 19, 2012. The Debtors said they do not have the liquidity necessary to repay a US$1.1 billion syndicated unsecured facility when it comes due on March 28, 2012. Falcon Gas Storage Company, Inc., later filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-11790) on April 30, 2012. Falcon Gas is an indirect wholly owned subsidiary of Arcapita that previously owned the natural gas storage business NorTex Gas Storage Company LLC. In early 2010, Alinda Natural Gas Storage I, L.P. (n/k/a Tide Natural Gas Storage I, L.P.), Alinda Natural Gas Storage II, L.P. (n/k/a Tide Natural Gas Storage II, L.P.) acquired the stock of NorTex from Falcon Gas for $515 million. Arcapita guaranteed certain of Falcon Gas' obligations under the NorTex Purchase Agreement. The Debtors tapped Gibson, Dunn & Crutcher LLP as bankruptcy counsel, Linklaters LLP as corporate counsel, Towers & Hamlins LLP as international counsel on Bahrain matters, Hatim S Zu'bi & Partners as Bahrain counsel, KPMG LLP as accountants, Rothschild Inc. and financial advisor, and GCG Inc. as notice and claims agent. Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. Founded in 1996, Arcapita is a global manager of Shari'ah- compliant alternative investments and operates as an investment bank. Arcapita is not a domestic bank licensed in the United States. Arcapita is headquartered in Bahrain and is regulated under an Islamic wholesale banking license issued by the Central Bank of Bahrain. The Arcapita Group employs 268 people and has offices in Atlanta, London, Hong Kong and Singapore in addition to its Bahrain headquarters. The Arcapita Group's principal activities include investing on its own account and providing investment opportunities to third-party investors in conformity with Islamic Shari'ah rules and principles. The Arcapita Group has roughly US$7 billion in assets under management. On a consolidated basis, the Arcapita Group owns assets valued at roughly US$3.06 billion and has liabilities of roughly US$2.55 billion. The Debtors owe US$96.7 million under two secured facilities made available by Standard Chartered Bank. Arcapita explored out-of-court restructuring scenarios but was unable to achieve 100% lender consent required to effectuate the terms of an out-of-court restructuring. Subsequent to the Chapter 11 filing, Arcapita Investment Holdings Limited, a wholly owned Debtor subsidiary of Arcapita in the Cayman Islands, issued a summons seeking ancillary relief from the Grand Court of the Cayman Islands with a view to facilitating the Chapter 11 cases. AIHL sought the appointment of Zolfo Cooper as provisional liquidator. ARCAPITA BANK: Court Approves Settlement with Standard Chartered ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York to has approved the settlement by and between Arcapita Bank B.S.C.(c), et al., the Committee of Unsecured Creditors, the Joint Provisional Liquidators of debtor Arcapita Investment Holdings Limited and Standard Chartered Bank. As reported in the TCR on Oct. 12, 2012, as a result of the Settlement, the Debtors will be able to move forward with the EuroLog IPO without litigating myriad potential disputes with SCB. In addition, SCB has agreed that the Debtors can use the proceeds of the EuroLog IPO for other purposes, thereby reducing the Debtors' need to draw on any debtor-in-possession financing facility. The Settlement also secures SCB's agreement not to object to any Approved DIP Financing. A copy of the Oct. 19 Order and the Settlement Term Sheet is available at http://bankrupt.com/misc/arcapita.doc587.pdf About Arcapita Bank Arcapita Bank B.S.C., also known as First Islamic Investment Bank B.S.C., along with affiliates, filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-11076) in Manhattan on March 19, 2012. The Debtors said they do not have the liquidity necessary to repay a US$1.1 billion syndicated unsecured facility when it comes due on March 28, 2012. Falcon Gas Storage Company, Inc., later filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-11790) on April 30, 2012. Falcon Gas is an indirect wholly owned subsidiary of Arcapita that previously owned the natural gas storage business NorTex Gas Storage Company LLC. In early 2010, Alinda Natural Gas Storage I, L.P. (n/k/a Tide Natural Gas Storage I, L.P.), Alinda Natural Gas Storage II, L.P. (n/k/a Tide Natural Gas Storage II, L.P.) acquired the stock of NorTex from Falcon Gas for $515 million. Arcapita guaranteed certain of Falcon Gas' obligations under the NorTex Purchase Agreement. The Debtors tapped Gibson, Dunn & Crutcher LLP as bankruptcy counsel, Linklaters LLP as corporate counsel, Towers & Hamlins LLP as international counsel on Bahrain matters, Hatim S Zu'bi & Partners as Bahrain counsel, KPMG LLP as accountants, Rothschild Inc. and financial advisor, and GCG Inc. as notice and claims agent. Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. Founded in 1996, Arcapita is a global manager of Shari'ah- compliant alternative investments and operates as an investment bank. Arcapita is not a domestic bank licensed in the United States. Arcapita is headquartered in Bahrain and is regulated under an Islamic wholesale banking license issued by the Central Bank of Bahrain. The Arcapita Group employs 268 people and has offices in Atlanta, London, Hong Kong and Singapore in addition to its Bahrain headquarters. The Arcapita Group's principal activities include investing on its own account and providing investment opportunities to third-party investors in conformity with Islamic Shari'ah rules and principles. The Arcapita Group has roughly US$7 billion in assets under management. On a consolidated basis, the Arcapita Group owns assets valued at roughly US$3.06 billion and has liabilities of roughly US$2.55 billion. The Debtors owe US$96.7 million under two secured facilities made available by Standard Chartered Bank. Arcapita explored out-of-court restructuring scenarios but was unable to achieve 100% lender consent required to effectuate the terms of an out-of-court restructuring. Subsequent to the Chapter 11 filing, Arcapita Investment Holdings Limited, a wholly owned Debtor subsidiary of Arcapita in the Cayman Islands, issued a summons seeking ancillary relief from the Grand Court of the Cayman Islands with a view to facilitating the Chapter 11 cases. AIHL sought the appointment of Zolfo Cooper as provisional liquidator. BCE INC: Moody's Says Denial of Astral Acquisition Credit Pos. -------------------------------------------------------------- Moody's Investors Service said that the Canadian Radio-television and Telecommunications Commission's (CRTC) October 18, 2012 denial of BCE Inc.'s (BCE) C$3.38 billion Astral Media Inc. (Astral; unrated) acquisition is credit-positive for BCE since the company will avoid re-regulation risks, an increase in leverage and an increase in earnings volatility. While the up-to-C$150 million break-up fee that BCE will pay Astral is credit-negative, BCE is, on balance, better off. BCE has requested Canadian Government review of the decision. The principal methodology used in rating BCE Inc. and Bell Canada was the Global Telecommunications Industry Methodology published in December 2010. As reported by the Troubled Company Reporter on March 3, 2009, Fitch Ratings upgraded the Issuer Default Rating and outstanding debt ratings of BCE Inc. and its subsidiary Bell Canada: BCE -- IDR to 'BBB+' from 'BB-'; -- Senior unsecured debt to 'BBB+' from 'BB-'. Bell Canada -- IDR to 'BBB+' from 'BB-'; -- Senior unsecured debt to 'BBB+' from 'BB-'; -- Subordinate debt to 'BBB' from 'B+'. The Rating Outlook is Stable. Bell Canada, headquartered in Montreal, Quebec, Canada, [wholly- owned by BCE Inc. (a publicly traded holding company that is also based in Montreal)], operates Canada's largest broadband services company with a product offering that features both fixed line and wireless voice and broadband services, satellite video, a nascent Internet Protocol television product, and a television content aggregation and production business. While Bell Canada operates nationally, its incumbent fixed line operations are in urban/suburban Ontario and Quebec. BERRY PLASTICS: Redeems Outstanding 11% Senior Subordinated Notes ----------------------------------------------------------------- Berry Plastics Corporation, a wholly owned subsidiary of Berry Plastics Group, Inc., redeemed all of the Company's outstanding 11% Senior Subordinated Secured Notes due 2016. Immediately before the redemption, $454,563,354 aggregate principal amount of the 11% Notes was outstanding. The redemption price for the 11% Notes was 100% of the aggregate principal amount redeemed plus (i) a premium of approximately $13 million as provided for in the indenture governing the 11% Notes and (ii) approximately $4 million in accrued and unpaid interest. The Company used $440 million of net proceeds from the initial public offering of Berry Parent and cash on hand to redeem the 11% Notes. Upon the redemption, the indenture and supplemental indentures governing the 11% Notes were terminated. About Berry Plastics Berry Plastics Corporation manufactures and markets plastic packaging products, plastic film products, specialty adhesives and coated products. At Jan. 2, 2010, the Company had more than 80 production and manufacturing facilities, primarily located in the United States. Berry is a wholly-owned subsidiary of Berry Plastics Group, Inc. Berry Group is primarily owned by affiliates of Apollo Management, L.P. and Graham Partners. Berry, through its wholly owned subsidiaries operates five reporting segments: Rigid Open Top, Rigid Closed Top, Flexible Films, Tapes/Coatings and Specialty Films. The Company's customers are located principally throughout the United States, without significant concentration in any one region or with any one customer. On Dec. 3, 2009, Berry Plastics obtained control of 100% of the capital stock of Pliant upon Pliant's emergence from reorganization pursuant to a proceeding under Chapter 11 for a purchase price of $602.7 million. Pliant is a leading manufacturer of value-added films and flexible packaging for food, personal care, medical, agricultural and industrial applications. The acquired business is primarily operated in Berry's Specialty Films reporting segment. The Company's balance sheet at April 2, 2011, showed $5.54 billion in total assets, $5.34 billion in total liabilities, and $202 million in total stockholders' equity. * * * Berry Plastics has a 'B3' corporate family rating, with stable outlook, from Moody's Investors Service. Moody's said in April 2010 that Berry's B3 CFR reflects weakness in certain credit metrics, financial aggressiveness and acquisitiveness and a continued difficult operating and competitive environment especially in the flexible plastics and tapes segments. The rating also reflects the Company's exposure to more cyclical end markets, relatively weak contracts with customers and a high percentage of commodity products. In November 2011, Standard & Poor's Ratings Services affirmed the 'B-' corporate credit rating on Berry and its holding company parent, Berry Plastics Group Inc. "The ratings on Berry reflect the risks associated with the company's highly leveraged financial profile and acquisition- driven growth strategy as well as its fair business risk profile," said Standard & Poor's credit analyst Cynthia Werneth. BHI EXCHANGE: S&P Withdraws 'B' Corp. Credit Rating on Request -------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B' corporate credit and all other ratings on Charlotte, N.C.-based BHI Exchange Inc., which operates and franchises Bojangles' restaurants, at the company's request. "BHI refinanced with its existing debt with new loans, which we have not been asked to rate," S&P said. BOUNDARY BAY: EIF 1 Opposes Approval of Plan Disclosures -------------------------------------------------------- Creditor Enhanced Income Fund 1, LLC, asks the U.S. Bankruptcy Court for the Central District of California to deny approval of the Second Amended Disclosure Statement explaining Boundary Bay Capital, LLC's Plan of Reorganization dated Aug. 30, 2011, because: 1. Neither the Debtor nor the Plan disclose the treatment of the full amount of EIF's claim which is in excess of the principal of $4 million in the promissory note; and 2. There is no disclosure as to how the Debtor will satisfy the Dunn Creditors in only 30 days after the Effective Date. EIF is listed in the Debtor's Plan as having a Class 2 claim in the amount of $2 million despite it holding a promissory note dated Oct. 1, 2009, with a principal of $4 million. As reported in the Troubled Company Reporter on Sept. 14, 2012, in a status report submitted for the Sept. 12 hearing, the Debtor said it is working diligently towards developing a consensual plan of reorganization. To achieve this result, the Debtor has spent a significant amount of time negotiating settlements with key creditors. The Debtor has also spent time revising the plan to address the concerns of the Official Committee of Unsecured Creditors. One and a half year since filing for bankruptcy and a year after filing a proposed reorganization plan, Boundary Bay has yet to receive approval of the bankruptcy exit plan. It might finally be able to do so as the remaining issues related to the plan have been resolved. The Debtor on Aug. 23, 2012 filed its Second Amended Plan and Disclosure Statement. A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/Boundary_Bay_DS_082312.pdf On Sept. 5, the Debtor announced it has reached a stipulation which will provide CB&T relief from the automatic stay to foreclose on a piece of real property and which will fully resolve any issues remaining as part of the objection to CB&T's claim. The Debtor said that the property -- the Pacific Coast property in Dana Point, California -- is not necessary for its effective reorganization. CB&T has agreed not to seek a deficiency claim against the Debtor. The Debtor's plan contemplates an orderly administration of the assets in order to maximize return to creditors. The Debtor said that in the absence of the Plan, the assets would be liquidated at substantially discounted prices. The real property assets being sold will be sold through a new entity, named NewCo, over sufficient time periods to generate the highest potential recoveries. NewCo will obtain a secured loan in the amount of $2.5 million, of which $991,000 would be distributed to the Debtor. Holders of general unsecured claims aggregating $45 million will have the option to receive equity in the reorganized debtor or elect to have 7.5% of their claims paid 90 days after the Effective Date under a buy-out option. Holders of unsecured claims each less than $2,000 will receive 10% of the value of their claims on the Effective Date. About Boundary Bay Boundary Bay Capital, LLC, is a California limited liability company with its headquarters in Irvine, California. The Company was in the business of making loans secured by liens on real property and notes secured by other secured notes (which, in turn, are secured by liens or real property). The Company also owns some real property through foreclosure. Boundary Bay Capital filed for Chapter 11 bankruptcy protection (Bankr. C.D. Calif. Case No. 11-14298) on March 28, 2011. Evan D. Smiley, Esq., and Hutchison B. Meltzer, Esq., at Weiland, Golden, Smiley, Wang Ekvall & Strok, LLP, in Costa Mesa, Calif., serve as the Debtor's bankruptcy counsel. Affiliate Cartwright Properties, LLC, filed a separate Chapter 11 petition (Bankr. C.D. Calif. Case No. 10-17823) on June 9, 2010. In its schedules, the Debtor disclosed $15.88 million in assets and $54.45 million in liabilities. BWAY PARENT: Moody's Confirms 'B2' CFR; Outlook Negative -------------------------------------------------------- Moody's Investors Service confirmed the B2 corporate family and probability of default ratings of BWAY Parent Company Inc., revised the ratings outlook to negative and concluded the review initiated on October 3, 2012. The review followed BWAY's announcement on October 2 that it had entered into a definitive agreement to be acquired by an affiliate of Platinum Equity in a transaction valued at approximately $1.24 billion. The company expects to finance the transaction with a $420-$480 million new senior secured term loan facility, the $205 million of existing seniro unsecured notes and up to $375 million of PIK toggle notes. The Company also expects to enter into a $150 million asset-based revolving credit facility (not rated by Moody's). The sponsor is expected to contribute approximately $294 million of common equity which is not expected to accrete, have a regular dividend or be putable. The BOE Merger Corporation will be merged into and with BWAY Parent Company, Inc. Moody's assigned ratings to the proposed acquisition financing and confirmed ratings on the existing instruments. Moody's took the following rating actions: Assignments: Issuer: BOE Merger Corporation Corporate Family Rating, Assigned B2 Probability of Default Rating, Assigned B2 Senior Unsecured Regular Bond/Debenture, Assigned Caa1 (LGD5, 87%) Issuer: BWAY Holding Company, Inc. (New) Senior Secured Bank Credit Facility, Assigned Ba3 (LGD2, 28%) Confirmations: Issuer: BWAY Parent Company, Inc. Probability of Default Rating, Confirmed at B2 Corporate Family Rating, Confirmed at B2 Speculative Grade Liquidity Rating, Confirmed at SGL-2 Senior Unsecured Regular Bond/Debenture, Confirmed at Caa1 (LGD6, 93%) Issuer: BWAY Holding Company, Inc. Senior Unsecured Regular Bond/Debenture, Confirmed at B3 (LGD4, 63% from LGD5,76%) Senior Secured Bank Credit Facility, Confirmed at Ba3 (LGD2, 29%) Issuer: ICL Industrial Containers ULC/ICL Senior Secured Bank Credit Facility, Confirmed at Ba3 (LGD2, 29%) The ratings outlook is negative. The ratings are subject to the receipt and review of the final documentation. Ratings Rationale The revision of the outlook to negative from stable reflects the weak profroma credit metrics, factors causing the recent weakness in unit volumes and impact of the sale of the bottle business. The negative outlook also reflects the partial reliance on productivity initiatives to achieve sufficient improvements in operating results to overcome the accretion in the PIK notes and improve credit metrics to a level consistent with the rating category over the horizon. Pro-forma for the LBO leverage is over 6.0 times and EBIT interest coverage less than 1.0 time. BWAY's B2 corporate family rating reflects credit risks resulting from the high concentration of sales, cyclical nature of the primary end market and acquisition strategy. The rating also reflects the company's financial aggressiveness. The company derives approximately half of its revenues from housing-related products (including paint and other building products) and 13% from one customer. Additionally, the top ten customers account for approximately 33% of revenue. While most of the targets for the company's acquisitiveness are smaller, the potential for a larger debt-financed acquisition exists and integration risk remains. The company has long-term contracts with customers that contain cost pass-through provisions, but other costs are excluded and there is the potential for significant lags. The ratings are supported by the company's dominant share in its markets, the limited number of alternate suppliers with scale and breadth of product line, and barriers to entry in the industry. BWAY also benefits from strong liquidity and long-standing customer relationships. The ratings are also supported by anticipated benefits from the integration of recent acquisitions and ongoing cost-cutting. Accretive acquisitions with free cash flow and an eventual stabilization of volumes are anticipated to further support credit metrics long term. The rating could be upgraded if BWAY sustainably improves credit metrics and maintains strong liquidity within the context of a stable operating and competitive environment. The company would also need to adopt a less aggressive financial policies. Specifically, the ratings could be upgraded, if debt to EBITDA declines below 5.5 times, free cash flow to debt increase to above 5.5%, the EBITA margin remains above 8.2%, and EBITA to gross interest improves to 1.6 times or better on a sustained basis. The rating could be downgraded if the company fails to improve credit statistics or there is a deterioration in liquidity or the operating and competitive environment. Continued aggressive financial policies could also pressure the rating. Specifically, the rating could be downgraded if the company fails to improve total debt to EBITDA to below 6.0 times, free cash flow to debt (adjusted for PIK interest) remains below the mid-single digits, the EBITA margin declines below 7.2%, and EBITA to gross interest is below 1.3 times. The principal methodology used in rating BWAY was the Global Packaging Manufacturers: Metal, Glass, and Plastic Containers Industry Methodology published in June 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. CAPABILITY RANCH: Hearing on Gordon Silver Hiring Nov. 13 --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada will convene a hearing on Nov. 13, 2012, at 10 a.m., to consider Capability Ranch, LLC's request to employ the law firm of Gordon Silver as bankruptcy counsel. The Debtor, in its motion, stated that it is necessary to employ attorneys under a general retainer to render professional services. GS will use reasonable efforts to coordinate with the Debtor and Debtor's other retained professionals to avoid unnecessary duplication of services. Prior to the Petition Date, the Debtor paid GS $7,752 for legal services rendered in connection with its restructuring. GS is also currently holding in retainer the sum of $44,747. The compensation for the services provided by GS attorneys and paraprofessionals is proposed at varying hourly rates ranging from $135 to $190 for paraprofessionals, from $190 to $360 for associates, and from $400 to $725 for shareholders of GS. To the best of the Debtor's knowledge, GS is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Capability Ranch Las Vegas-based Capability Ranch, LLC, fdba Monroe Property Company, LLC, filed for Chapter 11 bankruptcy (Bankr. D. Nev. Case No. 12-21121) on Sept. 21, 2012. Bankruptcy Judge Bruce A. Markell presides over the case. Thomas H. Fell, Esq., at Gordon Silver, serves as the Debtor's counsel. Capability Ranch estimated assets and debts of $50 million to $100 million. The Debtor said it owns property on 40060 Paws Up Road in Greenough, Montana. The property is a 37,000-acre luxury Montana ranch and Montana resort. According to http://www.pawsup.com The Resort at Paws Up has 28 luxury vacation homes and 24 luxury camping tents. The resort offers horseback riding, fly fishing, and spa treatments. No request has been made for the appointment of a trustee or examiner, and no official committees have been established. CAESARS ENTERTAINMENT: Amends Q1 Results to Reflect Assets Sold --------------------------------------------------------------- Caesars Entertainment Corporation revised its quarterly report for the period ended March 31, 2012, to reflect the results of Harrah's Maryland Heights, LLC, owner of the Harrah's St. Louis casino, as discontinued operations and to reflect the assets and liabilities included in the purchase agreement as held for sale. The Company's revised statement of operations reflects a net loss of $281.10 million on $2.20 billion of net revenues for the quarter ended March 31, 2012, compared with a net loss of $281.10 million on $2.27 billion of net revenues as originally reported. Caesars Entertainment previously entered into an Equity Purchae Agreement to sell Harrah's St. Louis to Penn National Gaming, Inc., for $610 million in cash. The transaction is expected to close in the fourth quarter of 2012. The Company expects to use the net proceeds from the sale to fund CEOC capital expenditures or to repurchase certain outstanding debt obligations of CEOC. Deutsche Bank Securities, Inc., served as financial advisor to Caesars Entertainment on this transaction. A copy of the revised consolidated statements is available at: http://is.gd/juBUOu About Caesars Entertainment Caesars Entertainment Corp., formerly Harrah's Entertainment Inc. --http://www.caesars.com/-- is one of the world's largest casino companies, with annual revenue of $4.2 billion, 20 properties on three continents, more than 25,000 hotel rooms, two million square feet of casino space and 50,000 employees. Caesars casino resorts operate under the Caesars, Bally's, Flamingo, Grand Casinos, Hilton and Paris brand names. The Company has its corporate headquarters in Las Vegas. Harrah's announced its re-branding to Caesar's on mid-November 2010. The Company reported a net loss of $666.70 million in 2011, and a net loss of $823.30 million in 2010. The Company's balance sheet at June 30, 2012, showed $28.03 billion in total assets, $27.43 billion in total liabilities, and $607.2 million in total equity. * * * As reported by the TCR on March 28, 2012, Moody's Investors Service upgraded Caesars Entertainment Corp's Corporate Family Rating (CFR) and Probability of Default Rating both to Caa1 from Caa2. The upgrade of Caesars' ratings reflects very good liquidity, an improving operating outlook for gaming in a number of the company's largest markets that is expected to drive earnings growth, the completion of a bank amendment that resulted in the extension of debt maturities to 2018 from 2015, and the public listing of the company's equity that increases financial flexibility by providing it with another potential source of capital. The upgrade of the SGL rating reflects minimal debt maturities over the next few years, significant cash balances (approximately $900 million at December 31, 2011) and revolver availability that will be more than sufficient to fund the company's cash interest and capital spending needs. In the Aug. 17, 2012, edition of the TCR, Standard & Poor's Ratings Services revised its rating outlook on Las Vegas-based Caesars Entertainment Corp. (CEC) and wholly owned subsidiary Caesars Entertainment Operating Co. Inc. (CEOC) to negative from stable. "We affirmed all other ratings on the companies, including our 'B-' corporate credit rating," S&P said. As reported by the TCR on Aug. 17, 2012, Fitch Ratings affirmed Caesars Entertainment Corp.'s Long-term Issuer Default Rating at 'CCC'. CARGO ACQUISITION: Moody's Withdraws 'Ba2' Senior Rating -------------------------------------------------------- Moody's Investors Service withdrew all ratings (Ba2 (Senior) and the Ba3 (Subordinate)) for Cargo Acquisition Companies Obligated Group's rated debt. The rated senior and subordinate series 2002 and 2003 notes were either redeemed or defeased as a result of a refinancing. Moody's holds no other rating of Cargo Acquisition Companies Obligated Group. Moody's has withdrawn the rating because the bonds have been redeemed. CENTRAL ILLINOIS ENERGY: Coop Can't Pursue Ridgestone Bank ---------------------------------------------------------- Chief Bankruptcy Judge Thomas L. Perkins granted a Motion for Summary Judgment filed by Ridgestone Bank in a lawsuit filed against it by the Chapter 7 trustee for the estate of Central Illinois Energy Cooperative. The trustee, A. Clay Cox, seeks to avoid as constructively fraudulent a prepetition transfer to Ridgestone of $42,500 paid as a loan fee in connection with its financing to Green Lion Bio- Fuels LLC, which acquired the Debtor's assets, on the theory that the funds were property of the Debtor transferred to Ridgestone to pay a liability of Green Lion, for which the Debtor did not receive reasonably equivalent value. The cause of action is pleaded, alternatively under section 548(a) of the Bankruptcy Code and under sections 5 and 6 of the Uniform Fraudulent Transfer Act. In its Answer, Ridgestone admits the basic facts of the transaction, but avers that the $42,500 payment was made with funds of Green Lion, not the Debtor, that the funds were not property of the Debtor, and that the transfer did not diminish the Debtor's estate. Central Illinois Energy Cooperative, an Illinois agricultural cooperative comprised of Central Illinois farmers, was formed in 2001, for the purpose of constructing, owning and operating a grain handling facility and administration building. The Debtor owned a controlling interest in Central Illinois Holding Company, LLC, the holding company for Central Illinois Energy, LLC (CIE), an entity formed in March, 2004, for the purpose of constructing, owning and operating an ethanol production facility and waste-coal fired power generating plant. The grain handling facility being constructed by the Debtor was located adjacent to the ethanol plant being constructed by CIE. The farmers who were members of the Debtor, hoped to sell corn to CIE for processing into ethanol and other byproducts. The two construction projects, separately financed, were both in serious financial trouble by June 2007. As a solution to its problems, the Debtor sought the assistance of Green Lion. On June 12, 2007, pursuant to a written Purchase Agreement, the Debtor transferred substantially all of its assets, including the grain handling facility in its not-yet-completed state, to Green Lion. Ridgestone provided the financing to Green Lion to enable it to close the purchase. The entire project failed within six months thereafter. CIE filed a voluntary petition under chapter 11 on Dec. 13, 2007, converting to chapter 7 on Aug. 4, 2008. A Chapter 11 involuntary petition was filed against the cooperative (Bankr. C.D. Ill. Case No. 09-81409) on May 1, 2009. HWS Energy Partners, LLC, the petitioning creditor, was represented by Douglas S. Slayton, Esq. CIE Cooperative did not file an answer and an order for relief was entered on June 18, 2009. The case was converted to Chapter 7 on July 16, 2009, on the motion of the U.S. Trustee. Richard E. Barber was appointed as Chapter 7 trustee. Pursuant to the Purchase Agreement, the Debtor sold substantially all of its assets to Green Lion. 2. The purchase and sale closed June 13, 2007. Under the Purchase Agreement, the gross purchase price for the Debtor's assets was stated to be $7,750,000. The Debtor agreed to accept $3,739,499.88 in cash at closing, with the remaining balance paid by Green Lion's assumption of certain obligations and the subsequent exchange of either membership interests or an unsecured promissory note. The Purchase Agreement provides that in addition to usual and customary adjustments at closing, Green Lion will be entitled to a credit against cash due at closing of $125,000 for a loan commitment fee, $50,000 for its independent attorney fees and costs, and $100,000 as a loan guaranty fee. Ridgestone was not a party to the Purchase Agreement. Ridgestone and Green Lion entered into a Construction Term Loan Agreement dated June 13, 2007, evidencing a loan of $4,250,000. As part of the loan agreement, the bank received a Loan Origination Fee of $42,500. The Debtor was not a party to the loan agreement. According to Judge Perkins, the Debtor clearly agreed to grant Green Lion a $275,000 reduction in the cash amount needed to close. In effect, this "adjustment" modified and reduced the stated cash to be paid to or for the benefit of the Debtor from $3,739,499.88 to $3,464,499.88. This lesser amount was the total cash consideration that the Debtor was entitled to receive as a matter of the plain meaning of the Purchase Agreement. The Debtor had no contractual right to all or any portion of the $275,000 amount for which Green Lion received a credit. Those funds remained the property of Green Lion. Thus, Ridgestone was paid from funds owned by Green Lion, not by the Debtor. The lawsuit is, A. CLAY COX, not individually but as Trustee for the estate of Central Illinois Energy Cooperative, Plaintiff, v. RIDGESTONE BANK, a Wisconsin banking corporation, Defendant, Adv. Proc. No. 11-8034 (Bankr. C.D. Ill.). A copy of the Court's Oct. 18, 2012 Opinion is available at http://is.gd/0QGaN8from Leagle.com. CHINA PRECISION: Gets Another Non-Compliance Notice from NASDAQ --------------------------------------------------------------- Che Kin Lui resigned as a member of the Board of Directors of China Precision Steel Inc. and as a member of the Board's Audit, Compensation and Nominating and Corporate Governance Committees, effective Aug. 8, 2012. Currently, the Company's Board of Directors consists of two independent directors and two non- independent directors and the Audit Committee is comprised of two members. The Company received on Oct. 18, 2012, a deficiency letter from the Listing Qualifications Staff at The NASDAQ Stock Market stating that the Company no longer complies with the independent director and audit committee composition rules set forth in NASDAQ Listing Rule 5605, requiring an Audit Committee to consist of at least three independent members of the board of directors. Consistent with NASDAQ Listing Rules 5605(b)(1)(A) and 5605(c)(4), NASDAQ has provided the Company with a cure period in order to regain compliance with the audit committee requirements. The Company has been given the earlier of the Company's next annual shareholders' meeting or Aug. 8, 2013, to regain compliance, except that, if the Company's next annual shareholders' meeting is held before Feb. 4, 2013, then the Company must evidence compliance by no later than Feb. 4, 2013. The Company is in the process of vetting suitable candidates for appointment to the Company's Board of Directors and Audit Committee within the cure period who meet the NASDAQ independence requirements. As previously reported by the TCR on March 21, 2012, China Precision received a letter from NASDAQ, notifying the Company that for 30 consecutive business days the bid price of its common stock had closed below $1.00 per share, the minimum closing bid price required by the continued listing requirements. About China Precision China Precision Steel Inc. is a niche precision steel processing company principally engaged in the production and sale of high precision cold-rolled steel products and provides value added services such as heat treatment and cutting medium and high carbon hot-rolled steel strips. China Precision Steel's high precision, ultra-thin, high strength (7.5 mm to 0.05 mm) cold-rolled steel products are mainly used in the production of automotive components, food packaging materials, saw blades and textile needles. The Company primarily sells to manufacturers in the People's Republic of China as well as overseas markets such as Nigeria, Thailand, Indonesia and the Philippines. China Precision Steel was incorporated in 2002 and is headquartered in Sheung Wan, Hong Kong. China Precision reported a net loss of $16.94 million for the year ended June 30, 2012, compared with net income of $256,950 during the prior fiscal year. The Company's balance sheet at June 30, 2012, showed $185.54 million in total assets, $66.67 million in total liabilities, all current, and $118.87 million in total stockholders' equity. Moore Stephens, in Hong Kong, issued a "going concern" qualification on the consolidated financial statement for the year ended June 30, 2012. The independent auditors noted that the Company has suffered a very significant loss in the year ended June 30, 2012, and defaulted on interest and principal repayments of bank borrowings that raise substantial doubt about its ability to continue as a going concern. CLEAR CHANNEL: Bank Debt Trades at 14% Off in Secondary Market -------------------------------------------------------------- Participations in a syndicated loan under which Clear Channel Communications, Inc., is a borrower traded in the secondary market at 85.86 cents-on-the-dollar during the week ended Friday, Oct. 19, an increase of 3.41 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 365 basis points above LIBOR to borrow under the facility. The bank loan matures on Jan. 30, 2016, and carries Moody's Caa1 rating and Standard & Poor's CCC+ rating. The loan is one of the biggest gainers and losers among 198 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About Clear Channel San Antonio, Texas-based CC Media Holdings, Inc. (OTC BB: CCMO) -- http://www.ccmediaholdings.com/-- is the parent company of Clear Channel Communications, Inc. CC Media Holdings is a global media and entertainment company specializing in mobile and on-demand entertainment and information services for local communities and premier opportunities for advertisers. The Company's businesses include radio and outdoor displays. For the six months ended June 30, 2012, the Company reported a net loss attributable to the Company of $182.65 million on $2.96 billion of revenue. Clear Channel reported a net loss of $302.09 million on $6.16 billion of revenue in 2011, compared with a net loss of $479.08 million on $5.86 billion of revenue in 2010. The Company had a net loss of $4.03 billion on $5.55 billion of revenue in 2009. The Company's balance sheet at June 30, 2012, showed $16.45 billion in total assets, $24.31 billion in total liabilities, and a $7.86 billion total shareholders' deficit. Bankruptcy Warning At March 31, 2012, the Company had $20.7 billion of total indebtedness outstanding. The Company said in its quarterly report for the period ended March 31, 2012, that its ability to restructure or refinance the debt will depend on the condition of the capital markets and the Company's financial condition at that time. Any refinancing of the Company's debt could be at higher interest rates and increase debt service obligations and may require the Company and its subsidiaries to comply with more onerous covenants, which could further restrict the Company's business operations. The terms of existing or future debt instruments may restrict the Company from adopting some of these alternatives. These alternative measures may not be successful and may not permit the Company or its subsidiaries to meet scheduled debt service obligations. If the Company and its subsidiaries cannot make scheduled payments on indebtedness, the Company or its subsidiaries, as applicable, will be in default under one or more of the debt agreements and, as a result the Company could be forced into bankruptcy or liquidation. * * * As reported in the TCR on Oct. 17, 2012, Fitch Ratings has affirmed the 'CCC' Issuer Default Rating (IDR) of Clear Channel Communications, Inc. The Rating Outlook is Stable. Fitch's ratings concerns center on the company's highly leveraged capital structure, with significant maturities in 2016; the considerable and growing interest burden that pressures FCF; technological threats and secular pressures in radio broadcasting; and the company's exposure to cyclical advertising revenue. The ratings are supported by the company's leading position in both the outdoor and radio industries, as well as the positive fundamentals and digital opportunities in the outdoor advertising space. The TCR also reported on Oct. 17 that Standard & Poor's Ratings Services assigned Clear Channel's proposed $2 billion priority guarantee notes due 2019 an issue-level rating of 'CCC+' (the same level as the 'CCC+' corporate credit rating on the parent company) and a recovery rating of '4', indicating its expectation for average (30% to 50%) recovery in the event of a payment default. "In addition, we are affirming our 'CCC+' corporate credit rating on both the holding company, CC Media Holdings Inc., and operating subsidiary Clear Channel, which we view on a consolidated basis; the rating outlook is negative," said Standard & Poor's credit analyst Jeanne Shoesmith. "The CC Media Holdings Inc. reflects the company's steep debt leverage and significant 2016 debt maturities. The proposed transaction extends about $2 billion of debt from 2014 and 2016 to 2019 and reduces 2016 maturities from $12 billion to a little over $10 billion. However, the interest rate on the new debt is about 5% higher than the existing term loan B debt. As a result, we expect that EBITDA coverage of interest will be very thin at about 1.2x and that discretionary cash flow will be only modestly positive in 2013, hindering the company's ability to repay debt and afford additional refinancing transactions with similar interest rate increases. The transaction increases the company's flexibility to repay 2014 maturities (currently $1.5 billion), which previously could only be repaid on a pro rata basis, and now permits the company to exchange and extend $3 billion of additional loans. We still view a significant increase in the average cost of debt or deterioration in operating performance for either cyclical, structural, or competitive reasons, as major risks as the company proceeds with a strategy to deal with its 2016 maturities," S&P said. CLEARWIRE CORP: Intel Corporation Owns 12.4% of Class A Shares -------------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Intel Corporation disclosed that, as of Oct. 17, 2012, it beneficially owns 94,076,878 shares of Class A common stock of Clearwire Corporation representing 12.4% of the shares outstanding. Intel previously reported beneficial ownership of 12.6% of Class A shares a of Oct. 3, 2012. Eagle River Holdings, LLC, on Oct. 17, 2012, delivered a notice to Intel and the other Equityholders pursuant to Section 3.3 of the Equityholders' Agreement regarding Eagle River's intent to transfer (i) 30,922,958 shares of Class A Common Stock and (ii) 2,728,512 shares of Class B Common Stock and a corresponding number of Clearwire Communications Class B Common Interests. Equityholders, including Intel, will have 30 days from receipt of the ERH ROFO Notice to notify Eagle River of their election to purchase all or any portion of the Interests in accordance with the terms and conditions of the ERH ROFO Notice and the Equityholders' Agreement. On Oct. 17, 2012, Sprint HoldCo delivered a response letter to the ERH ROFO Notice notifying ERH that Sprint HoldCo elects to purchase 100% of the Interests at the purchase price set forth in the ERH ROFO Notice. A copy of the filing is available at http://is.gd/BA8vIG About Clearwire Corporation Kirkland, Wash.-based Clearwire Corporation (NASDAQ: CLWR) -- http://www.clearwire.com/-- through its operating subsidiaries, is a provider of 4G mobile broadband network services in 68 markets, including New York City, Los Angeles, Chicago, Dallas, Philadelphia, Houston, Miami, Washington, D.C., Atlanta and Boston. The Company reported a net loss attributable to the Company of $717.33 million in 2011, a net loss attributable to the Company of $487.43 million in 2010, and a net loss attributable to the Company of $325.58 million in 2009. The Company's balance sheet at June 30, 2012, showed $8.43 billion in total assets, $5.65 billion in total liabilities, and $2.78 billion in total stockholders' equity. * * * As reported by the TCR on Nov. 25, 2011, Standard & Poor's Ratings Services lowered its corporate credit and senior secured first- lien issue-level ratings on Bellevue, Wash.-based wireless provider Clearwire Corp. to 'CCC' from 'CCC+'. The ratings on Clearwire continue to reflect its "highly leveraged" financial risk profile based on its high debt burden and "weak" liquidity (both terms as defined in S&P's criteria). "The ratings also reflect our view that Clearwire has a vulnerable business position as a developmental-stage company with significant competition from better capitalized wireless carriers, including AT&T Mobility and Verizon Wireless, which are deploying their own 4G wireless services," S&P said in January 2012. "We believe that the company would likely run out of cash in the late 2012 to early 2013 time frame absent significant asset sales, since we view the terms in the December 2011 wholesale agreement with Sprint Nextel as unfavorable in the near term and will likely constrain cash inflows in 2012 to 2013. We have not assumed spectrum sales in our liquidity assessment because of the uncertainty involved in finding a buyer, as well as timing. However, if the company could secure sufficient funding for operations through 2013, we could raise the ratings," S&P also stated. COMMERCETEL CORP: Extends Due Date of $4.2MM Notes to April 15 -------------------------------------------------------------- Commencing on Oct. 12, 2012, and continuing thereafter, Mobivity Holdings Corp., formerly CommerceTel Corporation, has entered into amendments to its 10% Senior Secured Convertible Bridge Notes due Oct. 15, 2012, in the principal amount of $4,347,419 with the holders of those Notes. Under the terms of the amendments, the holders of Notes in the aggregate principal amount of $4,209,720 have agreed to extend the maturity date of the Notes to April 15, 2013. In consideration of the Note holders' agreement to extend the maturity date, the amendment provides that the holder will have the option to convert the principal and interest under the Note into the securities offered by the Company in a qualifying equity financing at the lower of (a) the same price paid for those securities by other investors investing in the financing or (b) $.50 per share. Prior to the amendment, the conversion option under the Note entitled the Holder to convert the principal and interest under the Note into the securities offered by the Company in a qualifying equity financing at the same price paid for those securities by other investors investing in the financing. The Company is pursuing the execution of similar amendments by the holders of the remaining Notes in the aggregate principal amount of $137,699. A copy of the Form of Amendment is available for free at: http://is.gd/CXtxE8 About CommerceTel Corporation CommerceTel Corporation, headquartered in Chandler, Ariz., is a provider of technology that enables major brands and enterprises to engage consumers via their mobile phone. The Company's balance sheet at March 31, 2012, showed $4.57 million in total assets, $9.19 million in total liabilities, and a stockholders' deficit of $4.62 million. M&K CPAs, PLLC, in Houston, Texas, expressed substantial doubt about CommerceTel Corporation's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred recurring operating losses and negative cash flows from operations and is dependent on additional financing to fund operations. DAFFY'S INC: Donlin Recano Approved as Administrative Agent ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Daffy's, Inc., to employ Donlin, Recano & Company, Inc., as administrative agent. DRC is expected to, among other things: a. gather data in conjunction with the preparation, and assist with the preparation, of the Debtor's amended schedules of assets and liabilities and statements of financial affairs; b. provide a confidential data room, if requested; c. manage and coordinate any distributions pursuant to a confirmed plan or otherwise; and d. provide other administrative services, as may be requested from time to time by the Debtor, the Court or the Clerk. The Debtor early in the case won permission to hire Donlin as claims and noticing agent. An official creditors' committee has not been appointed in the case. In August, the Court waived the requirement that the Debtor file a list of creditors and the requirement that a meeting of creditors be held. The Court set Sept. 13, 2012, as the deadline for filing proofs of prepetition and 11 U.S.C. Section 503(b)(9) claims. Oct. 30 is the deadline for filing administrative expense claims. Government entities have until Jan. 28 next year to file proofs of claim. About Daffy's Inc. Secaucus, New Jersey-based Daffy's Inc., a 19-store chain, off- price retailer of designer fashions for women, men, children, and the home, located in the New York metropolitan area and Philadelphia, filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-13312) on Aug. 1, 2012, with a plan to shutter the business and pay off creditors in full. A copy of the Plan is available at: http://bankrupt.com/misc/Daffys_Chapter_11_Plan.pdf The Debtor has an Asset Purchase, Assignment and Support Agreement, dated as July 18, 2012, with Marcia Wilson, The Wilson 2003 Family Trust, and Jericho Acquisitions I LLC, pursuant to which the Debtor's leasehold interests will be sold to Jericho Acquisitions I LLC through the Plan. The Debtor has hired Gordon Brothers Retail Partners, LLC and Hilco Merchant Resources LLC to liquidate the Debtor's inventory. The Debtor estimates that the proceeds received from the liquidation of its inventory and the sale of its leasehold interests will exceed at least $60 million to satisfy approximately $37 million in claims. Cost of administering the chapter 11 case will not exceed approximately $5 million (after certain expenses are reimbursed pursuant to the Purchase Agreement). Accordingly, the Debtor believes that the disposition of the Debtor's principal assets will generate more than sufficient cash to pay all holders of Allowed Claims (as such term is defined in the Plan) in full, with interest, thus rendering all classes under the Plan unimpaired. The Debtor has filed its schedules, disclosing $51,106,469 in total assets and $36,646,856 in total liabilities. Bankruptcy Judge Martin Glenn presides over the case. The Debtor is represented by Andrea Bernstein, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP as counsel. Donlin, Recano & Company, Inc., serves as claims and notice agent. The Debtor's case is being funded by a $10 million postpetition financing with Vim-3, L.L.C., Vimwilco, L.P., and Marcia Wilson, as successor to Vim Associates, as guarantors; and Wells Fargo, National Association, as DIP lender. The DIP loan consists of $2.5 million in new money loans available on a revolving basis; and the roll up of $6.2 million of existing prepetition debt. Counsel for the DIP Lender are Donald E. Rothman, Esq., and Nathan C. Pagett, Esq., at Riemer & Braunstein LLP. Gordon Brothers and Hilco Merchant Resources are represented by Curtis, Mallet-Prevost, Colt & Mosle LLP Jericho Acquisition is represented by Brad Eric Scheler, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP. Marcia Wilson is represented by Dana B. Cobb, Esq., at Beattie Padovano, LLC. DAFFY'S INC: Plan Confirmation Hearing Adjourned to Dec. 17 ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has adjourned the hearing scheduled for Oct. 16, 2012, to Dec. 17, at 2 p.m., to consider the confirmation of Daffy's, Inc.'s modified Chapter 11 Plan. As reported in the Troubled Company Reporter on Aug. 3, 2012, Daffy's Inc., will shut the business and has a bankruptcy plan that would pay off creditors in full. Daffy's, which has 1,162 employees, filed simultaneously with its Aug. 1 bankruptcy petition a Chapter 11 plan that would pay all holders of allowed claims in full, with interest. The Debtor has not filed a disclosure statement as it is no longer soliciting votes on the Plan. All classes of creditors and equity holders are unimpaired and are thus deemed to accept the Plan, a copy of which is available at: http://bankrupt.com/misc/Daffys_Chapter_11_Plan.pdf About Daffy's Inc. Secaucus, New Jersey-based Daffy's Inc., a 19-store chain, off- price retailer of designer fashions for women, men, children, and the home, located in the New York metropolitan area and Philadelphia, filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-13312) on Aug. 1, 2012, with a plan to shutter the business and pay off creditors in full. A copy of the Plan is available at: http://bankrupt.com/misc/Daffys_Chapter_11_Plan.pdf The Debtor has an Asset Purchase, Assignment and Support Agreement, dated as July 18, 2012, with Marcia Wilson, The Wilson 2003 Family Trust, and Jericho Acquisitions I LLC, pursuant to which the Debtor's leasehold interests will be sold to Jericho Acquisitions I LLC through the Plan. The Debtor has hired Gordon Brothers Retail Partners, LLC and Hilco Merchant Resources LLC to liquidate the Debtor's inventory. The Debtor estimates that the proceeds received from the liquidation of its inventory and the sale of its leasehold interests will exceed at least $60 million to satisfy approximately $37 million in claims. Cost of administering the chapter 11 case will not exceed approximately $5 million (after certain expenses are reimbursed pursuant to the Purchase Agreement). Accordingly, the Debtor believes that the disposition of the Debtor's principal assets will generate more than sufficient cash to pay all holders of Allowed Claims (as such term is defined in the Plan) in full, with interest, thus rendering all classes under the Plan unimpaired. The Debtor has filed its schedules, disclosing $51,106,469 in total assets and $36,646,856 in total liabilities. Bankruptcy Judge Martin Glenn presides over the case. The Debtor is represented by Andrea Bernstein, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP as counsel. Donlin, Recano & Company, Inc., serves as claims and notice agent. The Debtor's case is being funded by a $10 million postpetition financing with Vim-3, L.L.C., Vimwilco, L.P., and Marcia Wilson, as successor to Vim Associates, as guarantors; and Wells Fargo, National Association, as DIP lender. The DIP loan consists of $2.5 million in new money loans available on a revolving basis; and the roll up of $6.2 million of existing prepetition debt. Counsel for the DIP Lender are Donald E. Rothman, Esq., and Nathan C. Pagett, Esq., at Riemer & Braunstein LLP. Gordon Brothers and Hilco Merchant Resources are represented by Curtis, Mallet-Prevost, Colt & Mosle LLP Jericho Acquisition is represented by Brad Eric Scheler, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP. Marcia Wilson is represented by Dana B. Cobb, Esq., at Beattie Padovano, LLC. DELTA 2: Moody's Assigns 'B2' CFR/PDR; Outlook Stable ----------------------------------------------------- Moody's Investors Service said that it had downgraded the bank loan ratings of Delta 2 (Lux) S.a.r.l. (Delta 2) to B1 (from Ba3). At the same time, Moody's assigned a B2 Corporate Family Rating and a B2 Probability of Default Rating to Delta Loan Note Nominee Limited (to be renamed Delta Debtco Limited), and withdrew the Ba3 CFR and B1 PDR ratings of Alpha Topco Limited (Alpha Topco). The outlook for all ratings is stable. Delta Loan Note Nominee Limited will wholly own Alpha Topco, which in turn is the holding company of a group of companies that hold the rights to commercially exploit the FIA Formula One (F1) World Championship. FIA is the governing body for world motor sport. Delta Loan Note Nominee Limited is raising US$1 billion through the issuance of new private high yield debt (not rated by Moody's). While the new high yield debt is structurally subordinated to the rated bank debt at Delta 2, it is guaranteed on a subordinated basis by the same guarantors that guarantee the bank debt and its cash interest payments will be serviced (subject to the bank loan's senior facility agreement and an intercreditor agreement) from cash flows generated by Formula One. Moody's has therefore moved its CFR to the Delta Loan Note Nominee Limited entity, and the new high yield debt is included in Moody's Loss Given Default (LGD) determination. Ratings Rationale The B2 CFR of Delta Loan Note Nominee Limited is two notches below the Ba3 CFR that Moody's previously assigned to Alpha Topco. The differential reflects Delta Loan Note Nominee Limited's materially increased leverage as a result of the new high yield debt issuance, the proceeds of which will be used to fund a distribution to Formula One's shareholders and a more aggressive financial strategy implemented by the shareholders in the wake of the postponement of an IPO for Formula One, initially planned for mid-2012. The downgrade of Formula One's bank debt to B1 (from Ba3) is based on the group's lower CFR, but also considers that the bank debt ranks ahead of the new high yield notes in Moody's LGD assessment. The planned distribution follows a decision earlier this year to distribute US$1.1 billion to shareholders, which has largely been executed. It will bring the total distributions announced in 2012 to US$2.2 billion. Pro forma for the second distribution, Moody's expects a Debt/EBITDA ratio (as defined by Moody's) for 2012 in excess of 6x, increasing further in 2013, before reducing gradually from 2014 onwards. The B2 CFR for Delta Loan Note Nominee Limited also considers the company's: (i) asset-light business model that relies heavily on the continuation of current contractual relationships; (ii) dependence on a relatively small number of revenue generating events; (iii) the need to innovate and adapt the franchise to keep and enhance its appeal to its fan base; (iv) exposure to key person risk regarding the pivotal role that Bernie Ecclestone - the group's CEO - has played in building and maintaining the F1 franchise; and (v) complex corporate structure. More positively, the B2 CFR recognizes the strength of F1's position as one of the world's best-known sport franchises and leading motorsport event with a well-established tradition and large global fan base. The rating also acknowledges: (i) Formula One's consistent operational track record and solid financial performance over the last few years; (ii) a good level of revenue visibility from multi-year contracts with key commercial partners, including promoters and broadcasters; and (iii) the cash generative nature of the business with limited ongoing capital expenditure needs. Given that Alpha Topco has not provided consolidated accounts and Delta Loan Note Nominee Limited will not do so in the future, Moody's relies in its analysis on the consolidated accounts of Delta Topco Limited (Delta Topco), currently the ultimate holding company for the Formula One business. Moody's adjusts Delta Topco's consolidated accounts for its stand-alone activities, which are essentially limited to its function as holding company for Alpha Topco and, in future, for Delta Loan Note Nominee Limited. Moody's has further assumed that Delta Topco's claim on Delta Loan Note Nominee Limited and its subsidiaries will remain limited to its ownership of Delta Loan Note Nominee Limited's common equity and that any additional future distributions to Delta Topco will be de minimis in the near term. Moody's has further assumed that bilateral agreements with most of the racing teams (including all of the top teams) will be translated into a new Concorde agreement in short order. The current Concorde agreement, which governs the relationship between the holder of the commercial rights to exploit F1 and the racing teams, will expire at the end of 2012. Finally, Moody's notes that the group's CEO recently appeared in a personal capacity as a witness in a court case surrounding alleged bribery at the time when the CVC funds acquired the company. Following the conclusion of the case, there is now some press speculation that German prosecutors might bring action against Mr Ecclestone himself. Here, Moody's takes comfort from the fact that Delta Topco's board commissioned an internal investigation in 2011, which was conducted by external auditors (Ernst & Young) and legal advisors (Freshfields), and which concluded that neither Formula One, nor CVC, had any involvement in the alleged payment that was the focal point of the court case. Following the company's aggressive distribution steps in 2012, the ratings are initially weakly positioned at the B2 level. Ratings could come under negative pressure, if: (i) leverage measured by Debt/EBITDA (as adjusted by Moody's) exceeds 7x; (ii) the company generates negative free cash flow; (iii) the Concorde Agreement is not renewed as currently envisaged; (iv) Moody's assumptions listed above prove to be incorrect; or (v) if there are signs that the company loses operating momentum on a sustained basis e.g. losses of major broadcasting contracts or material disruptions to the race schedule. Moody's does not foresee any upward rating pressure in the near to medium term. Over time, ratings could come under upward pressure, if leverage falls visibly and sustainably so that a Debt/EBITDA ratio below 6x can be achieved, together with ongoing free cash flow generation and steady operational performance (revenue growth, margin maintenance). Moody's views Delta Loan Note Nominee Limited liquidity as sufficient for its needs. The free cash flow generative nature of the business (as measured by Moody's -- after capex and dividends) together with an undrawn US$ 70 million revolving credit facility should cover the limited ongoing debt repayment requirements. Moody's notes that the revolver is subject to a set of typical financial maintenance covenants as customary for the rating level under which the agency would expect Formula One to maintain comfortable headroom. Delta Loan Note Nominee Limited, a Jersey company, will become the holding company for the group of companies that exploit the commercial rights to the FIA F1 Championship. The company is indirectly owned by a group of private investors with voting control held by funds advised by CVC Capital Partners Limited. Delta Loan Note Nominee Limited , Alpha Topco Limited and Delta 2 (Lux) S.a.r.l.'s ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (ii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside Delta Loan Note Nominee Limited, Alpha Topco Limited and Delta 2 (Lux) S.a.r.l.'s core industry and believes Delta Loan Note Nominee Limited , Alpha Topco Limited and Delta 2 (Lux) S.a.r.l.'s ratings are comparable to those of other issuers with similar credit risk. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. DEVI LLC: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------ Debtor: Devi, LLC 143 Colonial Drive Oxford, AL 36203 Bankruptcy Case No.: 12-41973 Chapter 11 Petition Date: October 16, 2012 Court: U.S. Bankruptcy Court Northern District of Alabama (Anniston) Debtor's Counsel: Harry P. Long, Esq. THE LAW OFFICE OF HARRY P. LONG, LLC P.O. Box 1468 Anniston, AL 36202 Tel: (256) 237-3266 E-mail: hlonglegal@aol.com Scheduled Assets: $8,407,000 Scheduled Liabilities: $11,392,530 The petition was signed by Manju Purohit, member. Debtor's list of its six largest unsecured creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Southern States Bank Mortgage $1,500,000 P.O. Box 2165 Anniston, AL 36202 BB&T Mortgage $1,500,000 1111 Quintard Avenue Anniston, AL 36201 BB&T Mortgage $1,200,000 34990 Emerald Coast Parkway, Suite 200 Destin, FL 32541 Lodgenet -- $6,671 Wasserstrom -- $676 Muzak -- $182 DEWEY & LEBOEUF: Stay Lifted to Allow XL to Pay Defense Expenses ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has approved the motion of XL Specialty Insurance Company to lift the automatic stay to the extent necessary to permit it to advance certain "defense expenses" pursuant to the Law Firm Management Liability and Company Reimbursement Policy No. ELU123088-11 it issued to Dewey & LeBoeuf LLP for the period from Oct. 21, 2011, to Oct. 2, 2012. The Policy has a $25 million aggregate limit of liability, inclusive of Defense Expenses. The Policy defines Defense Expenses to include reasonable legal fees and expenses incurred in the defense of a Claim first made during the Policy Period. Pursuant to the Stipulation and Order, the automatic stay imposed by 11 U.S.C. Section 362(a) of the Bankruptcy Code will be modified to the extent necessary to allow XL Specialty to advance Policy proceeds to Insured Persons or their counsel for Defense Expenses in connection with Claims now pending against them, as well as any additional Claims that may arise in the future, subject to XL Specialty's determination that such matters are covered or are potentially covered under the Policy and subject to a full reservation of XL Specialty's and the Debtor's rights under the Policy and applicable law. All advancements made pursuant to the Policy will be subject to a "soft cap" of $6.75 million, subject to further adjustment either by agreement or by further order of this Court. Consistent with but subject to the terms and conditions of the Policy, such advancements will reduce the Policy. About Dewey & LeBoeuf 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 LLP operated as a prestigious, New York City- based, law firm that traced its roots to the 2007 merger of Dewey Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird -- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in 1929. In recent years, more than 1,400 lawyers worked at the firm in numerous domestic and foreign offices. 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. DEX MEDIA WEST: Bank Debt Trades at 34% Off in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which Dex Media West LLC is a borrower traded in the secondary market at 65.68 cents-on- the-dollar during the week ended Friday, Oct. 19, an increase of 0.46 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 450 basis points above LIBOR to borrow under the facility. The bank loan matures on Oct. 24, 2014, and carries Moody's Caa3 rating and Standard & Poor's D rating. The loan is one of the biggest gainers and losers among 198 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About R.H. Donnelley & Dex Media Based in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp. (NYSE: RHD) -- http://www.rhdonnelley.com/-- publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc., and Local Launch, Inc., are the company's only direct wholly owned subsidiaries. Dex Media East LLC is a publisher of the official yellow pages and white pages directories for Qwest Communications International Inc. in the states, where Qwest is the primary incumbent local exchange carrier, such as Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota. R.H. Donnelley Corp. and 19 of its affiliates, including Dex Media East LLC, Dex Media West LLC and Dex Media, Inc., filed for Chapter 11 protection (Bank. D. Del. Case No. 09-11833 through 09- 11852) on May 28, 2009, after missing a $55 million interest payment on its senior unsecured notes. James F. Conlan, Esq., Larry J. Nyhan, Esq., Jeffrey C. Steen, Esq., Jeffrey E. Bjork, Esq., and Peter K. Booth, Esq., at Sidley Austin LLP, in Chicago, represented the Debtors in their restructuring efforts. Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, served as the Debtors' local counsel. The Debtors' financial advisor was Deloitte Financial Advisory Services LLP while its investment banker was Lazard Freres & Co. LLC. The Garden City Group, Inc., served as claims and noticing agent. The Official Committee of Unsecured Creditors tapped Ropes & Gray LLP as its counsel, Cozen O'Connor as Delaware bankruptcy co-counsel, J.H. Cohn LLP as its financial advisor and forensic accountant, and The Blackstone Group, LP, as its financial and restructuring advisor. The Debtors emerged from Chapter 11 bankruptcy proceedings at the end of January 2010. * * * In early April 2012, Standard & Poor's Ratings Services raised its corporate credit rating on Cary, N.C.-based Dex One Corp. and related entities to 'CCC' from 'SD' (selective default). The rating outlook is negative. "At the same time, we affirmed our issue-level rating on Dex Media East Inc.'s $672 million outstanding term loan, Dex Media West Inc.'s $594 million outstanding term loan, and R.H. Donnelley Inc.'s $866 million outstanding term loan due 2014 at 'D'. The recovery rating on these loans remains at '5', indicating our expectation of modest (10% to 30%) recovery for lenders in the event of a payment default," S&P said. "The company's March 9, 2012 amendment allows for ongoing subpar repurchases of its term debt until 2013, as long as certain conditions are met. Additionally, on March 22, 2012, the company announced the commencement of a cash tender offer to purchase a portion of its senior subordinated notes due in 2017 below par. The term loan and subordinated notes are trading at a significant discount to their par values, providing the company an economic incentive to pursue a subpar buyback. We believe that these circumstances suggest a high probability of future subpar buybacks, which are tantamount to default under our criteria," S&P said. "The 'CCC' corporate credit rating reflects our view that Dex One's business will remain under pressure given the unfavorable outlook for print directory advertising. We view the company's rising debt leverage, low debt trading levels, weak operating outlook, and steadily declining discretionary cash flow as indications of financial distress. As such, we continue to assess the company's financial risk profile as 'highly leveraged,' based on our criteria. We regard the company's business risk profile as 'vulnerable,' based on significant risks of continued structural and cyclical decline in the print directory sector. Structural risks include increased competition from online and other distribution channels as small business advertising expands across a greater number of marketing channels," S&P said. DIGITAL DOMAIN: Rosen Reminds of Nov. 19 Lead Plaintiff Deadline ---------------------------------------------------------------- The Rosen Law Firm reminds investors of the Nov. 19, 2012 lead plaintiff deadline in the class action lawsuit filed by the firm on behalf of investors who purchased the common stock of Digital Domain Media Group, Inc. in the Company's initial public offering on Nov. 18, 2011. The class action also includes those investors who bought DDMG stock anytime from Nov. 18, 2011 through Sept. 6, 2012. The firm announces that if you purchased DDMG stock between Nov. 18, 2011 and Sept. 6, 2012, you may join the DDMG class action by visiting the firm's website at http://rosenlegal.com; you may call Phillip Kim, Esq., toll-free, at 866-767-3653 or email pkim@rosenlegal.com for information on the class action. The Complaint alleges that, in violation of the federal securities laws, defendants made material misstatements of fact about the Company's financial condition in the IPO documents. Namely, Defendants (a) did not accurately describe the Company's "burn rate" of cash and its ability to continue as a going concern; (b) failed to disclose that at the time of the IPO, DDMG CEO Textor had entered into an undisclosed loan agreement for $10 million which was secured by DDMG shares; and (c) failed to disclose that certain members of DDMG's senior management had previously served as senior management of another company that went bankrupt in 2008. The Complaint alleges that these undisclosed facts materialized in the form of DDMG's bankruptcy filing on Sept. 11, 2012, damaging investors. If you wish to serve as lead plaintiff, you must move the Court no later than Nov. 19, 2012. A lead plaintiff is a representative party acting on behalf of other absent class members in directing the litigation. If you wish to join the litigation, or to discuss your rights or interests regarding this class action, please contact Jonathan Horne, Esq. or Phillip Kim, Esq. of The Rosen Law Firm, toll-free, at 866-767-3653, or via e-mail at jhorne@rosenlegal.com or pkim@rosenlegal.com. You may also visit the firm's website at http://www.rosenlegal.com. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. About Digital Domain Port St. Lucie, Florida-based Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/-- engaged 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, 2012, to sell its business for $15 million to Searchlight Capital Partners LP, subject to higher and better offers. At the auction on Sept. 21, the principal part of the business was purchased by a joint venture between Galloping Horse America LLC, an affiliate of Beijing Galloping Horse Co., and an affiliate of Reliance Capital Ltd., based in Mumbai. The $36.7 million total value of the contact includes $3.6 million to cure defaults on contracts and $2.9 million in reimbursement of payroll costs. 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. An official committee of unsecured creditors appointed in the case is represented by lawyers at Sullivan Hazeltine Allinson LLC and Brown Rudnick LLP. The company listed assets of $205 million and liabilities totaling $214 million. Debt includes $40 million on senior secured convertible notes plus $24.7 million in interest. There is another issue of $8 million in subordinated secured convertible notes. The Debtors also have sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. DIGITAL DOMAIN: CFO J. Nichols and Director J. Lunsford Resign -------------------------------------------------------------- John M. Nichols resigned his position as Chief Financial Officer of Digital Domain Media Group, Inc., effective as of Oct. 12, 2012. On the same date, Jeffrey W. Lunsford resigned his position as a member of the Board of Directors of the Company, effective immediately. About Digital Domain Port St. Lucie, Florida-based Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/-- engaged 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, 2012, to sell its business for $15 million to Searchlight Capital Partners LP, subject to higher and better offers. At the auction on Sept. 21, the principal part of the business was purchased by a joint venture between Galloping Horse America LLC, an affiliate of Beijing Galloping Horse Co., and an affiliate of Reliance Capital Ltd., based in Mumbai. The $36.7 million total value of the contact includes $3.6 million to cure defaults on contracts and $2.9 million in reimbursement of payroll costs. 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. An official committee of unsecured creditors appointed in the case is represented by lawyers at Sullivan Hazeltine Allinson LLC and Brown Rudnick LLP. The company listed assets of $205 million and liabilities totaling $214 million. Debt includes $40 million on senior secured convertible notes plus $24.7 million in interest. There is another issue of $8 million in subordinated secured convertible notes. The Debtors also have sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. EINSTEIN NOAH: Moody's Assigns 'B3' CFR; Rates Bank Facility 'B2' ----------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Einstein Noah Restaurant Group Inc.'s proposed $25 million senior secured revolving credit facility and $240 million senior secured term loan. In addition, Moody's assigned Einstein a B3 Corporate Family Rating (CFR), Caa1 Probability of Default Rating (PDR), and SGL-2 Speculative Grade Liquidity rating. The rating outlook is stable. Ratings Rationale Proceeds from the proposed financing will be used to fund a special dividend to shareholders not to exceed $160 million and refinance outstanding debt. In the event the size of the proposed financing increases from current expectations the ratings on the proposed term loan and revolver could be negatively impacted. Ratings are subject to review of final documentation. Ratings assigned are: Corporate Family Rating at B3 Probability of Default Rating at Caa1 $25 million guaranteed senior secured revolver due 2017 at B2 (LGD 3, 30%) $240 million guaranteed senior secured term loan B due 2018 at B2 (LGD 3, 30%) Speculative Grade Liquidity Rating at SGL-2 The rating outlook is stable. The B3 Corporate Family Rating reflects Einstein's high leverage and modest coverage, and Moody's concern that soft consumer spending and highly competitive environment will continue to pressure persistently weak customer traffic trends, earnings and debt protection metrics. The ratings also consider the company's financial policy which Moody's considers fairly aggressive given the proposal to raise debt by approximately $170 million in part to fund a distribution to shareholders. The ratings are supported by the company's material level of brand awareness, reasonable scale, and good liquidity. The B2 rating on the senior secured revolver and term loan reflects the facilities' first lien priority position relative to non-debt liabilities, predominantly expected lease rejection claims in a default scenario. The SGL-2 speculative grade liquidity rating reflects Moody's expectation that the company will maintain good liquidity over the next year. The stable outlook reflects Moody's view that the company's increased focus on menu innovation and providing greater value to the consumer should help to decelerate negative traffic trends over time. These initiatives along with various cost saving plans should also help to improve leverage at the restaurant level and result in improved earnings and debt protection metrics. Factors that could result in an upgrade include a sustained improvement in earnings driven by positive operating trends, particularly a stabilization of traffic, and lower costs. Specifically, an upgrade would require debt to EBITDA approaching 5.25 times and EBITA coverage of interest above 1.75 times on a sustained basis. A higher rating would also require maintaining good liquidity. There could be downward ratings pressure in the event the company is not able to stabilize negative traffic trends or a deterioration in operating performance results in an inability to improve credit metrics over the intermediate term. Specifically, a downgrade could occur if debt to EBITDA approached 6.5 times or EBITA to interest migrated towards 1.1 times on a sustained basis. A deterioration in liquidity for any reason could also result in negative ratings pressure. The principal methodology used in rating Einstein Noah Restaurant Group Inc. was the Global Restaurant 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. Einstein Noah Restaurants Group, Inc. owns, operates, franchises and licenses bagel bakery cafes in the United States under the brands Einstein Bros. Bagels, Noah's New York Bagels, and Manhattan Bagel Company. Annual revenues are approximately $424 million. EMISPHERE TECHNOLOGIES: Obtains $1.4-Mil. Bridge Loan from MHR -------------------------------------------------------------- Emisphere Technologies, Inc., issued on Oct. 17, 2012, a promissory note to MHR Institutional Partners IIA LP, MHR Institutional Partners II LP, MHR Capital Partners Master Account LP, and MHR Capital Partners (100) LP in the principal amount of $1,400,000 to be advanced by the Bridge Lender to the Company pursuant to the terms thereof. The Note provides for an interest rate of 13% per annum. Pursuant to the terms of the Note, the entire principal amount advanced by the Bridge Lender pursuant to the Note, plus all accrued interest thereon, is payable on demand, provided that no demand may be made prior to Jan. 17, 2013, and provided further that if the Bridge Lender in its reasonable discretion determines that the Company has made sufficient progress towards the consummation of a qualified equity financing by Jan. 17, 2013, then no demand may be made prior to Feb. 17, 2013. The Note provides that the Maturity Date will be accelerated to the closing date of an Equity Financing. The obligations under the Note are secured in accordance with the terms of the Amendment to the Security Agreement. A copy of the Note is available for free at http://is.gd/s31wql Also on Oct. 17, 2012, in connection with the Note, Emisphere and MHR entered into that certain Amendment to Pledge and Security Agreement. The Amendment amends that certain Pledge and Security Agreement, dated as of Sept. 26, 2005, to, among other things, include the Bridge Loan as an obligation secured by the terms of the Security Agreement and to include the Bridge Lender as a beneficiary of the terms of the Security Agreement. Pursuant to the terms of that certain Master Agreement and Amendment, dated June 4, 2010, by and between Emisphere and Novartis Pharma AG, the Amendment expressly excludes certain intellectual property licensed to Novartis from the collateral securing the Bridge Loan. In accordance with the terms of that certain 11.00% Senior Secured Convertible Note issued by Emisphere to MHR, MHR also provided a written consent to allow for the issuance of the Note and related obligations provided under the Amendment. A copy of the Amendment is available for free at http://is.gd/tzeIaN The Company entered into an Employment Agreement with Carl V. Sailer, pursuant to which the Company appointed Mr. Sailer as its Vice President of Marketing and Sales effective Oct. 15, 2012. The initial term of the Employment Agreement is three years, and the agreement will automatically renew for additional one-year terms unless either party provides notice of non-renewal to the other party at least six months prior to the end of the initial term or any renewal terms. The Employment Agreement provides for an annual base salary of $255,000, with eligibility to receive an annual bonus of up to $114,750. A copy of the Employment Agreement is available for free at: http://is.gd/7qLEZo About Emisphere Cedar Knolls, N.J.-based Emisphere Technologies, Inc., is a biopharmaceutical company that focuses on a unique and improved delivery of therapeutic molecules or nutritional supplements using its Eligen(R) Technology. These molecules are currently available or are under development. The Company's balance sheet at June 30, 2012, showed $2.52 million in total assets, $64.86 million in total liabilities, and a stockholders' deficit of $62.34 million. McGladrey and Pullen, LLP, in New York City, expressed substantial doubt about Emisphere's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations and its total liabilities exceed its total assets. EMISPHERE TECHNOLOGIES: Mark Rachesky Holds 47.7% Equity Stake -------------------------------------------------------------- Emisphere Technologies, Inc., issued to certain MHR funds a senior secured promissory note, in the principal amount of $1,400,000, with an interest rate of 13% per annum, secured by a first priority lien on certain of the Company's assets. The promissory note is payable on demand no earlier than Jan. 17, 2013, and may be accelerated upon the occurrence of certain events. Mark H. Rachesky, M.D., MHR Capital Partners Master Account LP, MHR Institutional Partners II LP, et al., beneficially own 38,557,573 shares of common stock of Emisphere representing 47.7% of the shares outstanding as of Oct. 17, 2012. A copy of the filing is available for free at: http://is.gd/ovnbWZ About Emisphere Cedar Knolls, N.J.-based Emisphere Technologies, Inc., is a biopharmaceutical company that focuses on a unique and improved delivery of therapeutic molecules or nutritional supplements using its Eligen(R) Technology. These molecules are currently available or are under development. The Company's balance sheet at June 30, 2012, showed $2.52 million in total assets, $64.86 million in total liabilities, and a stockholders' deficit of $62.34 million. McGladrey and Pullen, LLP, in New York City, expressed substantial doubt about Emisphere's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations and its total liabilities exceed its total assets. ENERGY FUTURE: Prices Offering of $252.7 Million Senior Notes ------------------------------------------------------------- Energy Future Intermediate Holding Company LLC and EFIH Finance Inc., both wholly-owned subsidiaries of Energy Future Holdings Corp., have priced a private offering of $252,714,000 principal amount of additional 6.875% Senior Secured Notes due 2017. The offering is expected to close on or about Oct. 23, 2012, subject to customary closing conditions. The Additional Notes will be issued as additional notes under the Indenture, dated as of Aug. 14, 2012, as supplemented by the first supplemental indenture, to be dated as of the Closing Date, each among the Issuers and The Bank of New York Mellon Trust Company, N.A., as trustee, pursuant to which the Issuers previously issued $250 million aggregate principal amount of their 6.875% Senior Secured Notes due 2017. The Additional Notes will have identical terms, other than the issue date and issue price, and will constitute part of the same series, as the Initial Notes. The Issuers intend to use the net proceeds from the offering for general corporate purposes, which may include the payment of dividends to EFH. About Energy Future Energy Future Holdings Corp., formerly known as TXU Corp., is a privately held diversified energy holding company with a portfolio of competitive and regulated energy businesses in Texas. Oncor, an 80%-owned entity within the EFH group, is the largest regulated transmission and distribution utility in Texas. The Company delivers electricity to roughly three million delivery points in and around Dallas-Fort Worth. EFH Corp. was created in October 2007 in a $45 billion leverage buyout of Texas power company TXU in a deal led by private-equity companies Kohlberg Kravis Roberts & Co. and TPG Inc. The Company's balance sheet at June 30, 2012, showed $43.44 billion in total assets, $52.17 billion in total liabilities and a $8.73 billion total deficit. Energy Future had a net loss of $1.91 billion on $7.04 billion of operating revenues for the year ended Dec. 31, 2011, compared with a net loss of $2.81 billion on $8.23 billion of operating revenues during the prior year. * * * As reported by the TCR on Aug. 15, 2012, Moody's downgraded the Corporate Family Rating (CFR) of EFH to Caa3 from Caa2 and affirmed its Caa3 Probability of Default Rating (PDR) and SGL-4 Speculative Grade Liquidity Rating. The downgrade of EFH's CFR to Caa3 from Caa2 reflects the company's financial distress and limited financial flexibility. ENERGY FUTURE: Fitch Rates $250 Million Secured Notes 'CCC+' ------------------------------------------------------------ Fitch rates the proposed Energy Future Intermediate Holding Company LLC (EFIH) issuance of $250 million 6.875% senior secured first-lien notes due 2017 'CCC+'. The Recovery Rating (RR) is 'RR1', which indicates an outstanding recovery of 91%-100%. The first-lien notes being issued are part of the same series as the outstanding $250 million senior secured first-lien notes due 2017 that were issued on Aug. 14, 2012. EFIH plans to use the net proceeds from the proposed offering for general corporate purposes, which may include payment of dividends to EFH. The new first-lien notes will be secured by EFIH's pledge of the collateral consisting of all of the membership interests and other investments it owns in Oncor Electric Delivery Holdings Company LLC (Oncor Holdings). The new notes will be secured equally and ratably with the existing first-lien debt at Energy Future Holdings Corp (EFH) and EFIH, which currently stands at $3.747 billion, and will be senior to all second-lien and unsecured debt at EFH/EFIH. With this offering, EFH/EFIH will exhaust its available first-lien senior secured debt capacity. EFH/EFIH has approximately $700 million of additional second-lien senior secured debt capacity available based on debt incurrence restrictions as of June 30, 2012. EFIH has opportunistically accessed the capital markets and, with the conclusion of this offering, would have raised approximately $2.25 billion of debt year-to-date. A significant portion of this has been utilized or committed to repay the inter-company loan to Texas Competitive Electric Holdings Company LLC (TCEH) that stood at $1.6 billion at the end of 2011, while the balance of new money raised has bolstered liquidity at EFH/EFIH. The repayment of the demand note does not alter the overall leverage at EFIH, since the inter-company notes were guaranteed by EFIH on a senior unsecured basis, but the interest cost to EFIH does increase materially. While higher interest costs at EFIH will impinge on liquidity, Fitch acknowledges that EFH has substantially reduced the liquidity risk in the event that TCEH demanded repayment of the inter-company notes. Fitch continues to believe that the current highly leveraged capital structure at TCEH is not sustainable and that some kind of default seems inevitable. Despite the upward movement in the shorter-term natural gas prices and declining reserve margins in Texas, Fitch believes it highly unlikely that power prices will recover to levels required for TCEH to reach cash breakeven. TCEH's generation output continues to suffer from partial economic back-down as natural gas power plants displace coal units during certain off-peak periods. While TXU Energy has been able to somewhat stem customer defections and sustain attractive margins year-to-date due to falling wholesale prices, intensified competition and significant headroom between TXU Energy's and competitive offers is likely to put pressure on both margins and customer retention. Combined liquidity at EFH/EFIH and TCEH stood at $3.83 billion as of Sept. 30, 2012, based on preliminary third-quarter disclosures by the company. Looking forward, Fitch expects combined liquidity to be affected by the free cash flow deficits at TCEH, reduced upstream dividend from Oncor Electric Delivery Company LLC (Oncor) during 2012-13, and higher interest expense associated with the new debt issued by EFIH year-to-date. Liquidity may not be a concern until 2014 given EFH/EFIH has the ability to issue $700 million in additional second-lien debt based on debt incurrence restrictions as of June 30, 2012. TCEH has the ability to issue $750 million of first-lien debt and $1.88 billion of second-lien debt, of which $1 billion can be issued for cash. TCEH has unlimited ability to issue first-lien debt for refinancing purposes. Fitch's assessment of the collateral valuation at EFH/ EFIH continues to depend solely on the value of Oncor Holdings' 80% ownership interest in Oncor. Fitch values Oncor Holdings' proportional interest in Oncor at $7.5 billion by using an 8.5x EV/EBITDA multiple and Oncor's expected 2014 EBITDA of $1.8 billion. The current offering has no impact on EFH/EFIH's instrument ratings, since Fitch had contemplated issuance of additional first-lien debt in its analysis. Fitch had assumed, for the purposes of the recovery analysis, that the permissible first-lien and second-lien capacity as of June 30, 2012 was fully utilized by EFH/EFIH. ENERGY FUTURE: Moody's Rates $250MM Senior Secured Notes 'Caa3' --------------------------------------------------------------- Moody's Investors Service assigned a Caa3 (LGD4 58%) rating to Energy Future Intermediate Holding Company LLC's (EFIH) new $250 million 6.875% senior secured notes due 2017. In addition, Moody's affirmed the Caa3 Corporate Family Rating (CFR) for EFIH's parent, Energy Future Holdings Corp. (EFH) and the Baa2 senior secured rating for Oncor Electric Delivery Company LLC (Oncor). Oncor is a rate-regulated transmission and distribution utility subsidiary of both EFIH and, ultimately, EFH. The rating outlooks for EFH, EFIH and Oncor remain negative. Ratings Rationale EFIH's SENIOR SECURED NOTES DUE 2017 EFIH's senior secured notes due 2017 and are assigned a Caa3 (LGD4, 58%) rating. The notes are secured on a first-priority basis by a pledge of all of the membership interests of Oncor Electric Holdings Company LLC (Oncor Holdings), which owns 80% of Oncor. The Caa3 rating is primarily derived from EFH's Caa3 CFR and its LGD methodology, but Moody's notes that any recovery value, in the event of a default, would ultimately be derived from the value of Oncor although Oncor remains outside of Moody's EFH CFR because of its ring fence type provisions. Depending on how EFH might approach any potential restructuring activity with its financially distressed subsidiary, Texas Competitive Electric Holdings Company LLC (TCEH), a new CFR could be assigned which excludes TCEH. Under this hypothetical scenario, EFIH's ratings would likely be upgraded by several notches. EFIH currently owns approximately $4.5 billion of EFH and TCEH debt securities, comprising roughly one-third of its balance sheet. The other two-thirds of EFIH's balance sheet is comprised of EFIH's ownership interests in Oncor Holdings. As noted above, EFIH's ownership interest in Oncor Holdings has been pledged as collateral for approximately $6.1 billion (principal amount) in debt securities, which includes the Oct. 18 issuance. Of this total amount, approximately $4.0 billion is secured on a first lien basis, with another approximately $2.1 billion secured on a second lien basis. On Oct. 18, Moody's estimates the value of Oncor Holdings at approximately $5.5 - $6.0 billion, which implies a total equity value of Oncor, including its 20% minority owners, of approximately $7 - $7.5 billion. In Moody's opinion, this valuation incorporates premium multiples of book value, net income and EBITDA. If, in a restructuring, the EFIH lenders foreclosed on the collateral, Moody's sees reasonably good recovery for both of EFIH's first lien and second lien securities, but the rating agency also notes that any change of control at Oncor would require the approval of the PUCT. Since the PUCT's approval would undoubtedly consider the public interest, the timing associated with achieving such an approval is uncertain, notwithstanding the PUCT's established guidelines on regulatory decisions. This potential regulatory uncertainty could affect the timing of recovery. RATINGS RATIONALE -- ONCOR Oncor's Baa2 senior secured rating is affirmed. Oncor's negative rating outlook reflects two primary issues, both of which are beyond Oncor's and its principal regulator, the Public Utility Commission of Texas' (PUCT), control. The first issue is the rising contagion risk exposure that Oncor has with its majority owner-parent, EFH. As the risk of a contentious restructuring increases at EFH and TCEH, Oncor will be exposed, at a minimum, to some level of contagion. In addition, as an 80% owned subsidiary, Oncor remains exposed to various consolidated corporate services, such as EFH's tax systems. That said, Moody's notes that EFH's recent decision to terminate its non-union pension fund serves to incrementally insulate Oncor from that specific contagion risk. The second issue is EFH's indirect leveraging of Oncor's implied equity value, which will approximate $6.1 billion with the recent issuance of new EFIH securities. Despite the ring fence provisions, EFH has utilized its equity in Oncor as a primary source of liquidity over the past few years. Moody's notes that this financing structure does not benefit Oncor, but rather benefits EFH and TCEH as it transfers debt originally raised at the EFH and TCEH levels and refinances it at the parent level of Oncor. As the pledged equity in Oncor approaches the high end of Moody's estimated valuation range, Moody's sees EFIH's intermediate parent holding company debt as a source of permanent leverage for Oncor, since Oncor is the only cash flow generating subsidiary of EFIH. Over the next few years, Moody's calculates annual cash flow of roughly $1.5 billion for Oncor. This results in a ratio of cash flow to debt approaching the 10% threshold, by including the debt of EFIH and EFH in the denominator, which is more indicative of a Baa2 senior secured rating, after taking into account the lower business risk profile associated with being a transmission and distribution (T&D) utility in a supportive regulatory environment. Absent the contagion risk exposure and indirect leveraging of its equity, Oncor is viewed as a fundamentally strong T&D utility, with good growth prospects and a supportive regulatory environment. On a stand-alone basis, Oncor would likely be rated at least A3 senior secured, similar to CenterPoint Energy Houston Electric (A3 senior secured), its most comparable peer. As EFH's most valuable asset, Oncor will attract a significant amount of attention from various creditor classes. For now, Moody's continues to incorporate a view that Oncor will remain insulated from its parent's financial distress, thanks to its ring fence type provisions and regulatory oversight. That said, Oncor's negative rating outlook will remain in place until the details associated with any potential EFH's restructuring program becomes available. On Oct. 18, Moody's thinks it would be unlikely that Oncor's senior secured rating would fall below the investment grade category. The ratings for EFH, TCEH, EFCH and EFIH's individual securities were determined using Moody's Loss Given Default (LGD) methodology. Based on EFH's Caa3 CFR and Caa3 PDR, and based strictly on the priority of claims within those entities, the LGD model would suggest a rating of Ca for EFIH's senior secured and senior secured second lien debt securities. The Caa3 rating assigned to EFIH's senior secured first and second lien debt securities reflects the fact that the holders of these securities will benefit primarily from their security interests of Oncor Holdings equity in Oncor, respectively. The methodologies used in this rating were Unregulated Utilities and Power Companies published in August 2009 and Regulated Electric and Gas Utilities published in August 2009. Ratings affirmed: EFH's Caa3 Corporate Family Rating Oncor's Baa2 senior secured rating Ratings assigned: EFIH's Caa3 (LGD4 58%) $250 million senior secured notes due 2017 ENERGY SOLUTIONS: Moody's Cuts Corp. Family Rating to 'Caa1' ------------------------------------------------------------ Moody's Investors Service has downgraded ratings of Energy Solutions, LLC ("ES"), including the Corporate Family and Probability of Default Ratings to Caa1 from B3, concluding the ratings review process that commenced on June 12, 2012. The rating outlook is stable. Ratings changed: Corporate Family, to Caa1 from B3 Probability of Default, to Caa1 from B3 $105 million first lien revolver due 2015, to B2, LGD2- 29% from B1, LGD2- 29% $560 million first lien term loan due 2016, to B2, LGD2- 29% from B1, LGD2- 29% $300 million senior unsecured notes due 2018, to Caa3, LGD5-84% from Caa2, LGD5-84% Ratings affirmed: Speculative Grade Liquidity, SGL-3 Rating Outlook, Stable Ratings Rationale The Corporate Family Rating downgrade to Caa1 reflects a higher risk profile due to an elevated debt burden, upcoming expiration of ES' Magnox contract, a challenging outlook for the Zion Station nuclear decommissioning project and likelihood that U.S. federal spending on remediation projects will remain flat until fiscal pressures lessen. As of Q2-2012 ES' had debt to EBITDA of 10x (Moody's adjusted, includes $98 million Q4-2011 asset retirement obligation write-up charge) and FFO + interest to interest of 1.6x, metrics on par with the Caa1 rating category. Further, ES' Magnox contract, a single award cost plus vehicle of the UK Nuclear Decommissioning Authority ("NDA"), comprised +50% of ES' 2011 revenues and expires in June, 2014. A multiple prime contracting vehicle will be sought by the NDA at re-bid; likelihood of ES sustaining revenues on par with the existing sole prime vehicle seems low. The challenging outlook of ES' Zion Station, Illinois nuclear plant decommissioning project, as it enters the most critical phase of the project, also weighs on the credit profile. While the potential for this first-of-its-kind "license stewardship" project to conclude profitably still exists, that likelihood diminished with the $98 million Zion Station asset retirement obligation increase of Q4-2011. The ARO has increased 13% versus the original September 2010 amount (cost revisions added $104 million versus initial $765 million Zion Station ARO). Gains within the trust on which ES' project revenues depend have provided some offset to the upward ARO revisions, but such strong returns will likely not be sustained and a complex phase of the project begins in 2013 --removal of the radioactive material from the spent fuel ponds. ES' plan to divest businesses and lower operating expenses could raise cash for debt pay-back but the prospect of meaningfully better credit statistics as a result seems unclear. The company's $811 million of debt includes $200 million that was needed to cash collateralize letters of credit of the license stewardship project. The associated interest burden is high and will continue until ES successfully completes the project in several years, releasing restricted cash to repay the debt. The project's large scale and capital requirements are outsized against ES' other earnings streams and existing liquidity sources, which makes the credit profile less resilient to further upward cost revisions. Further, ES' revenues could meaningfully decline at conclusion of the Magnox contract, although the contract's low margin suggests a lesser earnings impact. An adequate liquidity profile, as denoted by the Speculative Grade Liquidity rating of SGL-3, supports the stable rating outlook. The company held $71 million of cash on hand at Q2-2012. Revolver availability was $68 million, low against the company's $1.8 billion annual revenue base, but scheduled debt amortization of $5 million annually until 2016 is also low. Financial ratio covenant calculations under the bank credit facility have liberal cost add- back provisions, which supports the likelihood of near-term compliance. The adequate liquidity profile provides maneuvering room near term for ES to pursue its initiatives. Upward rating momentum would depend on expectation that ES can achieve its restructuring goals without creditors incurring loss. Likelihood of debt to EBITDA at 6x or below, FFO + interest to interest above 2x and a sustained adequate liquidity profile would also accompany upward momentum. Downward rating pressure would follow a weakened liquidity position or increased risk of default. Energy Solutions, Inc., headquartered in Salt Lake City, Utah, provides a range of services to the nuclear industry that are centered on the nuclear fuel cycle. Revenues for the last twelve months ended June 30, 2012 were $1.8 billion. The principal methodology used in rating ES was the Global Business & Consumer Service Industry Rating Methodology published in October 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. EPICEPT CORP: Has Until Nov. 15 to Ink Transaction with MidCap -------------------------------------------------------------- Midcap Funding III, LLC, agreed to extend the deadline for it to enter into a sale or partnering transaction with EpiCept Corporation from Oct. 15, 2012, to Nov. 15, 2012. As previously disclosed, on Aug. 27, 2012, EpiCept, together with its wholly-owned subsidiaries Maxim Pharmaceuticals Inc. and Cytovia, Inc., entered in to a First Amendment to Loan and Security Agreement with MidCap, as agent for the lenders. Under the Amendment, the Company committed to signing a definitive agreement, acceptable to MidCap, by Oct. 15, 2012, with respect to a sale or partnering transaction and to consummate such a transaction as soon as is practical but in any event no later than Jan. 15, 2013. About EpiCept Corporation Tarrytown, N.Y.-based EpiCept Corporation (Nasdaq and Nasdaq OMX Stockholm Exchange: EPCT) -- http://www.epicept.com/-- is focused on the development and commercialization of pharmaceutical products for the treatment of cancer and pain. The Company's lead product is Ceplene(R), approved in the European Union for the remission maintenance and prevention of relapse in adult patients with Acute Myeloid Leukemia (AML) in first remission. In the United States, a pivotal trial is scheduled to commence in 2011. The Company has two other oncology drug candidates currently in clinical development that were discovered using in-house technology and have been shown to act as vascular disruption agents in a variety of solid tumors. The Company's pain portfolio includes EpiCept(TM) NP-1, a prescription topical analgesic cream in late-stage clinical development designed to provide effective long-term relief of pain associated with peripheral neuropathies. Epicept reported a net loss of $15.65 million in 2011, a net loss of $15.53 million in 2010, and a net loss of $38.81 million in 2009. In the auditors' report accompanying the financial statements for year ended Dec. 31, 2011, Deloitte & Touche LLP, in Parsippany, New Jersey, noted that the Company's recurring losses from operations and stockholders' deficit raise substantial doubt about its ability to continue as a going concern. The Company's balance sheet at June 30, 2012, showed $5.30 million in total assets, $17.85 million in total liabilities and a $12.55 million total stockholders' deficit. EVERGREEN INT'L: S&P Puts 'CCC' Corp Credit Rating on Watch Neg --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'CCC' corporate credit rating, on Evergreen International Aviation Inc. on CreditWatch with negative implications. "We have become increasingly concerned about Evergreen's liquidity and its uncertain near-term operating outlook, which could challenge its ability to meet debt service requirements," said Standard & Poor's credit analyst Lisa Jenkins. "Evergreen's operating performance remains weak, reflecting the depressed state of the air cargo market and the company's current reliance on a mostly older fleet of aircraft. (Privately owned Evergreen does not file public financial statements.) While the company is taking steps to improve its liquidity and operating prospects, we believe it will take time for these efforts to bear fruit. Evergreen was in violation of its interest coverage and leverage covenants at the end of the fiscal second quarter (fiscal year ends in February) and is working on getting a waiver from its lenders." "The ratings reflect Evergreen's very tight liquidity and onerous debt service obligations. Standard & Poor's characterizes the company's business risk profile as 'vulnerable' and its financial risk profile as 'highly leveraged,' as our criteria define these terms. Evergreen derives the majority of its revenues from Evergreen International Airlines, its airfreight transportation subsidiary. The company also provides ground logistics services, helicopter and small aircraft services, and aviation sales and leasing," S&P said. "We will continue to monitor the company's liquidity and operating performance. If the company fails to make its upcoming interest payment or other debt service requirements, we would lower the corporate credit rating to 'SD' and the ratings on related debt issues to 'D'," S&P said. EXCEL BANK: Closed; Simmons First NB Assumes All Deposits --------------------------------------------------------- Excel Bank of Sedalia, Mo., was closed Friday, Oct. 19, by the Missouri Division of Finance, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Simmons First National Bank of Pine Bluff, Ark., to assume all of the deposits of Excel Bank. The four branches of Excel Bank will reopen during their normal business hours as branches of Simmons First National Bank. Depositors of Excel Bank will automatically become depositors of Simmons First National Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of Excel Bank should continue to use their existing branch until they receive notice from Simmons First National Bank that it has completed systems changes to allow other Simmons First National Bank branches to process their accounts as well. As of June 30, 2012, Excel Bank had around $200.6 million in total assets and $187.4 million in total deposits. In addition to assuming all of the deposits of the failed bank, Simmons First National Bank agreed to purchase essentially all of the assets. The FDIC and Simmons First National Bank entered into a loss-share transaction on $126.6 million of Excel Bank's assets. Simmons First National Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, please visit: http://www.fdic.gov/bank/individual/failed/lossshare/index.html Customers with questions about the transaction should call the FDIC toll-free at 1-800-830-4697. Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/excelbank.html The FDIC estimates that the cost to the Deposit Insurance Fund will be $40.9 million. Compared to other alternatives, Simmons First National Bank's acquisition was the least costly resolution for the FDIC's DIF. Excel Bank is the 46th FDIC-insured institution to fail in the nation this year, and the third in Missouri. The last FDIC-insured institution closed in the state was Truman Bank, St. Louis, on Sept. 14, 2012. FENTON SUB: Plan Confirmed; Settlement With Mulcahy Okayed ---------------------------------------------------------- Fenton Sub Parcel D, LLC, and Bowles Sub Parcel D, LLC, won confirmation of their Third Amended Joint Plan of Reorganization dated July 17, 2012. The Hon. Robert J. Kressel of the U.S. Bankruptcy Court for the District of Minnesota said that the confirmation of the Plan will constitute approval of a settlement of pending litigation in Hennepin County District Court, between the Debtors and Tim Mulcahy. The settlement involves rejection of the executory contract by Debtors, the withdrawal of claims by Mr. Mulcahy, and the division of an escrow in the principal amount of $50,000 with 70% to Mr. Mulcahy and 30% to the Debtors. A copy of the Third Amended Plan is available for free at http://bankrupt.com/misc/FENTON_SUB_plan_3amended.pdf About Fenton Sub Parcel D and Bowles Sub Parcel D Fenton Sub Parcel D LLC and Bowles Sub Parcel D LLC jointly own industrial multi-tenant properties located in the Twin Cities. They are controlled by StoneArch II/WCSE Minneapolis Industrial LLC. StoneArch is the 100% member of Bowles Subsidiary, LLC and of Fenton Subsidiary LLC. Bowles Subsidiary LLC is then the 100% member of Bowles Sub Parcel D LLC, and Fenton Subsidiary LLC is the 100% member of Fenton Sub Parcel D, LLC. In 2007, StoneArch acquired various LLCs, which in turn owned 27 industrial multi- tenant properties located in the Twin Cities. The properties were divided into four separate pools: A, B, C, and D. Fenton Sub Parcel D and Bowles Sub Parcel D jointly own the properties in pool D. As tenants in common, Fenton Sub Parcel D has an undivided 74.5394% interest and Bowles Sub Parcel D has an undivided 25.4606% interest. The Pool D Properties consist of six parcels of real property located in Anoka, Dakota, and Hennepin Counties, Minnesota. The Debtors expect the Pool D Properties to be worth $13,135,656 as of the Petition Date. Although they are two separate legal entities, Fenton Sub Parcel D and Bowles Sub Parcel D have consistently been treated as one enterprise. Hoyt Properties, Inc., acts as agent in managing the Pool D Properties. Fenton Sub Parcel D and Bowles Sub Parcel D filed for Chapter 11 bankruptcy (Bankr. D. Minn. Case Nos. 11-44430 and 11-44434) on June 29, 2011. The Debtors' petitions were signed by Steven Bruce Hoyt, chief manager, who is also a debtor (Bankr. D. Minn. Case No. 11-43816). He is separately represented by Michael C. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman, P.A. The cases were originally assigned to Judge Dennis D. O'Brien and reassigned to Judge Robert J. Kressel as the cases are related to the Hoyt case, which was filed earlier before Judge Kressel. Cynthia A. Moyer, Esq., James L. Baillie, Esq., and Sarah M. Gibbs, Esq., at Fredrikson & Byron, PA, represent the Debtors. FIRST EAST SIDE SB: Closed; Stearns Bank NA Assumes All Deposits ---------------------------------------------------------------- First East Side Savings Bank of Tamarac, Fla., was closed Friday, Oct. 19, by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Stearns Bank National Association of St. Cloud, Minn., to assume all of the deposits of First East Side Savings Bank. The sole branch of First East Side Savings Bank will reopen on during its normal banking hours as a branch of Stearns Bank. Depositors of First East Side Savings Bank will automatically become depositors of Stearns Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of First East Side Savings Bank should continue to use their existing branch until they receive notice from Stearns Bank that it has completed systems changes to allow other Stearns Bank branches to process their accounts as well. As of June 30, 2012, First East Side Savings Bank had around $67.2 million in total assets and $65.9 million in total deposits. In addition to assuming all of the deposits of the failed bank, Stearns Bank agreed to purchase essentially all of the assets. Customers with questions about the transaction should call the FDIC toll-free at 1-800-823-4939. Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/firsteastside.html The FDIC estimates that the cost to the Deposit Insurance Fund will be $9.1 million. Compared to other alternatives, Stearns Bank's acquisition was the least costly resolution for the FDIC's DIF. First East Side Savings Bank is the 45th FDIC-insured institution to fail in the nation this year, and the seventh in Florida. The last FDIC-insured institution closed in the state was GulfSouth Private Bank, Destin, earlier Friday, Oct. 19. FREESEAS INC: Had $20.8-Mil. Net Loss in 1st Half of 2012 --------------------------------------------------------- FreeSeas Inc. reported a net loss of US$20.8 million on US$8.9 million of operating revenues for the six months ended June 30, 2012, compared with a net loss of US$49.4 million on US$17.1 million of operating revenues for the same period last year. The higher net loss for the six months ended June 30, 2011, resulted primarily from the higher amount of vessel impairment loss of $47.3 million the Company recognized in the six months ended June 30, 2011, compared to a vessel impairment loss of $12.5 million the Company recognized in the six months ended June 30, 2012. The Company's balance sheet at June 30, 2012, showed US$120.8 million in total assets, US$104.1 million in total current liabilities, and shareholders' equity of US$16.7 million. According to the regulatory filing, based on the Company's cash flow projections for the remaining of 2012, cash on hand and cash provided by operating activities including the cash to be provided upon the sale of the vessels currently classified as held for sale will not be sufficient to cover scheduled debt repayments as of June 30, 2012, operating expenses and capital expenditure requirements for at least twelve months from the balance sheet date. "All of the above raises doubt regarding the Company's ability to continue as a going concern." In February, March and April 2012, the Company received notifications from Deutsche Bank and First Business Bank that the Company was in default under its loan agreements as a result of the breach of certain covenants and the failure to pay principal and interest due under the loan agreements. On April 26, 2012, the Company was advised by Deutsche Bank that it would approve the request to permanently amend the amortization schedule including refinancing of the balloon due in November 2012. The Company and the bank entered into an amended and restated facility agreement on Sept. 7, 2012. "Although the Company will continue to seek waivers to certain covenants from its remaining lender, FBB, and to restructure the FBB loan, there can be no assurances that the Company will be able to do so." A copy of the consolidated financial statements for the six months ended June 30, 2012, is available at http://is.gd/zu6Jo9 About FreeSeas Inc. Headquartered in Athens, Greece, FreeSeas Inc., formerly known as Adventure Holdings S.A., was incorporated in the Marshall Islands on April 23, 2004, for the purpose of being the ultimate holding company of ship-owning companies. The management of FreeSeas' vessels is performed by Free Bulkers S.A., a Marshall Islands company that is controlled by Ion G. Varouxakis, the Company's Chairman, President and CEO, and one of the Company's principal shareholders. The Company's fleet currently consists of six Handysize vessels and one Handymax vessel that carry a variety of drybulk commodities, including iron ore, grain and coal, which are referred to as "major bulks," as well as bauxite, phosphate, fertilizers, steel products, cement, sugar and rice, or "minor bulks." As of Oct. 12, 2012, the aggregate dwt of the Company's r operational fleet is approximately 197,200 dwt and the average age of its fleet is 15 years. * * * As reported in the TCR on July 18, 2012, Ernst & Young (Hellas) Certified Auditors Accountants S.A., in Athens, Greece, expressed substantial doubt about FreeSeas' ability to continue as a going concern, following its audit of the Company's financial statements for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred recurring operating losses and has a working capital deficiency. "In addition, the Company has failed to meet scheduled payment obligations under its loan facilities and has not complied with certain covenants included in its loan agreements with banks." G.S. ASSETS: Case Summary & 3 Unsecured Creditors ------------------------------------------------- Debtor: G.S. Assets, LLC. 423 Clay Pitts Road East Northport, NY 11731 Bankruptcy Case No.: 12-76228 Chapter 11 Petition Date: October 16, 2012 Court: U.S. Bankruptcy Court Eastern District of New York (Central Islip) Judge: Alan S. Trust Debtor's Counsel: Mark A. Frankel, Esq. BACKENROTH FRANKEL & KRINSKY, LLP 489 Fifth Avenue, 28th Floor New York, NY 10017 Tel: (212) 593-1100 Fax: (212) 644-0544 E-mail: mfrankel@bfklaw.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 three unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/nyeb12-76228.pdf The petition was signed by Samuel Strulovitch, managing member. GOD'S UNIVERSAL: Case Summary & 10 Unsecured Creditors ------------------------------------------------------ Debtor: God's Universal Kingdom Christian Church, Inc. dba God's Mainline Universal Prayer Congress, Inc. 7610 Central Avenue Hyattsville, MD 20785 Bankruptcy Case No.: 12-28851 Chapter 11 Petition Date: October 16, 2012 Court: U.S. Bankruptcy Court District of Maryland (Greenbelt) Judge: Wendelin I. Lipp Debtor's Counsel: Theodore N. Nkwenti, Esq. LAW OFFICES OF THEODORE NKWENTI, LLC 11249-B Lockwood Drive Silver Spring, MD 20901 Tel: (301) 681 0361 E-mail: bklawcenter@aol.com Scheduled Assets: $6,100,000 Scheduled Liabilities: $3,715,188 A copy of the Company's list of its 10 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/mdb12-28851.pdf The petition was signed by Lynette T. Nichols, president. GOLDEN STATE: Moody's Cuts Rating on Mortgage Notes to 'Caa1' ------------------------------------------------------------- Moody's Investors Service downgraded the rating on Golden State Petroleum Transport Corporation's (GOLDEN) 8.04% First Preferred Mortgage Notes due 2019 to Caa1 from B2. The outlook was changed to stable from negative. "The downgrade reflects the pending termination of the second of the two charters on GOLDEN's two VLCC tankers, fully exposing debt service on the notes to charter market rate and tanker resale volatility," commented Andrew Brooks, Moody's Vice President. "However, given the current level of cash balances allocated to each vessel, we do not see the potential for payment default emerging until 2016." Rating Rationale GOLDEN's Caa1 rating reflects the upcoming termination of the charter on GOLDEN's Very Large Crude Carrier (VLCC) Phoenix Voyager in March 2013, continuing weak tanker markets and excessive debt levels. Effective March 2013, Phoenix Voyager's bareboat charter will terminate following receipt from Chevron Transport Corporation (Chevron) of its six-month irrevocable notice of termination in September 2012. Phoenix Voyager will continue to earn its contracted $28,500 per day bareboat charter rate to the March termination date. In response to the charter's termination, manager Frontline Ltd. is required to first seek an Acceptable Replacement Charter for the impacted vessel. If such a charter is unavailable, Frontline is then required to pursue a sale of the vessel at the Minimum Required Bid. Should it prove unsuccessful, Frontline then re-charters the vessel on such terms as it deems appropriate. Chevron had previously terminated its charter on the VLCC Ulriken (ex-Antares Voyager) effective December 7, 2010. The Ulriken has since been operated in the spot market by manager Frontline Ltd., at rates generally below cash breakeven for operating and financing costs. Moody's notes that at June 30, 2012, Ulriken reported restricted cash of $16.6 million; the Phoenix Voyager reported a cash balance of $34.1 million. Valuing the vessels at approximately $20 million each together with the June 30 cash balance implies a loan to value (LTV) conceivably in the area of 100%. That the LTV is not grossly above 100% is the principal reason for not downgrading GOLDEN further below Caa1 in light of the termination of both its charter contracts. However, the longer the two tankers trade in the spot market at rates below those required to fully cover operating and debt service costs, cash balances will further erode, diminishing LTV and heightening payment default risk. The stable outlook reflects the current level of available liquidity, which appears sufficient to fund debt service through 2015, notwithstanding the loss of both bareboat charters and the prospective ongoing erosion of current cash balances. The rating could be further downgraded if the tanker market remains weak into 2013 or if liquidity erodes more rapidly than anticipated. It is unlikely that the rating would be upgraded without a re-chartering of the vessels at rates which restore the economics of the transaction to levels above break-even. GOLDEN's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (ii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside GOLDEN's core industry and believes GOLDEN's ratings are comparable to those of other issuers with similar credit risk. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Golden State Petroleum Transport Corporation is a special purpose entity established to act as agent for the issuance of debt to finance the construction and ownership of two VLCCs by two individual ship-owning companies, initially under charter to Chevron Transport Corporation, a shipping subsidiary of Chevron Corporation. GOLDEN is owned by Independent Tankers Corporation Limited ITCL, headquartered in Hamilton, Bermuda, which also owns a portfolio of oil tankers under charter to shipping subsidiaries of major international oil companies. ITCL is 82.5%-owned by Frontline Ltd., one of the world's largest shipping companies engaged in crude oil and product shipping. GRACIA'S AMBULANCE: Case Summary & 11 Unsecured Creditors --------------------------------------------------------- Debtor: Gracia's Ambulance Services Group Inc. P.O. Box 795 Hormigueros, PR 00660 Bankruptcy Case No.: 12-08221 Chapter 11 Petition Date: October 16, 2012 Court: U.S. Bankruptcy Court District of Puerto Rico (Ponce) Debtor's Counsel: Wanda I. Luna Martinez, Esq. LUNA LAW OFFICES PMB 389 P.O. Box 194000 San Juan, PR 00919-4000 Tel: (787) 998-2356 Fax: (787) 200-8837 E-mail: quiebra@gmail.com Scheduled Assets: $1,048,735 Scheduled Liabilities: $963,687 A copy of the Company's list of its 11 unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/prb12-08221.pdf The petition was signed by Hector Gracia Malave, president. GULFSOUTH PRIVATE BANK: Closed; SmartBank Assumes All Deposits -------------------------------------------------------------- GulfSouth Private Bank of Destin, Fla., was closed Friday, Oct. 19, by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with SmartBank of Pigeon Forge, Tenn., to assume all of the deposits of GulfSouth Private Bank. The four branches of GulfSouth Private Bank will reopen during their regular banking hours as branches of SmartBank. Depositors of GulfSouth Private Bank will automatically become depositors of SmartBank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of GulfSouth Private Bank should continue to use their existing branch until they receive notice from SmartBank that it has completed systems changes to allow other SmartBank branches to process their accounts as well. As of June 30, 2012, GulfSouth Private Bank had around $159.1 million in total assets and $151.1 million in total deposits. In addition to assuming all of the deposits of the failed bank, SmartBank agreed to purchase essentially all of the assets. Customers with questions about the transaction should call the FDIC toll-free at 1-800-822-7182. Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/gulfsouth.html The FDIC estimates that the cost to the Deposit Insurance Fund will be $36.1 million. Compared to other alternatives, SmartBank's acquisition was the least costly resolution for the FDIC's DIF. GulfSouth Private Bank is the 44th FDIC-insured institution to fail in the nation this year, and the sixth in Florida. The last FDIC-insured institution closed in the state was The Royal Palm Bank of Florida, Naples, on July 20, 2012. HANGER ORTHOPEDIC: Moody's Raises Sr. Secured Ratings to 'Ba2' -------------------------------------------------------------- Moody's Investors Service changed the rating outlook on Hanger Orthopedic Group Inc.'s to positive from stable. In addition, Moody's upgraded the ratings on Hanger's senior secured credit facilities to Ba2 from (P) Ba3 and assigned a Speculative Grade Liquidity Rating of SGL-2. Concurrently, Moody's affirmed the B1 Corporate Family and Probability of Default Ratings, and the B3 rating on Hanger's senior unsecured notes. The positive outlook reflects Moody's expectation that EBITDA growth will continue and result in gradually improving free cash flow and reduced leverage. Furthermore, the company has made good progress expanding its revenue base given the current challenging environment. Moody's raised its ratings on Hanger's credit facilities to reflect changes in the debt capital structure, namely the $9 million in subordinated seller notes (not rated) that are legally subordinated to the company's existing debt, along with a reduction in the company's outstanding senior secured debt. Consequently, these changes provide additional first loss absorption to Hanger's credit facilities. Following is a summary of Moody's rating actions and LGD revised estimates: Hanger Orthopedic Group Inc. Ratings upgraded: Senior secured revolver expiring 2015 to Ba2 (LGD 2, 29%) from (P) Ba3 (LGD 3, 30%) Senior secured term loan C due 2016 to Ba2 (LGD 2, 29%) from (P) Ba3 (LGD 3, 30%) Ratings affirmed: Corporate Family Rating at B1 Probability of Default Rating at B1 Senior unsecured notes due 2018 to B3 (LGD 5, 82%) from B3 (LGD 5, 84%) Ratings assigned: Speculative Grade Liquidity Rating, SGL-2 Ratings Rationale The B1 Corporate Family Rating is supported by the company's competitive position as the largest O&P (Orthotic & Prosthetic) services provider in the US, its national footprint and relatively stable, recurring revenue model. The rating is constrained primarily by the company's size as well as its payor concentration from government entities. Moody's could upgrade the rating if the company is able to effectively manage the growth of its business while continuing to improve its credit metrics. Specifically, an upgrade would require leverage to be sustained below 3.0 times. Other factors supporting an upgrade would be increasing its scale either organically or through acquisition, and improving its product diversification. Moody's could downgrade the rating if a decline in operating performance results in an expectation that debt to EBITDA will rise above 5.0 times, or if Moody's expects reimbursement rates to materially decline and the environment become meaningfully more negative. Furthermore, a significant debt financed acquisition could result in a downgrade of the ratings. The principal methodologies used in rating Hanger Orthopedic Group, Inc. were Global Business & Consumer Service Industry published in October 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. Hanger Orthopedic Group, Inc., headquartered in Austin, TX, is the leading provider of orthotic and prosthetic ("O&P) patient-care services in the US. The company owns and operates over 700 patient care centers in 45 states and the District of Columbia. For the twelve months ended June 30, 2012, the company recognized revenue of approximately $953 million. HARBINGER GROUP: Fitch Affirms 'B' IDR; Outlook Stable ------------------------------------------------------ Fitch Ratings has affirmed the 'B' Issuer Default Rating (IDR) and 'B/RR4' debt ratings of Harbinger Group Inc. (HRG), with a Stable Outlook. The ratings consider HRG's relatively high leverage, adequate debt service capabilities, and acquisition-focused operating strategy. The company has two major business segments: consumer products through its 57.5% ownership in Spectrum Brands, Inc. (SPB; Fitch IDR of 'BB-'), and insurance through its wholly owned subsidiary Fidelity & Guaranty Life Holdings, Inc. (F&G Life; Fitch Insurer Financial Strength rating of 'BBB'). While Fitch recognizes there is significant execution risk associated with HRG's acquisition strategy, the diversification of the company's operating profile and cash flows could improve over time if HRG is successful with this strategy. Fitch views HRG's leverage as high. Consolidated leverage (consolidated debt and preferred stock/adjusted EBITDA) was approximately 5.2x based on $477 million of EBITDA (for the latest 12 months [LTM]) at SPB and $40 million of statutory dividends from F&G Life. HRG's financial leverage ratio, excluding SPB- related debt, was 61% at July 1, 2012. Outstanding debt and preferred stock totaled $2.7 billion at July 1, 2012, with approximately $1.8 billion of SPB and $900 million at HRG. HRG's debt and preferred stock are structurally subordinated to the claims on cash flows and assets from existing and future debtholders at SPB and F&G Life. HRG's debt service capabilities are somewhat constrained due to limits on cash flows from both SPB and F&G Life. Cash flow from SPB is limited by its term loan agreement, and those conditions have loosened over the past year, allowing greater cash flow to HRG from SPB. Cash flow from F&G Life is primarily limited by statutory dividend restrictions and business needs, which is expected to limit dividends on a run-rate basis to approximately $40 million. Based largely on those restrictions, interest coverage is expected to be in the 1x to 2x range. Over the near term, HRG's liquidity position benefits from existing holding company cash and a financial covenant that requires HRG to maintain minimum cash balances equal to six months of HRG's senior secured debt interest expense. Further, HRG's ability to pay dividends or other cash distributions to its shareholders is limited by financial covenants to no more than 50% of net income and is subject to collateral coverage ratio tests. HRG's consolidated leverage will increase to about 5.7x on a pro forma basis given the effect of SPB's recently announced acquisition of Stanley's Black & Decker Hardware and Home Improvement Group. Consolidated leverage is expected to trend down to the 4.5x range over the next 24 months based on management plans for further debt reduction at SPB. Fitch notes that HRG's ability to increase secured debt to fund future acquisitions is somewhat limited by financial covenants, which includes a minimum collateral coverage ratio of 2x at HRG only. Over the near term, Fitch expects acquisitions by HRG to be funded through a combination of debt and approximately $404 million of existing cash and invested assets held by HRG. HRG uses the value of its controlled assets as collateral and its debt capacity is limited by certain coverage metrics. The largest part of the collateral is the value of SPB's shares. As SPB's performance improved consistently over the past year its share price has increased commensurately. SPB's share price has almost doubled in one year and HRG's collateral cushion is quite comfortable. HRG could materially increase its debt under the liquid collateral coverage ratio, which is its tightest covenant. The Stable Outlook reflects Fitch's view that improved operating trends at both SPB and F&G Life are sustainable over the near term. Fitch believes that SPB is well positioned to gain share in a weak economy due to its value-based operating strategy, which should improve the company's revenues and cash flows. Furthermore, Fitch believes that F&G Life's improved balance sheet fundamentals, expense reductions and investment portfolio repositioning should result in more stable earnings performance and dividend capacity going forward. HRG's primary strategy to acquire and grow attractive businesses that generate sustainable free cash flow is likely to keep leverage high. Leverage could also be erratic whenever there is a sizeable acquisition until the overall enterprise attains a much larger scale. Debt and debt service payments are likely to dampen near-term profitability. As a result, the rating is likely to remain in this range in the intermediate term. Key rating triggers that could lead to a downgrade include a reduction in F&G Life's ordinary statutory dividend capacity to below $40 million, a change in SPB's strategy to reduce leverage to between 2.5x to 3.5x within 18 to 24 months, an increase in consolidated leverage to the 6x range, an increase in HRG's (parent only) financial leverage ratio to above 70%, and the deployment of existing cash balances that increases the enterprise's credit risk. Key rating triggers that could lead to an upgrade include a significant increase in F&G Life's ordinary statutory dividend capacity from its current level of approximately $80 million, a reduction in consolidated leverage to the 4x range, a reduction in HRG (parent only) financial leverage ratio below 40%, and the deployment of existing cash balances that improves the magnitude and diversity of cash flows to HRG. HRG is a NYSE-traded holding company that is majority owned by investment funds affiliated with Harbinger Capital Partners LLC (Harbinger). Harbinger established HRG as a permanent capital vehicle to obtain controlling equity interests in established, dividend-paying businesses that operate across a diversified set of industries. The company currently operates in three business segments: consumer products through its 57.5% ownership in SPB, insurance through its wholly owned subsidiary F&G Life, and Salus, a newly established asset based lending business. The following ratings are affirmed, with a Stable Outlook: -- Long-Term IDR at 'B'; -- $500 million 10.625% senior secured notes at 'B/RR4'. HMX ACQUISITION: Files for Chapter 11 Protection ------------------------------------------------ HMX Acquisition Corp. October 19 disclosed that it has filed voluntary Chapter 11 petitions. In conjunction with the filing, the Company's existing lender has ratified and re-affirmed up to a $65 million credit facility. The DIP facility, subject to additional terms and conditions, provides immediate liquidity while the Company pursues strategic alternatives, enabling the Company to pay vendors for goods and services received after the filing. In addition, HMX Acquisition Corp. is seeking customary authority from the Court to continue operating its business in the ordinary course. The Company will to continue operating its business in the normal course as management focuses on preserving value for the benefit of all stakeholders. In conjunction with the filing, HMX Acquisition Corp. has filed a motion seeking approval of the stalking horse bid with Authentic Brands Group, LLC. Authentic Brands Group will provide a long term license of HMX's brands to a new entity which will continue to retain the company's employees, operate the existing brands, and operate the company's manufacturing facilities. The Company's Canadian affiliates have not sought bankruptcy protection. About HMX Group HMX Group is America's leading tailored clothing company, with a diverse portfolio of brands, both owned and licensed, that are distributed through all domestic retail channels and internationally. HMX's most prominent brands include Hickey Freeman, Coppley, Christopher Blue, Bobby Jones*, Argyle Culture*, Austin Reed*, Sansabelt and Hart Schaffner Marx, the brand worn by U.S. presidents past and present. North American tailored clothing manufacturing is based in Rochester, New York; Des Plaines, Illinois; and Hamilton, Ontario. The privately-held U.S.-based company acquired assets of the company formerly known as Hartmarx Corporation in August, 2009. *The referenced trademarks are licensed to and not owned by HMX Group or an affiliated company. HMX ACQUISITION: Salus Capital Provides $65 Million DIP Facility ---------------------------------------------------------------- Salus Capital Partners, LLC disclosed it has provided a $65 million Debtor-in-Possession (DIP) Credit Facility to HMX Group, a leading designer, manufacturer, and marketer of men's and women's business and leisure apparel. The DIP financing will be used by HMX Group to provide working capital as the Company operates under Chapter 11 of the U.S. Bankruptcy Code. "We are pleased to provide a DIP facility to HMX Group that provides the Company with the liquidity, time and a runway to effectuate a transaction that seeks to maximize value for all of the Company's constituencies - its employees, management, shareholders, vendors, and the estate," said Andrew H. Moser, President of Salus Capital. "HMX Group has our unwavering support during this critical period and we are delighted that our transaction will provide them with the necessary resources to run an efficient and orderly sale process." HMX Group is a leading tailored clothing company, with a diverse portfolio of brands, both owned and licensed, that are distributed through domestic and international retail channels. The privately held company is home of men's and women's luxury, specialty and mainstream apparel brands such as Argyleculture, Austin Reed, Bobby Jones, Christopher Blue, Hart Schaffner Marx, Hickey Freeman, Jag Jean, Misook, and Worn. Since launching in January 2012, Salus has provided loans to 16 companies throughout North America with circumstances ranging from turnarounds to emerging growth situations. To date, Salus has also provided three DIP financings to RoomStore, Inc., StraussAuto and now HMX Group. About Salus Capital Partners, LLC Salus Capital -- http://www.saluscapital.com/-- is a provider of senior secured asset-based loans to the small and middle-market across a variety of industries with additional complementary financing throughout the capital structure. Salus Capital's business strategy also includes providing asset management services to like-minded institutional investors such as community banks, insurance companies and private equity / hedge funds that may lack the infrastructure and dedicated competency within senior secured lending. HMX ACQUISITION: No Plans to Lay Off Workers Despite Bankruptcy --------------------------------------------------------------- Matthew Leonard at InnovationTrail.org reports that the CEO of HMX Acquisition Corp. said that no job layoffs or closures are planned, despite the parent company filing for bankruptcy protection in the U.S. Bankruptcy Court in Manhattan, New York. According to the report, Doug Williams, the CEO of HMX Group, spoke with the Innovation Trail's Kate O'Connell. The report relates Mr. Williams said, "We're in the midst of recapitalizing the company, and (so) to do so it required that we go through a chapter 11 process to allow that to happen, and we have selected a stalking horse bidder for the purchases of the assets of the company, and (in) that bidder they will own the intellectual property and license if back to the company in a long-term basis to continue to operate the factories and support all our employees in the United States." "Our focus is on preserving all the jobs in the United States. Both factories are very important to us, both in Rochester as well as Chicago, (NB: HMX Acquisition also owns the Hart Schaffner Marx brand based which is produced at a site in Chicago), we see it as a competitive advantage for our company and so at this time there are no layoffs planned, and we actually expect to continue to grow our business and eventually add more workers." "I would say to all of our employees, they know me well and my focus is again building a great company and preserving the jobs, so they have my personal commitment to ensure that (that) happens". As reported in the Oct. 22 edition of the Troubled Company Reporter, The Huffington Post said the Company has filed a warning notice with the U.S. Department of Labor regarding potentially closing the Rochester plant in December, with 431 jobs at the plant and 71 jobs at its corporate headquarters in New York expected to be affected. HMX Group and HMX Acquisition Corp. are a leading tailored clothing company, with a diverse portfolio of brands, both owned and licensed, that are distributed through domestic and international retail channels. The privately held company is home of men's and women's luxury, specialty and mainstream apparel brands such as Argyleculture, Austin Reed, Bobby Jones, Christopher Blue, Hart Schaffner Marx, Hickey Freeman, Jag Jean, Misook, and Worn. The company has manufacturing based in Rochester, N.Y.; Des Plaines, Ill.; and Hamilton, Ontario. HMX Acquisition filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 12-_____) on Friday, estimating under $50,000 in assets, and liabilities between $50 million to $100 million. HMX's original parent company, Hartmarx, filed for bankruptcy in 2009 and was acquired by British company Emerisque Brands and the North American branch of Indian clothing company SKNL. HMX ACQUISITION: Salus Providing $65-Mil. DIP Credit Loan --------------------------------------------------------- Salus Capital Partners LLC is providing a $65 million Debtor-in- Possession Credit Facility to HMX Group. The DIP financing will be used by HMX Group to provide working capital as the Company operates under Chapter 11 of the U.S. Bankruptcy Code. "We are pleased to provide a DIP facility to HMX Group that provides the Company with the liquidity, time and a runway to effectuate a transaction that seeks to maximize value for all of the Company's constituencies -- its employees, management, shareholders, vendors, and the estate," said Andrew H. Moser, President of Salus Capital. "HMX Group has our unwavering support during this critical period and we are delighted that our transaction will provide them with the necessary resources to run an efficient and orderly sale process." Salus -- http://www.saluscapital.com/-- is a provider of senior secured asset-based loans to the small and middle-market across a variety of industries with additional complementary financing throughout the capital structure. Salus Capital's business strategy also includes providing asset management services to like-minded institutional investors such as community banks, insurance companies and private equity/hedge funds that may lack the infrastructure and dedicated competency within senior secured lending. Since launching in January 2012, Salus has provided loans to 16 companies throughout North America with circumstances ranging from turnarounds to emerging growth situations. To date, Salus has also provided three DIP financings to RoomStore, Inc., StraussAuto and now HMX Group. Salus' media contact: Jen Dowd BackBay Communications Tel: 617-556-9982, x 225 E-mail: Jen.Dowd@backbaycommunications.com HMX Group and HMX Acquisition Corp. are a leading tailored clothing company, with a diverse portfolio of brands, both owned and licensed, that are distributed through domestic and international retail channels. The privately held company is home of men's and women's luxury, specialty and mainstream apparel brands such as Argyleculture, Austin Reed, Bobby Jones, Christopher Blue, Hart Schaffner Marx, Hickey Freeman, Jag Jean, Misook, and Worn. The company has manufacturing based in Rochester, N.Y.; Des Plaines, Ill.; and Hamilton, Ontario. HMX Acquisition filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 12-_____) on Friday, estimating under $50,000 in assets, and liabilities between $50 million to $100 million. HMX's original parent company, Hartmarx, filed for bankruptcy in 2009 and was acquired by British company Emerisque Brands and the North American branch of Indian clothing company SKNL. HOA RESTAURANT: S&P Lowers CCR to 'B-' on Lower Profits ------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Atlanta- based HoA Restaurants Group LLC (Hooters), including the corporate credit rating, to 'B-' from 'B'. The outlook is stable. "We also lowered the issue-level ratings on the company's senior secured notes (issued by HOA Finance Corp.) to 'B-' from 'B'. The recovery rating on this debt remains unchanged at '4', indicating our expectation of average recovery (30%-50%) in the event of a default," S&P said. "Its rating actions are a result of our lowering our profit outlook on Hooters in light of higher food costs over the near term," said Standard & Poor's credit analyst Charles Pinson-Rose. "The previous rating incorporated profit growth as a result of cost saving initiatives; Hooters has been successful in this regard, and has improved labor and other costs. However, higher food costs have counteracted these efforts, and we believe profitability will be near current levels in the near term." "The ratings on Hooters reflect Standard & Poor's view of the company's financial risk profile as 'highly leveraged.' This is based on forecasted credit ratios and the company's limited free cash flow generation relative to debt levels," S&P said. "The ratings also factor in our downward revision of the company's business risk assessment to 'vulnerable' from 'weak.' This assessment incorporates our expectation of weaker profit growth opportunities as a result higher food costs, and our belief that Hooters has limited prospects for higher sales, given tepid economic growth and its participation in the very competitive casual dining restaurant industry," S&P said. "The stable outlook reflects our expectation that profitability will remain near current levels over the near term and that the company will maintain adequate liquidity. However, if we believed the company could not maintain adequate liquidity or if the company's capital structure was not sustainable, we could lower the rating," S&P said. "Given the performance trends and industry conditions, a positive rating action is not a near-term consideration," S&P said. HOTEL AIRPORT: Javier Scimeca Approved as Financial Consultant -------------------------------------------------------------- The Hon. Enrique S. Lamoutte Inclan of the U.S. States Bankruptcy Court for the District of Puerto Rico authorized Hotel Airport Inc. to employ Javier Hernandez Scimeca as financial consultant and restructuring advisor. To the best of the Debtor's knowledge, Mr. Scimeca is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Hotel Airport Hotel Airport Inc., in San Juan, Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 11-06620) on Aug. 5, 2011. Judge Enrique S. Lamoutte Inclan oversees the case. Edgardo Munoz, PSC, in San Juan, P.R., serves as bankruptcy counsel. Francisco J. Garrido Molina serves as its accountant, and RS& Associates as external auditors to perform auditing services. The Debtor disclosed US$8,547,993 in assets and US$171,169,392 in liabilities as of the Chapter 11 filing. The petition was signed by David Tirri, its president. The Debtor's plan provides that holders of administrative expense claims and priority claims will be paid in full on the Plan's effective date. The Plan will be substantially funded by the Debtor's assets and income from the operation of business. The Plan proposes a merger between the Debtor/HAI and and its parent, CAF, whereby a single entity -- CAF -- will emerge. HOTEL AIRPORT: Plan Outline Hearing Continued until Nov. 27 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Puerto Rico continued until Nov. 27, 2012, at 2 p.m., the hearing to consider adequacy of the Disclosure Statement explaining Hotel Airport Inc.'s Chapter 11 Plan. At the hearing, the Court will also consider the Debtor's motion to assume an executory contract. As reported in the Troubled Company Reporter on Jan. 19, 2012, under the Plan, holders of administrative expense claims and priority claims will be paid in full on the Plan's effective date. The Plan will be substantially funded by the Debtor's assets and income from the operation of business, according to David Tirri, the Debtor's president. The Plan also considers the Debtor's experience and knowledge of the business and specific knowledge of Debtor's sector of the industry. The Reorganization process will take place under the management of Mr. Tirri. The Plan proposes a merger between the Debtor/HAI and its parent, CAF, whereby a single entity -- CAF -- will emerge. HAI's operations will continue under its present management as a division of CAF. The merger will take place upon the Effective Date of the Plan. The Debtor submits that the merger will strengthen HAI's ability to operate and maintain its business. CAF -- as successor in interest of HAI -- will assume its obligations maintaining HAI's current assets, which are all encumbered with secured debts. Upon the merge with CAF, Mr. Tirri's position will be vice- president, and general manager for the hotel operations, with his compensation remaining at $15,000 per month in salary, plus $10,000 per month for expenses. Other insiders which may from time to time be part of the management, due to their positions with CAF are CAF's stockholders Anthony C. Tirri, Jean Tirri, and Justin Tirri, with only Anthony C. Tirri receiving compensation of $5,000 per month. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/HOTELAIRPORT_DS_Dec092011.pdf About Hotel Airport Hotel Airport Inc., in San Juan, Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 11-06620) on Aug. 5, 2011. Judge Enrique S. Lamoutte Inclan oversees the case. Edgardo Munoz, PSC, in San Juan, P.R., serves as bankruptcy counsel. Francisco J. Garrido Molina serves as its accountant, and RS& Associates as external auditors to perform auditing services. The Debtor disclosed US$8,547,993 in assets and US$171,169,392 in liabilities as of the Chapter 11 filing. The petition was signed by David Tirri, its president. The Debtor's plan provides that holders of administrative expense claims and priority claims will be paid in full on the Plan's effective date. The Plan will be substantially funded by the Debtor's assets and income from the operation of business. The Plan proposes a merger between the Debtor/HAI and and its parent, CAF, whereby a single entity -- CAF -- will emerge. HYLAND SOFTWARE: Moody's Affirms 'B2' Corp. Family Rating --------------------------------------------------------- Moody's Investors Service affirmed Hyland Software, Inc.'s B2 corporate family rating ("CFR") and revised the outlook for the company's ratings to stable from negative following Hyland's plan to reduce the previously proposed dividend to shareholders to $95 million from $268 million. Moody's had assigned ratings to Hyland's new credit facilities in conjunction with the then proposed dividend recapitalization on October 11, 2012. Under the revised plan, Hyland is upsizing its proposed first lien term loan facility to $375 million from the initially proposed $320 million and is canceling its proposed $235 million second lien credit facility due to the smaller distribution to shareholders. As a result of the changes in the proposed capital structure, notably, the elimination of the 2nd lien debt, Moody's lowered the rating for Hyland's first lien credit facilities to B2, from Ba3. The change in the outlook to stable from negative reflects Hyland's stronger credit metrics and greater financial flexibility with more moderate levels of debt relative to the previously proposed recapitalization. Ratings Rationale Hyland's total debt-to-EBITDA leverage (Moody's adjusted and pro forma for the dividend recapitalization) is expected to be 4.7x under the revised terms, compared to about 7.0x in the previously proposed structure (but 1.3x higher than actual debt leverage at June 2012). Even though Hyland will have less leveraged balance sheet under the revised financing plan, Moody's expects the company's financial policies to remain aggressive under its financial sponsors. The B2 rating additionally considers Hyland's high business risks resulting from its modest operating scale relative to some of its substantially larger and financial stronger competitors, and its limited product portfolio focused on a niche segment within the Enterprise Content Management (ECM) software market. The B2 CFR is supported by Hyland's competitive market position in the mid-market segment, and its well-regarded industry verticals- focused product offerings in a growing ECM software market. Hyland's credit profile benefits from the predictability of its revenues. Approximately 51% of the company's revenue for LTM August 2012 were highly recurring in nature and it has low customer revenue concentration. The rating is further supported by Hyland's good revenue growth prospects and Moody's expectations that the company's leverage will progressively decline and that it will produce growing levels of free cash flow. The stable outlook reflects Moody's expectation that Hyland will maintain its competitive market position and generate organic revenue growth in the mid-single digits percentages. The outlook incorporates Moody's expectation that Hyland will continue its vertical-market expansion strategy through small-size acquisitions. Given Hyland's modest scale, narrow market focus, and increasing financial risk tolerance, a ratings upgrade is unlikely in the next 12 to 18 months. However, to the extent that the company is able to increase its profitability over time while maintaining a conservative and predictable leverage profile, Hyland's ratings could be upgraded. Moody's could downgrade Hyland's ratings if the company's operating performance deteriorates as evidenced by weak license sales and operating cash flow generation. Specifically, Hyland's ratings could be downgraded if Moody's believes that the company's Total Debt-to-EBITDA (Moody's adjusted) leverage is unlikely to decline to less than 6.0x or its free cash flow remains in the low single digit percentages of total debt for an extended period of time. Additionally, deterioration in liquidity, or a material degradation in the company's business or financial risk profile resulting from a large, transformative acquisition could trigger a downgrade. Moody's has taken the following ratings actions: Issuer: Hyland Software, Inc. Corporate Family Rating -- B2, Affirmed Probability of Default Rating -- B3, lowered from B2 $20 Million Senior Secured Revolving Credit Facility due 2017 -- B2 (LGD3, 35%), lowered from Ba3 (LGD 2, 27%) $375 Million (being upsized from $320 million) Senior Secured First Lien Term Loan due 2019 -- B2 (LGD3, 35%), lowered from Ba3 (LGD 2, 27%) $235 Million Senior Secured Second Lien Term Loan due 2020 -- To be withdrawn, previously Caa1, LGD5 (82%) Outlook -- Changed to Stable from Negative The principal methodology used in rating Hyland Software, Inc. was the Global Software Industry Methodology published in October 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Westlake, OH, Hyland Software, Inc. provides Enterprise Content Management software solutions to enterprise customers. Private equity firm Thoma Bravo owns a majority equity interest in the company. HYLAND SOFTWARE: S&P Affirms 'B' Corp. Credit Rating; Outlook Pos ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Westlake, Ohio-based Hyland Software Inc. and revised the outlook to positive. "We also assigned a 'B' issue-level rating to the proposed $375 million first-lien term loan. We also assigned this debt a recovery rating of '3', indicating expectations of meaningful (50% to 70%) recovery of principal in the event of a payment default," S&P said. "We are withdrawing the 'B' issue-level rating and recovery rating of '3' from the previously proposed $320 million first-lien term loan and the 'CCC+' issue-level rating and '6' recovery rating from the previously proposed $235 million second-lien term loan. The 'B' issue-level rating and the '3' recovery rating on the $20 million senior secured revolver are unchanged," S&P said. "The rating reflects our view of Hyland's limited operational scale and relatively modest competitive position, with respect to much larger competitors with significantly more resources in the fragmented enterprise content management (ECM) industry," said Standard & Poor's credit analyst Jacob Schlanger. "The company's predictable recurring revenue stream, stemming from high license renewal rates and favorable business segment growth, provides rating stability. We view Hyland's business risk as "weak" and its financial risk profile as 'aggressive,'" S&P said. "Hyland provides ECM software solutions that enable organizations to manage, control, and share unstructured (text, images, e-mails, and digital content) and structured content (information that is organized). The company generally targets middle-market businesses. Its products are tailored to specific users and vertical markets, with a particular focus on health care, but also caters to the financial services, government, and higher-education sectors," S&P said. "Hyland's outlook is positive, reflecting the need to demonstrate that its financial policies will continue and lead to a drop in leverage in the next 12 months to about prior levels. The company has demonstrated a more aggressive policy than in the past and is now paying a second dividend in less than a year, albeit pared back from earlier proposed levels. We could raise the rating if Hyland demonstrates modest acquisition activity over the next year and does not pay any more dividends, enabling leverage to drop back to the low- to mid-4x levels, which still would be at the high end of the range that the company has operated at over the past few years. We would revise the outlook to stable if leverage doesn't fall from current levels because of acquisitions or dividends, or if pricing pressure related to increased competition in the marketplace or a weak economy result in margin erosion," S&P said. IGNITE RESTAURANT: Gets Sr. Sec. Credit Waiver Until Nov. 15 ------------------------------------------------------------ Ignite Restaurant Group, Inc. has received a waiver through Nov. 15, 2012 from the lenders under its senior secured credit facility, whereby the lenders agreed to waive the rights and remedies under the credit agreement arising from the delay in the Company filing its Quarterly Reports on Form 10-Q required to be filed with the Securities and Exchange Commission. The waiver was granted to provide the Company with additional time to complete the review of the Company's historical accounting for fixed assets and related depreciation. The Company expects to file its Quarterly Reports upon completion of the accounting review and the restatement of its previously issued financial statements. The Company has also received a notice from Nasdaq indicating that Nasdaq has granted the Company's request for an exception to Listing Rule 5250(c)(1) in connection with the delay in the filing of its Quarterly Report on Form 10-Q for the second quarter ended June 18, 2012. The exception is conditioned upon the Company filing the Form 10-Q on or before Nov. 16, 2012. The Company will host a conference call to discuss the completion of the Company's accounting review and the restatement of its previously issued financial statements, as well as second quarter and third quarter 2012 results, on Oct. 30, 2012 at 5:00 PM Eastern Time. The Company previously disclosed that following an internal assessment of its lease accounting policies, it had determined it necessary to correct non-cash related errors related to its accounting treatment of certain leases. The Company also commenced a detailed review of its historical accounting for fixed assets and related depreciation expense in prior periods as a private company. Conference Call Information The conference call can be accessed live over the phone by dialing 888-487-0340 or for international callers by dialing 719-325-2333. A replay will be available one hour after the call and can be accessed by dialing 877-870-5176 or 858-384-5517 for international callers; the password is 4748736. The replay will be available until Nov. 6, 2012. The call will also be webcast live from the Company's website at http://www.igniterestaurants.com/under the "Investors" section. About Ignite Restaurant Group Ignite Restaurant Group, Inc. owns and operates two restaurant brands, Joe's Crab Shack and Brick House Tavern + Tap. Each brand offers a variety of high-quality, chef-inspired food and beverages in a distinctive, casual, high-energy atmosphere. Joe's Crab Shack and Brick House Tavern + Tap operate in a diverse set of markets across the United States. IMC HOME: Moody's Lowers Rating on Cl. M-2 Loans to 'B2' ------------------------------------------------------------ Moody's Investors Service has downgraded the ratings of five tranches from two subprime RMBS transactions issued by IMC, backed by Subprime loans. Ratings Rationale The actions are a result of the recent performance review of Subprime pools originated before 2005 and reflect Moody's updated loss expectations on these pools. The methodologies used in these ratings were "Moody's Approach to Rating US Residential Mortgage-Backed Securities" published in December 2008 and "Pre-2005 US RMBS Surveillance Methodology" published in January 2012. The rating actions reflect recent collateral performance and detailed analysis of timing and amount of credit enhancement released due to step-down. This individual pool level analysis incorporates performance variations across the different pools and the structure of the transaction. The above mentioned approach "Pre-2005 US RMBS Surveillance Methodology" is adjusted slightly when estimating losses on pools left with a small number of loans to account for the volatile nature of small pools. Even if a few loans in a small pool become delinquent, there could be a large increase in the overall pool delinquency level due to the concentration risk. To project losses on pools with fewer than 100 loans, Moody's first estimates a "baseline" average rate of new delinquencies for the pool that is dependent on the vintage of loan origination (11% for all vintages 2004 and prior). The baseline rates are higher than the average rate of new delinquencies for larger pools for the respective vintages. Once the baseline rate is set, further adjustments are made based on 1) the number of loans remaining in the pool and 2) the level of current delinquencies in the pool. The volatility of pool performance increases as the number of loans remaining in the pool decreases. Once the loan count in a pool falls below 75, the rate of delinquency is increased by 1% for every loan less than 75. For example, for a pool with 74 loans from the 2004 vintage, the adjusted rate of new delinquency would be 11.11%. In addition, if current delinquency levels in a small pool is low, future delinquencies are expected to reflect this trend. To account for that, the rate calculated above is multiplied by a factor ranging from 0.85 to 2.25 for current delinquencies ranging from less than 10% to greater than 50% respectively. Delinquencies for subsequent years and ultimate expected losses are projected using the approach described in the methodology publication listed above. When assigning the final ratings to senior bonds, in addition to the methodologies described above, Moody's considered the volatility of the projected losses and timeline of the expected defaults. For bonds backed by small pools, Moody's also considered the current pipeline composition as well as any specific loss allocation rules that could preserve or deplete the overcollateralization available for the senior bonds at different pace. The above methodology only applies to pools with at least 40 loans and a pool factor of greater than 5%. Moody's may withdraw its rating when the pool factor drops below 5% and the number of loans in the pool declines to 40 loans or lower unless specific structural features allow for a monitoring of the transaction (such as a credit enhancement floor). The primary sources of assumption uncertainty are Moody's central macroeconomic forecast and performance volatility as a result of servicer-related activity such as modifications. The unemployment rate fell from 9.0% in September 2011 to 7.8% in September 2012. Moody's expects unemployment rate to stay between 7.5% to 8.5% in 2013. Moody's expects housing prices to remain stable through the remainder of 2012 before gradually rising towards the end of 2013. Performance of RMBS continues to remain highly dependent on servicer activity such as modification-related principal forgiveness and interest rate reductions. Any change resulting from servicing transfers or other policy or regulatory change can also impact the performance of these transactions. Complete rating actions are as follows: Issuer: IMC Home Equity Loan Pass-Through Certificates, Series 1998-5 A-5, Downgraded to Ba1 (sf); previously on Mar 9, 2011 Downgraded to Baa1 (sf) A-6, Downgraded to Ba1 (sf); previously on Mar 9, 2011 Downgraded to A3 (sf) Issuer: IMC Home Equity Loan Trust 1997-3 M-1, Downgraded to B1 (sf); previously on Mar 9, 2011 Downgraded to Ba1 (sf) M-2, Downgraded to B2 (sf); previously on Mar 9, 2011 Downgraded to Ba2 (sf) A-6, Downgraded to Ba1 (sf); previously on Mar 9, 2011 Downgraded to Baa2 (sf) A list of these actions including CUSIP identifiers may be found at http://moodys.com/viewresearchdoc.aspx?docid=PBS_SF304050 A list of updated estimated pool losses, sensitivity analysis, and tranche recovery details is being posted on an ongoing basis for the duration of this review period and may be found at: http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF237255 INDIANAPOLIS DOWNS: Clash Over Sale to Centaur Continues -------------------------------------------------------- Peg Brickley at Dow Jones' Daily Bankruptcy Review reports that Centaur Gaming will have to wait until at least next week to find out whether a bankruptcy judge will sign off on its $500 million purchase of rival casino and racetrack operator Indianapolis Downs. About Indianapolis Downs Indianapolis Downs LLC operates Indiana Live -- http://www.indianalivecasino.com/-- a combined race track and casino at a state-of-the-art 283 acre Shelbyville, Indiana site. It also operates two satellite wagering facilities in Evansville and Clarksville, Indiana. Total revenue for 2010 was $270 million, representing an 8.7% increase in 2009. The casino captured 53% of the Indianapolis market share. In July 2001, Indianapolis Downs was granted a permit to conduct a horse track operation in Shelvyville, Indiana, and started operating the track in 2002. It was granted permission to operate the casino at the racetrack operation in May 2007. The casino began operations in July 2010. Indianapolis Downs and subsidiary, Indianapolis Downs Capital Corp., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 11-11046) in Wilmington, Delaware, on April 7, 2011. Indianapolis Downs estimated $500 million to $1 billion in assets and up to $500 million in debt as of the Chapter 11 filing. According to a court filing, the Debtor owes $98,125,000 on a first lien debt. It also owes $375 million on secured notes and $72.6 million on subordinated notes. Matthew L. Hinker, Esq., Scott D. Cousins, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP in Wilmington, Delaware, have been tapped as counsel to the Debtors. Christopher A. Ward, Esq., at Polsinelli Shughart PC, in Wilmington, Delaware, is the conflicts counsel. Lazard Freres & Co. LLC is the investment banker. Bose Mckinney & Evans LLP and Bose Public Affairs Group LLC serve as special counsel. Kobi Partners, LLC, is the restructuring services provider. Epiq Bankruptcy Solutions is the claims and notice agent. INNER CITY: Seeks Extension to File Creditor-Payment Plan --------------------------------------------------------- Marie Beaudette at Dow Jones' DBR Small Cap reports that Inner City Media Inc. is seeking a 31-day extension to file its creditor-repayment plan while it works to complete the sale of its radio stations to its senior lenders. About Inner City On Aug. 23, 2011, affiliates of Yucaipa and CF ICBC LLC, Fortress Credit Funding I L.P., and Drawbridge Special Opportunities Fund Ltd., signed involuntary Chapter 11 petitions for Inner City Media Corp. and its affiliates (Bankr. S.D.N.Y. Case Nos. 11-13967 to 11-13979) to collect on a $254 million debt. The Petitioning Creditors are party to the senior secured credit Facility pursuant to which they (or their predecessors in interest) extended $197 million in loans to the Alleged Debtors to be used for general corporate purposes. More than two years ago, the Alleged Debtors defaulted under the Senior Secured Credit Facility, and in any event the entire amount of principal and accrued and unpaid interest and fees became immediately due and payable on Feb. 13, 2010. Inner City Media's affiliates subject to the involuntary Chapter 11 are ICBC Broadcast Holdings, Inc., Inner-City Broadcasting Corporation of Berkeley, ICBC Broadcast Holdings-CA, Inc., ICBC- NY, L.L.C., ICBC Broadcast Holdings-NY, Inc., Urban Radio, L.L.C., Urban Radio I, L.L.C., Urban Radio II, L.L.C., Urban Radio III, L.L.C., Urban Radio IV, L.L.C., Urban Radio of Mississippi, L.L.C., and Urban Radio of South Carolina, L.L.C. Judge Shelley C. Chapman granted each of Inner City Media Corporation and its debtor affiliates relief under Chapter 11 of the United States Code. The decision came after considering the involuntary petitions, and the Debtors' answer to involuntary petitions and consent to entry of order for relief and reservation of rights. Attorneys for Yucaipa Corporate Initiatives Fund II, L.P. and Yucaipa Corporate Initiatives (Parallel) Fund II, L.P. are John J. Rapisardi, Esq., and Scott J. Greenberg, Esq., at Cadwalader, Wickersham & Taft LLP. Attorneys for CF ICBC LLC, Fortress Credit Funding I L.P., and Drawbridge Special Opportunities Fund Ltd. are Adam C. Harris, Esq., and Meghan Breen, Esq., at Schulte Roth & Zabel LLP. Akin Gump Strauss Hauer & Feld LLP serves as the Debtors' counsel. Rothschild Inc. serves as the Debtors' financial advisors and investment bankers. GCG Inc. serves as the Debtors' claims agent. The United States Trustee said that an official committee under 11 U.S.C. Sec. 1102 has not been appointed in the bankruptcy case of Inner City Media because an insufficient number of persons holding unsecured claims against the Debtor has expressed interest in serving on a committee. ISTAR FINANCIAL: Has $1.8 Billion Credit Facility with JPMorgan --------------------------------------------------------------- iStar Financial Inc. entered into a $1.82 billion senior secured credit facility due Oct. 15, 2017, with JPMorgan Chase Bank, N.A., as administrative agent, Barclays Bank PLC, as syndication agent, Bank of America, N.A., as documentation agent, and J.P. Morgan Securities LLC and Barclays Bank PLC, as joint physical bookrunners and, together with Merrill Lynch, Pierce, Fenner & Smith Incorporated., as joint lead arrangers and bookrunners. The New Credit Facility bears interest at a rate of LIBOR plus 4.50%, with a 1.25% LIBOR floor, and was issued at 99.0% of par. Proceeds from the New Credit Facility will be used to refinance the remaining balances of the Company's existing 2011 A-1/A2 secured credit facilities. Outstanding borrowings under the New Credit Facility are collateralized by a first lien on a fixed pool of approximately $2.29 billion of assets, with required minimum collateral coverage of not less than 125% of outstanding borrowings. If collateral coverage is less than 137.5% of outstanding borrowings, 100% of the proceeds from principal repayments and sales of collateral will be applied to repay outstanding borrowings under the New Credit Facility. For so long as collateral coverage is between 137.5% and 150% of outstanding borrowings, 50% of proceeds from principal repayments and sales of collateral will be applied to repay outstanding borrowings under the New Credit Facility and for so long as collateral coverage is greater than 150% of outstanding borrowings, the Company may retain all proceeds from principal repayments and sales of collateral. The New Credit Facility contains certain covenants relating to the collateral and restrictions on dividends, among other matters, but does not contain corporate level financial covenants such as minimum net worth, fixed charge coverage or minimum unencumbered assets covenants. A copy of the Credit Agreement is available for free at: http://is.gd/I3PFFk About iStar Financial New York-based iStar Financial Inc. (NYSE: SFI) provides custom- tailored investment capital to high-end private and corporate owners of real estate, including senior and mezzanine real estate debt, senior and mezzanine corporate capital, as well as corporate net lease financing and equity. The Company, which is taxed as a real estate investment trust, provides innovative and value added financing solutions to its customers. The Company reported a net loss of $25.69 million in 2011, compared with net income of $80.20 million in 2010. The Company's balance sheet at June 30, 2012, showed $7.18 billion in total assets, $5.71 billion in total liabilitieas and $1.47 billion in total equity. * * * In March 2012, Fitch affirmed the company's 'B-' issuer default rating. The IDR affirmation is based on a manageable debt maturity profile of the company, pro forma for the recently- consummated secured financing that extends certain of the company's debt maturities, relieving the overhang of significant unsecured debt maturities in 2012 and 2013. While this 2012 financing does not reduce the amount of total debt outstanding, the company's debt maturity profile is more manageable over the next two years, with only 48% of debt maturing pro forma, down from 61%. Given the mild improvement in commercial real estate fundamentals and value stabilization, the company's loan and real estate owned portfolio performance will likely improve going forward, which should increase the company's ability to repay upcoming indebtedness. As reported by the TCR on Oct. 5, 2012, Standard & Poor's Ratings Services affirmed its 'B+' long-term issuer credit rating on iStar Financial Inc. In October 2012, Moody's Investors Service upgraded the corporate family rating to B2 from B3. The current rating reflects the REIT's success in extending near term debt maturities and improving fundamentals in commercial real estate. The ratings on the October 2012 senior secured credit facility takes into account the asset coverage, the size and quality of the collateral pool, and the term of facility. JAYHAWK ENERGY: Had $30,500 Net Loss in June 30 Quarter ------------------------------------------------------- JayHawk Energy, Inc., reported a net loss of $30,535 on $112,359 of total revenue for the three months ended June 30, 2012, compared with a net loss of $311,607 on $52,732 of total revenue for the three months ended June 30, 2011. For the nine months ended June 30, 2012, the Company had a net loss of $968,425 on $439,811 of total revenue, compared with a net loss of $1.1 million on $224,087 of total revenue for the nine months ended June 30, 2011. The Company's balance sheet at June 30, 2012, showed $4.7 million in total assets, $2.9 million in total liabilities, and shareholders' equity of $1.8 million. A copy of the Form 10-Q is available at http://is.gd/IZC95u Coeur d'Alene, Idaho-based JawHawk Energy, Inc., and its wholly owned subsidiary, is engaged in the acquisition, exploration, development, production and sale of natural gas, crude oil and natural gas liquids primarily from conventional reservoirs within North America. The Company incorporated in Colorado on April 5, 2004, as Bella Trading Company, Inc. * * * DeCoria, Maichel & Teague, PS, in Spokane, Washington, expressed substantial doubt about JawHawk Energy's ability to continue as a going concern, following its audit of the Company's financial statements for the fiscal year ended Sept. 30, 2011. The independent auditors noted that the Company has incurred substantial losses, has negative working capital and has an accumulated deficit. K-V PHARMACEUTICAL: Has Access to Cash Collateral Until Nov. 21 --------------------------------------------------------------- The Bankruptcy Court approved a stipulation extending K-V Pharmaceutical Company and its affiliates' authorization to use cash collateral through and including Nov. 21, 2012, unless that authority is terminated in accordance with the terms and conditions set forth in the Final Cash Collateral Order. The Bankruptcy Court previously entered an agreed interim order on Aug. 10, 2012, which, among other things, authorized the Debtors' use of their cash collateral. On Sept. 14, 2012, the Bankruptcy Court authorized the Debtors to use their cash collateral through and including Oct. 18, 2012. About K-V Pharmaceutical K-V Pharmaceutical Company (NYSE: KVa/KVb) -- http://www.kvpharmaceutical.com/-- is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. The Company markets its technology distinguished products through ETHEX Corporation, a subsidiary that competes with branded products, and Ther-Rx Corporation, the company's branded drug subsidiary. 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. KEOWEE FALLS: Says Sale Closed; Plan and Outline to be Filed ------------------------------------------------------------ Keowee Falls Investment Group, LLC, asks the U.S. Bankruptcy Court for the District of South Carolina to deny the U.S. Trustee's motion to convert the Debtor's case to one under Chapter 7 of the Bankruptcy Code. As reported in the Troubled Company Reporter on Oct. 10, 2012, W. Clarkson McDow, Jr., U.S. Trustee for Region 4, told the Court that the Debtor's disclosure statement and plan were due Aug. 29, 2012, pursuant to SCBLR 3016-1(a), but the Debtor has not filed the disclosure statement and plan. The Debtor has represented that it has approximately $165,000 in cash once all sales are closed. The schedules show unsecured claims in the amount of $214,661. According to the Debtor, cause does not exist to grant the U.S. Trustee's motion because the sales of its assets as approved by the Court have closed, and it is in the process of completing its Disclosure Statement and Plan of Liquidation. About Keowee Falls Investment Group Travelers Rest, South Carolina-based Keowee Falls Investment Group, LLC, filed a Chapter 11 petition (Bankr. D. S.C. Case No. 12-01399) in Spartanburg, South Carolina, on March 2, 2012. Bankruptcy Judge John E. Waites presides over the case. R. Geoffrey Levy, Esq., at Levy Law Firm, LLC assists the Debtor in its restructuring effort. Keowee Falls estimated assets at $100 million to $500 million and debts at $10 million to $50 million. In its amended schedules, the Debtor disclosed $32,671,753 in assets and $19,913,844 in liabilities as of the Chapter 11 filing. The Court authorized the Debtor to (i) sell substantially all of the assets; and (ii) assume and assign certain designated unexpired leases and executory contracts to Worthington Hyde Partners-II, L.P., pursuant to an asset purchase agreement. KRONOS INC: Moody's Rates New Secured Revolver Debt 'Ba3' --------------------------------------------------------- Moody's Investors Service affirmed Kronos Incorporated's B2 corporate family rating ("CFR") and probability of default rating, and assigned Ba3 and Caa1 ratings to the company's proposed first and second lien credit facilities. The company will use net proceeds from the new credit facilities and about $50 million of cash on hand to refinance existing debt and pay approximately $538 million in dividends to its shareholders. Moody's revised the rating outlook to negative reflecting the company's elevated financial risk profile and aggressive financial policies which will result in a material erosion in the company's financial flexibility. Moody's will withdraw the ratings for Kronos' existing credit facilities upon repayment of debt and cancellation of the facilities. Ratings Rationale Pro forma for the proposed dividend recapitalization, Kronos' leverage (Moody's adjusted total debt-to-LTM June EBITDA) will increase to about 7.4x from 5.4x. While Kronos' leverage will deteriorate and temporarily exceed the expected range for the B2 CFR, Moody's affirmed Kronos' rating to reflect the company's solid track record of organic revenue and operating cash flow growth. Moody's expects Kronos' debt-to-EBITDA leverage to decline to close to 6.0x by the end of 2013, driven by revenue growth of about 5% to 6% (Moody's estimates) and modest term loan repayments. Although Kronos' interest expense will increase significantly, Moody's expects the company to generate free cash flow in the mid single digit percentages of total debt while maintaining its current levels of R&D and capital expenditure outlays. Moody's analyst Raj Joshi said, "Although near term risks are alleviated by Kronos' strong track record of execution, growing market and the company's free cash flow prospects, a highly leveraged balance sheet will limit Kronos' financial flexibility in the intermediate term." He added, "The risks are especially pronounced as larger enterprise resource management software vendors are strengthening their Human Capital Management (HCM) offerings and new competitors with cloud-based models are challenging existing vendors and business models." The B2 CFR reflects Kronos' high leverage and its moderate scale relative to the more diversified peer enterprise software companies, some of which have significantly stronger financial profiles. The rating also consider Kronos' high geographic and product line concentration, and the intensely competitive operating environment in the HCM market. The rating is supported by Kronos' leading market position in the niche workforce management (WFM) applications segment of the HCM market and a growing market for WFM solutions. Kronos's credit profile benefits from its large and diversified installed base of enterprise clients and its high levels of recurring maintenance and subscription revenue which provide good revenue and cash flow visibility. The rating is further supported by the company's good liquidity and good business execution that has resulted in sustained growth in revenue and EBITDA. The negative outlook reflects Kronos' high leverage and limited flexibility to absorb execution missteps and external challenges, or pursue acquisitions, at least over the next few quarters. Given the company's high leverage Moody's does not anticipate a rating upgrade in the near-to-intermediate term. Kronos' rating or outlook could be lowered if Moody's believes that the company is unlikely to reduce and sustain total debt-to- EBITDA leverage below 6.0x or free cash flow/Debt ratio in excess of 5% of total debt. The rating could be downgraded if revenue growth weakens as a result of competitive pressure or execution challenges, or EBITDA margins deteriorate, leading to an erosion in liquidity and operating cash flow. Moody's has taken the following actions: Issuer: Kronos Incorporated Corporate Family Rating -- Affirmed B2 Probability of Default Rating -- Affirmed B2 New Senior Secured Revolver Credit Facility due October 2017 -- Assigned, Ba3, LGD2 (29%) New 1st Lien Term Loan due October 2019 -- Assigned, Ba3, LGD2 (29%) New 2nd Lien Term Loan due April 2020 -- Assigned, Caa1, LGD5 (83%) The following ratings will be withdrawn upon the closing of the refinancing: Senior Secured Revolver Credit Facility due June 2017 -- B1, LGD3 (36%) Senior Secured Revolver Credit Facility (extended tranche) due June 2016 -- B1, LGD3 (36%) 1st Lien Term Loan due June 2014 -- B1, LGD3 (36%) 1st Lien Term Loan (extended tranche) due June 2017 -- B1, LGD3 (36%) $370 million 1st Lien Incremental Term Loan due December 2017 -- B1, LGD3 (36%) 2nd Lien Term Loan due June 2015 -- Caa1, LGD5 (88%) 2nd Lien Term Loan (extended tranche) due June 2018 -- Caa1, LGD5 (88%) Outlook: Changed to Negative from Stable The principal methodology used in rating Kronos Incorporated was the Global Software Industry Methodology published in October 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Chelmsford, MA, Kronos provides human capital management solutions to enterprise customers. Kronos was taken private by private equity firms Hellman & Friedman and JMI Equity in 2007. LEHMAN BROTHERS: Cantor Is Chief Gen. Counsel; Grossman to LBSF --------------------------------------------------------------- Lehman Brothers Holdings Inc. (LBHI) disclosed that it has named Matthew Cantor, a prominent bankruptcy attorney and investment manager, as its Executive Vice President of Legal Affairs and Chief General Counsel. Cantor will step down as a director on the board of Lehman Brothers Special Finance (LBSF) and be replaced by Ken Grossman, an accomplished veteran investor in troubled and distressed credit products and special situations. In this newly created role, Cantor will head the legal department, coordinate the company's legal functions and oversee all litigation matters, bringing his proactive and strategic approach to the many complex legal matters in which the company is involved. "The LBHI Board has been very clear in its objective to obtain the best results possible for creditors, negotiating settlements when possible and vigorously pursuing litigation when justified and necessary," said Cantor. "The broad scope and complex nature of the pending legal issues present a compelling opportunity, and I look forward to working with the outstanding lawyers at the company." John Suckow, LBHI's President and CEO, said: "Matt Cantor is an outstanding lawyer and strategic thinker. His insight and experience will be important as we continue our aggressive efforts to maximize asset values and mitigate claims." Cantor has been a partner at the law firms of Weil, Gotshal & Manges and Kirkland & Ellis, and during his legal career has represented debtors, creditors and investors in bankruptcy cases and workouts. Most recently, he was a founding principal of Normandy Hill Capital, an investment manager focusing on distressed, event-driven credit and special situations. Ken Grossman, who has joined the LBSF board in Cantor's place, previously served as President and a Director of Signature Group Holdings, Inc. and as a Managing Director at Ramius, LLC, an $11 billion multi-strategy fund. He was also a member of the Management Committee at Del Mar Asset Management and a portfolio manager at Alpine Associates and Balfour Investors. Suckow added: "We are fortunate to have been able to attract a director at LBSF with Ken's experience and investment and legal acumen." Ken is currently a director of T-Ink, Inc., a leading developer of interactive and conductive inks. He has served on numerous creditor and shareholder committees and holds a Juris Doctorate degree from the National Law Center at George Washington University. 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: Judge Dismisses Key Claims in Class Action ----------------------------------------------------------- A federal judge dismissed some key claims in a class action lawsuit against former officers of Lehman Brothers Holdings Inc., including claims based on overvalued real estate and repurchase agreements known as Repo 105, Bloomberg News reported. The California plaintiffs, seven public entities and an insurance company can proceed with limited claims against some former executives including ex-Chairman Richard Fuld, according to an opinion filed by U.S. District Judge Lewis Kaplan in Manhattan on October 15. The California entities, which purchased Lehman securities from October 25, 2004, through March 31, 2008, accused management of misleading investors about key aspects of the company's business, Bloomberg News reported. Judge Kaplan found that there was sufficient evidence for the lawsuit to stand only for a few specific instances of misrepresentations, including a Dec. 13, 2007 annual report from Lehman and a Nov. 6, 2007 executive committee meeting. "The examiner's report concluded that a trier of fact could find that Repo 105 transactions were used to create a materially misleading picture of Lehman's financial condition beginning in late 2007," the federal judge said in the ruling. Mr. Fuld will also have to face allegations that he fraudulently gifted a Florida residence to his wife for $100 in November 2008, Bloomberg News reported. The case is In re: Lehman Brothers Securities and ERISA Litigation, U.S. District Court, Southern District of New York, No. 08-05523. 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. LENCO MOBILE: Had Net Loss of $2.2-Mil. in First Quarter -------------------------------------------------------- Lenco Mobile Inc. reported a net loss of $2.2 million on $4.1 million of revenue for the three months ended March 31, 2012, compared with a net loss of $4.1 million on $2.4 million of revenue for the same period last year. The Company's balance sheet at March 31, 2012, showed $37.3 million in total assets, $18.2 million in total liabilities, and stockholders' equity of $19.1 million. As reported in the TCR on July 5, 2012, Peterson Sullivan LLP, in Seattle, Washington, expressed substantial doubt about Lenco Mobile's ability to continue as a going concern, following its auditor of the Company's financial statements for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has experienced recurring losses from operations and negative cash flows from operating activities. A copy of the Form 10-Q is available at http://is.gd/eymfos Seattle, Washington-based Lenco Mobile Inc. is a global provider of proprietary mobile messaging and mobile web solutions to large enterprises and marketing agencies. LENNAR: Moody's Lifts CFR to 'Ba3'; Sr. Notes Rating to 'B1' ------------------------------------------------------------ Moody's Investors Service upgraded Lennar's corporate family rating and probability of default rating to Ba3 from B1, and the ratings on the company's senior unsecured and convertible senior notes to B1 from B2. At the same time, Moody's assigned a B1 rating to Lennar's proposed $350 million of senior unsecured notes due 2022, proceeds from which will be used for working capital and for general corporate purposes, which may include acquisitions or repurchases of some of the company's outstanding senior notes. The speculative grade liquidity assessment is SGL-2, and the ratings outlook is stable. The following rating actions were taken: Corporate family rating, upgraded to Ba3 from B1; Probability of default rating, upgraded to Ba3 from B1; Existing senior unsecured notes, upgraded to B1, LGD4-60% from B2, LGD4-61%; Existing convertible senior notes, upgraded to B1, LGD4-60% from B2, LGD4-61%; Proposed new $350 million of senior unsecured notes due 2022, assigned a B1 LGD4-60%; Speculative grade liquidity assessment, affirmed at SGL-2; Ratings outlook is stable. Ratings Rationale The ratings upgrade for Lennar reflects the company's improving operating performance, which Moody's expects to continue, including an expanding revenue base, growing gross margins, sustainable net income generation, and Moody's expectation that the homebuilding industry will continue demonstrating modest growth over the intermediate term, in terms of both demand and pricing, allowing the company to generate stronger credit metrics. The company has been enjoying solid growth during the current recovery and was the first homebuilder to benefit from the reversal of the deferred tax valuation reserve, which enhanced its net worth and reduced its homebuilding debt leverage. The Ba3 corporate family rating is supported by the company's industry-leading gross margins, its strong earnings performance in a weak housing environment, the slimming down of its joint venture activities into a relatively few (for Lennar) critical land ventures, the substantial tangible equity base, and one of the homebuilding industry's more transparent disclosures of off- balance sheet activities. The company has been able to stretch out a heavy debt maturity schedule during a time of uncertain market access through successful, multiple equity and debt issuances, nearly eliminate its formerly outsized recourse joint venture debt exposure, and generate net income even as the majority of its peers continued to rack up losses. At the same time, Lennar's ratings incorporate its elevated adjusted homebuilding debt leverage, which is a pro forma 56.8% as of August 31, 2012, the expectation of negative cash flow from operations over the next 12 to 18 months, the long land position, the still-substantial, albeit greatly reduced, total (as opposed to recourse) debt at its joint venture operations, and its high proportion of speculative construction. Lennar's liquidity is supported by its pro forma $1 billion unrestricted cash position at August 31, 2012, full availability under its senior unsecured revolving credit facility due 2015, the aggregate commitment for which has recently been increased to $500 million, the availability of about $100 million at August 31, 2012 under its various letter of credit facilities aggregating $400 million, and adequate to healthy headroom under its covenants. The stable outlook reflects Moody's expectation that homebuilding industry conditions will remain favorable over the next 12 to 18 months, allowing the company to yield solid operating growth, and that the company will whittle down its currently elevated debt leverage. The ratings could benefit if the company continues to generate positive and growing net income, resumes growing its free cash flow, continues to strengthen its liquidity, and, most importantly, drives its debt leverage sustainably below 45%. The outlook and/or ratings could come under pressure if the economic backdrop suddenly and significantly takes a turn for the worse; the company returns to generating more than modestly negative net income; impairments were again to rise materially; the company were to experience even sharper-than-expected reductions in its trailing 12-month free cash flow generation; and/or adjusted debt leverage were to approach 60% on a sustained basis. The considerable proportion of secured land purchase and recourse off-balance sheet debt within the capital structure is the reason for the one notch difference between Lennar's corporate family rating and the rating on its unsecured notes. The principal methodology used in rating Lennar was the Global Homebuilding Industry Methodology published in March 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Founded in 1954 and headquartered in Miami, Florida, Lennar is one of the country's largest homebuilders. The company has a presence in 16 states and specializes in the sale of single-family homes for first-time, move-up and active adult buyers. Lennar also invests in distressed real estate assets and provides mortgage financing to its customers. Total revenues and consolidated net income for the last twelve months ending August 31, 2012 were approximately $3.7 billion and $585 million, respectively. LEVER DEVELOPMENT: Loses Bid to Stop Involuntary Chapter 7 ---------------------------------------------------------- Lever Development, LLC, failed in its bid to challenge an involuntary chapter 7 petition filed against it by Laushine Enterprises, LLC, Harvey Building Products, and West Gloucester Capital, LLC. Lever had argued that the claim held by WGC is subject to bona fide dispute. Bankruptcy Judge Melvin S. Hoffman, however, held that Lever has failed to carry its burden that the claim of WGC is subject to a bona fide dispute. Section 303(b) of the Bankruptcy Code provides that an involuntary petition may be filed by three creditors who hold claims that (a) are not contingent as to liability or the subject of bona fide dispute as to liability or amount, and (b) aggregate at least $14,425. It is conceded that Laushine and Harvey hold undisputed claims against Lever that exceed, in the aggregate, $14,425. The Bankruptcy Court has earlier ruled that WGC had established a prima facie claim against Lever for $6,085,159 pursuant to a guaranty and thus the burden of proving the existence of a bona fide dispute shifted to Lever. Lever was hired as general contractor by The Village of West Gloucester, LLC, to develop a 34-unit adult condominium community known as The Village at West Gloucester on land it owned at 36 Atlantic Street in Gloucester, Massachusetts. To finance construction of the project the Village obtained a total of $7,900,000 in loans from Digital Federal Credit Union. The first note (referred to as the Infrastructure Note) was in the original principal amount of $4,800,000; the second note (referred to as the Construction Note) was in the original principal amount of $3,100,000. Both notes were to mature on June 11, 2010. Lever executed a guaranty on the Infrastructure Note. The Village defaulted under the amended loan documents. On April 23, 2010, the Village filed a voluntary chapter 11 petition (Bankr. D. Mass. Case No. 10-42000). On July 23, 2010, WGC was granted relief from the automatic stay in the Village's bankruptcy case permitting it to exercise its state law rights and remedies under its loan documents, including foreclosing the mortgage on the Gloucester real estate. On Nov. 4, 2010, the Village's chapter 11 case was converted to a case under chapter 7 and Gary Weiner was appointed chapter 7 trustee. On Nov. 2, 2011, petitioning creditors filed an involuntary chapter 7 petition (Bankr. D. Mass. Case No. 11-44639) against Lever. Lever had argued that if "illegal or improper" actions of a lender triggered the primary obligor's default, a guarantor is excused from his obligations under the guaranty. Lever asserts that DCU colluded with WGC to engineer a default by the Village of its obligations under the loan documents and a related forbearance agreement so that WGC could purchase the Village loan and ultimately step into the role of developer of the condominium project. Judge Hoffman ruled, however, that the "evidence before me does not support Lever's version of the facts. The Village's defaults under the loan documents and the Forbearance Agreement were entirely of its own making." Jennifer Roberts, Esq., at LaTanzi, Spaulding & Landreth, in Orleans, Mass., represents West Gloucester Capital, LLC. Ethan Jeffery, Esq., at Murphy & King, P.C., in Boston, argues for petitioning creditors, Laushine Enterprises, LLC, Harvey Building Products, and West Gloucester Capital, LLC. Mark Nestor, Esq., in Gloucester, represents Lever Development, LLC. A copy of the Court's Oct. 18 Findings of Fact and Conclusions of Law is available at http://is.gd/kUa3qzfrom Leagle.com. LIGHTSQUARED INC: Will Seek Approval of Revised KEIP on Oct. 23 --------------------------------------------------------------- LightSquared Inc., et al., will ask the Bankruptcy Court on Oct. 23, 2012, to approve a revised key employee incentive plan, the terms of which have been agreed upon by the Debtor and the Ad Hoc Secured Group and which the U.S. Trustee is reviewing. The significant modifications reflected in the Revised KEIP include (x) removal of the issuance of restricted stock units ("RSUs") as consideration, (y) tightening LightSquared's budget compliance requirements, which is now tested twice rather than once, and (z) tightening payment dates under the Emergence Objective. A comparison between the KEIP and Revised KEIP is available at: http://bankrupt.com/misc/lightsquared.doc385.pdf 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. LIONS GATE: Moody's Affirms 'B1' Corporate Family Rating -------------------------------------------------------- Moody's Investors Service affirmed Lions Gate Entertainment, Inc.'s B1 Corporate Family Rating (CFR) and B1 Probability of Default Rating (PDR) following the amendment to increase its revolver borrowing limit under its 2nd lien notes indenture, and the subsequent consolidation of Summit Entertainment, LLC (Summit) into its credit. The B1 rating on its senior secured 2nd lien notes remains unchanged, and loss given default point estimates were updated to reflect the change in capital structure. Moody's upgraded Lionsgate's Speculative Grade Liquidity rating to SGL-2 from SGL-3, as a result of the transaction's improvement on Lionsgate's liquidity profile . The following is a summary of the actions: Upgrades: Lions Gate Entertainment Inc. Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3 LGD Updates: Senior Secured 2nd Lien Notes due 2016, Changed to LGD4 - 51% from LGD3 - 42% (no change to B1 rating) The amendment to the senior secured 2nd lien notes allows Lionsgate to borrow up to $650 million under its $800 million revolving credit facility, increased from the previous $340 million borrowing limitation calculated in the company's notes indenture. Following the amendment, Lionsgate terminated and prepaid the $299.2 million outstanding term loan at Summit (B1 CFR), which had thus far been an unrestricted subsidiary whose assets were not pledged towards debt at Lionsgate and whose debt did not have recourse to Lionsgate's other cash flow and assets. The company also arranged for Summit and certain of its affiliates to become guarantors under Lionsgate's 2nd lien notes indenture and credit agreement. In Moody's view, the termination and prepayment of the Summit loan and the subsequent guarantees that were put into place for Summit to directly support Lionsgate debt, effectively unify the credit. As a result, Moody's has withdrawn all ratings for Summit. Moody's notes that the Summit term loan had excess cash flow sweep provisions that provided for disciplined repayment of debt using the significant proceeds expected from the second Breaking Dawn film in the Twilight series (slated for release in November 2012) as well other new film and library cash flows at Summit. "While Lionsgate's revolver has no cash flow sweep provisions to ensure such disciplined debt reduction, we expect the company to be reasonably self-disciplined and pay down any incremental revolver debt using cash proceeds from the Summit assets in a similar fashion as was expected under the Summit term loan," stated Neil Begley, a Moody's Senior Vice President. In addition, the absence of the cash sweep will provide Lionsgate with more financial flexibility, given its significant expected near term production costs. Moody's anticipates that the consolidation of Summit may result in cost savings associated with a simplified overhead structure, and since the Summit term loan had a higher interest rate than Lionsgate's credit facility, Lionsgate will benefit from lower interest expense which Moody's estimates to be over $20 million in reduced cumulative interest expense. In Moody's view, any substantial increase in revolver debt would be mitigated by its creditors getting full recourse to Summit's cash flows consistent with the priority of claims on the Lionsgate assets, primarily from the Twilight franchise, and therefore its B1 CFR is not impacted by the transaction. On a standalone basis (excluding Summit), Moody's expected Lionsgate to have moderately negative cash flow in the near term driven by the high investment in film and TV production, and turn cash flow positive only beginning fiscal 2014 upon the release of sequels under its Hunger Games franchise. The credit consolidation of Summit will improve the company's near term cash flow and have the effect of smoothing out its metrics, since most of Summit's cash flow is expected to come in over the next 24 months upon the release of its last Twilight film. On a consolidated basis, Moody's expects the company to pay down debt, sustain leverage under 5.0x and generate positive free cash flow in fiscal 2013. Moody's upgraded the company's liquidity rating to SGL-2 from SGL- 3, as the rating agency expects the inclusion of Summit's cash flows to improve Lionsgate's cash flow generation to positive over the next 12 months. Moody's also expects the borrowing availability under its revolver to increase as it applies cash flows from Summit to reduce its revolver debt, enhancing its access to external liquidity as it now has a $650 million revolver borrowing limit instead of the previous $340 million limit. The B1 rating on Lionsgate's senior secured 2nd lien notes is unchanged by the amendment, since the rating already accommodated for anticipated changes in the company's capital structure that may have resulted in higher revolver borrowings and therefore increased the amount of senior debt in the capital structure. RATINGS RATIONALE The B1 Corporate Family Rating (CFR) reflects the inherent high risk and typical low margins associated with the film production business and the mixed performance of Lions Gate's film slate in recent years, which has led to frequent losses, often negative free cash flow and high leverage. This is partially mitigated by the company's significant asset value as well as the success of the first film in the Hunger Games franchise and significant expected cash flows from the probable success of the remaining three sequels in the series, which are slated to be released through fiscal 2016. Moody's expects operating performance to improve as a result of the company's cost reduction initiatives as well as increasing contribution (to EBITDA) from TV program syndication revenues and the cable network businesses, which include TVGuide Network and EPIX. The company has improved financial flexibility after the consolidation of Summit Entertainment, which generates significant positive cash flows driven by its Twilight film franchise (with the last film slated for release in November 2012). Moody's expects the company to sustain leverage under 5.0x and generate positive free cash flow in fiscal 2013, as heavy investments in film and TV production are expected to be offset by significant cash flows from at least one major sequel release per year. Despite the higher visibility for profits and cash flows provided by the Hunger Games and Twilight franchises, the company's ratings are constrained by the potential for reinvestment of its profits in underperforming films and the absence of cash flow sweep requirements which enforce discipline for debt pay down, given the volatile nature of its businesses and high absolute levels of debt. The rating is supported by the company's good liquidity profile, characterized by positive free cash flow generation and ample borrowing capacity under its $800 million revolver. The stable outlook reflects Moody's expectation that the company will generate positive cash flow over the forward rating horizon as returns begin to flow from the significant television and film investments. The outlook also reflects Moody's expectation that management will use a portion of future free cash flows towards debt repayment and will take steps to strengthen its balance sheet and improve and sustain its credit metrics. A rating upgrade is unlikely in the near term given the prospective nature of the current rating and low visibility on the revenues in later years, especially beyond the completion of the Hunger Games franchise. However, ratings could be upgraded if the company has more consistent film performance across its slate and demonstrates the ability to develop other successful film franchises, or the company diversifies its operations further and thereby reducing the impact from theatrical film performance contribution and volatility, such that it can generate sustainable positive free cash flow, and materially reduce absolute debt and sustain debt-to-EBITDA leverage of under 3.0x. The company's ratings could be downgraded if operating performance falls short of current expectations and the company regresses to consistent negative free cash flow which in turn, would likely pressure its liquidity position without access to capital markets. Additionally, downward pressure might occur if the company engages in acquisitions that adversely impact cash flow, leverage and/or liquidity. A change in Moody's expectation of the company's ability and commitment towards debt reduction could also lead to a downgrade. Lionsgate's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (ii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside Lionsgate's core industry and believes Lionsgate's ratings are comparable to those of other issuers with similar credit risk. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Lionsgate Entertainment Corp., domiciled in British Columbia, Canada (headquartered in Santa Monica, CA), is a motion picture studio with a diversified presence in the production and distribution of motion pictures, television programming, home entertainment, video-on-demand and digitally delivered content. LONGVIEW POWER: Bank Debt Trades at 17% Off in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which Longview Power LLC is a borrower traded in the secondary market at 82.95 cents-on- the-dollar during the week ended Friday, Oct. 19, a drop of 0.49 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 575 basis points above LIBOR to borrow under the facility. The bank loan matures on Oct. 31, 2017. The loan is one of the biggest gainers and losers among 198 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. Longview is a special purpose entity created to construct, own, and operate a 695 MW supercritical pulverized coal-fired power plant located in Maidsville, West Virginia, just south of the Pennsylvania border and approximately 70 miles south of Pittsburgh. The project is owned 92% by First Reserve Corporation (First Reserve or sponsor), a private equity firm specializing in energy industry investments, through its affiliate GenPower Holdings (Delaware), L.P. (GenPower), and 8% by minority interests. MARTIN PEMSTEIN: Brother Allowed $23K Claim for Lost Inventory -------------------------------------------------------------- Bankruptcy Judge Robert Kwan overruled, in part, the objections filed by Martin Pemstein and Diana Pemstein to the proof of claim asserted by Martin's brother, Harold, on account of lost inventory. Harold contends that Martin is liable to him for lost inventory of his, which was either lost or stolen when his property was in Martin's custody after Martin, as landlord, recovered leased premises from Harold, as tenant at 519 South Santa Fe, Santa Ana, California. Martin had obtained a writ of possession of the premises after filing an unlawful detainer lawsuit against Harold in the Superior Court of California, County of Orange. Pursuant to the writ of possession, Martin evicted Harold from the premises, and Martin took over complete custody and control of the premises on May 29, 2008. To secure the premises, Martin physically boarded up the premises with plywood to prevent access from the adjacent property, which Harold was using as his new business premises. Access to the premises could only be obtained through Martin's express consent. Due to the eviction, Harold was unable to completely remove his personal property consisting of inventory in his business from the premises. After the eviction, Martin allowed some access to the premises to Harold and Harold's employees to retrieve Harold's business inventory from the premises on May 30 and 31, 2008, but Martin then did not allow Harold access to the premises afterwards despite repeated requests by Harold by his lawyer, Steven Cameron, to Martin by his lawyer, David Rosenbaum. According to Judge Kwan, given California Code of Civil Procedure Sec. 1993.06, Martin had a duty as a landlord with respect to Harold as an evicted tenant as to the personal property remaining on the leased premises, that is, Harold's remaining business inventory, and therefore Martin should have acted with due care by exercising reasonable care in these circumstances. "A reasonable person would have recognized the valuable business inventory remaining in the premises and considered the extended period of time that the property was left unattended and poorly secured by the plywood, or allowed Harold access to the premises to finish removing the business inventory. Martin breached this duty of care by not allowing Harold reasonable access to the premises or better securing the premises against theft," said Judge Kwan, who granted Harold a $23,730 general unsecured claim for the lost inventory in his brother's case. A copy of the Court's Oct. 17, 2012 Memorandum Decision is available at http://is.gd/VZ6Qmcfrom Leagle.com. Martin Pemstein and Diana Pemstein, based in Newport Beach, California, filed for Chapter 11 bankruptc (Bankr. C.D. Calif. Case No. 10-15552) on April 28, 2010. Judge Robert N. Kwan oversees the case. Nancy Knupfer, Esq., at Fredman Knupfer Lieberman LLP, serves as the Pemsteins' counsel. In their petition, the Pemsteins estimated $1 million to $10 million in assets, and under $1 million in debts. A list of the Company's 12 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb10-15552.pdf MERCURY PAYMENT: Moody's Affirms 'B1' CFR; Outlook Negative ----------------------------------------------------------- Moody's Investors Service affirmed Mercury Payment Systems, LLC's ("MPS") B1 Corporate Family Rating (CFR) and the B1 rating for its upsized first lien term loan facility. The company is raising $100 million of incremental term loans and plans to use the proceeds to pay a one-time dividend to its shareholders. Pro forma for the proposed dividend recapitalization MPS' financial leverage (debt to EBITDA) is expected to increase by about 1.3x to 4.0x (Moody's adjusted, based on LTM June 2012 EBITDA). Moody's affirmed MPS' B1 CFR based on the company's track record of strong revenue and operating cash flow growth, albeit on a smaller base, its good projected interest coverage, and Moody's view that while leverage is high, it is expected to decline and remain within a range consistent with the B1 CFR. Nonetheless, Moody's revised MPS' ratings outlook to negative to reflect the company's aggressive financial policies and weaker than expected free cash generation, primarily as a result of elevated capital expenditures. Moody's analyst Raj Joshi said, "MPS' risks have increased as it is increasing debt leverage and raising spending on non-core projects while it is in the midst of rolling out a new transaction processing platform over the next several quarters." Moody's has affirmed the following ratings: Issuer: Mercury Payment Systems, LLC. Corporate Family rating -- B1 Probability-of-default rating -- B2 $25 million senior secured revolving credit facility due July 2016 -- B1, LGD3 (35%, changed from 34%) $199 million ($299 million after $100 million of incremental term loan) senior secured term Loan B due July 2017 -- B1, LGD3 (35%, changed from 34%) Outlook: Outlook: Revised to Negative from Stable Ratings Rationale The B1 CFR reflects the defensibility of MPS' business model through its long standing relationships with software developers and integrated point of sales (IPOS) dealers focusing on small and medium size merchants. MPS' ability to integrate its payment processing functionality within the IPOS systems and its recurring revenue-sharing incentives to the IPOS dealers increase the stickiness of its service, which contributes to the company's low volume attrition rates, which are below the industry average. The rating incorporates Moody's expectations that the company will maintain strong revenue growth momentum through expanding merchant base while maintaining stable transaction processing margins. The B1 rating is constrained by MPS' modest scale relative to other merchant acquirers and its highly competitive merchant acquirers/payment processors industry, which includes several operators with significantly larger operating scale and strong merchant referral channels through affiliations with financial institutions. The rating also reflects MPS' aggressive financial policies and potential for increases in debt to accelerate returns to shareholders. MPS is developing an in-house platform (IHP) for processing merchant payment transactions which is expected to result in transactions processing cost savings as the company converts its merchant base to IHP in the next three years. However, the implementation of the platform, coupled with the company's plans to invest in corporate headquarters, will result in elevated levels of spending which is expected to constrain free cash flow (after tax distributions to partners) in the next 12 to 18 months. Projected free cash flow will likely be meaningfully lower than Moody's previous expectations. The negative outlook reflects MPS' weak free cash flow projected over the next 12 to 18 months, its execution risk in converting its merchant accounts to IHP, and its high leverage resulting from its shareholder-friendly financial policies. Moody's could downgrade MPS' ratings if cost overruns or challenges in converting its customers to its internal payment processing platform results in a degradation of MPS' liquidity or lower than anticipated free cash flow (after tax distributions to partners). The ratings could be downgraded if MPS' Debt-to-EBITDA leverage (Moody's adjusted) approaches 4.5x and if free cash flow is expected to remain in the low single digit percentages of total debt for an extended period of time as a result of competitive challenges, erosion in profitability or customer base, or delays in realizing the cost savings from the IHP platform. Given MPS' high leverage, limited operating scale and projected modest levels of profitability in the next 12 to 24 months, a ratings upgrade is unlikely over this period. Moody's could upgrade MPS' ratings if the company maintains conservative financial policies and demonstrates meaningful growth in revenue and free cash flow (after tax distributions to partners) over time. The principal methodology used in rating Mercury Payment Systems was Moody's Global Business and Consumer Services Industry Methodology, published in October 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. Mercury Payment Systems, LLC is headquartered in Durango, CO and provides payment processing services to small and medium-sized merchants in the U.S. and Canada. Private equity firm Silver Lake Partners owns a majority interest in the company. MERIDIAN SHOPPING: Chapter 11 Reorganization Case Dismissed ----------------------------------------------------------- The Hon. Stephen L. Johnson of the U.S. Bankruptcy Court for the Northern District Of California dismissed the Chapter 11 case of Meridian Shopping Center, LLC. As reported in the Troubled Company Reporter on June 25, 2012, the Debtor asked the Court to dismiss its bankruptcy case because its sole asset, the real property commonly known as Meridian Shopping Center in San Jose, California, was sold through a foreclosure sale on May 18, 2012. Meridian Shopping Center LLC owns and operates the shopping center Meridian Park Plaza in Milpitas, California. Meridian Shopping Center filed for Chapter 11 bankruptcy (Bankr. N.D. Calif. Case No. 12-50380) on Jan. 18, 2012. Judge Stephen L. Johnson presides over the case. The Debtor scheduled $14,000,000 in assets and $10,912,623 in liabilities. The petition was signed by John Wynn, manager. MERIDIAN SPORTS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Meridian Sports Clubs California, LLC dba Meridian Sports Clubs Meridian's Bodies in Motion Meridian's Honolulu Club Bodies in Motion 16663 Roscoe Boulevard North Hills, CA 91343 Bankruptcy Case No.: 12-19163 Chapter 11 Petition Date: October 16, 2012 Court: U.S. Bankruptcy Court Central District of California (San Fernando Valley) Judge: Alan M. Ahart Debtors' Counsel: Jeffrey W. Dulberg, Esq. PACHULSKI STANG ZIEHL & JONES LLP 10100 Santa Monica Boulevard, 13th Floor Los Angeles, CA 90067 Tel: (310) 277-6910 E-mail: jdulberg@pszjlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petitions were signed by Charles H. Grieve, II, manager. Affiliates that simultaneously filed for Chapter 11: Debtor Case No. ------ -------- Meridian Sports Club L.A., LLC 12-19165 Assets: $1,000,001 to $10,000,000 Debts: $1,000,001 to $10,000,000 Courtyard Club, Inc. 12-19166 Assets: $1,000,001 to $10,000,000 Debts: $1,000,001 to $10,000,000 A. Meridian Sports Clubs' List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of Marin Line of Credit $249,879 1450 Grant Avenue Novato, CA 94945 DEG III, LLC Rent $242,377 1132 Bishop Street, Suite 2305 Honolulu, HI 96813 Wallcon, Inc. Leasehold $233,576 3525 Hyland Avenue, Suite 250 Improvements Costa Mesa, CA 92626 HK Northridge, LLC Rent $227,389 Kilroy Realty, L.P. Rent $180,286 Sydney Johnson Rent $178,097 Great Wash Park LLC Rent $127,793 Two Peas In A Pod, LLC Rent $127,463 NAI Capital, Inc. Commissions $124,406 Carr & Pike Settlement $75,000 Coral Pacific Construction LLC Leasehold Improvements $65,251 NEC Financial Services, LLC Equipment Lease $49,864 David Barton Gym Expense Reimbursements $45,414 Sandell Flowers Rent $32,063 City of Pasadena Utilities $26,598 Debinaire Co. Trade Debt $21,439 Fore Supply Co. Trade Debt $19,294 Wolcott Architecture Interiors, Professional Services $19,126 Inc. Las Vegas Billboards, LLC Trade Debt $18,250 Marr Jones & Wang Professional Services $15,434 B. Meridian Sports Club L.A.'s List of Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Jamison Valley Holdings Settlement $73,000 3424 Wilshire Boulevard, Suite 1200 Los Angeles, CA 90010 C. Courtyard Club's List of Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ RREEF America REIT II Corp. BBBB Rent $33,603 P.O. Box 9032 Addison, TX 75001-9032 MERRILL CORP: Moody's Reviews 'Caa3' Corp. Rating for Upgrade ------------------------------------------------------------- Moody's Investors Service placed Merrill Corporation's Caa3 Corporate Family Rating ("CFR") and Ca/LD Probability of Default Rating ("PDR") on review for upgrade. Moody's also assigned a rating of B1 to Merrill Communications LLC's ("Merrill Communications") proposed $30 million first lien revolver, B3 to the proposed $455 million first lien term loan and Caa3 to the proposed $150 million second lien notes. The review reflects Moody's expectation that the transaction, if completed in accordance with the proposed terms, will significantly improve the company's liquidity position by refinancing Merrill Communications' existing debt. The company plans to use proceeds from the refinancing and existing cash to retire at par all of Merrill Communications' existing $626 million of debt, which would otherwise mature on December 22, 2012 (in the case of the $33 million first lien revolver and $374 million first lien term loan) and November 2013 (in the case of the $220 million second lien term loan). On Review for Upgrade: Issuer: Merrill Corporation Corporate Family Rating, Placed on Review for Upgrade, currently Caa3 Probability of Default Rating, Placed on Review for Upgrade, currently Ca/LD Assignments: Issuer: Merrill Communications LLC Senior Secured First Lien Revolver, Assigned a B1, LGD1 - 1% Senior Secured First Lien Term Loan, Assigned a B3, LGD3 - 35% Second Lien Notes, Assigned a Caa3, LGD5 - 83% Outlook Actions: Issuer: Merrill Corporation Outlook, Changed To Rating Under Review From Stable Rating Rationale In the review, Moody's will assess the terms and conditions of the proposed financing and their impact on Merrill's liquidity profile. If the transaction closes in accordance with the proposed terms, Moody's expects to upgrade the CFR to Caa1 with a stable outlook. The Caa1 CFR would reflect the company's high financial leverage (approximately 6.0 times LTM 7/31/12 debt/EBITDA pro forma for the transaction and incorporating Moody's standard adjustments) and exposure to cyclical changes in capital markets activity, while considering Merrill's established positions in its key markets including virtual data room and regulatory filings services. The B1, B3 and Caa3 ratings on the proposed first lien super- priority revolver, first lien term loan and second lien notes, respectively, assume that Merrill's CFR and PDR will be upgraded to Caa1 if the refinancing closes in accordance with the proposed terms. The proposed first lien revolver and term loan due 2017 will be secured by a first lien on substantially all of the assets of Merrill, Merrill Communications and its domestic operating subsidiaries, and 66% of voting and 100% of non-voting equity interests of Merrill Communications' foreign operating subsidiaries. The revolver and term loan will be guaranteed by Merrill and substantially all of Merrill Communications' current and future domestic operating subsidiaries. The revolver will have a super-priority claim with respect to the application of proceeds of all of the collateral and guarantees. The proposed second lien notes due 2018 will have the same borrowers and guarantees as the first lien facility, and a second priority claim on the same collateral. The notes will also include warrants to purchase, without any additional consideration, 10% of Merrill's equity. The existing Caa3 CFR and Ca/LD PDR factor in some potential that the company, which operates under a forbearance agreement, would be unable to refinance by December 22, 2012 and would need to restructure its debt either out-of-court or through a bankruptcy process. The CFR and PDR are under review for upgrade based on the proposed refinancing transaction, as well as the recent improvement in the company's operating performance. The rating would be upgraded if the transaction is completed according to the proposed terms. The rating would remain unchanged or potentially lowered if the proposed refinancing does not occur and the company is unable to address its refinancing needs in a timely manner. The principal methodology used in rating Merrill Corporation was the Global Business & Consumer Service Industry Rating Methodology published in October 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. Merrill Corporation provides document and data management services, litigation support, branded communication programs, fulfillment, imaging, and printing services to the financial, insurance, legal, life sciences and other market segments. The company generated $788 million of revenue for the twelve months ended October 31, 2011, and, based on preliminary financial statements, approximately $801 million of revenue for the twelve months ended July 31, 2012. MERRILL CORP: S&P Puts 'CCC-' CCR on Watch on Debt Refinancing -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'CCC-' corporate credit rating on St. Paul, Minn.-based Merrill Corp. on CreditWatch with positive implications. "At the same time, we assigned the proposed $30 million revolving credit facility due 2017 a preliminary 'B+' issue-level rating with a recovery rating of '1', indicating our expectation for very high (90% to 100%) recovery in the event of a payment default. We also assigned the $455 million first-lien term loan due 2017 our preliminary 'B-' issue-level rating with a recovery rating of '3' (50% to 70% recovery expectation), and assigned the $150 million senior secured second-lien notes due 2018 our preliminary 'CCC' issue-level rating with a recovery rating of '6' (0% to 10% recovery expectation)," S&P said. "The CreditWatch placement is based on the announcement that the company plans to refinance its revolving credit facility due 2012, $374 million first-lien term loan due December 2012, and $219 second-lien notes due November 2013. In concluding our CreditWatch review, we will evaluate the final credit agreement terms and conditions compared to our expectations," S&P said. "We could raise the corporate credit rating to 'B-' if Merrill Corp. completes the proposed refinancing transaction at the expected pricing levels with a covenant cushion of at least 20%," said Standard & Poor's credit analyst Chris Valentine. "Any changes in the terms and conditions or signs that free cash flow would become breakeven would likely result in us raising our corporate credit rating by two notches to 'CCC+'. We expect to resolve our CreditWatch listing in November upon closing of the refinancing transaction. Despite an improvement in the maturity profile from the transaction, we believe the company will continue to have high debt leverage, weak interest coverage, and limited liquidity given the high interest costs associated with the refinancing," S&P said. "In concluding our CreditWatch review, we will evaluate the final credit agreement terms and conditions compared to our expectations. We could raise the rating to 'B-' if Merrill Corp. completes the proposed refinancing transaction at the expected pricing levels with a covenant cushion of at least 20%. Any changes in the terms and conditions would likely result in us raising our corporate credit rating by two notches to 'CCC+'. Conversely, if the company is unable to refinance the facility or extend debt maturities, we would likely lower the rating given the December 2012 debt maturities and short window to attempt another deal," S&P said. MID-MOUNTAIN MACHINERY: Court Confirms 2nd Amended Plan ------------------------------------------------------- Bankruptcy Judge Patricia C. Williams confirmed the Second Amended And Modified Plan Of Reorganization filed by Mid-Mountain Machinery, Inc., according to an Oct. 18 Findings of Fact and Conclusions of Law available at http://is.gd/SkuQ01from Leagle.com. The Debtor filed the Second Amended And Modified Plan on Oct. 5. On the same day, the Debtor filed a Stipulation On Confirmation Of Second Amended Plan Of Reorganization executed by Mid-Mountain, CNH, Banner Bank, Mark V. Blutcher, and Douglas D. Helton that set forth the treatment for CNH and Banner Bank under the Plan. In the Stipulation, Banner Bank and CNH each agreed to (1) cast an Amended Ballot accepting the Plan, (2) stipulate to the entry of the order confirming the Plan, and (3) waive any right of appeal. The Liquidation Analysis prepared by the Debtor's advisors provides that creditors will receive a greater distribution under the Plan than would be received if the assets of the Debtor were liquidated by a Chapter 7 Trustee or by any other means. The Plan provides for the financial reorganization of the Debtor. Confirmation of the Plan is not likely to be followed by the need for further financial reorganization of the Debtor. Mid-Mountain Machinery, Inc., based in Spokane, Washington, filed for Chapter 11 bankruptcy (Bankr. E.D. Wash. Case No. 11-02930) on June 13, 2011. Judge Patricia C. Williams oversees the case. Barry W. Davidson, Esq., at Davidson Backman Medeiros PLLC, serves as the Debtor's counsel. In its petition, the Debtor estimated under $10 million in both assets and debts. The petition was signed by Mark V. Blutcher, president. A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/waeb11-02930.pdf MOSS FAMILY: Bankruptcy Court Approves Beachwalk Realty as Broker ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Indiana authorized Moss Family Limited Partnership and Beachwalk. L.P. to employ Beachwalk Realty, L.L.C. as broker. Beachwalk Realty, as broker, will sell properties located at: i) 112 Cottage Camp, Michigan City, Indiana; and ii) 102 Cottage Camp, Michigan City, Indiana. The broker is an affiliate of the Debtors; however, the broker represents that it neither represents nor holds any interest adverse to the Debtor's estate. About Moss Family Limited Partnership Moss Family Limited Partnership and Beachwalk, L.P., filed Chapter 11 petitions (Bankr. N.D. Ind. Case Nos. 12-32540 and 12-32541) on July 17. Judge Harry C. Dees, Jr., presides over the case. Daniel Freeland, Esq., at Daniel L. Freeland & Associates, P.C., represents the Debtors as counsel. Moss Family Limited Partnership disclosed $6,609,576 in assets and $6,299,851 in liabilities as of the Chapter 11 filing. The petition was signed by Tom Moss, partner. MOSS FAMILY: Taps Patrick Kepchar of PK Financial as Accountant --------------------------------------------------------------- Moss Family Limited Partnership and Beachwalk. L.P., ask the U.S. Bankruptcy Court for the Northern District of Indiana for permission to employ Patrick Kepchar of PK Financial as accountant. Mr. Kepchar will, among other things: -- prepare any and all necessary tax returns and other financial filings; -- prepare cash flow projections and assistance with workout options; and -- perform all accounting services as are in the interest of th Debtors. The Debtor agreed to compensate the Mr. Kepchar according to these hourly rates: Accounting services $85 Meeting with client and/or attorney and related preparation and travel $105 Testimony, meetings with creditors and third parties and related preparation and travel $135 Mr. Kepchar will be compensated out of the assets of the estate. About Moss Family Limited Partnership Moss Family Limited Partnership and Beachwalk, L.P., filed Chapter 11 petitions (Bankr. N.D. Ind. Case Nos. 12-32540 and 12-32541) on July 17, 2012. Judge Harry C. Dees, Jr., presides over the case. Daniel Freeland, Esq., at Daniel L. Freeland & Associates, P.C., represents the Debtors as counsel. Moss Family Limited Partnership disclosed $6,609,576 in assets and $6,299,851 in liabilities as of the Chapter 11 filing. The petition was signed by Tom Moss, partner. MOTORS LIQUIDATION: Files GUC Trust Report as of Sept. 30 --------------------------------------------------------- Wilmington Trust Company, acting solely in its capacity as trust administrator and trustee of the Motors Liquidation Company GUC Trust filed a GUC Trust Report required by Section 6.2(c) of the GUC Trust Agreement together with the Budget Variance Report, each for the quarter ended Sept. 30, 2012. Pursuant to the Amended and Restated Motors Liquidation Company GUC Trust Agreement dated as of June 11, 2012, as amended, Wilmington Trust Company, acting solely in its capacity as trust administrator and trustee of the Motors Liquidation Company GUC Trust, is required to file certain GUC Trust Reports with the Bankruptcy Court for the Southern District of New York. In addition, pursuant to that certain Bankruptcy Court Order Authorizing the GUC Trust Administrator to Liquidate New GM Securities for the Purpose of Funding Fees, Costs and Expenses of the GUC Trust and the Avoidance Action Trust, dated March 8, 2012, the GUC Trust Administrator is required to file certain quarterly variance reports. During the quarter ended Sept. 30, 2012, additional Reserved Securities consisting of 35,934 additional shares of New GM Common Stock and 32,668 additional warrants of each class of warrants were set aside to fund projected GUC Trust Administrative Costs and GUC Trust Reporting Costs, primarily as a result of increases to reserves for expected costs of liquidation. In addition, as a result of the GUC Trust Administrator's quarterly reevaluation of the Taxes on Distribution Reserve for the quarter ended Sept. 30, 2012, the GUC Trust Administrator determined that it was necessary to include 231,663 additional shares of New GM Common Stock and 210,602 additional warrants of each class of warrants in the Taxes on Distribution Reserve. This increase was partially related to a change in the calculation of securities to be set aside. The Second Revised Calculation uses the lowest market price for the securities since Dec. 15, 2011 (the date the New GM Securities were transferred to the GUC Trust from MLC) in converting the potential taxes on future gains from the disposition of New GM Securities from a dollar value into the number of New GM Securities comprising the Taxes on Distribution Reserve. This differs from the First Revised Calculation which used the market price for the securities at quarter end for such conversion. As a result of those increases, as of Sept. 30, 2012, the aggregate amounts of Reserved Securities consisted of 5,662,868 shares of New GM Common Stock and 5,148,062 warrants of each class of warrants, which reflects both the Taxes on Distribution Reserve as well as New GM Securities reserved for the purposes of funding GUC Trust Administrative Costs and GUC Trust Reporting Costs projected for 2013 and 2014. In addition, the Motors Liquidation Company GUC Trust said that no distribution in respect of its Units is anticipated for the fiscal quarter ended Sept. 30, 2012. A copy of the GUC Trust Report is available for free at: http://is.gd/GNesEC About Motors Liquidation General Motors Corporation and three of its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 09-50026) on June 1, 2009. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Garden City Group is the claims and notice agent of the Debtors. The U.S. Trustee appointed an Official Committee of Unsecured Creditors and a separate Official Committee of Unsecured Creditors Holding Asbestos-Related Claims. Lawyers at Kramer Levin Naftalis & Frankel LLP served as bankruptcy counsel to the Creditors Committee. Attorneys at Butzel Long served as counsel on supplier contract matters. FTI Consulting Inc. served as financial advisors to the Creditors Committee. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represented the Asbestos Committee. Legal Analysis Systems, Inc., served as asbestos valuation analyst. The Bankruptcy Court entered an order confirming the Debtors' Second Amended Joint Chapter 11 Plan on March 29, 2011. The Plan was declared effect on March 31. On Dec. 15, 2011, Motors Liquidation Company was dissolved. On the Dissolution Date, pursuant to the Plan and the Motors Liquidation Company GUC Trust Agreement, dated March 30, 2011, between the parties thereto, the trust administrator and trustee -- GUC Trust Administrator -- of the Motors Liquidation Company GUC Trust, assumed responsibility for the affairs of and certain claims against MLC and its debtor subsidiaries that were not concluded prior to the Dissolution Date. MUSCLEPHARM CORP: James Greenwell Named to Board of Directors ------------------------------------------------------------- The Board of Directors of MusclePharm Corporation appointed James J. Greenwell, age 53, to the Board. Mr. Greenwell was appointed to fill a vacancy created by the resignation of Mark E. Groussman from the Board, effective Oct. 18, 2012. Mr. Greenwell was also appointed to serve on the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee of the Board. Mr. Groussman's resignation was not the result of any disagreement with the Company, known to an executive officer of the Company, on any matter relating to the Company's operations, policies or practices. Since 2000, Mr. Greenwell has been the Chief Executive Officer of Datria Systems Inc., a speech recognition application software company. He has also served as the Datria Systems' Chairman since 2002. In prior employment, he served as a technology executive in a number of private and public companies. He has served on the board of directors of the Cherry Creek School Foundation since September 2010. He was a founding member of Friends of Denver Fire and served on its board of directors from 2007 through 2010. Mr. Greenwell served on the board of directors of the Denver Chapter of the American Heart Association from 2002 through 2008 and was Chairman of the board in 2007. He also served on the board of trustees of the Bonfils Blood Center Foundation from 1999 through 2003. Mr. Greenwell earned a BS from the College of Business at Michigan State University and an MBA degree from Saint Mary's College. The Company also entered into a standard form of indemnification agreement with Mr. Greenwell. The Indemnification Agreement generally provides that the Company will, to the fullest extent permitted by applicable law, indemnify Mr. Greenwell in accordance with and subject to the terms of the Indemnification Agreement. In addition, the Indemnification Agreement provides for the advancement of expenses incurred by Mr. Greenwell in connection with any covered proceeding to the fullest extent permitted by applicable law. The rights provided by the Indemnification Agreement are in addition to any other rights to indemnification or advancement of expenses to which Mr. Greenwell may be entitled under applicable law, the Company's articles of incorporation or bylaws, or otherwise. On Oct. 15, 2012, the Board adopted compensation for its independent directors, including Mr. Greenwell. Independent directors of the Company will receive an annual cash retainer of $20,000; a meeting fee of $1,000 per meeting attended for all in- person and telephonic meetings of the Board subject to a $6,000 per-year cap on meeting fees; an initial stock grant of 300,000 shares of restricted common stock of the Company; an annual common stock grant aggregating $25,000 of value, payable at the end of each calendar quarter in common stock of the Company based upon the closing price of the common stock in its primary trading market on the date of grant. No fees will be paid for membership on Board committees except that the chairman of the Audit Committee will receive a meeting fee of $1,000 per meeting attended for all in-person and telephonic meetings of the Audit Committee. 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. NESBITT PORTLAND: Alvarez & Marsal Approved as Financial Advisors ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California authorized Nesbitt Portland Property LLC, et al., to employ Alvarez & Marsal North America, LLC as financial advisors nunc pro tunc as of Aug. 21, 2012. U.S. Bank National Association -- the trustee and successor in interest to Bank of America, N.A., as trustee for Registered Holders of GS Mortgage Securities Corporation II, Commercial Mortgage Passthrough Certificates, Series 2006-GG6, acting by and through Torchlight Loan Services, LLC, as special servicer -- has objected to the request. According to papers filed by the Debtors in Court on Aug. 30, A&M will provide both restructuring advisory and valuation assistance to the Debtors, necessary in the preparation of a formal plan of reorganization. The Debtors propose to pay Alvarez & Marsal on an hourly basis at these rates: Managing director $625 - $850 Director $450 - $625 Associate $300 - $450 Analyst $225 - $300 The Debtors will also reimburse the firm's out-of-pocket expenses, and provide indemnification to the firm's professionals. Alvarez & Marsal managing director Steven Varner attests that the firm does not hold any interest adverse to the Debtors' estates and is a "disinterested person" as defined in 11 U.S.C. Sec. 101(14). About Nesbitt Portland Property et al. Windsor Capital Group Inc. CEO Patrick M. Nesbitt sent hotel- companies to Chapter 11 bankruptcy to stop a receiver named by U.S. Bank National Association from taking over eight Embassy Suites hotels. The eight hotels were pledged by the Debtors as collateral for the loans with U.S. Bank. According to http://www.wcghotels.com/Santa Monica-based Windsor owns and/or operates 23 branded hotels in 11 states across the U.S. Windsor Capital is the largest private owner and operator of Embassy Suites hotels. In the case U.S. Bank vs. Nesbitt Bellevue Property LLC, et al. (S.D.N.Y. 12 Civ. 423), U.S. Bank obtained approval from the district judge in June to name Alan Tantleff of FTI Consulting, Inc., as receiver for: * Embassy Suites Colorado Springs in Colorado; * Embassy Suites Denver Southeast in Colorado; * Embassy Suites Cincinnati - Northeast in Blue Ash, Ohio; * Embassy Suites Portland - Washington Square in Tigard, Oregon; * Embassy Suites Detroit - Livornia/Novi in Michigan; * Embassy Suites El Paso in Texas; * Embassy Suites Seattle - North/Lynwood in Washington; and * Embassy Suites Seattle - Bellevue in Washington The receiver obtained district court permission to engage Crescent Hotels and Resorts LLC to manage the eight hotels. But before Mr. Adam could take physical possession of the properties and take control of the Hotels, the eight borrowers filed Chapter 11 petitions (Bankr. C.D. Calif. Lead Case No. 12-12883) on July 31, 2012, in Santa Barbara, California. The debtor-entities are Nesbitt Portland Property LLC; Nesbitt Bellevue Property LLC; Nesbitt El Paso Property, L.P.; Nesbitt Denver Property LLC; Nesbitt Lynnwood Property LLC; Nesbitt Colorado Springs Property LLC; Nesbitt Livonia Property LLC; and Nesbitt Blue Ash Property LLC. Bankruptcy Judge Robin Riblet presides over the cases. The Debtors are represented in the Chapter 11 case by attorneys at Susi & Gura, PC, and Griffith & Thornburgh LLP. Alvarez & Marsal North American, LLC, serves as financial advisors. Attorneys at Kilpatrick Townsend & Stockton LLP represented the Debtors in the receivership case. U.S. Bank National Association, as Trustee and Successor in Interest to Bank of America, N.A., as Trustee for Registered Holders of GS Mortgage Securities Corporation II, Commercial Mortgage Passthrough Certificates, Series 2006-GG6, acting by and through Torchlight Loan Services, LLC, as special servicer, are represented in the case by David Weinstein, Esq., and Lawrence P. Gottesman, Esq., at Bryan Cave LLP. On Sept. 5, 2012, the Debtors filed with the Court their schedules of assets and liabilities. Nesbitt Portland scheduled $29.4 million in assets and $192.3 million in liabilities. Nesbitt Portland's hotel property is valued at $27.19 million, and secures a $191.9 million debt to U.S. Bank. NEWPAGE CORP: Plan Outline Hearing Scheduled for Nov. 6 ------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware will convene a hearing on Nov. 6, 2012, at 11 a.m., to consider the adequacy of the Disclosure Statement explaining NewPage Corporation's First Amended Joint Chapter 11 Plan. Objections, if any, are due by Oct. 30. As reported in the Troubled Company Reporter on Oct. 10, 2012, the Debtor filed a revised reorganization plan along with an explanatory disclosure statement telling first-lien creditors they will have a 56.6% recovery by receiving all of the new stock in the paper maker in exchange for debt. According to the report, the plan, filed after business hours on Oct. 5, was the product of a settlement cobbled together by a bankruptcy judge serving as mediator. The settlement was disclosed Oct. 1. There will be an Oct. 31 hearing to approve the disclosure statement. Second-lien noteholders and some unsecured creditors will split $30 million in cash and the first $50 million collected by a litigation trust. The disclosure statement tells holders of $1.06 billion in second-lien debt that their recovery amounts to 6%. The report related that depending on which election some creditors make, the recovery by holders of $29.3 million in unsecured claims is 5.3%, according to the disclosure statement. Trade suppliers who agree to provide credit in the future will receive 15% on their claims over two years. For holders of $207.8 million in senior subordinated debt, the predicted recovery is 0.2%, according to the disclosure statement. After the initial $50 million from the trust, additional distributions will be shared by the first- and second-lien noteholders and some unsecured creditors. NewPage will fund the litigation trust with $40 million in cash and specified lawsuit recoveries. NewPage will also loan the trust $5 million for administrative expenses. The official creditors' committee supports the newly negotiated plan. The report noted that NewPage filed a Chapter 11 plan in August that dissatisfied both secured and unsecured creditors. The company said unsecured creditors were "hopelessly out of the money," with no theory that would bring them a dividend under a Chapter 11 plan. The settlement compromised allegations by the official creditor's committee that that the lenders financed an acquisition in 2007 and a refinancing two years later that included fraudulent transfers. The Bloomberg report disclosed that NewPage, 80%-owned by Cerberus Capital Management LP, disclosed assets of $3.4 billion and debt totaling $4.2 billion in the Chapter 11 reorganization begun in September 2011. Liabilities included $232 million on a revolving credit, plus $1.77 billion on 11.375% senior secured first-lien notes. Second-lien obligations include $802 million in 10% secured notes and $225 million in floating-rate notes. In addition to $200 million in 12% senior unsecured notes, $498 million is owing on two issues of floating-rate pay-in-kind notes. About NewPage Corp Headquartered in Miamisburg, Ohio, NewPage Corporation was the leading producer of printing and specialty papers in North America, based on production capacity, with $3.6 billion in net sales for the year ended Dec. 31, 2010. NewPage owns paper mills in Kentucky, Maine, Maryland, Michigan, Minnesota, Wisconsin and Nova Scotia, Canada. NewPage Group, NewPage Holding, NewPage, and certain of their U.S. subsidiaries commenced Chapter 11 voluntary cases (Bankr. D. Del. Case Nos. 11-12804 through 11-12817) on Sept. 7, 2011. Its subsidiary, Consolidated Water Power Company, is not a part of the Chapter 11 proceedings. Separately, on Sept. 6, 2011, its Canadian subsidiary, NewPage Port Hawkesbury Corp., brought a motion before the Supreme Court of Nova Scotia to commence proceedings to seek creditor protection under the Companies' Creditors Arrangement Act of Canada. NPPH is under the jurisdiction of the Canadian court and the court- appointed Monitor, Ernst & Young in the CCAA Proceedings. Initial orders were issued by the Supreme Court of Nova Scotia on Sept. 9, 2011 commencing the CCAA Proceedings and approving a settlement and transition agreement transferring certain current assets to NewPage against a settlement payment of $25 million and in exchange for being relieved of all liability associated with NPPH. On Sept. 16, 2011, production ceased at NPPH. NewPage originally engaged Dewey & LeBoeuf LLP as general bankruptcy counsel. In May 2012, Dewey dissolved and commenced its own Chapter 11 case. Dewey's restructuring group led by Martin J. Bienenstock, Esq., Judy G.Z. Liu, Esq., and Philip M. Abelson, Esq., moved to Proskauer Rose LLP. In June, NewPage sought to hire Proskauer as replacement counsel. NewPage is also represented by Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, as co-counsel. Lazard Freres & Co. LLC is the investment banker, and FTI Consulting Inc. is the financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. In its balance sheet, NewPage disclosed $3.4 billion in assets and $4.2 billion in total liabilities as of June 30, 2011. The Official Committee of Unsecured Creditors selected Paul Hastings LLP as its bankruptcy counsel and Young Conaway Stargatt & Taylor, LLP to act as its Delaware and conflicts counsel. NIP COMPANY: Brenda T. Cubbage Serves as New Lead Bankr. Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Texas approved Brenda T. Cubbage of Spencer Crain Cubbage Healy & McNamara pllc as new lead counsel in the Chapter 11 case of The Nip Company and Retirement Capital Group, Inc. Ms. Cubbage will replace Thomas H. Grace who is no longer employed with Spencer Crain. About The NIP Company The NIP Company -- aka NIP, National Insurance Partners, Inc., or NIP-RCG, Inc. -- filed a bare-bones Chapter 11 petition in its hometown in Austin, Texas (Bankr. W.D. Tex. Case No. 12-10393) on Feb. 28, 2012. Its affiliate, San Diego, California-based Retirement Capital Group, Inc., filed for Chapter 11 protection (Bankr. W.D. Tex. Case No. 12-10396) on the same day. The NIP Company disclosed, in an amended schedules, $5,002,426 in assets and $6,234,108 in liabilities and RCG disclosed $9,710,368 in assets and $2,113,905 in liabilities as of the Chapter 11 filing. Judge H. Christopher Mott presides over the cases. The Debtor sought and obtained approval to employ Thomas H. Grace, Esq., and the law firm of Spencer Crain Cubbage Healy & McNamara PLLC as counsel. Steven A. Felsenthal, Esq. , Chapter 11 trustee is represented by Stutzman, Bromberg, Esserman & Plifka. The trustee tapped Lain, Faulkner & Co., P.C., as accountants. ONEBEACON US: Moody's Affirms '(P)Ba1' Preferred Stock Rating ------------------------------------------------------------- Moody's Investors Service has affirmed the A2 insurance financial strength (IFS) ratings of the OneBeacon Insurance Group inter- company pool (OneBeacon Pool) and Baa2 senior debt ratings of its intermediate parent, OneBeacon U.S. Holdings, Inc. (OneBeacon U.S.) following the company's announcement that it has entered into a definitive agreement to sell its runoff business to Armour Group Holdings Limited (Armour). The transaction is expected to close during the second half of 2013 and is subject to regulatory approvals. At the close, OneBeacon will transfer to Armour designated legal entities within the OneBeacon group (the "run-off entities"), containing the assets, liabilities (including gross and ceded reserves), and capital supporting the run-off business. The rating outlook for OneBeacon's ongoing pooled legal entities remains stable; however, Moody's has changed the outlook of the run-off entities (subsidiaries listed below) to negative from stable. OneBeacon U.S. is an indirect wholly-owned subsidiary of OneBeacon Insurance Group, Ltd (NYSE: OB), which, in turn, is an indirect 75%-owned subsidiary of White Mountains Insurance Group, Ltd. (NYSE: WTM), with the remaining 25% shares publicly owned. Principal and interest on OneBeacon U.S.'s outstanding senior notes are guaranteed by WTM. Ratings Rationale "The negative outlook of the run-off entities reflects our expectation, at close of the transaction, of a weakened credit profile including a long tail run-off casualty business substantially comprising asbestos and environmental (A&E) reserves, expected weaker capitalization on a risk-adjusted basis, and severance of support from the OneBeacon group" said Pano Karambelas, lead analyst for OneBeacon. The company expects to recognize a $101 million after-tax GAAP charge on the disposition of its run-off business, which is meaningfully sized at approximately 9% of OneBeacon's shareholders' equity at June 30, 2012. However, Karambelas added, "the stable outlook on the remaining members of the OneBeacon pool reflects our view that the planned disposition of the run-off business removes a significant source of potential adverse loss development (reserves totaling approximately $2.2 billion on a gross basis) while allowing the company to focus its commitments and capital to its specialty lines strategy." ONEBEACON INSURANCE GROUP The A2 IFS rating of OneBeacon's inter-company pool members reflects the company's strong underwriting capabilities and good profitability in several low-to-moderate hazard niche specialty property/casualty segments, strong producer relationships, and good capitalization. Factors offsetting these strengths include meaningful though significantly reduced financial leverage, the company's track record as an active manager of capital, and execution risk associated with entry into new specialty segments. Factors that could lead to an upgrade in OneBeacon's ratings include: -- financial leverage consistently below 20%; -- maintenance of appropriate level of risk capitalization with gross underwriting leverage less than 3.0x; and -- earnings coverage consistently above 6x. Factors that could lead to a downgrade in OneBeacon's ratings include: -- deterioration in reserve position, equity capital declines by more than 10% as a result of operating losses; -- financial leverage consistently above 30%; or -- earnings coverage consistently below 4x. In a separate transaction, OneBeacon announced its plan to sell OneBeacon pool member Essentia Insurance Company to Markel Corporation. The proposed transaction is expected to close in 1Q13 subject to regulatory approvals. The following ratings were affirmed with a stable outlook: Altantic Specialty Insurance Company -- insurance financial strength at A2; Essentia Insurance Company -- insurance financial strength at A2; Homeland Insurance Company of New York -- insurance financial strength at A2; OneBeacon U.S. Holdings, Inc. -- senior unsecured debt at Baa2; OneBeacon U.S. Holdings, Inc. -- provisional senior unsecured debt at (P)Baa2; provisional subordinated debt at (P)Baa3; provisional junior subordinated debt at (P)Baa3; provisional preferred stock at (P)Ba1; OneBeacon U.S. Holdings Trust I, II, III -- provisional trust preferred securities at (P)Baa3. The following ratings were affirmed and the outlook was changed to negative from stable: The Camden Fire Insurance Association -- insurance financial strength at A2; The Northern Assurance Company of America -- insurance financial strength at A2; OneBeacon America Insurance Company -- insurance financial strength at A2; OneBeacon Insurance Company -- insurance financial strength at A2; OneBeacon Midwest Insurance Company -- insurance financial strength at A2; Potomac Insurance Company -- insurance financial strength at A2. The principal methodology used in this rating was Moody's Global Rating Methodology for Property and Casualty Insurers published in May 2010. OneBeacon Insurance Group, Ltd. is a Bermuda-domiciled insurance holding company. For 2011, OneBeacon reported total premiums earned of approximately $1.0 billion and net income of $55 million. GAAP shareholders' equity was $1.15 billion at 6/30/12, compared to $1.11 billion at 12/31/11. White Mountains Insurance Group, Ltd. is a Bermuda-domiciled insurance holding company. For 2011, WTM reported net premium volume of nearly $2.0 billion and net income of $809 million. WTM's consolidated shareholders' equity was $4.3 billion at June 30, 2012. PABELLON DE LA VICTORIA: Case Summary & 18 Unsecured Creditors -------------------------------------------------------------- Debtor: Pabellon De La Victoria Movimiento Iglesias De Fe (Mi Fe) Inc. P.O. Box 1093 Hormigueros, PR 00660 Bankruptcy Case No.: 12-08223 Chapter 11 Petition Date: October 16, 2012 Court: U.S. Bankruptcy Court District of Puerto Rico (Ponce) Debtor's Counsel: Gloria M. Justiniano Irizarry, Esq. JUSTINIANO'S LAW OFFICE Ensanche Martinez 8 Dr. A Ramirez Silva Mayaguez, PR 00680-4714 Tel: (787) 831-2577 Fax: (787) 805-7350 E-mail: gloriae55amg@yahoo.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Evelyn Dominguez Ramos, president. Debtor's List of Its 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Banco Popular De Puerto Rico -- $10,870,870 P.O. Box 10700 San Juan, PR 00936 Banco Popular De Puerto Rico -- $1,875,000 P.O. Box 10700 San Juan, PR 00936 Banco Popular De Puerto Rico -- $485,724 P.O. Box 10700 San Juan, PR 00936 Banco Popular De Puerto Rico -- $355,457 P.O. Box 10700 San Juan, PR 00936 Banco Popular De Puerto Rico -- $231,699 Banco Popular De Puerto Rico -- $165,961 Municipality Of Hormigueros Business Debt $99,770 Banco Popular De Puerto Rico -- $21,700 C.I.T. Group Business Debt $15,568 Pro Tech Services -- $10,980 IRS -- $3,584 Xerox Business Debt $2,900 State Insurance Fund -- $1,779 La Cadena Del Milagro -- $1,774 PRTC Business Debt $1,650 Carlos Rodriguez Incles -- $1,000 Contractor Cash & Carry Business Debt $635 Renacer 106.1 FM Business Debt $282 PAR PHARMACEUTICALS: S&P Assigns 'B+' Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services assigned Woodcliff Lake, N.J.-based pharmaceutical company Par Pharmaceuticals Cos. Inc. its 'B+' corporate credit rating. The rating outlook is stable. "At the same time, we assigned the company's senior secured credit facility, which consists of a $1.055 billion term loan B and a $150 million revolving credit facility (undrawn), our 'B+' issue- level rating with a recovery rating of '3', indicating our expectation for meaningful (50% to 70%) recovery for lenders in the event of payment default," S&P said. "We also assigned the company's $490 million senior unsecured notes our 'B-' issue-level rating with a recovery rating of '6', indicating our expectation for negligible (0% to 10%) recovery in the event of payment default," S&P said. "The rating on Par reflects our assessment that the company has a 'weak' business profile because of its position as the fifth largest generic pharmaceutical company and its lack of scale compared with other larger generic companies," said Standard & Poor's credit analyst Michael Berrian. "We also believe that Par has an 'aggressive' financial risk profile. Despite pro forma leverage of 5.3x as of June 30, 2012, we believe EBITDA growth and the use of some free cash flow for debt reduction will bring leverage to less than 5x over the next year. Par is a manufacturer and marketer of a broad portfolio of generic drugs," S&P said. PATRIOT COAL: Notices of Transfers of Claims Made on Oct. 5 and 8 ----------------------------------------------------------------- Notices of transfers of claims were made last week in the Chapter 11 cases of Patriot Coal Corporation, et al., to wit: A. Debtor Apogee Coal Company LLC Transferee Tannor Partners Credit Fund, LP Transferor Philippi-Hagenbuch, Inc. Scheduled Amount of Claim $32,748.20 Claim # Not Disclosed Transfer Date Oct. 5, 2012 Docket Entry 1385 B. Black Stallion Coal Company, LLC Transferee Sierra Liquidity Fund, LLC Transferor Johnson Industries, Inc. Scheduled Amount of Claim $12,222.34 Claim # Not Disclosed Transfer Date Oct. 8, 2012 Docket Entry 1394 C. Black Stallion Coal Company, LLC Transferee Sierra Liquidity Fund, LLC Transferor Johnson Industries, Inc. Scheduled Amount of Claim $12,222.34 Claim # 399 Transfer Date Oct. 8, 2012 Docket Entry 1395 About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The case has been assigned to Judge Shelley C. Chapman. The U.S. Trustee appointed a seven-member creditors committee. PATRIOT COAL: Wants Stay Lifted to Allow Payment of Defense Costs ----------------------------------------------------------------- Patriot Coal Corporation, et al., ask the U.S. Bankruptcy Court for the Southern District of New York to enter an order modifying the automatic stay, to the extent it applies, to allow XL Specialty Insurance Company and Ace American Insurance Company to advance Defense Expenses of former CEO Richard M. Whiting and former CFO Mark N. Schroeder (now SVP for Financial Planning of Patriot) and to any future covered individuals who might be named as defendants in related or similar class actions under the XL Policy and the Ace Excess Policy. On Oct. 31 2011, XL Specialty Insurance Company issued to Patriot Management Liability and Company Reimbursement Insurance Policy No. ELU123382-11 for the period Oct. 31, 2011, to Oct. 31, 2012. Subject to all of its terms and conditions, the XL Policy potentially affords coverage up to a maximum aggregate limit of liability of $15,000,000, including Defense Expenses. The XL Policy contains three Insuring Agreements. First, under Insuring Agreement A, coverage is provided to Insured Persons for Loss resulting from a Claim if such Loss is not indemnified by Patriot. Insuring Agreement B provides coverage to Patriot to the extent it indemnifies the Insured Persons for covered Loss in connection with Claims made against Insured Persons. Insuring Agreement C provides coverage to Patriot for Company Loss resulting from any Securities Claim made against Patriot. Prior to the Petition Date, Ace American Insurance Company issued to Patriot CODA Premier Directors and Officers Liability Excess DIC Policy No. DOX G23652936 005 for the period Oct. 31, 2011, to Oct. 31, 2012. Subject to all of its terms and conditions, the Excess Policy potentially affords coverage up to a maximum aggregate limit of liability of $10,000,000. The Excess Policy provides that Ace will cover Defense Costs for covered individuals to the extent the XL Policy does not provide coverage. Expinoza and Rogers Class Actions On Sept. 21, 2012, Ernesto Espinoza filed a putative class action complaint on behalf of himself and all others similarly situated in the United States District Court for the Eastern District of Missouri. The Espinoza Complaint named Richard M. Whiting and Mark N. Schroeder as defendants. The Espinoza Complaint asserts claims against the Defendants under Section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. Section 78a et seq. (the "Exchange Act"), and SEC Rule 10b-5, codified at 17 C.F.R. 240.10b-5. The Espinoza Complaint also brings claims against Mr. Whiting under Section 20(a) of the Exchange Act. On Oct. 9, 2012, Furman Jerry Rogers III filed a putative class action complaint on behalf of himself and all others similarly situated in the United States District Court for the Eastern District of Missouri. The Rogers Complaint asserts the same causes of action against the same Defendants as the Espinoza Complaint. About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The case has been assigned to Judge Shelley C. Chapman. The U.S. Trustee appointed a seven-member creditors committee. PATRIOT COAL: Wants Plan Filing Period Extended Until May 5 ----------------------------------------------------------- Patriot Coal Corporation, et al., ask the U.S. Bankruptcy Court for the Southern District of New York to extend the Debtors' exclusive periods within which to file and solicit acceptances of a plan or reorganization by 180 days, from Nov. 6, 2012, and Jan. 5, 2013, respectively, to May 5, 2013, and July 4, 2013, respectively, citing, among others, the existence of certain unresolved contingencies, the resolution of which will affect the Debtors' ability to propose a confirmable plan of reorganization. About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The case has been assigned to Judge Shelley C. Chapman. The U.S. Trustee appointed a seven-member creditors committee. PATRIOT COAL: Fifth Third Agrees to Challenge Deadline Extension ---------------------------------------------------------------- On Oct. 18, 2012, the Official Committee of Unsecured Creditors of Patriot Coal Corporation, et al., and Fifth Third Bank as Administrator and LC Bank stipulated to extend the challenge deadline pursuant to the Aug. 3, 2012 Final DIP Order approving Patriot's $802 million debtor-in-possession financing. Subject to and qualified by the terms of the Extension Stipulation, Fifth Third Bank has agreed to an extension of the Challenge Deadline for the Committee only, to and through Dec. 3, 2012. Counsel to Fifth Third Bank, as Pre-Petition Securitization Adminstrator, may be reached at: Craig E. Reimer, Esq. MAYER BROWN LLP 71 S. Wacker Drive Chicago, IL 60606 Tel: (312) 782-0600 Fax: (312) 701-7711 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. PENN VIRGINIA: S&P Affirms 'B' Corp. Credit Rating; Outlook Pos --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Radnor, Pa.-based Penn Virginia Corp. (PVA) to positive from negative. "At the same time, we affirmed our ratings on Penn Virginia, including the 'B' corporate credit rating," S&P said. "The revision of the outlook to positive reflects a substantial improvement in PVA's liquidity profile," said Standard & Poor's credit analyst Christine Besset. "Over the last several months, the company has bolstered liquidity by slightly more than $300 million through a combination of common and preferred stock, an increased borrowing base, and the sale of its Appalachian assets. Based on our assumption that PVA will outspend cash flow by $100 million to $150 million annually in the next couple of years, we expect the company's liquidity sources to cover its needs through year-end 2014." "The ratings on PVA reflect what we view as the company's 'aggressive' financial risk and 'vulnerable' business risk. The ratings incorporate the company's relatively modest asset base and production, exposure to natural gas (still 45% of pro forma production in the second quarter of 2012), and aggressive capital spending strategy due to its strategic shift to oil and liquids production. These risks are mitigated by a decent level of geographic diversity, an increasing profitability due to the ramp- up in oil production, and an 'adequate' liquidity profile," S&P said. "The positive outlook reflects our view that we could raise our ratings on the company over the next several quarters. We could upgrade our ratings on Penn Virginia if liquids production and reserves continue to increase and if we view it likely that the company will be able to sustain debt leverage below 3.75x while preserving adequate liquidity. We could stabilize the ratings if we revised our current assumptions such that leverage would exceed 4.5x or liquidity deteriorates materially, likely due to higher- than-expected capital spending," S&P said. PCF SALECO: Wins More Time to Respond to Involuntary Bankruptcy --------------------------------------------------------------- Steve Holtz at CSP Daily News reports that PCF Saleco LLC has received a second extension of the deadline to respond to the involuntary bankruptcy petition filed by three industry suppliers. CSP Daily, citing court documents, says a U.S. Bankruptcy Court judge approved the unopposed extension request to Oct. 31. According to the report, in late September, PCF Saleco received a two-week extension from the original response date of Sept. 27, citing a pending plan to reach a "successful conclusion" to negotiations with its gasoline supplier -- Phillips 66 -- that would allow the company "to stabilize and focus upon its business operations." The report notes, apparently still at an impasse, PCF Saleco requested a second extension on Oct. 12, specifically noting an extended contract negotiation with ConocoPhillips/Phillips 66. The report says the second request came after PCF Saleco handed operations of its stores in the Kansas City market over to GasMart USA, allowing the pumps and related c-stores to begin operating again. According to the report, financial problems at PCF Saleco led to the temporary shutdown of the sites, which motivated the involuntary bankruptcy filing. According to the report, PCF Saleco, which purchased its 78 stores from ConocoPhillips on Jan. 30, 2009, allegedly owes the three suppliers involved in the involuntary petition more than $1.65 million, according to the Chapter 11 documents filed with the District of Colorado Bankruptcy Court on Aug. 31. The report says, earlier this month, Phillips 66 spokesperson Alissa Hicks told The Kansas City Star that the fuel company was "working with the marketer and the owner to resolve the issue as quickly as possible." PCF Saleco LLC is a retail chain spun off of K&G Petroleum in 2008. Core-Mark International Inc., D&H Pump Service Inc., and ACM Industries Inc. filed an involuntary Chapter 11 bankruptcy petition against the Company. Core-Mark, based in South San Francisco, Calif., claims PCF Saleco owes it more than $1.64 million. D&H Pump, a supplier of commercial fuel systems based in Albuquerque, N.M., said PCF Saleco owes it $10,778. ACM Industries, a restaurant-supply company, also of Albuquerque, claims PCF Saleco owes it nearly $3,000. Caroline Fuller, Esq., represents the three unsecured creditors. POST APARTMENT: Moody's Raises Preferred Rating From 'Ba1' ---------------------------------------------------------- Moody's Investors Service raised the senior unsecured rating of Post Apartment Homes, LP and the preferred rating of Post Properties, Inc. to Baa2 and Baa3, respectively, from Baa3 and Ba1. The outlook was revised to stable from positive, reflecting Moody's expectation that Post Properties will grow prudently through acquisitions and development while maintaining its solid credit profile. Ratings Rationale "Post Properties has positioned itself favorably in this current environment of strong apartment fundamentals while maintaining some of the best credit metrics found in the multifamily sector," said Chris Wimmer, a vice president at Moody's. According to Moody's, Post Properties has a recognizable brand in Atlanta and other markets, the average age of its apartment communities is relatively new and the firm is able to command a meaningful premium to market rents across its portfolio. Moreover, the multifamily REIT's leverage metrics have improved with the strong performance of the multifamily sector and are among the best of its peers. At the end of the second quarter of 2012, effective leverage was 33.6%, down from 40.1% at year end 2010, and the firm's secured debt as a percent of gross assets had dropped to 15.2% from 22.1% at 3Q11. Finally, Post Properties' liquidity situation remains robust, with $330 million in unsecured lines of credit that were 100% available at the end of the second quarter, a large unencumbered asset base and very manageable debt maturities for the next four years. Among Moody's chief concerns with respect to Post Properties' credit profile include geographic concentrations in Atlanta (26.5% of NOI as of 2Q12), DC Metro (19.8%) and the state of Texas (27.2%), the risk of which is heightened by the firm's smaller size relative to its rating category. Furthermore, Post Properties has experienced high volatility with its EBITDA margins. Moody's indicated that the rating agency would likely increase Post Properties' ratings should the apartment REIT increase in size to $5 billion or more in gross assets accompanied by improvement in geographic diversity while maintaining fixed charge coverage higher than 2.75x and net debt less than 7x EBITDA. Secured debt would also need to be 15% or lower than gross assets. Improvement in EBITDA margins to 55% or better would also bode well for ratings improvement. Conversely, should Post Properties experience a decline in fixed charge coverage to 2.5x or lower, or an increase in net debt to more than 7x EBITDA, Moody's would likely revisit the rating with a negative bias. Downward pressure on the firm's ratings would also result from increases in secured debt closer to 20% of gross assets, as well as any meaningful reversal of the progress made in its geographic diversification. The following ratings were raised with a stable outlook: Post Properties, Inc. -- Baa3 preferred stock, from Ba1; (P)Baa3 preferred shelf, from (P)Ba1. Post Apartment Homes, LP -- Baa2 senior unsecured, from Baa3; (P)Baa2 senior unsecured shelf, from (P)Baa3. In the last rating action with respect to Post Properties, Moody's affirmed the REIT's ratings with a positive outlook on December 13, 2011. The principal methodology used in this rating was Moody's Approach for REITs and Other Commercial Property Firms published in July 2010. Post Properties, Inc. (NYSE: PPS) is a REIT headquartered in Atlanta and is a developer and operator of upscale multifamily communities. Post Properties operates in ten markets across the country and has interests in 21,982 apartment units in 59 communities, including 1,471 apartment units in four communities held in unconsolidated entities and 1,810 apartment units in six communities currently under development or in lease-up. The Company is also selling luxury for-sale condominium homes in two communities through a taxable REIT subsidiary. PREMIER DENTAL: Moody's Assigns 'B3' Corp. Family Rating -------------------------------------------------------- Moody's Investors Service assigned B3 Corporate Family and Probability of Default Ratings to Premier Dental Services, Inc. ("PDS"), the parent company of Western Dental Services, Inc. ("Western Dental"). At the same time, Moody's assigned B3 (LGD4, 54%) ratings to the company's proposed first lien senior secured credit facilities, including a $275 million senior secured first lien term loan and a $25 million senior secured first lien revolver. The proceeds from the senior secured credit facilities will be used, along with an additional $300 million cash equity contribution, to finance the acquisition of the company by New Mountain Capital ("NMC") from current owners, Court Square Capital Partners for approximately $550 million, and pay transaction fees and expenses. The outlook for the ratings is stable. This is the first time Moody's has publicly rated Premier Dental Services, Inc Moody's assigned the following ratings: $25 million senior secured first lien revolving credit facility, rated B3 (LGD4, 54%) $275 million senior secured first lien term loan, rated B3 (LGD4, 54%) Corporate Family Rating, B3 Probability of Default Rating, B3 All ratings are subject to review of final documentation. Ratings Rationale Western Dental's B3 Corporate Family Rating reflects the company's small absolute revenue size, relatively high financial leverage, high geographic concentration in California and considerable level of bad debt expense. On a pro forma basis for the twelve months ended June 30, 2012, the company's adjusted debt to EBITDA was approximately 4.7 times. The ratings are supported by the company's leading market position, its strong track record of successful de novo expansion, favorable fundamentals within the U.S. dental care industry and substantial equity contribution on behalf of New Mountain Capital. The rating reflects the high reliance on the ability of the company's regulated operating subsidiaries to continue to successfully upstream cash via dividend payments to service the debt held at Premier Dental Services, Inc. While viewed as highly unlikely to occur, upstream payments have the ability to become restricted under the operation of the Knox-Keene Act, the California Department of Managed Health Care ("DMHC") or the operating performance of these subsidiaries. The rating outlook is stable, reflecting Moody's expectation that financial leverage will improve over the next 12 to 18 months, and that the company will exhibit improved free cash flow to debt. The stable outlook also reflects Moody's assumption that the company will not face regulatory limitations related to the up-streaming of dividends from the regulated subsidiaries to service the debt held at Premier Dental Services, Inc. The ratings could be upgraded if positive free cash flow is sustained, leverage is reduced to levels approaching 4.0 times on a Moody's adjusted basis, and the company maintains a relatively clean legal and regulatory profile. The ratings could be downgraded if there is a material contraction in the level of operating cash flow, such that free cash flow turns negative, or if the company's liquidity deteriorates. While highly unlikely, the ratings could also be lowered if the company faces any regulatory restrictions in making dividend payments from its regulated subsidiaries to service the debt held at Premier Dental Services, Inc. The principal methodology used in rating Premier Dental Services, Inc. was the Global Healthcare Service Providers rating 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. Headquartered in Orange, California, Premier Dental Services, Inc. ("PDS"), and its subsidiaries and affiliates, including Western Dental Services, Inc., (collectively "Western Dental") is a leading provider of full service general, specialty and orthodontic dentistry services in the United States (89% of revenue), and the largest provider of dentistry services in the state of California. As a regulated and licensed HMO/health plan under California's Knox-Keene Health Care Service Plan Act of 1975, and as permitted under Arizona law, Western Dental operates predominantly under the staffing model, whereby the company directly employs its dentists. The company's Dental Benefits segment (11% of revenue) designs, sells, and administers group and government managed care dental plans primarily in California. Western Dental has 172 dental centers and 2,600 operatories in California, Arizona, Nevada and Texas, and generated total revenues of approximately $455 million over the twelve months ended June 30, 2012. RADLAX GATEWAY: Court Dismissed Chapter 11 Case ----------------------------------------------- Bankruptcy Judge Bruce W. Black last month issued an order dismissing the Chapter 11 case of RadLAX Gateway Hotel LLC. The Court's order, dated Sept. 19, directed the Debtor to pay the U.S. Trustee $13,000 due pursuant to 28 U.S.C. Sec. 1930, plus any accrued interest pursuant to 31 U.S.C. Sec. 3717 by Sept. 26. The Court retained jurisdiction to enforce collection of the payment. As reported by the Troubled Company Reporter on Sept. 5, the U.S. Trustee for Region 11 believed the bankruptcy estate has diminished, that any likelihood of rehabilitation is absent in the case. The Bankruptcy Court set a hearing for Sept. 19, to consider a motion to convert RadLAX's Chapter 11 case to one under Chapter 7 of the Bankruptcy Code, or in the alternative dismiss the case. The Bankruptcy Court on June 21 entered an order granting a second renewed motion by the Debtor's lender for relief from the automatic stay with respect to the Radisson Hotel at Los Angeles International Airport, the Debtor's primary asset. As reported by the TCR on July 17, the Court issued a 15th interim order allowing RadLAX to use Amalgamated Bank's cash collateral to fund the bankruptcy case through Oct. 17, 2012. As of the petition date, the Debtor and RadLAX Gateway Deck, LLC, owed in excess of $120 million on account of the construction loan from Amalgamated Bank, as trustee of the Longview Ultra I Construction Loan Investment Fund, in its capacity as administrative agent for itself and San Diego National Bank. The Debtors were authorized to use the cash collateral relating to the hotel's room revenues and food and beverage revenues to pay operating expenses of the hotel. A controversy in the RadLAX case got the attention of the U.S. Supreme Court early this year. In a May 2012 decision, the Supreme Court affirmed the rights of lenders to make a credit bid in a bankruptcy sale. The High Court said a debtor may not obtain confirmation of a Chapter 11 cramdown plan that provides for the sale of collateral free and clear of the bank's lien, but does not permit the Bank to credit-bid at the sale. In RadLAX's case, the debtors proposed to sell their property free and clear of Amalgamated Bank's liens and repay the Bank with the sale proceeds. The Supreme Court said the ability to credit-bid helps to protect a creditor against the risk that its collateral will be sold at a depressed price. Deanne Maynard, Esq., at Morrison & Foerster, argued for Amalgamated Bank in the appeal. About River Road Hotel & RadLAX Gateway Hotel River Road Hotel Partners, LLC, developed and manages the InterContinental Hotel Chicago O'Hare located in Rosemont, Illinois. Affiliate RadLAX Gateway Hotel LLC owns the Radisson hotel at Los Angeles International Airport. Both were controlled owned by Harp Group. River Road and its affiliates filed Chapter 11 in Chicago (Bankr. N.D. Ill. Lead Case No. 09-30029) on Aug. 17, 2009. Based in Oak Brook, Illinois, River Road estimated assets of as much as $100 million and debt of as much as $500 million in its Chapter 11 petition. River Road disclosed $0 in assets and $14,400,000 in liabilities as of the Chapter 11 filing. RadLAX and its affiliates filed a separate chapter 11 petition (Bankr. N.D. Ill. Case No 09-30047) also on the same date. RadLAX estimated $50 million to $100 million in assets and up to $500 million in debts. David M. Neff, Esq., at Perkins Coie LLP, serves as counsel to the River Road and RadLAX debtors. The two cases, however, are not jointly administered. The Official Committee of Unsecured Creditors is represented by Stephen T. Bobo and Ann E. Pille at Reed Smith LLP. Adam A. Lewis, Esq., and Norman S. Rosenbaum, Esq., of Morrison Foerster LLP of San Francisco, California; and John W. Costello, Esq., and Mary E. Olson, Esq., of Wildman, Harrold, Allen & Dixon LLP of Chicago, Illinois, represented Amalgamated Bank. John Sieger, Esq., and Andrew L. Wool, Esq., of Katten Muchin Rosenman LLP represented U.S. Bank. The bankruptcy judge in Chicago on July 7, 2011, signed a confirmation order for the Chapter 11 plan for River Road. The plan, which was proposed by River Road's lender, Amalgamated Bank, will give ownership in exchange for $162 million in debt. The lender would waive its deficiency claim on taking title through the plan. The plan was declared effective Nov. 23, 2011. RENAISSANCE LEARNING: Moody's Affirms 'B2' CFR; Outlook Stable -------------------------------------------------------------- Moody's Investors Service affirmed Renaissance Learning, Inc.'s B2 corporate family rating (CFR) and changed its probability of default (PDR) rating to B3 from B2. Moody's also assigned B2 ratings to Renaissance 's proposed amended/extended first lien senior secured credit agreement, consisting of a $20 million revolving credit facility due 2017 and a $230 million term loan due 2018. The ratings outlook remains stable. The company will use cash combined with proceeds from the amended term loan to refinance existing indebtedness, including the $75 million second lien term loan (unrated). Moody's views the transaction as credit positive as it materially reduces interest expense, extends debt maturities, and reduces leverage. Specifically, the pro forma debt balance declines to $230 million from $248 million as of September 30, 2012. However, there is no change to the company's ratings or outlook based on Moody's view that, despite the benefits of the transaction, pro forma credit metrics do not improve sufficiently to justify a higher rating. The change in the PDR to B3 from B2 reflects the fact that the proposed capital structure consists entirely of first lien debt (as per Moody's Loss Given Default Methodology). Rating affirmed: Corporate family rating at B2 Rating changed: Probability of default rating to B3 from B2 Ratings assigned: Proposed $20 million first lien senior secured revolving credit facility due 2017 at B2 (LGD3, 34%) Proposed $230 million first lien senior secured revolving credit facility due 2018 at B2 (LGD3, 34%) Ratings to be withdrawn: $20 million first lien senior secured revolving credit facility due 2016 at B1 (LGD3, 34%) $173 million first lien senior secured term loan due 2017 at B1 (LGD3, 34%) Rating Rationale Renaissance's B2 corporate family rating reflects the company's small scale, high leverage with debt to EBITDA expected to slightly exceed 5.0 times (Moody's adjusted and pro forma for the pending refinancing), and balance sheet debt that is well in excess of revenues. The rating also considers the company's reliance on a single product -- Accelerated Reader -- for a large portion of its revenues, as well as competition from large scale well-capitalized companies and the company's susceptibility to school budget cuts. High leverage reduces Renaissance's financial flexibility and its ability to withstand changes to the competitive environment. Notwithstanding these risks, the rating derives support from Renaissance's business position as a provider of computer-based assessment technology in a fragmented market, a large-base of active school customers, a material proportion of recurring subscription-based revenues, and its ability to grow orders despite weak macroeconomic conditions and the associated pressures on school budgets. The rating also benefits from the company's good operating margins and expectations for positive free cash flow generation supported by modest capital expenditure requirements. The stable outlook reflects Moody's expectation that Renaissance will continue to grow new orders despite continued school budgetary pressures while applying free cash flow to debt reduction. The ratings could be pressured if the challenging operating environment causes order trends to weaken such that Renaissance's debt to EBITDA increases above 6.0 times and/or EBITDA less capex to interest falls below 2.0 times. Debt financed acquisitions and/or shareholder enhancement activities could also pressure the ratings. Moody's could upgrade Renaissance's ratings if it organically grows its scale and broadens its product mix while sustaining debt to EBITDA below 4.0 times, EBITDA less capex coverage of interest expense above 2.5 times, and free cash flow to debt in excess of 10%. The ratings are subject to the conclusion of the transactions, as proposed, and Moody's review of final documentation. Additional information can be found in the Renaissance Credit Opinion published on Moodys.com. The principal methodology used in rating Renaissance Learning, Inc. was the Global Business & Consumer Service Industry Rating Methodology published in October 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. Renaissance Learning, Inc. is a provider of computer-based assessment technology and school improvement programs for pre- kindergarten through senior high (pre-K-12) schools and districts. The company revenues were approximately $140 million for the twelve months ended June 30, 2012 (adjusting for the write-off of deferred revenue). RESIDENTIAL CAPITAL: Court OKs Amendments to DIP Loan Agreement --------------------------------------------------------------- Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York authorized Residential Capital LLC and its debtor-affiliates to amend the Superpriority Debtor-in-Possession Credit and Guaranty Agreement with Barclays Bank plc in order to: (i) consummate the sale of their "legacy" whole loan portfolio prior to the sale of their mortgage loan origination and servicing platform; and (ii) sell certain junior lien collateral consisting of Federal Housing Administration mortgage insurance backed mortgage loans and mortgage loans guaranteed by the U.S. Department of Veterans Affairs. The Court also authorized the Debtors to pay aggregate fees of up to $2.05 million to the lenders and administrative agent under the Amended DIP Agreement. The Original DIP Agreement provides the Debtors with up to $190 million revolving loan facility, up to $1.060 billion A-1 term loan facility, and up to $200 million A-2 term loan facility. 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 and 24. The hearing to approve the sales is set for Nov. 19. 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). RESIDENTIAL CAPITAL: Has Green Light to Pay Up to $7MM to Execs --------------------------------------------------------------- The Bankruptcy Court authorized Residential Capital LLC and its affiliates to pay $4.1 million to $7.0 million to 17 executives and senior managers to incentivize them for the work they've done to preserve and maximize the value of the Debtors' estates for the benefits of creditors. Under the Key Employee Incentive Program, the aggregate award for closing the stalking horse sales has been reduced from 63% to 20%; and a new metric allocates a greater percentage (50%) of an individual's award to the improvement of the purchase prices paid at the auctions for sale of the Debtors' assets. The remaining 30% of the KEIP awards are allocated evenly among achieving the financial/operational metrics utilized in the Original KEIP. This is the Debtors' second request for approval of the KEIP. The first KEIP was rejected by the Court after determining that the structure of the program was not primarily incentivizing. 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 and 24. The hearing to approve the sales is set for Nov. 19. 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). RESIDENTIAL CAPITAL: AFI Files Letter Supporting Sale ----------------------------------------------------- Ally Financial Inc. filed with the Court a letter agreement, dated May 13, 2012, by and between AFI and Nationstar Mortgage LLC. AFI says it wishes to make all interested parties, including any qualified bidder on Residential Capital's mortgage servicing and origination platform, aware of the terms of the AFI Support Letter. Subject to and without waiving any of AFI's objections and reservation of rights relating to the Asset Purchase Agreement and the Debtors' proposed platform sale, AFI says it is prepared to offer substantially similar terms to all qualified bidders participating in the auction scheduled for Oct. 23, 2012. Syncora Guarantee Seeks Clarification The RMBS Trustees objected to the Debtors' proposed assumption and assignment of certain executory contracts, mostly servicing agreements, in connection with the proposed sale of the Debtors' mortgage servicing platform to Nationstar Mortgage, LLC. The Court scheduled an Oct. 17 hearing to consider the RMBS Trustees' objection. Syncora Guarantee Inc. complains that early consideration by the Court of the RMBS Trustees' objection, at a hearing where other objections that raise identical and similar issues have not been noticed and are not heard, will prejudice Syncora's interests. Syncora relates that it objects to the Debtors' proposed assumption and assignment of certain servicing contracts in connection with the proposed asset sale on substantially the same grounds as the RMBS Trustees that (i) the Debtors propose to fundamentally alter those contracts in violation of Chapter 11 and the rights provided under the contracts to counterparties, and (ii) the Debtors have not demonstrated that the proposed assignee of these contracts, Nationstar Mortgage LLC can and will fully perform under these contracts under assumption and assignment. CitiMortgage, Inc., Fannie Mae, USAA Federal Savings Bank, and MidFirst Bank joined in Syncora's request for clarification on Oct. 17 hearing. These parties also reserve their rights to further raise objections to the proposed assumption and assignment of executory contracts. 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 and 24. The hearing to approve the sales is set for Nov. 19. 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). RESIDENTIAL CAPITAL: Committee Retains EPIQ as Info Agent --------------------------------------------------------- The Court authorized the Official Committee of Unsecured Creditors in Residential Capital LLC's cases to retain Epiq Bankruptcy Solutions, LLC, as its information agent. Epiq will, among other things, maintain the Committee website, establish an email address to allow unsecured creditors to send questions and comments concerning the Chapter 11 cases, provide a class center to respond to creditor inquiries, and assist the Committee with certain administrative tasks. Epiq professionals will be paid according to these hourly rates: Clerk $32- $48 Case Manager $76-$116 IT/Programming $112-$152 Snr. Case Manager/Consultant $132-$176 Senior Consultant $180-$220 As information agent, Epiq will: (a) establish and maintain a web site at www.rescapcommittee.com that provides, without limitation general information regarding the Chapter 11 cases, contact information, the claims bar dates, voting deadlines with respect to any chapter 11 plan of reorganization filed in the Chapter 11 Cases, the claims docket, the Debtors' monthly operating reports, a list of omnibus hearing dates, answers to frequently asked questions; and links to other relevant websites; (b) establish an e-mail address to allow unsecured creditors to send questions and comments concerning the Chapter 11 Cases; (c) provide a call center or other creditor hotline, respond to creditor inquiries via telephone, letter, email, facsimile or otherwise, as appropriate, and related services (which will be published on the Committee Web site); (d) assist the Committee with certain administrative tasks, including, but not limited to, printing and serving documents as directed by the Committee and its counsel; and (e) provide a confidential data room, if necessary. 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 and 24. The hearing to approve the sales is set for Nov. 19. 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). RESORT AT PIKES: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: The Resort at Pikes Peak, LLC P.O. Box 1316 Boulder, CO 80306 Bankruptcy Case No.: 12-31369 Chapter 11 Petition Date: October 16, 2012 Court: U.S. Bankruptcy Court District of Colorado (Denver) Judge: Michael E. Romero Debtor's Counsel: David M. Serafin, Esq. LAW OFFICE OF DAVID M. SERAFIN 3773 Cherry Creek Drive N., Suite 575 Denver, CO 80209 Tel: (303) 862-9124 E-mail: david@davidserafinlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by John C. Ball, CEO. REVEL ENTERTAINMENT: Bank Debt Trades at 31% Off ------------------------------------------------ Participations in a syndicated loan under which Revel Entertainment Group LLC is a borrower traded in the secondary market at 69.42 cents-on-the-dollar during the week ended Friday, Oct. 19, a drop of 8.36 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 750 basis points above LIBOR to borrow under the facility. The bank loan matures on Feb. 15, 2017, and carries Moody's Caa1 rating and Standard & Poor's CCC rating. The loan is one of the biggest gainers and losers among 198 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. Revel Entertainment -- http://www.revelresorts.com/-- owns Revel, a newly opened beachfront resort that features more than 1,800 rooms with sweeping ocean views. The smoke-free resort has indoor and outdoor pools, gardens, lounges, a 32,000-square-foot spa, a collection of 14 restaurant concepts, and a casino. Revel is located on the Boardwalk at Connecticut Avenue in Atlantic City, New Jersey. RICHFIELD EQUITIES: Hearing Today on Sale; Teamsters, Bank Object ----------------------------------------------------------------- Richfield Equities LLC is slated to return to the Bankruptcy Court in Flint, Mich., Tuesday morning at 11 a.m. to seek approval of guidelines that will govern the sale of the Debtors' assets and operations affecting their Flint facility. Richfield is seeking to sell primarily eight waste disposal services contracts in Oakland County, Michigan, to Rizzo Environmental Services Inc., which has agreed to serve as stalking horse bidder in an auction with its $2 million offer. The deal with Rizzo has a closing date of Nov. 9. Richfield has another deal to sell other assets, operations, and contracts to Halton Recyclng Limited for $5 million. Halton has agreed to have its bid tested at auction. The Halton deal also has a closing date of Nov. 9. The Teamsters union, Local 332, on Monday lodged a limited objection to the proposed sale. The union said the deals will certainly impact the more than 100 Teamsters Local 332-represented employees ni Richfield's Flint Division. The Teamsters complained that neither Richfield nor the prospective buyers have approached the union or responded with respect to issues relating to the sale, the continued employment of the Flint division employees, the continuing application of the union's collective bargaining agreement, or the continuing operations of the Flint Division. They also have failed to provide documents requested by the union. The union said the proposed sale documents appear to contemplate Court approval that would, in effect, purport to reject the CBA and extinguish labor law obligations. 1st Source Bank, which purports to have a lien on certain of the assets being sold, said it does not consent to the sale of its collateral. The bank said the Debtor cannot demonstrate that the price the property is sold is greater than the aggregate value of all liens with respect to the collateral at this time. 1st Source Bank said the Debtor owes it $228,171 pursuant to promissory notes, which is secured by certain of the Debtors' assets, including freightliners, trucks and containers. Richfield is in default under the promissory notes. The Teamsters union is represented in the case by: Lisa M. Smith, Esq. McKNIGHT McCLOW CANZANO SMITH & RADTKE P.C. 400 Galleria Officentre, Suite 117 Southfield, MI 48034 Tel: 248-354-9650 E-mail: lsmith@michworklaw.com The bank is represented in the case by: Jeffery A. Johnson, Esq. Trevor Q. Gasper, Esq. MAY OBERFELL LORBER 4100 Edison Lakes Parkway, Suite 100 Mishawaka, IN 46545 Tel: 574-243-4100 Fax: 574-232-9789 E-mail: jjohnson@maylorber.com tgasper@maylorber.com About Richfield Equities Flint, Michigan-based Richfield Equities, L.L.C., and three affiliates sought Chapter 11 bankruptcy protection (Bankr. E.D. Mich. Case Nos. 12-33788 to 12-33791) on Sept. 18, 2012. The affiliates are Richfield Landfill, Inc., Richfield Management, L.L.C., Inc., and Waste Away Disposal, L.L.C. Judge Daniel S. Opperman oversees the case. The Debtors have tapped Carson Fischer, P.L.C. as bankruptcy counsel; Huron Consulting Services, LLC's Jeffrey M. Beard as chief restructuring officer; C. Thomas Toppin & Associates, P.c. as general corporate and transactional counsel; and Kurtzman Carson Consultants LLC as claims and notice agent. In its petition, Richfield Equities estimated under $1 million in assets and between $10 million to $50 million in debts. Richfield Landfill estimated between $10 million to $50 million in both assets and debts. The petitions were signed by Jeffrey M. Beard, chief restructuring officer. Richfield Equities is a vertically integrated solid waste collection, transfer, disposal and recycling company that service the southeast, central/mid, and "thumb" regions of Michigan. The Debtors have two landfills, two transfer stations, and collection and hauling operations. The Companies' consolidated balance sheet shows assets of $37.1 million and liabilities of $41.8 million as of April 30, 2012. The U.S. Trustee has appointed a four-member official committee of unsecured creditors. RICHFIELD EQUITIES: U.S. Trustee Appoints 4-Member Creditors Panel ------------------------------------------------------------------ Daniel M. McDermott, the U.S. Trustee for Region 9, appointed four members to an official committee of unsecured creditors in the Chapter 11 case of Richfield Equities LLC and its affiliated debtors. The panel members are: (a) Rick Slagenwhite Michigan Tractor and Machinery Co. 24800 Novi Rd. Novi, MI 48375 Tel: 248-349-4800 Fax: 866-743-4213 E-mail: rick.slagenwhite@michigancat.com (b) David S. Wardin Kieft Engineering, Inc. 5852 S. Main St. Clarkston, MI 48346 Tel: 248-625-5251 ext. 208 Fax: 248-625-7110 E-mail: dwardin@kiefteng.com (c) Mike Skuratovich Eastern Oil Company 590 S. Paddock St Pontiac, MI 48341 Tel: 248-333-1333 ext. 239 Fax: 248-333-1333 E-mail: mskuratovich@easternoil.com (d) Roger G. Zulauf, CPA Fenner, Melstrom, & Dooling, PLC 355 S. Old Woodward #200 Birmingham, MI 48009 Phone: 248-258-8900 Fax: 248-258-2727 Email: rzulauf@fmdcpas.com The U.S. Trustee is represented in the case by: Claretta Evans, Esq. Trial Attorney Office of the U.S. Trustee 211 West Fort St - Suite 700 Detroit, MI 48226 Tel: (313) 226-7912 E-mail: Claretta.Evans@usdoj.gov The Committee is being represented by: Scott A. Wolfson, Esq. Anthony J. Kochis, Esq. WOLFSON BOLTON PLLC 3150 Livernois, Suite 275 Troy, MI 48083 Telephone: (248) 247-7103 Facsimile: (248) 247-7099 E-Mail: swolfson@wolfsonbolton.com Flint, Michigan-based Richfield Equities, L.L.C., and three affiliates sought Chapter 11 bankruptcy protection (Bankr. E.D. Mich. Case Nos. 12-33788 to 12-33791) on Sept. 18, 2012. The affiliates are Richfield Landfill, Inc., Richfield Management, L.L.C., Inc., and Waste Away Disposal, L.L.C. Judge Daniel S. Opperman oversees the case. The Debtors have tapped Carson Fischer, P.L.C. as bankruptcy counsel; Huron Consulting Services, LLC's Jeffrey M. Beard as chief restructuring officer; C. Thomas Toppin & Associates, P.c. as general corporate and transactional counsel; and Kurtzman Carson Consultants LLC as claims and notice agent. In its petition, Richfield Equities estimated under $1 million in assets and between $10 million to $50 million in debts. Richfield Landfill estimated between $10 million to $50 million in both assets and debts. The petitions were signed by Jeffrey M. Beard, chief restructuring officer. Richfield Equities is a vertically integrated solid waste collection, transfer, disposal and recycling company that service the southeast, central/mid, and "thumb" regions of Michigan. The Debtors have two landfills, two transfer stations, and collection and hauling operations. The Companies' consolidated balance sheet shows assets of $37.1 million and liabilities of $41.8 million as of April 30, 2012. RICHFIELD EQUITIES: Sec. 341 Creditors' Meeting on Wednesday ------------------------------------------------------------ Daniel M. McDermott, the U.S. Trustee for Region 9, will convene a Meeting of Creditors pursuant to Section 341 of the Bankruptcy Code in the Chapter 11 cases of Richfield Equities LLC and its affiliated debtors on Oct. 24, 2012 at 11:30 a.m. Eastern Standard Time at the Office of the United States Trustee, 600 Church St, Room G-19, in Flint, Michigan. Rule 9001(5) of the Federal Rules of Bankruptcy Procedure requires that a representative of the Debtors appears at the Meeting of Creditors for the purpose of being examined under oath by a representative of the Office of the United States Trustee and by any interested parties that attend the meeting. Creditors are welcome, but not required, to attend the meeting. The Meeting of Creditors may be continued or adjourned by notice at the meeting, without further written notice to creditors. About Richfield Equities Flint, Michigan-based Richfield Equities, L.L.C., and three affiliates sought Chapter 11 bankruptcy protection (Bankr. E.D. Mich. Case Nos. 12-33788 to 12-33791) on Sept. 18, 2012. The affiliates are Richfield Landfill, Inc., Richfield Management, L.L.C., Inc., and Waste Away Disposal, L.L.C. Judge Daniel S. Opperman oversees the case. The Debtors have tapped Carson Fischer, P.L.C. as bankruptcy counsel; Huron Consulting Services, LLC's Jeffrey M. Beard as chief restructuring officer; C. Thomas Toppin & Associates, P.c. as general corporate and transactional counsel; and Kurtzman Carson Consultants LLC as claims and notice agent. In its petition, Richfield Equities estimated under $1 million in assets and between $10 million to $50 million in debts. Richfield Landfill estimated between $10 million to $50 million in both assets and debts. The petitions were signed by Jeffrey M. Beard, chief restructuring officer. Richfield Equities is a vertically integrated solid waste collection, transfer, disposal and recycling company that service the southeast, central/mid, and "thumb" regions of Michigan. The Debtors have two landfills, two transfer stations, and collection and hauling operations. The Companies' consolidated balance sheet shows assets of $37.1 million and liabilities of $41.8 million as of April 30, 2012. The U.S. Trustee has appointed a four-member official committee of unsecured creditors. The panel is represented by Wolfson Bolton PLLC. RICHFIELD EQUITIES: Has Final Approval of Comerica DIP Financing ---------------------------------------------------------------- Richfield Equities LLC and its debtor-affiliates sought and obtained, on a final basis, permission from the Bankruptcy Court to borrow funds from Comerica Bank, the Debtors' pre-bankruptcy lender. The Debtors also won permission to borrow cash tied to the bank debt. As of the petition date, Richfield Equities owed Comerica $18,170,628 in principal, $220,196 in interest, and $7,742 in late fees. The amounts include $8,903,627 owed under a Revolving Credit Note; $1,558,499 under a Term Note; $1,505,963 under a Term Note-D; $2,600,000 under a Huron Hills Note; $998,330 under a Conversion Term Note; and $2,604,208 under a Capital Requirements Note. The Debtors are also indebted to the bank for unpaid, fully earned and nonrefundable fees which total $620,000. The debt is secured by substantially all assets of the Debtors and the corporate guarantors, including without limitation (i) real property commonly known as 11145 E. Mt. Morris Road, Davison, Michigan; (ii) real property commonly known as 4151 McMillan, Bad Axe, Michigan, and (iii) real property commonly known as 4132 Dove Road, Port Huron, Michigan. Pursuant to the Final DIP Order, the Bank may consider, in its sole discretion, postpetition advances for operating expenses, provided that the principal amount of such requested postpetition advance and all other postpetition advances under a Postpetition Revolving Note by Richfield Equities, L.L.C. to the Bank, plus the outstanding principal amount of the prepetition Revolving Credit Note, will not exceed the lesser of (A) $12,600,000, or (B) the Advance Formula as defined in the Prepetition Loan Documents, provided that the Temporary Additional Overformula Amount is amended to mean $9,800,000. The Court previously issued an Interim Order on Sept. 21, which authorized the bank to advance funding, provided that the principal amount of the postpetition advance and all other postpetition advances under a Postpetition Revolving Note by Richfield Equities, L.L.C. to the Bank, plus the outstanding principal amount of the prepetition Revolving Credit Note, will not exceed the lesser of (A) $10,620,000, or (B) the Advance Formula as defined in the Prepetition Loan Documents, provided that the Temporary Additional Overformula Amount is amended to mean $8,215,290. The Final DIP Order provides that the Debtors' ability to request advances and the Postpetition Note will terminate on the earlier of Nov. 9, 2012, or upon a default by the Debtors, unless the Termination Date is extended by written stipulation of the Bank and Debtors. The order provides that interest on the Prepetition Notes will continue to accrue at the non-default rate specified in the Prepetition Loan Documents. The non-default rate of interest on the Postpetition Note will be the Daily Adjusting LIBOR Rate plus the Applicable Margin of 6.0%. The order requires the Debtors to close the sale of substantially all of their assets by Nov. 9, 2012. Regarding the use of the bank's cash collateral, as adequate protection with respect to the prepetition bank debt and for any diminution in the Prepetition Collateral (whether cash collateral or non-cash collateral), the Bank is granted a continuing and replacement security interest and lien in all of the Postpetition Collateral. The replacement lien on Postpetition Collateral granted to the Bank will be junior only to (i) the lien securing the postpetition debt, and (ii) if the Debtors' interest in any of the Postpetition Collateral as of the Petition Date was encumbered by a valid, binding and unavoidable lien senior to the prepetition lien held by Bank, then to such existing senior lien. While final, the DIP Order provides a window for the official unsecured creditors' committee to file objection to the financing through the earlier of (a) 14 days after it is served with the DIP Order, or (b) Nov. 13, 2012. Comerica Bank is represented by: Ralph E. McDowell, Esq. Marc M. Bakst, Esq. BODMAN PLC 6th Floor at Ford Field 1901 St. Antoine Street Detroit, MI 48226 Tel: 313-259-7777 E-mail: rmcdowell@bodmanlaw.com mbakst@bodmanlaw.com About Richfield Equities Flint, Michigan-based Richfield Equities, L.L.C., and three affiliates sought Chapter 11 bankruptcy protection (Bankr. E.D. Mich. Case Nos. 12-33788 to 12-33791) on Sept. 18, 2012. The affiliates are Richfield Landfill, Inc., Richfield Management, L.L.C., Inc., and Waste Away Disposal, L.L.C. Judge Daniel S. Opperman oversees the case. The Debtors have tapped Carson Fischer, P.L.C. as bankruptcy counsel; Huron Consulting Services, LLC's Jeffrey M. Beard as chief restructuring officer; C. Thomas Toppin & Associates, P.c. as general corporate and transactional counsel; and Kurtzman Carson Consultants LLC as claims and notice agent. In its petition, Richfield Equities estimated under $1 million in assets and between $10 million to $50 million in debts. Richfield Landfill estimated between $10 million to $50 million in both assets and debts. The petitions were signed by Jeffrey M. Beard, chief restructuring officer. Richfield Equities is a vertically integrated solid waste collection, transfer, disposal and recycling company that service the southeast, central/mid, and "thumb" regions of Michigan. The Debtors have two landfills, two transfer stations, and collection and hauling operations. The Companies' consolidated balance sheet shows assets of $37.1 million and liabilities of $41.8 million as of April 30, 2012. The U.S. Trustee has appointed a four-member official committee of unsecured creditors. The panel is represented by Wolfson Bolton PLLC. SAGAMORE PARTNERS: Gets 13th Interim OK to Use Cash Collateral -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida, according to Sagamore Partners, Ltd.'s case docket, authorized, in a thirteenth interim order: 1. the Debtor's continued access to the cash collateral of Secured Lender JPMCC 2006-LDP7 Miami Beach Lodging, LLC, to pay for the operating expenses and costs of administration, pursuant to a revised budget, with a permitted variance of 5% on a per line item basis; 2. grant adequate protection; and 3. the Debtor's payments to critical vendors. As reported in the Troubled Company Reporter on Aug. 2, 2012, as adequate protection, the secured lender is granted replacement liens. In addition, the lender will receiver from the Debtor interest payments, calculated at the contract rate of 6.54%, based on the outstanding principal amount of the prepetition debt, as provided in the budget. It is also an allowed superpriority administrative expense claim under Section 507(b) of the Bankruptcy Code. About Sagamore Partners, Ltd. Bay Harbor, Florida-based Sagamore Partners, Ltd., owns and operates the oceanfront Sagamore Hotel, also known as The Art Hotel due to its captivating art collection from recognized artists and its contemporary design. The all-suite boutique hotel is situated within Miami's Art Deco Historic District on South Beach. Sagamore Partners is owned by Martin Taplin. Sagamore Partners filed for Chapter 11 bankruptcy (Bankr. S.D. Fla. Case No. 11-37867) on Oct. 6, 2011. Judge A. Jay Cristol presides over the case. Joshua W. Dobin, Esq., and Peter D. Russin, Esq., at Meland Russin & Budwick, P.A., in Miami, Fla., serve as the Debtor's counsel. The Debtor disclosed $71,099,556 in assets and $52,132,849 in liabilities as of the Chapter 11 filing. The petition was signed by Martin W. Taplin, Pres of Miami Beach Vacation Resorts, Inc., manager of Sagamore GP, LLC, general partner. The Debtor has requested for an extension in its solicitation period. Bankruptcy Judge A. Jay Cristol denied approval of the disclosure statement explaining its Plan of Reorganization. Pursuant to the Plan, the Debtor proposes to reinstate the maturity date of its loan with JPMCC 2006-LDP7 Miami Beach Lodging, with interest from the Effective Date of the Plan at the loan's non-default interest rate; and cure monetary defaults under the Loan by paying the Secured Lender unpaid interest which has accrued on the Loan at the Interest Rate, but not interest which has accrued on the Loan at the Default Rate. SALUTARIS DIALYSIS: Judge Declines to Revive Chapter 11 Case ------------------------------------------------------------ Bankruptcy Judge Brian K. Tester denied a motion filed by Salutaris Dialysis & Nephrology Center requesting reconsideration of the Court's Aug. 1 Opinion and Order dismissing the Debtor's Chapter 11 case. The Court also denied the Debtor's request to amend or alter certain findings of fact and conclusions of law under Rule 52(b) F.R. Civ. P. (Dkt. No. 40). Judge Tester ruled that Salutaris' main asset is the 2009 lease agreement with San Juan Bautista Medical Center d/b/a Hospital San Juan Bautista for the operation of the dialysis ambulatory service. The judge noted that the lease has been rejected as part of the hospital's 2011 bankruptcy and eventual sale to Hospital Menonita Caguas Inc. The Court also held that the Certificate of Necessity and Convenience and a licence, both issued by the Puerto Rico Department of Health, and that permitted the Debtor to operate as a dialysis ambulatory center through February 2014 have been revoked and superseded by the CNC and license the DOH issued in favor of Menonita following the sale. Accordingly, Judge Tester said reorganization is unlikely and there is no reasonable likelihood of rehabilitation. Moreover, there are no assets to liquidate or administer in a potential Chapter 7 case. Judge Tester said dismissal appeared to be in the best interest of the creditors and the estate, and not conversion. Escuela de Medicina San Juan Bautista and Hospital Menonita Caguas opposed the Debtor's motion for reconsideration. A copy of the Court's Oct. 17, 2012 Opinion and Order is available at http://is.gd/mqTDF4from Leagle.com. San Juan Bautista Medical Center Corp. filed for Chapter 11 bankruptcy (Bankr. D.P.R. Case No. 11-02270) on March 18, 2011. Salutaris Dialysis & Nephrology Center, in Caguas, Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D.P.R. Case No. 12-04675) on June 15, 2012. The Law Office of Carlos Rodriguez Quesada, Esq., serves as the Debtor's counsel. In its petition, the Debtor listed under $50,000 in assets and under $10 million in debts. A copy of the Company's list of its 14 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/prb12-04675.pdf The petition was signed by Shakil Shafique, secretary. SEARCHMEDIA HOLDINGS: 11.2-Mil. Warrants to Expire on Feb. 19 ------------------------------------------------------------- SearchMedia Holdings Limited's Board of Directors has approved an extension of the expiration date of its 10.7 million warrants with an exercise price of $6.00 and 500,000 warrants with an exercise price of $7.00 from Nov. 19, 2012, to Feb. 19, 2013. All other provisions of the warrants remain the same. 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. SHALE-INLAND HOLDINGS: Moody's Assigns 'B3' CFR; Outlook Stable --------------------------------------------------------------- Moody's Investors Service assigned a B3 corporate family and probability of default rating to Shale-Inland Holdings, LLC. In addition, Moody's assigned a B3 rating to the company's proposed $250 million senior secured notes due 2019. The rating outlook is stable. The proceeds from the proposed note offering will be used to refinance a portion of Shale-Inland's existing indebtedness, and to pay related fees and expenses. The company plans to pay down the majority of the outstanding balance on its asset based lending facility and to reduce the borrowing limit on that facility to $175 million from $350 million upon completion of the note offering. The following ratings were assigned in this rating action: Corporate Family Rating B3; Probability of Default Rating B3; $250 million of senior secured notes B3 (LGD4, 57%); This is a newly initiated rating and is Moody's first press release on this issuer. Ratings Rationale The B3 corporate family and probability of default ratings reflect Shale-Inland's small size, elevated leverage, significant exposure to the cyclical downstream energy sector, the possibility of further debt financed acquisitions and the company's low profit margins, which are typical of the distribution industry. Moody's expects Shale-Inland to produce revenue of approximately $950 million and EBITDA of approximately $70 million over the next 12 months including Moody's standard adjustments for leases. This should result in an elevated leverage ratio of approximately 4.5x. Shale-Inland's ratings are supported by the company's profitable history, beneficial exposure to MRO activity, long-term relationships with large and well-established customers as well as the countercyclical working capital needs and limited capital expenditure requirements of the distribution business model. Shale's pro forma liquidity profile also supports the ratings since they will have no near-term debt maturities and low outstanding borrowings on the credit facility after the note offering is complete. The stable outlook presumes the company's operating results will remain relatively stable or gradually improve over the next 12 to 18 months and result in improved credit metrics. It also assumes the company will carefully balance its leverage and other credit metrics with its acquisition strategy. The outlook considers the resilience of the distribution business model, which in a downturn should benefit from cash generated through reduced working capital. The ratings could experience upward pressure if the company reduces its financial leverage below 4.0x and consistently generates free cash flow of at least $50 million. Negative rating pressure could develop if deteriorating operating results or debt financed acquisitions result in a leverage ratio consistently above 4.5x or an interest coverage ratio below 1.5x, as measured by (EBITDA-CapEx)/Interest. A significant reduction in borrowing availability or liquidity could also result in a downgrade. The principal methodology used in rating Shale-Inland was the Global Distribution & Supply Chain Services methodology published in November 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Shale-Inland Holdings, LLC, headquartered in Houston, Texas, is a distributor and supplier of pipe, valves, fittings (PVF), related products and technical solutions to the energy and industrial sectors and a processor of stainless steel and aluminum products. Shale-Inland was formed in March 2012 through the combination of HD Supply's Industrial Pipe, Valves and Fittings division and Shale-Inland's Main Steel and Stamping & Fabricating divisions. The company operates in three segments: Specialty Industrial PVF (approximately 56% of LTM sales) is a distributor of pipe, fittings, flanges and other products primarily for the petrochemical, refining and power generation industries; Sunbelt (approximately 37% of LTM sales) is a distributor of manual and automated valve products and accessories for the petrochemical, refining, upstream oil & gas, power generation, marine and other industrial end-markets; Fabrication & Distribution Services (approximately 7% of LTM sales) is a provider of processing, stamping, fabrication and distribution services for the transportation, food service and other industrial end-markets. The company operates out of approximately 47 branch locations throughout the United States and Canada. SHUANEY IRREVOCABLE: Beach Community's Case Dismissal Plea Denied ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Florida denied Beach Community Bank's motion to dismiss the Chapter 11 case of Shuaney Irrevocable Trust. On Aug. 23, 2012 Beach Community Bank stated that the Debtor must nevertheless be required to demonstrate that it has a reasonable prospect for confirming a Plan of Reorganization within a reasonable period of time. In a separate filing, Donald F. Walton, U.S. Trustee for Region 21, has withdrawn its second motion to dismiss or convert the Debtor's case to one under Chapter 7 of the Bankruptcy Code. The U.S. Trustee said that the Debtor filed the missing monthly financial reports, paid the quarterly fees owed to the U.S. Trustee for the second quarter of 2012, and filed a plan and disclosure statement. The Court, according to Troubled Company Reporter, June 21, 2012, version, also denied the motion of Beach Community to stay the Chapter 11 proceeding of the Debtor pending the completion of an appeal of the Amended Order on the Debtor's Status as an Eligible Debtor. About Shuaney Irrevocable Trust Shuaney Irrevocable Trust, in Fort Walton Beach, Florida, filed for Chapter 11 bankruptcy (Bankr. N.D. Fla. Case No. 11-31887) on Dec. 1, 2011. The Debtor scheduled $20,996,723 in assets and $19,625,890 in debts. The Law Office of Mark Freund serves as counsel to the Debtor. Judge William S. Shulman presides over the case. SIDEWINDER DRILLING: Moody's Rates $225-Mil. Senior Notes 'B3' -------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Sidewinder Drilling Inc.'s proposed $225 million senior notes due 2019. The proceeds will be used to fund the acquisition of Union Drilling, Inc. which is targeted to close in the fourth quarter of 2012. Moody's also assigned a B3 Corporate Family Rating. These are first time ratings for Sidewinder. The rating outlook is stable. Issuer: Sidewinder Drilling, Inc. Assignments: Corporate Family Rating (CFR), Assigned B3 Probability of Default Rating (PDR), Assigned B3 US$225 million Senior Unsecured Regular Bond/Debenture (Notes), Assigned B3 US$225 million Senior Unsecured Regular Bond/Debenture (Notes), Assigned a range of LGD4 (58%) RATINGS RATIONALE "Sidewinder's B3 Corporate Family Rating (CFR) reflects its small scale and limited operational history as a land drilling rig company operating in the highly cyclical North American land drilling sector subject to volatile oil and gas prices and capital spending by upstream companies," stated Michael Somogyi, Moody's Vice President -- Senior Analyst. "Sidewinder has increased the size and scope of its rig fleet since its formation in April 2011 through significant capital spending and opportunistic acquisitions helping it establish a broader operational footprint and customer base." A privately-owned, North American onshore drilling company, Sidewinder is focused on providing contract drilling services to Exploration & Production (E&P) companies targeting unconventional resource plays. Sidewinder was formed in April 2011 by company management and Avista Capital Partners (equity sponsor). Building on its initial newbuild program of five high-specification rigs, Sidewinder acquired two rigs from Crown Drilling in September 2012, which currently operate under long-term contracts with Chevron in the Marcellus and Utica shale plays. On September 24, 2012, Sidewinder entered into a Merger Agreement to acquire Union Drilling, Inc. (Union), adding 53 land drilling rigs. Giving effect for the Union acquisition, on track to close in the fourth quarter of 2012, Sidewinder's fleet totals 60 rigs with a contract backlog of $251 million through 2015. The company identifies a core fleet of 36 rigs with an average age of 3.6 years comprised of 20 AC/SCR powered rigs and 16 modern mechanical rigs. The remaining 24 rigs are classified as legacy mechanical rigs with an average age of 34.2 years. The emergence of more complex horizontal oil wells across unconventional resource plays has sparked a need for higher spec and more capable land rig technology. Sidewinder continues to strategically position its core fleet in the more active oily basins in the US including the Bakken and Permian basins and liquids-rich basins in the Marcellus/Utica and Arkoma regions across an expanded customer base. With over 90% of Sidewinder's core rig fleet providing in excess of 1,000 horsepower, the company's rigs are suited to maximize drilling penetration rates and achieve longer lateral horizontal lengths. Combined with enhanced rig mobility technology, Sidewinder is positioning to provide upstream operators with opportunities to reduce drilling costs, cycle times and enhance well efficiency. With consideration of rigs delivered in 2012 under fixed contract terms, Moody's estimates Sidewinder's 2012 run rate EBITDA at approximately $90 million. The company's proforma leverage profile against a capital structure put in place to fund the Union acquisition, is in-line with conservative leverage metric of around 2.5x. Sidewinder has limited capital requirements given the age of its core fleet and is positioned to generate positive free cash flow by mid-2013 with a liquidity profile further supported by a new 5 year, $50 million senior secured revolver. The B3 rating on the proposed $225 million senior notes reflects both the overall probability of default of Sidewinder, to which Moody's assigned a PDR of B3, and a loss given default of LGD 4 (58%). The company will have in place a $50 million secured revolving credit facility upon closing of the Union acquisition that will have a first-lien claim to substantially all of Sidewinder's assets. Moody's overrode the rating agency's Loss Given Default Methodology generated note rating given the underlying asset value that should provide higher than average recovery for unsecured noteholders. However, the notes could get notched down from the CFR should the size of the priority claim from the secured revolver increase significantly in proportion to the unsecured claim. The stable outlook reflects Moody's anticipation that drilling activity will remain healthy, Sidewinder successfully integrates the Union acquisition and realizes EBITDA projections. Proven operational performance, contract execution and the ability to prudently grow and upgrade its rig fleet without significantly increasing leverage from current levels would be keys to an upgrade. A downgrade could occur if EBITDA compression or debt financed growth expansion raises the company's leverage profile above 3.0x for a sustained period. The principal methodology used in rating Sidewinder Drilling, Inc. was the Global Oilfield Services Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Sidewinder Drilling, Inc. is privately-owned, North American onshore drilling company headquartered in Houston, Texas. SIDEWINDER DRILLING: S&P Assigns 'B-' Corp. Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to Houston-based Sidewinder Drilling Inc. (Sidewinder). The outlook is stable. "At the same time, we assigned our 'B-' senior unsecured debt rating (the same as the corporate credit rating) and '3' recovery rating to the company's planned $225 million unsecured note issuance due 2019. The '3' recovery rating indicates our expectation of meaningful (50% to 70%) recovery in the event of a default," S&P said. "Sidewinder plans to use the proposed notes to fund its planned acquisition of Union Drilling Inc. (not rated). The notes will be placed in escrow until the acquisition closes. If the acquisition does not close by March 31, 2013, the escrowed funds will be applied to the redemption of the notes plus accrued and unpaid interest. Our rating incorporates the expectation that the acquisition will close as contemplated," S&P said. "The ratings on Sidewinder reflect the company's participation in the very competitive and cyclical onshore contract drilling industry, limited scale of operations, integration risk related to its acquisition of much larger Union Drilling, high exposure to natural gas basins relative to rated peers, and aggressive leverage measures," said Standard & Poor's credit analyst Marc D. Bromberg. "Partially mitigating these weaknesses, Sidewinder will have adequate liquidity and a relatively young and sophisticated fleet of core drilling rigs. We characterize the business risk profile as 'vulnerable' and the financial profile as 'highly leveraged.'" "Sidewinder provides contract drilling services to exploration and production (E&P) companies in the U.S. Pro forma for its acquisition of Union Drilling, total fleet size will be 60 rigs. However, 24 of these are old and less competitive mechanical rigs that we expect will either be sold or scrapped (8 have already been identified by the company). Based on the remaining 36 core rigs, fleet size and EBITDA is meaningfully smaller relative to rated peers such as Pioneer Drilling and Parker Drilling. However, Sidewinder's core fleet will be young at 3.6 years and relatively sophisticated based on horsepower, engine configuration, and walking ability (i.e., ability for the rig to move itself between drilling locations)," S&P said. "While its peers exhibit some business line diversity, Sidewinder's operations are solely focused on contract drilling. We consider this a key weakness as the contract drilling industry is highly competitive and cash flows can fall precipitously during a cyclical downturn. While Sidewinder will have about one-third of its core fleet contracted through next year, E&P customers can typically renegotiate terms for contracted rigs, notably day rates, when hydrocarbon prices are weak because drillers wish to maintain favorable customer relationships. Moreover, Sidewinder's core fleet has historically had a comparatively larger proportion of rigs in basins tied to weak natural gas prices such as the Anadarko, Fayetteville, and Marcellus. While rigs are interchangeable between gas and liquids wells, we think that the core fleets' historical presence in gas-weighted plays presents the risk that mobilization to liquids basins could be slower and more difficult than that of its peers," S&P said. "In addition, Sidewinder competes against a number of significantly larger industry participants with a long-standing track record, including Nabors Industries, Patterson-UTI, Helmerich & Payne, and Precision Drilling. The larger industry participants generally maintain much more geographic and operating diversity and have well-entrenched customer relationships. This is evident when comparing Union Drilling's results during the latest industry downturn. Revenues declined nearly 45% and EBITDA fell by about 50% from 2008 to 2009, while peers' measures were much less volatile," S&P said. "The stable outlook reflects our expectation that near-term market conditions will not weaken. As a result, we forecast that Sidewinder will maintain adequate liquidity," S&P said. "If liquidity weakens, such that the company may not generate sufficient cash flow to cover its fixed charges, we could lower the rating. We consider this unlikely over the next year given the company's ability to curtail spending and its current liquidity position. An upgrade is unlikely over the next year given the limitations of the company's narrow business scope and small revenue and EBITDA," S&P said. SIGNATURE STATION: Wants to Use Rental Income --------------------------------------------- At the onset of the case, Signature Station LP filed papers in Court seeking permission to use rental income from its apartment complex to pay for costs and expenses while in bankruptcy. The Debtor said the use of the rents is "critically needed" so the Debtor could meet ordinary operating expenses, and to continue business operations. The Debtor said Regions Bank, its primary secured creditor, may hold a perfected security in the property, the rents and security deposits received therefrom. The Debtor said the value of the collateral greatly exceeds the roughly $14.4 million owed to the bank. The Debtor said that as of March 6, the property was appraised for $18.8 million, so the bank has a sizeable equity cushion. The Debtor was scheduled to appear before the Court on Friday afternoon, Oct. 19, for a hearing on the request. The Debtor also has an Oct. 25 deadline to file complete schedules of assets and liabilities, a statement of financial affairs, and other documents. Under the Bankruptcy Code, the Debtor may seek an extension of that deadline for cause shown. About Signature Station Signature Station LP owns and operates a 262-unit partment complex known as Alexander at Stonecrest, a Low Income Tax Credit community, located at 100 Leslie Oaks Drive, Lithonia, DeKalb County, Georgia. The property consists of 12 3-story apartment buildings with a swimming pool and sun deck and other facilities. The apartment complex is managed by Signature Management Corp., which is 76% owned by Chuck Smith, one of the owners of the general partnet of the Debtor. Signature Station filed a Chapter 11 petition (Bankr. N.D. Ga. Case No. 12-75646) in Atlanta on Oct. 11, 2012. The Debtor is a Single Asset Real Estate as defined in 11 U.S. Sec. 101(51B). The Debtor estimated $10 million to $50 million in total assets and liabilities. Bankruptcy Judge Margaret Murphy presides over the case. Howick, Westfall, McBryan & Kaplan, LLP, serves as counsel. The petition was signed by Michael L. Smith, president of Stonecrest Partners, Inc., sole general partner. SIGNATURE STATION: Sec. 341 Creditors' Meeting Set for Nov. 21 -------------------------------------------------------------- The U.S. Trustee in Atlanta, Georgia, will convene a Meeting of Creditors pursuant to 11 U.S.C. Sec. 341(a) in the Chapter 11 case of Signature Station LP on Nov. 21, 2012, at 1:00 p.m. at Hearing Room 367, Atlanta. Signature Station LP owns and operates a 262-unit partment complex known as Alexander at Stonecrest, a Low Income Tax Credit community, located at 100 Leslie Oaks Drive, Lithonia, DeKalb County, Georgia. The property consists of 12 3-story apartment buildings with a swimming pool and sun deck and other facilities. The apartment complex is managed by Signature Management Corp., which is 76% owned by Chuck Smith, one of the owners of the general partnet of the Debtor. Signature Station filed a Chapter 11 petition (Bankr. N.D. Ga. Case No. 12-75646) in Atlanta on Oct. 11, 2012. The Debtor is a Single Asset Real Estate as defined in 11 U.S. Sec. 101(51B). The Debtor estimated $10 million to $50 million in total assets and liabilities. The Debtor said that as of March 6, 2012, the property was appraised for $18.8 million. Bankruptcy Judge Margaret Murphy presides over the case. Howick, Westfall, McBryan & Kaplan, LLP, serves as counsel. The petition was signed by Michael L. Smith, president of Stonecrest Partners, Inc., sole general partner. SIMMONS FOODS: Moody's Says Proposed Asset Sale Credit Positive --------------------------------------------------------------- In an Issuer Comment published on October 19, 2012, Moody's Investors Service said the proposed sale by Simmons Foods and its affiliates of its can manufacturing plant and the related new long-term supply agreement is a credit positive for the company. Moody's believes that the $30 million of gross cash proceeds expected from the transaction will provide ample relief from tightening bank covenants for at least a year and allow the company time to navigate through the current difficult operating environment in the chicken industry. "If the proposed transaction is consummated as we expect, Simmons should remain comfortably in compliance with its bank financial covenants at least through the third quarter of 2013," commented Brian Weddington, the author of the comment. But Weddington also cautioned that "Simmons' financial metrics could weaken again in the first half of 2013 if high corn prices do not moderate, which could raise covenant concerns again in the fourth quarter of next year." On October 15, 2012, Simmons entered into an agreement to sell its three-piece can manufacturing business to Crown Cork and Seal USA ("Crown"). Simultaneously, Simmons entered into a 10-year supply agreement with the purchaser, under which Crown will supply 100% of Simmons' requirements for aluminum and steel cans used in its wet pet food operations. Crown already supplies all the cans that Simmons does not manufacture for itself. As reported by the Troubled Company Reporter on June 7, 2012, Moody's Investors Service upgraded the Corporate Family Rating (CFR) and the Probability of Default Rating (PDR) of Simmons Foods, Inc (collectively with its affiliates, "Simmons") to B3 from Caa1. Concurrently, the ratings on the second lien notes were raised to Caa1 from Caa2. The rating outlook was changed to stable from developing. Simmons Foods, Inc. and its affiliates, headquartered in Siloam Springs, Arkansas, is one of the leading vertically integrated poultry processors, and a large private label pet food producer in the United States. The company operates in three primary business groups: (i) Poultry; (ii) Pet Food; and (iii) Other, which includes Simmons' rendering operations. The company is principally owned and controlled by members of the Simmons family. Net sales reported for the twelve month period ended June 30, 2012 totaled approximately $1.3 billion. SNO MOUNTAIN: Lender Casts Doubt on Involuntary Petition -------------------------------------------------------- DFM Realty, Inc., the assignee of National Penn Bank under a pre- bankruptcy loan, is accusing Sno Mountain LP of "manipulating the bankruptcy system", saying Sno Mountain -- acting through several of its limited partners -- strategically filed the bankruptcy petition to delay a scheduled sheriff sale of the Debtor's property. DFM Realty pointed out that the parties who filed the involuntary petition are primarily the limited partners or equity holders of the Debtor. At least three of the petitioning parties are guarantors of the obligations evidenced by the NatPenn Loan. DFM Realty is asking the Bankruptcy Court to lift the automatic stay so it may proceed with the sheriff sale. In the alternative, DFM asks the Court to dismiss the case, saying the bankruptcy was filed as a litigation tactic against it. DFM Realty also filed another motion asking the Bankruptcy Court to bar SNO Mountan from using cash that constitutes DFM's collateral. DFM asserted that, "while the involuntary petition, if properly commenced, arguably stays the exercise of the Lender's rights against the Debtor and all the Collateral, prior to answering the involuntary petition, the Debtor continues to use and otherwise benefit from the Collateral without providing any adequate protection to the Lender of its rights and security interests." In September 2007, the Debtor entered into a Construction Loan Agreement and a Mortgage Note, evidencing a loan made by NatPenn to the Debtor in the maximum principal amount of $7,500,000 and secured by the Debtor's assets. John Anderson, Denis Carlson, Richard Ford, Charles Hertzog, Edward Reitmeyer, and Adam Meadows guaranteed all obligations owing to NatPenn. In April 2009, the Debtor -- together with Sno Mountain LLC, Denis Carlson, Charles Hertzog, and Edward Reitmeyer -- entered into a second Construction Loan Agreement and a Mortgage Note with NatPenn in the maximum principal amount of $2,000,000. According to DFM Realty, since 2009, the Debtor has failed to make payment on account of various real property taxes related to the Real Property. The Debtor has been in default of the Loan Documents since as early as February 2010. DFM Realty relates that since 2010, the Debtor (and various Guarantors) has made numerous representations to NatPenn of impending restructuring and/or refinancing transactions -- including as late as July and September 2012 -- pursuant to which the Debtor and the Guarantors would satisfy the Loan Documents. All such representations have proven to be false and no transactions have ever been forthcoming or finalized. After numerous meetings, amendments and forbearances -- the last of which expired no later than Dec. 15, 2011 -- in February 2012, NatPenn sought and obtained judgment against the Debtor in the Court of Common Pleas of Lackawanna County in the amount of $6,654,473 with respect to the First Loan, and $1,645,129 with respect to the Second Loan. As a result of the Debtor's failure to keep the taxes against the Real Property current, on Sept. 21, 2012, NatPenn made protective advances in the amount of $439,702.93 to satisfy real property taxes against the Real Property to avoid an upset sale under 72 Pa. Stat. Sec. 5860.601, et. seq. of the Real Property. On Oct. 9, 2012, NatPenn assigned all its right, title and interest, in and to the Loan Documents and Judgments to DFM Realty. A sheriff sale of the Real Property was scheduled for Oct. 16 at 10:00 a.m. The involuntary petition was filed less than 12 hours before the Sheriff Sale was scheduled to occur. As a result of the filing of the Debtor's bankruptcy case, the Sheriff Sale was adjourned until Nov. 13, 2012 in accordance with applicable non- bankruptcy law. DFM Realty said the Real Property is encumbered by: $8,639,304 in outstanding principal balance due and owing under the NatPenn Loan plus the Judgments, exclusive of interest, fees and costs accruing from and after the date of entry of the Judgments. Interest, fees and costs are continuing to accrue; $5,000,000 in mortgage securing debt in favor of the Commonwealth of Pennsylvania, by and through the Department of Community and Economic Development Attn: Machinery and Equipment Loan Fund; $846,206 in Mechanic's Lien filed on Sept. 3, 2010 by Scandale Associated Builders & Engineers, Ltd.; $153,397 in Mechanic's Lien filed Dec. 16, 2010 by Creative Design Innovations, Inc.; $1,981 in Sewage Treatment Lien filed on Sept. 7, 2010 by the Sewer Authority of the City of Scranton, Inc.; and $3,840 under a Notice of District Justice Lien filed May 1, 2009 by Big Bass Lake, Inc. DFM Realty also said the Debtor has not made any payments on account of real estate taxes for tax year 2011 and 2012 (in the aggregate amount of no less than $283,357.68) against the Real Property. According to DFM Realty, upon information and belief, the estimated value of the Real Property may not exceed the total amount of the liens asserted against it. DFM Realty is represented in the case by: Peter S. Clark, Esq. Derek J. Baker, Esq. Lauren S. Zabel, Esq. REED SMITH LLP 2500 One Liberty Place 1650 Market Street Philadelphia, PA 19103 Tel: (215) 851-8100 Fax: (215) 851-1420 E-mail: dbaker@reedsmith.com About Sno Mountain Various parties -- predominated by various limited partners of Sno Mountan LP, including Richard Ford, Charles Hertzog, Edward Reitmeyer, who are each guarantors of certain obligations owing by Sno Mountain -- filed an involuntary Chapter 11 petition against Sno Mountain (Bankr. E.D. Pa. Case No. 12-19726) On Oct. 15, 2012. The other petitioning parties include Wynnewood Capital Partners, L.L.C., t/a WCP Snow Mountain Partners, L.P., and Kathleen Hertzog. The Alleged Debtor is the owner and operator of a popular ski mountain resort and water park known as "Sno Mountain," located at 1000 Montage Mountain Road in Scranton, Pennsylvania. The Debtor's bankruptcy case is a "single asset real estate" case within the meaning of 11 U.S.C. Sec. 101(51)(B). Judge Jean K. FitzSimon oversees the case. Brian Joseph Smith, Esq., at Brian J. Smith & Associates PC, represents the petitioning creditors. SNO MOUNTAIN: Petitioning Creditors Want Trustee Appointed ---------------------------------------------------------- The Bankruptcy Court was slated to hold a hearing Oct. 22 on the request of creditors that have petitioned to place Sno Mountain L.P. in Chapter 11 bankruptcy for appointment of a "gap trustee" and to replace Denis Carlson as general partner of the alleged debtor. The petitioning creditors include Wynnewood Capital Partners, L.L.C., t/a WCP Snow Mountain Partners, L.P., Edward Reitmeyer, Charles Hertzog, Kathleen Hertzog, and Richard Ford. According to papers filed by the Petitioning Creditors, pursuant to a Limited Partnership Agreement, Wynnewood is the general partner of the Alleged Debtor, while WCP, Mr. Reitmeyer, Charles Hertzog and Kathleen Hertzog are each limited partners. The Limited Partners said they each have substantial financial stakes in the Alleged Debtor. Messrs. Reitmeyer, Ford and Hertzog, among others, have executed certain personal guarantees for certain debts of the Alleged Debtor. Mr. Carlson is the President of Wynnewood and maintains exclusive control over Wynnewood. According to the Petitioning Creditors, Wynnewood as the General Partner, by and through its principal, Mr. Carlson, committed fraud, gross neglect and inattention, breach of trust and fiduciary duty, willful and fraudulent mismanagement and malfeasance in the control of the affairs, interests and transactions of the Alleged Debtor. They said the General Partner, through Mr. Carlson, used Partnership property and funds as their own. Among other things, the General Partner and Mr. Carlson improperly made distributions to Mr. Carlson from Partnership funds and loaned the money of the Alleged Debtor to themselves or family members of Mr. Carlson for their own use, on worthless securities, for personal gain and benefit. The unauthorized use of funds included payment to Mr. Carlson's personal employees, including James Held, who was Mr. Carlson?s personal assistant and chauffeur. The General Partner, through Mr. Carlson, also allowed and/or authorized James Held to receive payments for services that were not performed. For example, Mr. Held was to receive wages during the ski season of $5,000 per pay period. Mr. Held continued to receive $5,000 payments throughout the year totaling of $136,000, when no services were performed during most of the year. The General Partner, through Mr. Carlson, also used an ATM card for a Partnership bank account for personal use and for purposes unrelated to the legitimate operations of the Alleged Debtor, including numerous such transactions in Philadelphia, where Partnership conducts virtually no transactions. Mr. Carlson also secured a loan to the Alleged Debtor with a mortgage on his personal residence. However, he began repaying himself through distributions from the Debtor to make his mortgage payments. He also attempted to steal a payment from Tobyhanna Army Depot for roughly $40,000, which belonged to the Debtor. Mr. Carlson directed the manager to send the $40,000 check to him via Federal Express to his address in Philadelphia, rather than directing that the check be deposited in a Partnership account. He then attempted to deposit the check into the personal bank account for the General Partner. Mr. Carlson also misused an entity known as Moose Advertising, LLC, which is a wholly owned subsidiary of the Alleged Debtor, for their own personal gain. He would use the operating account of Moose Advertising for payment of his own personal expenses. According to the Petitioning Creditors, the General Partner and Mr. Carlsons? actions have caused the entry of judgments against Messrs. Reitmeyer, Hertzog and Ford as to alleged guarantees signed by them regarding the Debtor?s debt to National Penn Bank. If the General Partner and, in turn, Mr. Carlson, is not immediately stripped of all authority and removed as general partner of the Debtor, the interests of the Debtor and of the limited partners of the Debtor continue to be at great risk of irretrievable loss. In their request, the Petitioning Creditors ask the Court to install Mark Varrastro as general manager and appoint Gary Seitz, Esq., as interim Trustee. Mr. Seitz is with the firm of Rawle and Henderson, LLP. He is a Bankruptcy Panel Trustee with many years of experience and is of impeccable honesty and character. He has indicated a willingness to serve and has executed a verification of disinterestedness. The Petitioning Creditors did not provide additional information on Mr. Varrastro. About Sno Mountain Various parties -- predominated by various limited partners of Sno Mountan LP, including Richard Ford, Charles Hertzog, Edward Reitmeyer, who are each guarantors of certain obligations owing by Sno Mountain -- filed an involuntary Chapter 11 petition against Sno Mountain (Bankr. E.D. Pa. Case No. 12-19726) On Oct. 15, 2012. The other petitioning parties include Wynnewood Capital Partners, L.L.C., t/a WCP Snow Mountain Partners, L.P., and Kathleen Hertzog. The Alleged Debtor is the owner and operator of a popular ski mountain resort and water park known as "Sno Mountain," located at 1000 Montage Mountain Road in Scranton, Pennsylvania. The Debtor's bankruptcy case is a "single asset real estate" case within the meaning of 11 U.S.C. Sec. 101(51)(B). Judge Jean K. FitzSimon oversees the case. Brian Joseph Smith, Esq., at Brian J. Smith & Associates PC, represents the petitioning creditors. SOLYNDRA LLC: Seeks $1.5-Bil. in Damages From Suntech et al. ------------------------------------------------------------ Dan Ritter, writing for Wall St. Cheat Sheet, reports that Solyndra LLC is seeking $1.5 billion in damages from Suntech Power Holdings, Trina Solar, and Yingli Green Energy Holding, which it claims collaborated in price-fixing and other unsavory practices in order to run U.S. competitors out of business. "It's obvious that this lawsuit is a misguided effort by Solyndra to find scapegoats for its failure to commercialize its technology at a competitive price point," the report quotes Suntech America managing director E. L. McDaniel. The report notes the collapse of Solyndra was widely publicized because it was the first company to receive a loan guarantee under President Barack Obama's stimulus program. However desperate the case may seem, it comes as the U.S. Commerce Department issues strong anti-dumping and countervailing duties on Chinese solar imports. The report relates Solyndra is seeking bankruptcy-court approval of a plan to pay creditors that has attracted negative attention from the government. The Internal Revenue Service sees the company's plan as a way to try and obtain nearly $1 billion in tax benefits. The U.S. Department of Energy is looking for a resolution where its claim is protected. The report notes American solar manufacturers First Solar and SunPower survived what Solyndra is calling a conspiracy to fix prices and create a monopoly, although apparently just barely. Both companies have lost substantial share value this last year to date, and will struggle to regain ground even after the government's new tariffs. Demand for solar power isn't as high as it needs to be to sustain tangible growth, despite support from the government. Chinese solar companies are still likely to remain competitive in the United States while supply remains high and production takes time to wind down. About Solyndra LLC Founded in 2005, Solyndra LLC was a U.S. manufacturer of solar photovoltaic solar power systems specifically designed for large commercial and industrial rooftops and for certain shaded agriculture applications. The Company had 968 full time employees and 211 temporary employees. Solyndra has sold more than 500,000 of its panels since 2008 and generated cumulative sales of over $250 million. Fremont, California-based Solyndra and affiliate 360 Degree Solar Holdings Inc. sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12799) on Sept. 6, 2011. Solyndra is at least the third solar company to seek court protection from creditors since August 2011. Judge Mary F. Walrath presides over the Debtors' cases. The Debtors are represented by Pachulski Stang Ziehl & Jones LLP as legal adviser. AlixPartners LLP serves as noticing claims and balloting agent. Imperial Capital LLC serves as the company's investment banker and financial adviser. The Debtors also tapped former Massachusetts Governor William F. Weld, now with the law firm McDermott Will & Emery, to represent the company in government investigations and related litigation. BDO Consulting, a division of BDO USA, LLP, as financial advisor and BDO Capital Advisors, LLC, serves as investment banker for the creditors' panel. The Official Committee of Unsecured Creditors of Solyndra LLC has tapped Blank Rome LLP as counsel and BDO Consulting as financial advisors. In October 2011, the Debtors hired Berkeley Research Group, LLC, and designated R. Todd Neilson as Chief Restructuring Officer. Solyndra owed secured lenders $783.8 million, including $527.8 million to the U.S. government pursuant to a federal loan guarantee, and held assets valued at $859 million as of the Petition date. The U.S. Federal Financing Bank, owned by the U.S. Treasury Department, is the Company's biggest lender. When they filed for Chapter 11, the Debtors pursued a two-pronged strategy to effectuate either a sale of their business to a "turnkey" buyer who may acquire substantially all of Solyndra's assets or, if the Debtors were unable to identify any potential buyers, an orderly liquidation of the assets for the benefit of their creditors. Solyndra did not receive acceptable offers to buy the business as a going concern. Two auctions late last year brought in a total of $8 million. A three-day auction in February generated another $3.8 million. An auction in June generated $1.79 million from the sale of 7,200 lots of equipment. Solyndra filed a liquidating plan at the end of July and scheduled a hearing on Sept. 7 for approval of the explanatory disclosure statement. The Plan is designed to pay 2.5% to 6% to unsecured creditors with claims totaling as much as $120 million. Unsecured creditors with $27 million in claims against the holding company are projected to have a 3% dividend. SONYA PORRETTO: Duty to Indemnify Not Based on Actual Payments -------------------------------------------------------------- Chief Bankruptcy Judge Jeff Bohm in Houston issued last week a memorandum opinion in a dispute that, the judge noted, "underscores how far-reaching" Section 542(b) of the Bankruptcy Code1 really is. Sonya M. Porretto, the debtor, and Darryl A. Nelson entered into an Agreed Final Decree of Divorce whereby Mr. Nelson was obligated to pay certain creditors and to indemnify the Debtor and hold her harmless for any damages arising from his failure to pay. Mr. Nelson did, in fact, fail to pay and, when the Debtor filed for bankruptcy, those creditors were allowed claims against her bankruptcy estate. The Chapter 7 Trustee filed a lawsuit against Mr. Nelson on the estate's behalf under Sec. 542(b), and seeks an order requiring Mr. Nelson to turnover funds sufficient to satisfy the claims. On Oct. 10, 2012, Mr. Nelson's counsel filed an affidavit from Mr. Nelson setting forth that Mr. Nelson had made a few payments to reduce the debts. There is no dispute, however, that a substantial portion of the debts has not been paid. Mr. Nelson also contends that his duty to indemnify the estate has not yet been triggered. Specifically, he argues that the" estate has not made any distributions for which the Trustee may seek indemnification." Sec. 542(b) requires that "an entity that owes a debt that is property of the estate and that is matured, payable on demand, or payable on order, shall pay such debt to, or on the order of, the trustee." Thus, the test for whether turnover is appropriate is two-fold. First, the debt must be property of the estate. Second, it must be matured and payable on demand or on order. According to Judge Bohm, Mr. Nelson's obligations pursuant to the Agreed Divorce Decree are debts that are property of the estate. On the date the Chapter 11 petition was filed, the Debtor had a legal interest in indemnification pursuant to the Agreed Divorce Decree; therefore, this interest became property of the Debtor's Chapter 11 estate upon the filing of her Chapter 11 petition. Once the Chapter 11 case was converted to a Chapter 7, the indemnification interest became property of the Chapter 7 estate. Judge Bohm also held that Mr. Nelson's obligations pursuant to the Agreed Divorce Decree are matured and payable on demand or order. The judge noted that the duty to indemnify is not conditioned, as is the duty to reimburse, on actual payments being made. Judge Bohm pointed out that during her Chapter 11 case, the Debtor entered into settlement agreements with certain creditors, and these creditors now have allowed claims in the Chapter 7 case. As a result, Mr. Nelson's obligation to indemnify the estate for the debts is mature and payable on order. The Chapter 7 Trustee (on behalf of the estate) is not required to first pay the claims before seeking indemnification from Mr. Nelson. In his ruling, Judge Bohm directed Mr. Nelson to turn over funds to the Chapter 7 Trustee sufficient to satisfy the debts, reduced by any amounts Mr. Nelson has already paid, plus reasonable attorneys' fees and costs. Because there are genuine issues of material fact in dispute as to exactly how much the debt totals at present, and as to the reasonableness of the amount of attorneys' fees, a trial will be held to determine the exact amount that Mr. Nelson will be ordered to turnover. But, once that amount is determined, Mr. Nelson will be required to immediately turnover that exact amount in good funds to the Trustee. The lawsuit is, Randy W. Williams, Trustee, Plaintiff-Substitute, v. Darryl A. Nelson, Defendant, Adv. Proc. No. 11-03226 (Bankr. S.D. Tex.. A copy of Judge Bohm's Oct. 18, 2012 Memorandum Opinion is available at http://is.gd/ngxWotfrom Leagle.com. Sonya M. Porretto filed for Chapter 11 bankruptcy (Bankr. S.D. Tex. Case No. 09-35324) on July 27, 2009. Her Chapter 11 case was converted to Chapter 7 on Dec. 19, 2011. Randy Williams was appointed the Chapter 7 Trustee. SOUTHERN AIR: Chapter 11 Plan Hands Ownership to Lenders -------------------------------------------------------- Katy Stech at Dow Jones' Daily Bankruptcy Review reports that struggling cargo airline Southern Air Inc. says it can emerge from bankruptcy protection with a smaller fleet of airplanes and more manageable debt payments since its lenders agreed to accept ownership of the company as payment for their $288 million loan. About Southern Air Based in Norwalk, Connecticut, military cargo airline Southern Air Inc. -- http://www.southernair.com/-- its parent Southern Air Holdings Inc., and their affiliated entities filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 12-12690 to 12-12707) in Wilmington on Sept. 28, 2012, blaming the decline in business from the U.S. Department of Defense, which reduced its troop count in Afghanistan and hired Southern Air less frequently. Bankruptcy Judge Christopher S. Sontchi presides over the case. Brian S. Rosen, Esq., Candace Arthur, Esq., and Gabriel Morgan, Esq., at Weil, Gotshal & Manges LLP; and M. Blake Cleary, Esq., and Maris J. Kandestin, Esq., at Young, Conaway, Stargatt & Taylor, serve as the Debtor's counsel. Zolfo Cooper LLC serves as the Debtors' bankruptcy consultant and special financial advisor. Kurtzman Carson Consultants, LLC, serves as claims and notice agent. In its petition, the Debtors estimated $100 million to $500 million in both assets and debts. The petition was signed by Jon E. Olin, senior vice president. Canadian Imperial Bank of Commerce, New York Agency, the DIP agent and prepetition agent, is represented by Matthew S. Barr, Esq., and Samuel Khalil, Esq., at Milbank Tweed Hadley & McCloy LLP; and Mark D. Collins, Esq., and Katherine L. Good, Esq., at Richards Layton & Finger PA. Stephen J. Shimshak, Esq., and Kelley A. Cornish, Esq., at Paul Weiss Rifkind Wharton & Garrison LLP; and Mark E. Felger, Esq., at Cozen O'Connor, represent Oak Hill Capital Partners II, LP, OH Aircraft Acquisition LLC, and Oak Hill Cargo 360 LLC. SPANISH BROADCASTING: Attiva Wants Class A Directors Appointed -------------------------------------------------------------- Attiva Capital Partners Ltd. encourages the Board of Directors of Spanish Broadcasting to improve corporate governance by separating the roles of Chairman and chief executive officer and stay true to its motto "the largest publicly traded Hispanic-controlled media and entertainment company in the United states". In addition, Attiva Capital suggested that the Board appoint additional directors. "In its duty to look after the interest of all shareholders, SBS must increase its board to include directors representing holders of Class A and Preferred Stock, respectively," Attiva said in a regulatory filing. As of Oct. 19, 2012, Attiva Capital and its affiliates beneficially own 421.982 of Class A Shares of the Company representing 10.127% of the shares outstanding. A copy of the filing is available for free at http://is.gd/dbL1wb About Spanish Broadcasting Headquartered in Coconut Grove, Florida, Spanish Broadcasting System, Inc. -- http://www.spanishbroadcasting.com/-- owns and operates 21 radio stations targeting the Hispanic audience. The Company also owns and operates Mega TV, a television operation with over-the-air, cable and satellite distribution and affiliates throughout the U.S. and Puerto Rico. Its revenue for the twelve months ended Sept. 30, 2010, was approximately $140 million. The Company's balance sheet at June 30, 2012, showed $466.74 million in total assets, $418.02 million in total liabilities, $92.34 million in cumulative exchangeable redeemable preferred stock, and a $43.63 million total stockholders' deficit. * * * In November 2010, Moody's Investors Service upgraded the corporate family and probability of default ratings for Spanish Broadcasting System, Inc., to 'Caa1' from 'Caa3' based on improved free cash flow prospects due to better than anticipated cost cutting and the expiration of an unprofitable interest rate swap agreement. Moody's said Spanish Broadcasting's 'Caa1' corporate family rating incorporates its weak capital structure, operational pressure in the still cyclically weak economic climate, generally narrow growth prospects (though Spanish language is the strongest growth prospect) given the maturity and competitive pressures in the radio industry, and the June 2012 maturity of its term loan magnify this challenge. In July 2010, Standard & Poor's Ratings Services raised its corporate credit rating on Miami, Fla.-based Spanish Broadcasting System Inc. to 'B-' from 'CCC+', based on continued improvement in the company's liquidity position. The rating outlook is stable. "The rating action reflects S&P's expectation that, despite very high leverage, SBS will have adequate liquidity over the intermediate term to meet debt maturities, potential swap settlements, and operating needs until its term loan matures on June 11, 2012," said Standard & Poor's credit analyst Michael Altberg. SPEEDWAY MOTORSPORTS: Rights Deal No Impact on Moody's 'Ba1' CFR ---------------------------------------------------------------- Moody's Investors Service said NASCAR's announcement that it signed a new eight-year multi-platform media rights agreement with FOX Sports Media Group does not affect Speedway Motorsports, Inc.'s (SMI) Ba1 Corporate Family Rating or stable rating outlook, although the announcement is credit positive for SMI as it secures hefty increases in a very important contractual revenue source through 2022. SMI's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (ii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside SMI's core industry and believes SMI's ratings are comparable to those of other issuers with similar credit risk. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. SMI, headquartered in Concord, NC, is the second largest promoter, marketer and sponsor of motor sports activities in the U.S. primarily through its ownership of eight major race tracks. NASCAR sanctioned events account for the majority of SMI's approximate $530 million revenue for the LTM ended 6/30/12. SRA INT'L: S&P Affirms 'B' Corp. Credit Rating; Outlook Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Fairfax, Va.-based SRA International Inc. to negative from stable. "At the same time, we affirmed our 'B' corporate credit rating and other ratings on the company," S&P said. "The outlook revision reflects our view that SRA's fiscal 2013 (ended June 30, 2013) revenue will be constrained as a result of the loss of the Federal Insurance Deposit Corp. (FDIC) contract, which represented about 9% of its fiscal 2012 revenues and about 7% of its first-quarter fiscal 2013 revenues. SRA may need to reallocate resources from its FDIC contract to other contracts," S&P said. "The ratings on SRA International reflect Standard & Poor's Ratings Services' view that the company's financial risk profile is highly leveraged, as demonstrated by adjusted leverage of about 6.3x, and also takes into account the significant influence of U.S. government agency budgetary constraints on its performance. Partially offsetting these factors is the company's 'fair' business risk profile under our criteria, with predictable revenue streams based on a contractual backlog of business, as well as a diversified customer and contract base of approximately 1,200 active contracts that generate consistent cash flows, even in the currently tight defense spending environment," S&P said. SRA is a provider of technology and strategic consulting services and solutions, primarily to government organizations. Offerings include systems design, development, and integration; cyber security and information assurance; outsourcing; and managed services. The company serves customers in three markets: national security, civil government, and health. "The outlook is negative, reflecting our view that the loss of its largest contract would cause the company's already high debt leverage to remain elevated, as a result of a lower EBITDA base. We expect the company to maintain consistent profitability and to continue to generate positive FOCF. We would consider an outlook revision to stable if the company can demonstrate that the loss of its FDIC contract does not affect its ability to retain its existing contracts and successfully bid and win contracts with both existing and new customers and if leverage declines back to the 6x level. We could lower the rating if the competitive bidding environment leads to the loss of additional material contracts, or if it faces margin pressures, which erode SRA's EBITDA base, leading to leverage approaching 7x," S&P said. SPRINGHILL PARTNERS: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: SpringHill Partners 16 E. Old Willow Road Prospect Heights, IL 60070 Tel: (312) 372-8703 Bankruptcy Case No.: 12-41075 Chapter 11 Petition Date: October 16, 2012 Court: U.S. Bankruptcy Court Northern District of Illinois (Chicago) Judge: Donald R. Cassling Debtor's Counsel: Linda Spak, Esq. SPAK & ASSOC 6938 N. Kenton Lincolnwood, IL 60712 Tel: (312) 372-8703 Fax: (773) 338-4956 E-mail: attorneyspak@yahoo.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by John Livaditis, partner. STEAK N SHAKE: S&P Withdraws 'B' Corp. Credit Rating on Request --------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B' corporate credit rating and stable outlook on Indianapolis-based restaurant operator Steak n Shake Operations Inc. at the company's request. "The company has recently completed the refinancing of its $110 million term loan with a new $130 million term loan, while it increased the size of its revolver to $50 million from $20 million. The refinancing was essentially leverage neutral with pro forma total debt to EBITDA remaining at the mid-3x area and EBITDA coverage of interest in the high-3x area at July 4, 2012," S&P said. STEREOTAXIS INC: Franklin Resources Discloses 19.4% Equity Stake ---------------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Franklin Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr., and Franklin Advisers, Inc., disclosed that as of Sept. 30, 2012, they beneficially own 1,636,640 shares of common stock of Stereotaxis, Inc., representing 19.4% of the shares outstanding. A copy of the filing is available at: http://is.gd/hQ8hKW About Stereotaxis Based in St. Louis, Mo., Stereotaxis, Inc., designs, manufactures and markets the Epoch Solution, which is an advanced remote robotic navigation system for use in a hospital's interventional surgical suite, or "interventional lab", that the Company believes revolutionizes the treatment of arrhythmias and coronary artery disease by enabling enhanced safety, efficiency and efficacy for catheter-based, or interventional, procedures. For the year ended Dec. 31, 2011, Ernst & Young LLP, in St. Louis, Missouri, expressed substantial doubt about Stereotaxis' ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring operating losses and has a working capital deficiency. The Company reported a net loss of $32.0 million for 2011, compared with a net loss of $19.9 million for 2010. The Company's balance sheet at June 30, 2012, showed $36.61 million in total assets, $50.09 million in total liabilities and a $13.47 million total stockholders' deficit. STODDARD STREET: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Stoddard Street Redevelopment Corporation 11507 Philmar Saint Louis, MO 63138 Bankruptcy Case No.: 12-49997 Chapter 11 Petition Date: October 16, 2012 Court: U.S. Bankruptcy Court Eastern District of Missouri (St. Louis) Judge: Charles E. Rendlen, III Debtor's Counsel: Rochelle D. Stanton, Esq. 745 Old Frontenac Square, Suite 202 Frontenac, MO 63131 Tel: (314) 991-1559 E-mail: rstanton@rochelledstanton.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company's list of its largest unsecured creditors filed with the petition does not contain any entry. The petition was signed by Craig Spruills, chief financial officer. STORY BUILDING: Case Dismissal Hearing Continued Until Dec. 4 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California has continued until Dec. 4, 2012, at 10:30 a.m., the hearing to consider creditor Wells Fargo Bank, N.A.'s request for the dismissal of the Chapter 11 case of Story Building LLC. Wells Fargo, serves as trustee for the Registered Holders of J.P. Morgan Chase Commercial Mortgage Securities Corp. At the hearing, the Court will also consider Wells Fargo's request for relief from stay on the real property. About Story Building LLC Story Building LLC is a real estate management company based in Irvine, California. The Company owns and operates a 13-story historical building located in Downtown, Los Angeles, known as the Walter P. Story Building, located at 610 S. Broadway. The building is primarily utilized as a jewelry plaza. Story Building LLC filed for Chapter 11 bankruptcy protection (Bankr. C.D. Calif. Case No. 10-16614) on May 17, 2010. Sandford Frey, Esq., who has an office in Los Angeles, California, represents the Debtor in its restructuring effort. The Debtor disclosed $19,421,024 in assets and $16,500,721 in liabilities as of the Chapter 11 filing. There was no official committee of unsecured creditors appointed in the Debtor's case. The Debtor's Plan provides that distributions will be funded primarily from operations of the Story Building property, and the new value contribution. The Debtor's interest holder has agreed to provide $160,000. STORY BUILDING: Plan Outline Hearing Continued Until Nov. 30 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Central District of California has continued until Nov. 30, 2012, at 10:30 a.m., the hearing to consider adequacy of the Disclosure Statement explaining Story Building LLC's Second Amended Plan of Reorganization. The Court also ordered that further amended DS and separate amended plan to be filed by Oct. 26, further comments/opposition are due by Nov. 9, and reply is due by Nov. 16. As reported in the Troubled Company Reporter on May 10, 2012, plan distributions will be funded primarily from operations of the Story Building property, and the new value contribution. The Debtor's interest holder has agreed to provide $160,000. Under the Plan, Wells Fargo Bank N.A., owed in excess of $12.6 million, will receive interest payments until Dec. 31, 2015 and the full payment of the balance of the claim will be paid on Dec. 31, 2015. Holders of Class 4 general non-insider unsecured claims estimated to total $3.86 million will receive, among other things, (i) a pro rata share of 25% of net operating income for the calendar years 2012 to 2017, derived from the rents generated from the Story Building property; (ii) one final payment of the balance of the allowed claim and all accrued interest in full on or before Dec. 31, 2018; and (iii) in the event that the property is sold, a pro rata share of up to 100% of the net proceeds, if any, after payment of all costs of sale, etc. The interest of the existing owner of the Debtor will be unaffected by the Plan. Wells Fargo and the unsecured creditors are impaired under the Plan. A copy of the final modifications proposed by Wells Fargo and consented to by the Debtor to the Disclosure Statement are available for free at: http://bankrupt.com/misc/StoryBuilding_DS_Final.pdf http://bankrupt.com/misc/StoryBuilding_DS_Final2.pdf http://bankrupt.com/misc/StoryBuilding_DS_Final3.pdf About Story Building LLC Story Building LLC is a real estate management company based in Irvine, California. The Company owns and operates a 13-story historical building located in Downtown, Los Angeles, known as the Walter P. Story Building, located at 610 S. Broadway. The building is primarily utilized as a jewelry plaza. Story Building LLC filed for Chapter 11 bankruptcy protection (Bankr. C.D. Calif. Case No. 10-16614) on May 17, 2010. Sandford Frey, Esq., who has an office in Los Angeles, California, represents the Debtor in its restructuring effort. The Debtor disclosed $19,421,024 in assets and $16,500,721 in liabilities as of the Chapter 11 filing. There was no official committee of unsecured creditors appointed in the Debtor's case. The Debtor's Plan provides that distributions will be funded primarily from operations of the Story Building property, and the new value contribution. The Debtor's interest holder has agreed to provide $160,000. SUNGARD DATA: Moody's Rates $500-Mil. Sr. Subordinated Notes Caa1 ----------------------------------------------------------------- Moody's Investors Service assigned a Caa1 rating to SunGard Data Systems Inc.'s (SunGard) proposed $500 million 7 year senior subordinated notes. All other ratings, including the B2 corporate family rating (CFR), and the stable outlook remain unchanged. Proceeds from these notes are expected to repay a portion of the existing $1 billion senior subordinated notes due August 2015. Rating Rationale The B2 corporate family rating (CFR) reflects Moody's expectation that SunGard's financial leverage will likely remain high (currently at mid 5 times adjusted debt to EBITDA) through 2013. SunGard reduced leverage earlier this year (from mid 6 times adjusted debt to EBITDA) with the completion of the sale of its Higher Education (HE) business, in which net proceeds of $1.22 billion were used to repay some of its senior secured credit facility term loans. While credit positive, the sustainability of SunGard's cash flow after the sale of HE remains in question due to the underperformance of the Availability Services (AS) business relative to the Financial Systems (FS) business. AS' revenues and profits have deteriorated in recent years, as SunGard has not executed effectively in a recovery/business continuity industry that is growing. Consistent revenue and profitability growth (in the low single digits) with adjusted debt to EBITDA under 5x on a sustained basis could result in a higher rating. The rating could be lowered if revenue or operating profitability were to decline (e.g., continued revenue and operating margin erosion in Availability Services) such that the company's ratio of adjusted debt to EBITDA were to exceed 7x on a sustained basis. The stable outlook reflects Moody's expectation of flat revenue growth in 2013 given the weakness in the global financial services industry and the time required to turnaround the Availability Services business. Moody's expects modest improvement to its financial leverage arising from cost savings and annual free cash flow of about $400 million. The stable outlook also assumes SunGard will not increase its debt leverage significantly or make dividend payments to its private equity sponsors. Ratings assigned: Senior Subordinated Notes -- rated Caa1 The principal methodology used in rating SunGard Data Systems Inc. was the Global Business & Consumer Service Industry Rating Methodology published in October 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. With about $4 billion of annual revenues, SunGard Data Systems Inc. is a provider of software and IT services, and is owned by a consortium of private equity investors (including Bain, Blackstone, KKR, Silver Lake, Texas Pacific Group, GS Partners, and Providence Equity). THOR INDUSTRIES: Hearing on Cash Collateral Continued Until Nov. 2 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Tennessee, according to Thor Industries LLC's case docket, continued until Nov. 2, 2012, at 9 a.m., the hearing to consider the Debtor's request to use cash collateral, and the related objection filed by creditor Tennessee State Bank. As reported by the Troubled Company Reporter on May 24, 2012, Judge Marcia Phillips Parsons authorized Thor Industries to use TSB's cash collateral to fund general ongoing business operations in accordance with a budget. To secure the aggregate amount of all cash collateral used by the Debtor, Tennessee State Bank is granted (i) a replacement lien and security interest on all of the Prepetition Collateral and (ii) an additional postpetition lien and security interest, junior only to any valid and presently existing liens or security interests, in the property of the estate. Prior to the petition date, Thor Industries entered into a Loan Agreement with Tennessee State Bank to continue the development of Mountain Cove Marina, a related RV park, and a related campground facility, all located in Campbell County, Tennessee, on Norris Lake. In addition, certain property known as the Hickory Bluff Marina was pledged as additional Collateral to secure the loan of Tennessee State Bank and to insure the United States Department of Agriculture long-term financing of the development project. As of March 30, 2012, the total debt owing by Thor Industries to Tennessee State Bank was $8,471,899 while the appraised value of the Collateral of the development was $11,875,000. Thor Industries said it needs the cash collateral for the payment of its operating budgets and one additional capital expense. Thor Industries said it has no present alternative borrowing source from which it could secure additional funding to operate it business. Without the authority to use cash collateral, Thor Industries said it will be unable to continue its business operations and propose a plan of reorganization. Thor Industries said it will be seriously and irreparable harmed, resulting in significant losses to the Debtor's estate and its creditors. The Debtor is liable to the bank in an amount not exceeding $8,363,000. At the hearing, the Court will also consider Tennessee State's motion for relief from stay; the Debtor's motion to sell, and Tennessee State's objection thereto. About Thor Industries Lake City, Tennessee-based Thor Industries, LLC, filed a Chapter 11 petition (Bankr. E.D. Tenn. Case No. 12-50625) in Greenville on March 30, 2012. The Debtor disclosed $11.97 million in assets and $10.0 million in liabilities as of the Chapter 11 filing. The Debtor owns the property in Mountain Lake Marina & RV Resort in Campground Road, Lake City, Tennessee, worth $11 million and securing an $8.52 million debt. The Debtor also owns a property Hickory Bluff Marina, in Camden County, Georgia, worth $875,000 and securing a $375,000 loan. Judge Marcia Phillips Parsons oversees the case. Dean B. Farmer, Esq., at Hodges, Doughty & Carson PLLC represents the Debtor in its restructuring efforts. The petition was signed by R. Steven Williams, Sr., chief manager. Samuel K. Crocker, U.S. Trustee for Region 8, was unable to form a committee of unsecured creditors because there were an insufficient number of unsecured creditors interested in forming a committee. TOMKINS AIR: S&P Assigns Prelim. 'B' Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary 'B' corporate credit rating to Richardson, Texas-based Tomkins Air Distribution. The rating outlook is stable. "At the same time, we assigned our preliminary 'B' issue-level rating (same as the corporate credit rating) to the company's proposed $100 million revolving credit facility due 2017 and its proposed $525 million first-lien term loan due 2018. The preliminary recovery rating is '3', indicating our expectation of meaningful (50% to 70%) recovery for lenders in the event of a payment default," S&P said. "In addition, we assigned our preliminary 'CCC+' issue-level rating (two notches below the corporate credit rating) to the company's proposed $135 million second-lien term loan due 2020. The preliminary recovery rating is '6', indicating our expectation of negligible (0% to 10%) recovery for lenders in the event of a payment default," S&P said. "Proceeds from these offerings will be used to fund the acquisition of Pinafore Holdings B.V.'s Tomkins Group Air Distribution Division by an affiliate of the Canada Pension Plan Investment Board (CPP). Total consideration for the acquisition is $1.1 billion, including the proposed debt and contributed equity from CPP," S&P said. "The preliminary corporate credit rating on Tomkins Air Distribution reflects what we consider to be the combination of Tomkins' 'weak' business risk profile and 'highly leveraged' financial risk profile," said Standard & poor's credit analyst Maurice S. Austin. "Our view of the company's weak business risk is due to Tomkins' exposure to highly cyclical commercial and residential construction markets, volatile raw material costs, and a highly competitive operating environment. Still, it is our view that Tomkins derives a competitive advantage from its leading market position in niche categories and its broad and diversified distribution network for its heating, ventilation, and air conditioning (HVAC) components." "Tomkins is the leading North American manufacturer of products that are used to distribute, recycle, and vent air, and which are critical components of HVAC systems within non-residential and residential buildings. Tomkins designs nd manufactures a broad range of products including grilles, registers and diffusers, dampers and louvers, terminal units, commercial & industrial fans, chimneys, vents and accessories and air filters used in a variety of industrial and commercial applications. Tomkins has developed an extensive distribution network in the U.S. for both its non- residential and residential products that provides a significant competitive advantage relative to smaller, regional, and local competitors, in our opinion," S&P said. "The stable rating outlook reflects our expectation that credit measures will remain consistent with the company's highly leveraged financial risk profile, with 2013 debt to EBITDA and FFO to debt of about 5.5x and 12%, respectively, based on our assumptions of flat end-market demand. We expect Tomkins will maintain adequate liquidity based on committed revolving borrowing capacity and free operating cash flow," S&P said. "We could lower the rating if Tomkins experiences weaker-than- expected end-market demand, resulting in weaker-than-expected operating performance or if the company experiences higher-than- expected costs from establishing an internal corporate infrastructure such that total leverage increases above 6x on a sustained basis. This could occur if the aforementioned actions result in more than a 150 basis point decline in gross margins," S&P said. "An upgrade is less likely in the next 12 months given our outlook for flat commercial construction activity. However, we could raise our rating in the longer term when commercial construction improves and after Tomkins establishes a track record of maintaining lower leverage comfortably in the 4x to 5x range," S&P said. TOWNSEND CORP: Plan Filing Exclusivity Extended to Jan. 2 --------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California extended Townsend Corporation, et al.'s exclusive periods to file and solicit acceptances for the proposed chapter 11 Plan until Jan. 2, 2013, and Feb. 28, respectively. The Debtor related that they are working on closing the sale of substantially all of LRJ Anaheim's assets. About Townsend Corporation Auto dealers Townsend Corporation, d/b/a Land Rover Jaguar Anaheim Hills, and LRJC, Inc., d/b/a Land Rover Jaguar Cerritos -- http://www.lrjah.com/and http://lrjcerritos.com/-- filed for Chapter 11 bankruptcy (Bankr. C.D. Calif. Case Nos. 11-22690 and 11-22695) on Sept. 9, 2011. The Debtors sell new Jaguar and Land Rover vehicles and various previously owned vehicles. The Debtors also have service and parts departments. The Debtors are principally owned and operated by Ernest Townsend and his son, Joshua Townsend. LRJ Anaheim has been in business since 2000. LRJ Cerritos has been in business since 2006. The Chapter 11 cases were reassigned from Judge Robert N. Kwan to Judge Catherine E. Bauer. Todd M. Arnold, Esq., and Martin J. Brill, Esq., at Levene, Neale, Bender, Yoo & Brill, LLP, represent the Debtors. Each of the Debtors estimated $10 million to $50 million in both assets and debts. The petitions were signed by Ernest W. Townsend, IV, the president. TRIBUNE CO: Bank Debt Trades at 24% Off in Secondary Market ----------------------------------------------------------- Participations in a syndicated loan under which Tribune Co. is a borrower traded in the secondary market at 76.07 cents-on-the- dollar during the week ended Friday, Oct. 19, an increase of 0.36 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 300 basis points above LIBOR to borrow under the facility. The bank loan matures on May 17, 2014. The loan is one of the biggest gainers and losers among 198 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. * * * As reported by The Troubled Company Reporter on Oct. 20, 2012, Tribune Company, et al., posted a $3.663 million net income for the period July 30 to Aug. 26, 2012. Revenues for the period totaled $217.486 million while operating expenses totaled $201.881 million. As of Aug. 26, 2012, the Debtors had consolidated current assets totaling $2,509,515,000, and consolidated current liabilities totaling $537,050,000. The Debtors had assets totaling $9.616 billion, liabilities totaling $17.786 billion, resulting to $8.171 billion shareholders' deficit. Disbursements for the operating period totaled $202,823,000, which consisted of $69,638,000 in compensation and benefits, $125,356,000 in general disbursements, and $7,829,000 in reorganization-related disbursements. For the operating period, $7,675,753 was paid to Chapter 11 professionals, including $5,150,186 to Sidley Austin LLP. The amount paid to the Chapter 11 professionals since the bankruptcy filing totaled $277,358,692. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8, 2008. The Debtors proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North America LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Chadbourne & Parke LLP and Landis Rath LLP serve as co-counsel to the Official Committee of Unsecured Creditors. AlixPartners LLP is the Committee's financial advisor. Landis Rath Moelis & Company serves as the Committee's investment banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, represents the Committee in connection with the lawsuit filed against former officers and shareholders for the 2007 LBO of Tribune. Protracted negotiations and mediation efforts and numerous proposed plans of reorganization filed by Tribune Co. and competing creditor groups have delayed Tribune's emergence from bankruptcy. Many of the disputes among creditors center on the 2007 leveraged buyout fraudulence conveyance claims, the resolution of which is a key issue in the bankruptcy case. The bankruptcy court has scheduled a May 16 hearing on Tribune's plan. Judge Kevin J. Carey issued an order dated July 13, 2012, overruling objections to the confirmation of Tribune Co. and its debtor affiliates' Plan of Reorganization. Before it formally emerges from bankruptcy, Tribune must still get approval from the Federal Communications Commission on new broadcast licenses and waivers for overlapping ownership of television stations and newspapers in certain markets. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TSC SIEBER: Chapter 7 Trustee Can Recover $451K Against Ex-Manager ------------------------------------------------------------------ Bankruptcy Judge Bill Tyler ruled that Stephen J. Zayler, in his capacity as the trustee of the Chapter 7 Bankruptcy Estate of TSC Sieber Services LC, is entitled to recover from Jerry Don Calicutt, Jr., former manager of the Debtor, the sum of: $411,749 as actual damages arising from the misappropriation of funds and breaches of fiduciary duty committed by the Defendant and to prevent the unjust enrichment of the Defendant arising from his unauthorized actions; $1,000 as statutory damages under the Texas Theft Liability Act. 6 TEX. PRAC. & REM. CODE Sec. 134.005(a) (Vernon 2011); $250 for court costs; and $38,391 as pre-judgment interest through Oct. 18, 2012. The Court also ruled that the Chapter 7 Trustee is entitled to prejudgment interest on such judgment sum accruing from Dec. 9, 2010, the date the lawsuit was filed, until the date of judgment at the rate of 5% per annum. The Chapter 7 Trustee is also entitled to post-judgment interest at a rate of 0.18%. 28 U.S.C. ? 1961. The lawsuit is STEPHEN J. ZAYLER, Trustee Plaintiff, v. JERRY DON CALICUTT, Jr. Defendant, Adv. Proc. No. 10-6031 (Bankr. E.D. Tex.). A copy of the Court's Oct. 18, 2012 Findings of Fact and Conclusions of Law is available at http://is.gd/5f2Etnfrom Leagle.com. TSC Sieber Services, LC, filed a Chapter 11 voluntary petition (Bankr. E.D. Tex. Case No. 09-61042) on Oct. 17, 2009. The case was subsequently converted to Chapter 7 on Nov. 2, 2009, and Stephen J. Zayler was appointed as the Chapter 7 Trustee. The Debtor was primarily engaged in the business of pipeline construction. The Debtor eventually conducted its operations from three locations -- Arp, Texas, Millsap, Texas, and Keithville, Louisiana. TXU CORP: Bank Debt Trades at 31% Off in Secondary Market --------------------------------------------------------- Participations in a syndicated loan under which TXU Corp., now known as Energy Future Holdings Corp., is a borrower traded in the secondary market at 69.31 cents-on-the-dollar during the week ended Friday, Oct. 19, a drop of 0.31 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 450 basis points above LIBOR to borrow under the facility. The bank loan matures on Oct. 10, 2017, and carries Moody's Caa1 rating and Standard & Poor's CCC rating. The loan is one of the biggest gainers and losers among 198 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About Energy Future Energy Future Holdings Corp., formerly known as TXU Corp., is a privately held diversified energy holding company with a portfolio of competitive and regulated energy businesses in Texas. Oncor, an 80%-owned entity within the EFH group, is the largest regulated transmission and distribution utility in Texas. The Company delivers electricity to roughly three million delivery points in and around Dallas-Fort Worth. EFH Corp. was created in October 2007 in a $45 billion leverage buyout of Texas power company TXU in a deal led by private-equity companies Kohlberg Kravis Roberts & Co. and TPG Inc. The Company's balance sheet at Dec. 31, 2011, showed $44.07 billion in total assets, $51.83 billion in total liabilities, and a $7.75 billion total deficit. Energy Future had a net loss of $1.91 billion on $7.04 billion of operating revenues for the year ended Dec. 31, 2011, compared with a net loss of $2.81 billion on $8.23 billion of operating revenues during the prior year. * * * In late January 2012, Moody's Investors Service changed the rating outlook for Energy Future Holdings Corp. (EFH) and its subsidiaries to negative from stable. Moody's affirmed EFH's Caa2 Corporate Family Rating (CFR), Caa3 Probability of Default Rating (PDR), SGL-4 Speculative Grade Liquidity Rating and the Baa1 senior secured rating for Oncor. EFH's Caa2 CFR and Caa3 PDR reflect a financially distressed company with limited flexibility. EFH's capital structure is complex and, in our opinion, untenable which calls into question the sustainability of the business model and expected duration of the liquidity reserves. TXU CORP: Bank Debt Trades at 26% Off in Secondary Market --------------------------------------------------------- Participations in a syndicated loan under which TXU Corp., now known as Energy Future Holdings Corp., is a borrower traded in the secondary market at 74.30 cents-on-the-dollar during the week ended Friday, Oct. 19, a drop of 0.78 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 350 basis points above LIBOR to borrow under the facility. The bank loan matures on Oct. 10, 2014, and carries Standard & Poor's CCC rating. The loan is one of the biggest gainers and losers among 198 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About Energy Future Energy Future Holdings Corp., formerly known as TXU Corp., is a privately held diversified energy holding company with a portfolio of competitive and regulated energy businesses in Texas. Oncor, an 80%-owned entity within the EFH group, is the largest regulated transmission and distribution utility in Texas. The Company delivers electricity to roughly three million delivery points in and around Dallas-Fort Worth. EFH Corp. was created in October 2007 in a $45 billion leverage buyout of Texas power company TXU in a deal led by private-equity companies Kohlberg Kravis Roberts & Co. and TPG Inc. The Company's balance sheet at Dec. 31, 2011, showed $44.07 billion in total assets, $51.83 billion in total liabilities, and a $7.75 billion total deficit. Energy Future had a net loss of $1.91 billion on $7.04 billion of operating revenues for the year ended Dec. 31, 2011, compared with a net loss of $2.81 billion on $8.23 billion of operating revenues during the prior year. * * * In late January 2012, Moody's Investors Service changed the rating outlook for Energy Future Holdings Corp. (EFH) and its subsidiaries to negative from stable. Moody's affirmed EFH's Caa2 Corporate Family Rating (CFR), Caa3 Probability of Default Rating (PDR), SGL-4 Speculative Grade Liquidity Rating and the Baa1 senior secured rating for Oncor. EFH's Caa2 CFR and Caa3 PDR reflect a financially distressed company with limited flexibility. EFH's capital structure is complex and, in our opinion, untenable which calls into question the sustainability of the business model and expected duration of the liquidity reserves. UNIGENE LABORATORIES: Files Form S-1, Registers 161.7MM Shares -------------------------------------------------------------- Unigene Laboratories, Inc., filed a registration statement on Form S-1 relating to the sale of up to 161,739,676 shares of the Company's common stock, par value $.01 per share, by Victory Park Credit Opportunities, L.P, Victory Park Credit Opportunities Intermediate Fund, L.P., VPC Fund II, L.P., and VPC Intermediate Fund II (Cayman), L.P., of which 153,093,862 shares will be issuable upon the conversion of senior secured convertible notes held by the selling stockholders and the balance of which are currently held of record by the selling stockholders. The Company will not receive any proceeds from the sale of its shares by the selling stockholders. All costs, expenses and fees in connection with the registration of these shares will be borne by the Company. The Company's common stock is quoted on the OTC Bulletin Board and the OTC Markets -- OTCQB tier under the symbol "UGNE." On Oct. 17, 2012, the last reported closing price of the Company's common stock was $0.2945 per share. These over-the-counter quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. A copy of the prospectus is available for free at: http://is.gd/XQLjCV About Unigene Unigene Laboratories, Inc. OTCBB: UGNE) -- http://www.unigene.com/ -- is a biopharmaceutical company focusing on the oral and nasal delivery of large-market peptide drugs. Unigene reported a net loss of $17.92 million in 2011, a net loss of $27.86 million in 2010, and a net loss of $13.38 million in 2009. The Company's balance sheet at June 30, 2012, showed $11.69 million in total assets, $77.56 million in total liabilities and a $65.87 million total stockholders' deficit. Grant Thornton LLP, in New York, expressed substantial doubt about the Company's ability to continue as a going concern following the 2011 financial results. The independent auditors noted that the Company has incurred a net loss of $17,900,000 during the year ended Dec. 31, 2011, and, as of that date, has an accumulated deficit of approximately $189,000,000 and the Company's total liabilities exceeded total assets by $55,138,000. Bankruptcy Warning Under the Company's amended and restated March 2010 financing agreement with Victory Park Management, LLC, so long as the Company's outstanding note balance is at least $5,000,000, the Company must maintain a minimum cash balance equal to at least $2,500,000 and its cash flow must be at least $2,000,000 in any fiscal quarter or $7,000,000 in any three consecutive quarters. "Without additional financing, we will not be able to maintain a minimum cash balance of $2,500,000, or maintain an adequate cash flow, in order to avoid default in periods subsequent to September 30, 2012," the Company said in its quarterly report for the period ended June 30, 2012. "As a result, we will be in default under the financing agreement, which would result in the full amount of our debt owed to Victory Park becoming immediately due and payable. Even if we are able to raise cash and maintain a minimum cash balance of at least $2,500,000 through the March 2013 maturity date, there is no assurance that the notes will be converted into common stock, in which case, we may not have sufficient cash from operations or from new financings to repay the Victory Park debt when it comes due. There can be no assurance that new financings will be available on acceptable terms, if at all. In the event that we default, Victory Park could retain control of the Company and will have the ability to force us into involuntary bankruptcy and liquidate our assets." VAREL INTERNATIONAL: Moody's Assigns 'B3' CFR; Outlook Stable ------------------------------------------------------------- Moody's Investors Service assigned a B3 Corporate Family Rating (CFR) to Varel International Energy Funding Corp. (VIEFC), and a B3 rating to VIEFC's proposed senior secured $230 million term loan and $20 million revolving credit facilities. The rating outlook is stable. Following the close of the proposed transaction, Moody's will withdraw the Caa2 CFR on Varel Funding Corp. (Funding Co.) and the B3 rating on Funding Co.'s term loan facility, which is being refinanced with the new VIEFC term loan issue. VIEFC is a special purpose corporation that was formed to facilitate an Islamic Shari'ah compliant financing structure. VIEFC will borrow from outside investors and enter into a lease financing facility and a commodity purchase facility with Varel International Energy Services, Inc. and Varel International Industries, L.P. (collectively "Varel"). The lease financing facility and the commodity purchase facility will be funded with VIEFC's borrowings. Varel entities will then use the proceeds to repay existing debt at Funding Co., and will be ultimately responsible for funding future payments due under VIEFC's credit facilities. Moody's assigned ratings to VIEFC are subject to a review of final documentation. "This refinancing will extend the term of Varel's debt maturities, lower overall cost of borrowings and solidify liquidity," said Sajjad Alam, Moody's Analyst. "While debt levels will remain largely unchanged following the transaction, improving earnings and an international footprint should support a leverage profile consistent with the B3 CFR level." Issuer: Varel International Energy Funding Corp. Assignments: Corporate Family Rating, Assigned B3 Probability of Default Rating, Assigned B3 US$230M Senior Secured Bank Credit Facility, Assigned B3 US$20M Senior Secured Bank Credit Facility, Assigned B3 US$230M Senior Secured Bank Credit Facility, Assigned a range of LGD3, 44 % US$20M Senior Secured Bank Credit Facility, Assigned a range of LGD3, 44 % Ratings Rationale VIEFC's B3 Corporate Family Rating (CFR) reflects Varel's small scale in a highly competitive industry dominated by very large players with substantial financial resources; overriding reliance on a single product line - drillbits - for the generation of revenues and cash flows; high financial leverage, weak tangible asset coverage and the highly cyclical operating environment dictated by volatile global oil and gas and basic material prices. The rating also considers the company's private ownership and complex financing structure under the Shari'ah principles that limits access to broader capital markets. The rating is supported by Varel's presence in various international markets, which tend to be less cyclical than the North American market; leadership position in providing drillbits to mining and industrial companies which softens its dependence on the oil & gas industry; and the generally healthy drilling trends worldwide, particularly toward deeper, horizontal and more complex wells. The secured term loan and the revolver rank pari passu and they both are rated B3, the same level as the CFR. Moody's overrode the Moody's Loss Given Default Methodology generated note rating by one notch, to reflect Varel's limited tangible asset coverage, the complex Shari'ah compliant financing structure and the distribution of a portion of assets in foreign jurisdictions, that could result in lower than normal recovery for the secured lenders in a bankruptcy situation. The B3 credit facility rating reflects both the overall probability of default of VIEFC, to which Moody's assigns a PDR of B3, and a loss given default of LGD3 (44%). Varel should have adequate liquidity through the end of calendar 2013 based on approximately $36 million of cash on hand and a $20 million undrawn revolving credit facility at the close of the refinancing transaction and Moody's expectation of free cash flow generation. Moody's notes that roughly $16 million of balance sheet cash is currently restricted and located in offshore locations which will be released and used overseas in the next 12 months. The company is still negotiating covenants with the banks, but Moody's expects financial covenants to be set at levels that would provide at least 25%-30% headroom through the end of 2013. The company's alternate liquidity is weak given the all asset pledge by Varel's domestic subsidiaries and 65% equity interest pledge from foreign subsidiaries. The stable outlook reflects Varel's adequate liquidity through the end of calendar 2013 and the planned deleveraging through amortization of the term loan facility. An upgrade is unlikely in the near future given Varel's current scale and leverage in the highly cyclical and competitive drillbit industry. A significant amount of debt reduction leading to a debt/EBITDA ratio below 3x would be a pre-requisite for any upgrade consideration. The rating could be downgraded if debt/EBITDA cannot be managed below 4x. A prompt downgrade may also result if free cash flow turns negative or total liquidity (unrestricted cash plus revolver availability) drops below $25 million. The principal methodology used in rating Varel was the Global Oilfield Services Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquatered in Carrollton, Texas, Varel globally manufactures and distributes drill bits and casing and completion tools to customers in upstream oil and gas and mining industries around the world. WAVE2WAVE COMMS: Hearing on Case Conversion Set for Nov. 13 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey will convene a hearing on Nov. 13, 2012, at 10 a.m., to consider Wave2Wave Communications, Inc., et al.'s motion to convert their Chapter 11 cases to those under Chapter 7 of the Bankruptcy Code. Objections or responses, if any, are due Nov. 6, at 5 p.m. Unless objections are timely filed and served, the Motion will be deemed uncontested. About Wave2Wave Communications Wave2Wave Communications Inc., a provider of voice and data services to businesses, filed for bankruptcy (Bankr. D. N.J. Case No. 12-13896) on Feb. 17, 2012. Wave2Wave, which estimated up to $100 million assets and debts, says it sought Chapter 11 protection, after access provider Verizon Communications Inc. threatened to cut off its service. Affiliates RNK Inc. and RNK VA LLC also filed petitions. Wave2Wave was founded in 1999. Judge Donald H. Steckroth presides over the case. Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., serves as the Debtors' counsel. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., serves as their special counsel. Kurtzman Carson Consultants LLC serves claims, noticing and balloting agent. J.H. Cohn LLP serves as financial advisor. The petition was signed by Steven Asman, president and chairman of the Debtors' board. The official committee of unsecured creditors is represented by Cooley LLP. The Debtor is being sold to a company affiliated with Robert DePalo, an officer of the first-and second-lien lenders and a minority shareholder for $3.5 million cash plus the assumption of debt. WESCO INT'L: Moody's Says EECOL Acquisition Credit Negative ----------------------------------------------------------- Moody's Investors Service said that WESCO International, Inc.'s recent announcement that it entered into a definitive agreement to acquire Canadian-based EECOL Electric Corporation for CAD$1.14 billion is credit negative but is not likely to impact its Ba3 corporate family rating or stable outlook. Moody's ratings assessment will be subject to review of final terms and conditions. WESCO International, Inc. is one of the leading providers of electrical construction products and electrical, industrial, and communications maintenance, repair and operating supplies ("MRO") in North America. The company reported sales of $6.5 billion for the twelve months ended September 30, 2012. WEZBRA DAIRY: Files Schedules of Assets and Liabilities ------------------------------------------------------- Wezbra Dairy, LLC, filed with the U.S. Bankruptcy Court for the Northern District of Indiana its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $2,775,000 B. Personal Property $1,354,016 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $6,655,059 E. Creditors Holding Unsecured Priority Claims $16,288 F. Creditors Holding Unsecured Non-priority Claims $1,527,186 ----------- ----------- TOTAL $4,129,016 $8,198,533 A copy of the schedules is available for free at http://bankrupt.com/misc/WEZBRA_DAIRY_sal.pdf About Wezbra Dairy Wezbra Dairy, LLC, operator of a dairy farm in Continental, Ohio, filed a Chapter 11 petition (Bankr. N.D. Ind. Case No. 12-12592) on Aug. 6, 2012. The Debtor owns 936 head of cattle and lease 24 head of cattle that must be fed and maintained on a daily basis. Wezbra Dairy estimated $10 million to $50 million in assets and $1 million to $10 million in debts. The Debtor owes Bank of America N.A. the amount of $6.5 million, secured by a blanket lien on the Debtor's assets. Judge Robert E. Grant oversees the case. Daniel J. Skekloff, Esq., and Scot T. Skekloff, Esq., at Skekloff, Adelsperger & Kleven, LLP serve as counsel to the Debtor. WILSONART LLC: Moody's Cuts Rating on Senior Secured Loans to B2 ---------------------------------------------------------------- Moody's Investors Service affirmed the B2 Corporate Family Rating and B2 Probability of Default rating of Wilsonart LLC. Moody's also downgraded the company's proposed senior secured bank credit facility to B2 from Ba3 reflecting the change to an all first lien bank debt capital structure rather than the bank debt and unsecured note structure that had been previously proposed. The rating for the original senior unsecured notes rated Caa1 has been withdrawn. The rating outlook is stable. The following ratings/assessments were affected by these actions: - Corporate Family Rating affirmed at B2; - Probability of Default Rating affirmed at B2; - Senior Secured Revolving Credit Facility due 2017 downgraded to B2 (LGD3, 48%) from Ba3 (LGD3, 30%); and, - Senior Secured Term Loan B due 2019 downgraded to B2 (LGD3, 48%) from Ba3 (LGD3, 30%). Ratings Rationale The downgrade of Wilsonart's proposed first lien bank credit facility to B2 from Ba3 results from the company's decision to have a new capital structure consisting entirely of bank debt rather than a combination of bank debt and unsecured notes. Wilsonart recently announced that it is upsizing its Term Loan B to $725 million from $425 million, replacing its planned $300 million unsecured notes offering. The revised rating, which is the same rating as the Corporate Family Rating, for the bank debt reflects its new position as the preponderance of debt in Wilsonart's capital structure. Additionally, the bank debt no longer benefits from a first-loss cushion that would have been provided by more junior debt. The new senior secured credit facility will still consist of a $175 million Senior Secured Revolver expiring in 2017 and a larger $725 million Senior Secured Term Loan B due 2019. Both facilities will benefit from a first-priority interest in substantially all of Wilsonart's domestic tangible and intangible assets and will be guaranteed by the company's future and existing domestic subsidiaries. The revolver and term loan will rank pari passu with each other in a recovery scenario. Term loan amortization of 1% or $7.25 million per year remains very manageable for Wilsonart, and will be offset by lower cash interest payments since the incremental increase in the term loan will be priced lower than the original unsecured notes. Wilsonart's B2 Corporate Family Rating reflects the company's high debt leverage, with pro forma adjusted debt-to-EBITDA of about 5.7 times following the proposed transaction. According to Moody's projections, debt leverage could fall to approximately 5.5 times by the end of 2013 as a result of improved profitability, and potentially some debt reduction from free cash flow over that period (all ratios incorporate Moody's standard accounting adjustments). However, Moody's recognizes Wilsonart's business profile as a significant credit strength. Wilsonart's size, scale and strong distribution network increase barriers to entry and provide support to the rating. The ratings may be upgraded if Wilsonart is able to reduce leverage to achieve adjusted debt-to-EBITDA below 5.0 times and improve operating profitability such that adjusted EBITA-to- interest expense approaches 3.0 times. Ratings may also be upgraded if the company's European exposure declines, or if the euro zone economy begins to experience a recovery. The ratings may be downgraded if the company fails to meet Moody's expectations for improvement in debt leverage, with adjusted debt- to-EBITDA remaining close to or above 6.0 times. Adjusted EBITA- to-interest expense approaching 1.5 times could also pressure the ratings. In addition, a significant deterioration in European end markets or an increase in exposure to that region could result in negative rating actions. The principal methodology used in rating Wilsonart LLC was the Global Manufacturing Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Wilsonart LLC, headquartered in Temple, TX, is a leading global manufacturer and distributor of high pressure laminates and other decorative surfacing products. The company's product offering includes laminates, solid surfaces, adhesives, and worktops designed for residential and non-residential new construction and repair & remodeling. Clayton, Dubilier & Rice, through its respective affiliates, will own about 51% of Wilsonart, with Illinois Tool Works, Inc. remaining the minority equity owner with a 49% interest. Revenues for the 12 months ended June 30, 2012 were approximately $1.1 billion. WILSONART LLC: S&P Cuts Rating on $900MM Secured Credit to 'B+' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its preliminary issue- level rating on Wilsonart LLC's proposed $900 million senior secured credit facility to 'B+' (same as the corporate credit rating) from 'BB-'. "We also revised the preliminary recovery rating to '3', indicating our expectation of meaningful (50% to 70%) recovery for lenders in the event of a payment default, from '2'. At the same time, we are withdrawing the preliminary issue- level rating on the senior notes," S&P said. "The revision reflects lower recovery prospects for lenders due to a revised capital structure in which the term loan will be increased to $725 million from $425 million. The company will no longer issue $300 million in senior unsecured notes. The company already has a $125 million cash revolver in place, bringing the total under this facility to $900 million," S&P said. "The preliminary 'B+' corporate credit rating and stable outlook on Wilsonart LLC reflects what we consider to be the combination of Wilsonart's 'fair' business risk profile and 'aggressive' financial risk profile. Our view of the company's fair business risk profile is due to the company's exposure to highly cyclical commercial and residential construction and remodeling markets, volatile raw material costs, and a highly competitive operating environment. These factors are somewhat offset by its leading market position in the high pressure laminate (HPL) business, significant geographic and customer diversification, and relatively attractive EBITDA margins," S&P said. RATINGS LIST Wilsonart LLC Corporate credit rating B+(prelim)/Stable/-- Downgraded; Recovery Rating Revised To From Proposed $900 mil term loan B due 2019 B+(prelim) BB-(prelim) Recovery Rating 3(prelim) 2(prelim Rating Withdrawn Senior unsecured notes NR B(prelim) Recovery rating NR 5(prelim) WINDSOR PETROLEUM: Moody's Cuts Rating on Sec. Notes to 'Caa2' -------------------------------------------------------------- Moody's Investors Service downgraded Windsor Petroleum Transport Corporation's (WINPET) 7.84% Term Secured Notes rating to Caa2 from Caa1; the outlook remains negative. "Notwithstanding the extension of two charters to July 2014, with the tanker market remaining depressed, the prospects for further renewals is uncertain, and material improvement in charter rates is dubious," commented Andrew Brooks, Moody's Vice President. "Beyond 2014, cash flows could again be compromised and cash balances further eroded reflecting continuing charter termination risk and the expiration of minimum pricing provisions under those charters, heightening potential payment default risk." Rating Rationale WINPET's Caa2 rating reflects the continuing weakness in charter rates for Very Large Crude Carrier (VLCC) tankers, uncertain prospects and pricing for the ongoing renewal of existing charters and debt levels that likely exceed by a wide margin the asset value of the tankers securing that debt. BP Shipping Ltd. (BP), the existing charter-party, has the right, with 12-months irrevocable notice, to terminate the charter on each of its three VLCCs on the anniversary date of each one-year extension of the respective charter. While BP opted to extend for another year the bareboat charters for the VLCC British Purpose to July 14, 2014, and the British Pride to July 30, 2014, weak tanker markets continue to make prospective renewals highly uncertain. However, through mid-July 2014, both tankers will trade on a market rate subject to a minimum bareboat rate of $20,000 per day, providing stability and certainty of cash flow during that period of time. Of WINPET's remaining two VLCCs, BP renewed the British Progress charter in January 2012 to January 2, 2014; in January 2013 BP will have the option to either renew this charter for another year at a market rate without a minimum rate, or terminate the charter. The charter for fourth VLCC, British Pioneer, was terminated by BP effective January 2011, and it has traded in the spot market since that date. Upon the termination of a charter, manager Frontline Ltd. is required to first seek an Acceptable Replacement Charter for the impacted vessel. If such charter is unavailable, Frontline is then required to attempt a sale of the vessel at the Minimum Required Bid. Should a sale prove unsuccessful, Frontline then re- charters the vessel on such terms as it deems appropriate, which is the current status of the Pioneer. Following the expiration of its charter, British Pioneer has generated spot revenues insufficient to fully cover its operating costs and allocated debt service, depleting its cash reserves. The cash balance at June 30 among the three VLCCs remaining under charter aggregated $30.8 million; the funding of Pioneer's losses has eroded the combined cash balance to its current level. Moody's believes the combined cash resources from existing charters together with current cash balances will support WINPET's debt service into 2015, at which time WINPET could face a payment default on its term notes, assuming no further charter renewals. Subsequent charter renewals or a sale of Pioneer would push a potential default further into the future; however, weak tanker markets and the supply of newer vessels increase the risk that BP may not retain the remaining three charters on future option dates. Moreover, the $20,000 per day minimum rate floor provided for over the course of the first four annual renewals is scheduled to expire on the end dates of the current charter extensions, fully exposing each of the vessels to charter market price volatility and uncertain cash flows even if those charters are subsequently renewed. The negative outlook reflects weakness in charter rates, the uncertain prospects for charter contract renewals, the upcoming expiration of the rate floor should charters be renewed and excessive debt levels. The rating could be downgraded should any of the three remaining charters be terminated, should a recovery in charter rates remains dim into 2013 or should cash balances erode more rapidly than anticipated due to higher operating costs. Given the negative outlook and cash flow uncertainty beyond 2014, a rating upgrade is not likely. WINPET's ratings were assigned by evaluating factors Moody's believes to be relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near-to-intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of the shipping industry and its ratings are believed to be comparable to those of other issuers with similar contract structures.Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Windsor Petroleum Transport Corporation is a special purpose entity established to act as agent for the issuance of debt to finance the construction and ownership of four VLCCs by four individual ship-owning companies, initially under charter to BP Shipping Ltd., a shipping subsidiary of BP plc. WINPET is owned by Independent Tankers Corporation Limited (ITCL), headquartered in Hamilton, Bermuda, which also owns a portfolio of oil tankers under charter to shipping subsidiaries of major international oil companies. ITCL is 82.5%-owned by Frontline Ltd., one of the world's largest shipping companies engaged in crude oil and product shipping. XINERGY CORP: S&P Puts 'CCC+' Corp. Credit Rating on Watch Neg -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including the 'CCC+' corporate credit rating, on Knoxville, Tenn.-based Xinergy Corp. on CreditWatch with negative implications. "The CreditWatch listing reflects our view that ongoing weakness in domestic coal markets will continue to affect smaller Central Appalachian coal producers, including Xinergy," said credit analyst Gayle Bowerman. "We believe that anemic demand for thermal coal will continue over the next several quarters, and that near- term prospects in the domestic metallurgical coal market remain challenging due to relative weakness in the global steel industry." "In resolving the CreditWatch placement, we will review our performance expectations and Xinergy's near-term liquidity position to determine if a lower rating is warranted. This will include meeting with management to discuss its operating prospects, capital expansion plans and its liquidity relative to our expectations," S&P said. YNS ENTERPRISE: Files Schedules of Assets and Liabilities --------------------------------------------------------- YNS Enterprise No. 1, LLC filed with the U.S. Bankruptcy Court Central District of California its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property Unknown B. Personal Property See Schedule B C. Property Claimed as Exempt D. Creditors Holding Secured Claims $37,431,786+ E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $74,273 ----------- ----------- TOTAL Unknown $37,506,059+ A copy of the schedules is available for free at http://bankrupt.com/misc/YNS_ENTERPRISE_sal.pdf About YNS Enterprise YNS Enterprise No. 1, LLC, is the owner and operator of a modern commercial retail shopping center consisting of various parcels and buildings located in Rancho Cucamonga, California. The Property, commonly known as "Masi Plaza", includes 171,802 square feet of leasable space. The property is 76% occupied and generates monthly net operating income of $180,000. The property is managed by an independent third party property management company -- Pacific Century Investment, Inc. YNS Enterprise filed a bare-bones Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-28185) on Aug. 5, 2012 in Riverside. The Debtor, a single asset real estate under 11 U.S.C. Sec. 101(51B), estimated assets and debts of at least $10 million. The Debtor said its principal asset is located at 8122 Foothill Boulevard, in Rancho Cucamongo, California. Related entities SSM Enterprises, Inc., YJC Investment Group V, Inc., and YNS Investment Group, Inc. hold 100% of the membership interests in the Debtor. The petition was signed by Young Jae Chung, president of YJC. Bankruptcy Judge Wayne E. Johnson presides over the case. Timothy J. Yoo, Esq., at Levene Neale Bender Rankin & Brill LLP, serves as the Debtor's counsel. ZACKY FARMS: Lowenstein Retained as Creditors' Committee Counsel ---------------------------------------------------------------- Lowenstein Sandler was recently retained as creditors' committee counsel in the Chapter 11 bankruptcy case of integrated poultry producer Zacky Farms. Fresno, California-based Zacky Farms, whose operations include the raising, processing and marketing of poultry products, filed for bankruptcy protection on October 8, 2012 in Sacramento, California. The company has approximately 1,000 employees and operates in multiple plants, farms and offices in California, including operations in Los Angeles, Fresno, Tulare, Kings, San Joaquin and San Bernardino Counties. The company's gross sales were $142 million in 2010 and $146 million in 2011. The company blames high feed prices for losses in recent years and faces between $50 million and $100 million in debts. The Lowenstein team includes Kenneth A. Rosen, Bruce S. Nathan, Jeffrey D. Prol, Wojciech F. Jung and Keara Waldron. ZIONS BANCORPORATION: Moody's Corrects Oct. 3 Rating Release ------------------------------------------------------------ Moody's Investors Service issued a correction to the October 3, 2012, rating release on Zions Bancorporation. Moody's Investors Service placed the long-term ratings of Zions Bancorporation and its subsidiaries on review for upgrade. Zions Bancorporation is rated B1 for subordinated debt and its lead operating bank, Zions First National Bank, has a standalone bank financial strength rating of D+, which maps to a baseline credit assessment of ba1. The bank's long-term deposit rating is Ba1. The short-term Not-Prime ratings of Zions First National Bank and other bank affiliates were also placed on review. The short-term Not-Prime ratings of Zions Bancorporation were affirmed and are not on review. The bank financial strength rating of D+ was affirmed, but its baseline credit assessment of ba1 was placed on review for upgrade. Ratings Rationale Moody's review for possible upgrade follows Zions' successful steps to reduce its asset concentrations, which has lead to lower credit costs and improved profitability. This was a product of the bank both reducing the construction lending portion of its commercial real estate (CRE) portfolio and enhancing its capital base. Its CRE exposure is approximately 2.3 times its Moody's adjusted tangible common equity (TCE) as of June 30, 2012, incorporating Zions' recent TARP repayment. Combined with its portfolio of trust preferred CDOs, which Moody's believes have a high correlation of performance with CRE, the CRE and CDO exposure equals 2.7 times TCE, which is a high level, but well down from 5 times TCE in 2008. The review will focus on Zions' comparative expected long-term performance given its franchise positioning. In particular, Moody's will consider tactical and strategic efforts that Zions may undertake in an effort to avoid the rebuilding of asset concentrations in its portfolio. As well, Moody's will focus on the risks that emanate from Zions' high reliance on net interest income to generate total earnings. The last rating action on Zions was on December 8, 2011 when long- term ratings were upgraded. The principal methodology used in this rating was Moody's Consolidated Global Bank Rating Methodology published in 2012. Zions Bancorporation headquartered in Salt Lake City Utah reported total assets of $53.4 billion as of June 30, 2012. On Review for Possible Upgrade: Issuer: Amegy Bank National Association Issuer Rating, Placed on Review for Possible Upgrade, currently Ba2 OSO Rating, Placed on Review for Possible Upgrade, currently NP Deposit Rating, Placed on Review for Possible Upgrade, currently NP OSO Senior Unsecured OSO Rating, Placed on Review for Possible Upgrade, currently Ba2 Senior Unsecured Deposit Rating, Placed on Review for Possible Upgrade, currently Ba1 Issuer: Amegy Corporation Issuer Rating, Placed on Review for Possible Upgrade, currently Ba3 Issuer: California Bank & Trust Issuer Rating, Placed on Review for Possible Upgrade, currently Ba2 OSO Rating, Placed on Review for Possible Upgrade, currently NP Deposit Rating, Placed on Review for Possible Upgrade, currently NP OSO Senior Unsecured OSO Rating, Placed on Review for Possible Upgrade, currently Ba2 Senior Unsecured Deposit Rating, Placed on Review for Possible Upgrade, currently Ba1 Issuer: Nevada State Bank Issuer Rating, Placed on Review for Possible Upgrade, currently Ba2 OSO Rating, Placed on Review for Possible Upgrade, currently NP Deposit Rating, Placed on Review for Possible Upgrade, currently NP OSO Senior Unsecured OSO Rating, Placed on Review for Possible Upgrade, currently Ba2 Senior Unsecured Deposit Rating, Placed on Review for Possible Upgrade, currently Ba1 Issuer: Zions Bancorporation Pref. Stock Non-cumulative Preferred Stock, Placed on Review for Possible Upgrade, currently B3(hyb) Subordinate Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently B1 Senior Unsecured Medium-Term Note Program, Placed on Review for Possible Upgrade, currently (P)Ba3 Issuer: Zions Capital Trust B Pref. Stock Preferred Stock, Placed on Review for Possible Upgrade, currently B2(hyb) Issuer: Zions First National Bank Issuer Rating, Placed on Review for Possible Upgrade, currently Ba2 OSO Rating, Placed on Review for Possible Upgrade, currently NP Deposit Rating, Placed on Review for Possible Upgrade, currently NP OSO Senior Unsecured OSO Rating, Placed on Review for Possible Upgrade, currently Ba2 Senior Unsecured Deposit Rating, Placed on Review for Possible Upgrade, currently Ba1 Outlook Actions: Issuer: Amegy Bank National Association Outlook, Changed To Rating Under Review From Stable Issuer: Amegy Corporation Outlook, Changed To Rating Under Review From Stable Issuer: California Bank & Trust Outlook, Changed To Rating Under Review From Stable Issuer: Nevada State Bank Outlook, Changed To Rating Under Review From Stable Issuer: Zions Bancorporation Outlook, Changed To Rating Under Review From Stable Issuer: Zions Capital Trust B Outlook, Changed To Rating Under Review From Stable Issuer: Zions First National Bank Outlook, Changed To Rating Under Review From Stable * Moody's Says US Credit Card Delinquencies Up 2.39% in Sept. ------------------------------------------------------------- Securitized credit card charge-offs in the US decreased to 4.11% in September from 4.19% in August, according to Moody's Credit Card Indices. Moody's expects the charge-off rate index to continue its modest decline as the historically low delinquency rates of this past summer would indicate. "This month's improvement continues the steady declines since charge-offs peaked in the first quarter of 2010," said Jeffrey Hibbs, a Moody's assistant vice president and analyst. "In September, the strong credit trends that have been driving the charge-off rate steadily lower for the past several years remain firmly in place." The delinquency rate index increased to 2.39% in September, seven basis points above the all-time low set last month. September typically features seasonally elevated delinquencies, according to Moody's, but this month's reading is just the second time since October 2009 that delinquencies have increased, as the improving credit quality of collateral pools has overwhelmed seasonal patterns. The delinquency rate measures the proportion of account balances for which a monthly payment is more than 30 days late as a percent of total outstanding principal balance. The principal payment rate index also receded from its all-time high set last month, but the overall third quarter mark of 22.07% established a new high, a continued indicator of strong credit trends. The yield index slipped again to 18.38%, which led the excess spread index to decline by a single basis point, although it is still near its all-time high level. "Historically low delinquencies and high payment rates underscore the exceptionally strong credit quality of securitized credit card receivables," said Hibbs. "Issuers charged off the accounts of weaker cardholders at record levels during the recession, and originators have added few receivables from new accounts to securitizations." The result, he explained, is credit card securitizations that almost exclusively comprise receivables of well-seasoned, high- quality cardholder accounts that have performed well despite persistently high unemployment. * Moody's Says Liquidity-Stress Index Unchanged in Oct. at 3.5% --------------------------------------------------------------- Moody's Liquidity-Stress Index (LSI) remained at 3.5% by mid- October, unchanged from the prior two months and still close to July's record low of 3.1%, Moody's Investors Service says in its latest edition of SGL Monitor. The low reading suggests that speculative-grade companies have sufficient liquidity to manage their cash needs through the end of 2013, despite potential risks. Moody's Liquidity-Stress Index falls when corporate liquidity appears to improve and rises when it appears to weaken. "Companies have been proactive in preparing to absorb potential shocks, taking advantage of low interest rates and accessible markets to refinance upcoming debt maturities," says Vice President -- Senior Credit Officer John Puchalla. "Nevertheless, contagion from the European debt crisis and continued sluggish global economic growth could reduce both companies' earnings and their access to bank loans and the bond markets." An additional threat is the so-called "fiscal cliff," or the combination of tax increases and automatic budget cuts scheduled to take effect in the US from the beginning of 2013, Mr. Puchalla says. The low LSI is consistent with Moody's expectation that the US speculative-grade default rate will decline over the coming year, to 3.0% by September 2013, from 3.5% at the end of the third quarter. The LSIs for the three US industries on which Moody's currently has a negative outlook -- steel, coal and newspapers -- are not at alarming levels, and remain far below their peaks during the financial crisis, the SGL Monitor says. This extends across industries, indicating that most firms have managed their liquidity conservatively, pushing out maturities and resolving potential covenant violations. Moody's Covenant-Stress Index fell to 2.2% in September from 2.7% in August. The decline suggests that speculative-grade companies continue to have adequate headroom under their financial covenants. The index measures the extent to which speculative- grade companies are at risk of violating debt covenants, and decreases when headroom under covenants seems to increase. * Epiq System Breaks Ground on Kansas City HQ Expansion ------------------------------------------------------- Epiq Systems, Inc. on Oct. 17 disclosed that it has initiated construction on a 20,000 square foot expansion to its corporate headquarters in Kansas City, Kansas. The approximate $7.5 million facility expansion will primarily accommodate the company's growing requirements for technology professionals. Upon completion in summer 2013, Epiq will be positioned to expand its Kansas City workforce to more than 200 associates. Epiq currently employs approximately 1,000 associates worldwide. The company expects to receive approximately $4.5 million of incentives related to the facility and employment expansion in the form of property tax reductions, sales tax exemptions and Kansas income tax credits. "Through the expansion of our corporate headquarters, we will be better equipped to fulfill the growing demand for Epiq's technology-enabled solutions," said Tom W. Olofson, chairman and CEO, Epiq Systems. "Additionally, we are pleased to reinvest in the local community and bring additional jobs to Kansas City, Kansas." "Connecting business and technology is vital for our community," said Kansas City, Kansas Mayor Joe Reardon. "Epiq's expansion aligns with that goal by employing top business and technology professionals in the area, helping to strengthen our city's dynamic and diverse culture. This expansion continues what promises to be a record setting year for new business and economic development in Wyandotte County." About Epiq Systems Epiq Systems is a global provider of technology-enabled solutions for electronic discovery, bankruptcy and class action administration. It offers full-service capabilities, which include litigation, investigations, financial transactions, regulatory compliance and other legal matters for eDiscovery. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Share Total Total Holders' Working Assets Equity Capital Company Ticker ($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) BERRY PLASTICS G BERY US 5,114.0 (472.0) 552.0 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) CAPMARK FINANCIA CPMK US 20,085.1 (933.1) - CC MEDIA-A CCMO US 16,451.8 (7,861.9) 1,570.9 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 441.0 (1,345.5) 74.0 DUN & BRADSTREET DNB US 1,795.6 (821.9) (655.6) ELOQUA INC ELOQ US 37.5 (9.6) (14.2) FAIRPOINT COMMUN FRP US 1,877.4 (184.4) 51.6 FERRELLGAS-LP FGP US 1,397.3 (27.5) (50.9) 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 908.1 (164.3) 48.1 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 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 INTERCEPT PHARMA ICPT US 12.1 (9.4) 6.1 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 5,865.0 (1,296.0) (1,532.0) 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) 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 PERFORMANT FINAN PFMT US 198.3 (4.2) 17.3 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 REALOGY HOLDINGS RLGY US 7,822.0 (1,721.0) (484.0) 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 SHUTTERSTOCK INC SSTK US 30.2 (29.6) (33.4) SINCLAIR BROAD-A SBGI US 2,160.2 (66.3) (1.4) SUPERVALU INC SVU US 11,854.0 (27.0) (80.0) TAUBMAN CENTERS TCO US 3,096.1 (295.3) - TEMPUR-PEDIC INT TPX US 865.5 (12.1) 258.9 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) ********* 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 ***