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/raid1/www/Hosts/bankrupt/TCR_Public/130110.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, January 10, 2013, Vol. 17, No. 9 Headlines 1220 SOUTH: Court Approves Kaufman Rossin as Accountants 333-345 GREEN: Files for Chapter 11 in Brooklyn 333-345 GREEN: Case Summary & Unsecured Creditor ADVANCED MICRO: S&P Lowers CCR, Sr. Unsecured Ratings to 'B' AHERN RENTALS: Noteholders Argue for Right to File Their Own Plan AJW OFFSHORE: Liquidating Cayman Islands Funds File Chapter 15 AMERICAN AIRLINES: Bondholders Review Info, Weigh on Merger AMERICAN AIRLINES: US Airways Pilots' Union Backs Merger AMERICAN AIRLINES: AEA Withdraws Bid to End Dispatchers' Contract AMERICAN AIRLINES: Assumes Contract With NY Port Authority AMERICAN AIRLINES: Assumes Contract With Airbus, IAE AMERICAN AIRLINES: Reports December 2012 Revenue & Traffic Results AMERICAN INT'L GROUP: Lawmakers Warns Against Not Joining Lawsuit AMERIFORGE GROUP: Moody's Corrects January 7 Rating Release AMPAL-AMERICAN: Creditors Given Right to File Competing Plan ATWATER PUBLIC: S&P Removes 'BB+' Rating from CreditWatch BANK OF THE COMMONWEALTH: Execs Charged for Understating Losses BENJAMIN S. SISON: Wins Dismissal of Lender's Lawsuit BIG M INC: Meeting to Form Creditors' Panel on Jan. 16 BTA BANK: Kazakhstan Bank's Reorganization Enforced in U.S. CHINA VILLAGE: Can Sell Commercial Property to APIC Coin CIT GROUP: Moody's Hikes Corp. Family Rating to 'Ba3'; COCOPAH NURSERIES: Hires Hochman Salkin as Special Tax Counsel COLLEGE BOOK: Court Approves Howell & Fisher as Counsel COLLEGE BOOK: William Norton Approved as Special Counsel COLLEGE BOOK: Court Approves Fowler as Accounting Consultant COLONIAL BANCORP: Auditor Wants FDIC's $1B Malpractice Suit Axed COLONIAL PROPERTIES: Fitch Withdraws 'BB+' Issuer Default Rating CONQUEST SANTA: U.S. Trustee Unable to Form Creditor's Committee DAYSTAR TECHNOLOGIES: Gets Nasdaq Listing Non-Compliance Notice DENNIS ATIYEH: E.D. Pa. District Court Affirms Case Dismissal DIGITAL GENERATION: Receives NASDAQ Notice of Potential Delisting DREIER LLP: Trustee Nets Clawback Deal Over Penthouse Payments DUNLAP OIL: U.S. Trustee Names Three-Member Creditor's Committee EASTMAN KODAK: Suit Claiming Kodak Hid Bankruptcy Plans Reopened EASTMAN KODAK: Nokia, Nintendo Object to Patent Sale Order EURAMAX INTERNATIONAL: Moody's Corrects Dec. 11 Rating Release FANNIE MAE: Sued with Freddie Mac in Maryland for Unpaid Taxes FIRST DATA: Fitch Affirms B Issuer Default Rating; Outlook Stable FIRSTFED FINANCIAL: Consummates Chapter 11 Stock Plan FLORIDA INSTITUTE FOR NEUROLOGIC: Uses Ch. 11 to Avoid Receiver GORDIAN MEDICAL: Has Exclusive Control of Case Until March GOSPEL RESCUE: DC Judge Clarifies Applicability of Rule 9006(f) HAMPTON CAPITAL: Gulistan Carpet Falls Into Chapter 11 HAWKER BEECHCRAFT: Seeks Approval of Deal with Pilatus Aircraft HOWREY LLP: Citi under Double-Barreled Attack Over Loan Programs HOWREY LLP: Creditor Defends Bid to Bring Alter Ego Claims HYDROFLAME TECH: Files List of 20 Largest Unsecured Creditors INTERFACE SECURITY: Moody's Assigns '(P)B3' CFR; Outlook Stable INTERFACE SECURITY: S&P Assigns Prelim. 'B-' Corp. Credit Rating K-V PHARMACEUTICAL: Files Chap. 11 Plan KEOWEE FALLS: Plan Outline Approved; Feb. 26 Confirmation Hearing LAWRENCE DARWIN MCKAY: Court Converts Case to Chapter 7 LBI MEDIA: Moody's Cuts Rating on Sr. Secured Notes to 'Caa1' LEHMAN BROTHERS: Stresses Tax Exemptions Amid $6.5B Archstone Sale LIGHTSQUARED INC: LP Lenders Balk at Conflict of Interest LIGHTSQUARED INC: Lenders Targeting Falcone, Not Company Officers LODGENET INTERACTIVE: Moody's Cuts PDR to 'D' After Default LYMAN HOLDING: Files Supplemental Schedules of Assets and Debts LYMAN HOLDING: Court Approves Cairncross as Real Estate Counsel MDC HOLDINGS: S&P Assigns 'BB+' Rating to Two Note Classes MF GLOBAL: Former Customers Lose Bid to Depose Corzine, Others MODERN PRECAST: U.S. Trustee Names Five-Member Creditor's Panel NCL CORP: Moody's Reviews 'B2' CFR/PDR for Possible Upgrade NEW PEOPLES: Richard Preservati Discloses 16% Equity Stake NEW ENGLAND COMPOUNDING: DOJ Wants Chapter 11 Trustee NEWLEAD HOLDINGS: Receives Investment of $236.4 Million NORTEL NETWORKS: Delays Hearing to Approve Executive Bonuses NORTHAMPTON GENERATING: Plan Outline Hearing Set for Jan. 15 OCALA FUNDING: Sovereign Strikes $9M Deal in Fund Transfer Suit OXBOW MACHINE: First Amended Plan Outline Fails to Pass Muster PEMCO WORLD: WAS Sees Confirmation in Near Future PENNFIELD CORP: Aims to Keep Chapter 11 Control Pending Sale PINNACLE AIRLINES: Seeks OK for Various Agreements with Delta PRESSURE BIOSCIENCES: Has Exchange Agreement with Clayton Struve QBEX ELECTRONICS: U.S. Trustee Names Three-Member Creditor's Panel QR PROPERTIES: Court Rejects Country Club Members' Claims RADIAN GUARANTY: Releases Dec. Mortgage Insurance Delinquency Data RAHA LAKES: Files Schedules of Assets and Liabilities REID PARK: Plan Docs. Again Amended After Confirmation Denied REID PARK: Says Lender Plan Outline Devoid of Key Information RESIDENTIAL CAPITAL: To Make Annual Incentive Plan Payments RESIDENTIAL CAPITAL: Committee May Sue Wells Fargo, U.S. Bank RESIDENTIAL CAPITAL: RFC, et al., Amend SOFA for 90-Day Transfers RESIDENTIAL CAPITAL: Burnett Files Suit vs. GMAC Mortgage RG STEEL: Still Studies Strategies to Exit Chapter 11 RG STEEL: Sale of Mineral Rights to Mineral Acquisition Closes RG STEEL: Wants to Pay Prepetition Claims of Trial Experts RG STEEL: Harvey Goodman Approved as Broker for Colorado Assets RG STEEL: Goes After $100M in Flurry of Clawback Suits RITZ CAMERA: Reduced Work Load for Weinsweig Amid Wind-Down RITZ CAMERA: Jan. 15 Hearing on Case Conversion RIVIERA DRILLING: Court Confirms Plan Proposed by Gunnison Energy ROCK ENERGY: Has Forbearance with Maximilian Until March 1 RUBY TUESDAY: Has $15.1 Million Net Loss in 2nd Qtr. Ended Dec. 4 S.G.F. PROPERTIES: Updated Case Summary & Creditors' Lists SATCON TECHNOLOGY: Judge Nixes $1.6M Bonus Plan SAVE MOST: Files Schedules of Assets and Liabilities SAVE MOST: Wants to Hire Michael G. Spector as Counsel SEARCHMEDIA HOLDINGS: Had $5.9MM Profit for 1st 9 Mos. of 2012 SELECT TREE: Evans Bank Has Green Light to Foreclose SELECT TREE: Sells New Jersey Trees to Down to Earth for $60K SENTINEL MANAGEMENT: Trust Wins in Test Case for Clawback Lawsuits SHELL'S DISPOSAL: Dist. Court Affirms Plan Feasibility Ruling SHILOH INDUSTRIES: Debt Amendment No Impact on Moody's B1 Rating SPEEDWAY MOTORSPORTS: Moody's Affirms 'Ba1' CFR; Outlook Stable SPEEDWAY MOTORSPORTS: S&P Expects to Cut Sr. Notes Rating to 'BB-' STALLION OILFIELD: S&P Withdraws 'B' Rating on $500MM Secured Loan STINSON PETROLEUM: $3.5MM Transfer to Community Bank Not Avoidable STOCKTON, CA: City Officers Protected From Lawsuit SUNCOKE ENERGY: Moody's Assigns 'Ba3' CFR/PDR; Outlook Stable SUNCOKE ENERGY: S&P Assigns 'BB-' CCR, Stable Outlook TEMPEL STEEL: S&P Cuts Corporate Credit Rating to 'B-' THQ INC: Judge Approves Jan. 22 Auction for Assets TORM A/S: Board Reports on Restructuring, Debt Moratorium TRIZETTO GROUP: S&P Alters Outlook on 'B' CCR to Negative USA BABY: District Court Dismisses Former President's Lawsuit VITRO SAB: 5th Cir. Affirms Order Recognizing Mexican Proceeding VM ODELL'S: Colorado Court Issues Injunction Order VTE PHILADELPHIA: Files for Ch. 11 to Stop Sheriff's Sale VTE PHILADELPHIA: Case Summary & 20 Largest Unsecured Creditors WINDSTREAM CORP: Fitch Rates New $700MM Sr. Unsecured Notes 'BB+' WINDSTREAM CORP: Moody's Rates $700MM Sr. Unsecured Notes 'Ba3' WINDSTREAM CORP: S&P Assigns 'BB+' Rating to $300MM Secured Loan WSG DULLES: Lenders Win Dismissal of Chapter 11 Cases * Banks, Bondholders Fight Argentina Injunction in U.S. Court * FINRA Plans to Expand its Focus * Insurers Losses from Hurricane Sandy to Hit $20BB, Fitch Says * AlixPartners Promotes 27 Professionals to Senior Positions * Dykema Opens Minneapolis Office with IP, Corporate Focus * Hilco Opens Hong Kong Office for Asset Disposition Services * Recent Small-Dollar & Individual Chapter 11 Filings ********* 1220 SOUTH: Court Approves Kaufman Rossin as Accountants -------------------------------------------------------- 1220 South Ocean Boulevard LLC sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of Florida to employ Kaufman, Rossin & Co., P.A., as accountants to assist the Debtor with all tax returns and to provide consulting services. Blain L. Heckaman, an employee at Kaufman Rossin will perform accounting services as interim and year end accounting services, including general consulting services relate to bankruptcy accounting issues. The hourly rates of Kaufman Rossin are: Principals $310 - $450 Directors/Manager $230 - $300 Supervisors/ Senior $165 - $220 Staff II and I $100 - $160 Kaufman Rossin has agreed to waive an unsecured claim of $6,000. To the best of the Debtor's knowledge, Kaufamn Rossin is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About 1220 South Ocean Boulevard 1220 South Ocean Boulevard, LLC, filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 12-32609) in its home-town in West Palm Beach, Florida. The Debtor disclosed $74 million in total assets and $41.5 million in liabilities as of Sept. 7, 2012. According to http://1220southocean.com/,1220 South Ocean is a French-inspired waterfront estate homes and resort located in Palm Beach. Owned by real estate developer Dan Swanson, president of Addison Development, 1220 South Ocean sits on 2.5 private and secure acres of land, has 20,000 square feet of living plus an additional 7,000 square feet of loggias, garages & guest house. The resort is located four miles to Palm Beach International Airport. Mr. Swanson other developments include the Phipps Estates in Palm Beach and Addison Estates at the Boca Hotel. Judge Erik P. Kimball oversees the case. Kenneth S. Rappaport, Esq., at Rappaport Osbourne & Rappaport, in Boca Raton, Florida, serves as counsel to the Debtor. 333-345 GREEN: Files for Chapter 11 in Brooklyn ----------------------------------------------- 333-345 Green LLC filed a Chapter 11 petition (Bankr. E.D.N.Y. Case No. 13-40085) in Brooklyn on Jan. 8, 2013. The Debtor, engaged in the development and management of real property, disclosed total assets of $16.0 million and liabilities of $26.9 million in its schedules. The property in 333-345 Greene Avenue, in Brooklyn, is valued at $16 million and secures a $25.2 million debt. According to the statement of financial affairs, the Debtor did not earn income from the property in fiscal years 2011 and 2012. There's a pending foreclosure action in Supreme Court King County commenced by Team Green 333 LLC against the Debtor. Joseph Tyraneur and Martin Daskal each own 50% of the voting securities of the Debtor. No first day motions were filed by the Debtor. 333-345 GREEN: Case Summary & Unsecured Creditor ------------------------------------------------ Debtor: 333-345 Green LLC 1274 49th Street, Suite 212 Brooklyn, NY 11219 Bankruptcy Case No.: 13-40085 Chapter 11 Petition Date: January 8, 2013 Court: U.S. Bankruptcy Court Eastern District of New York (Brooklyn) Judge: Jerome Feller Debtor's Counsel: Marc A. Pergament, Esq. WEINBERG GROSS & PERGAMENT, LLP 400 Garden City Plaza Garden City, NY 11530 Tel: (516) 877-2424 E-mail: mpergament@wgplaw.com Scheduled Assets: $16,034,873 Scheduled Liabilities: $26,934,091 The petition was signed by Joseph Tyrnauer, member-manager. Affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- 1775 East 17th St., LLC 12-44498 06/19/12 The Company's list of its 20 largest unsecured creditors filed with the petition contains only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ Homo at Greene NY Inc. -- $1,700,000 1274 49th Street, Suite 212 Brooklyn, NY 11219 ADVANCED MICRO: S&P Lowers CCR, Sr. Unsecured Ratings to 'B' ------------------------------------------------------------ Standard & Poor's Rating Services said that it lowered its corporate credit and senior unsecured ratings on Advanced Micro Devices Inc. (AMD) to 'B' from 'BB-'. At the same time, S&P removed the ratings from CreditWatch, where S&P had placed them with negative implications on Oct. 12, 2012. "The downgrade reflects our expectation for continued revenue and earnings declines resulting in leverage exceeding 7x over the coming year because of weak PC industry demand prospects and intense competition from industry peers, including Intel," said Standard & Poor's credit analyst John Moore. The 'B' corporate credit rating reflects AMD's "vulnerable" business risk profile, characterized by intense competition from Intel Corp., as well as prospects for tablet computing to continue to subdue PC industry growth and AMD's earnings over the coming year, resulting in leverage expected to exceed 7x and S&P's assessment of AMD's financial risk profile as "highly leveraged." The ratings also reflect the company's "adequate" liquidity. S&P's management and governance assessment is "fair." "The outlook is stable. Despite our expectation for AMD's leverage to climb above 7x over the coming year, we believe the company has an opportunity to stabilize its operating performance in 2013 and has liquidity sufficient to bridge this period of weak performance. Improvements should come through product introductions, potential embedded product design wins, and recently announced restructuring initiatives. A downgrade could result from a number of developments, including protracted low demand, further erosion of market share, or weaker manufacturing execution in concert with foundry partners. Any of these scenarios could weaken the financial profile that supports the rating. Specifically, we would consider a lower rating if liquidity were likely to fall below $700 million or prospects to reduce leverage below 7x in 2014 diminish. Considering AMD's competitive challenges, an upgrade is unlikely at present," S&P said. AHERN RENTALS: Noteholders Argue for Right to File Their Own Plan ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that holders of 90% of the second-lien notes issued by Ahern Rentals Inc. argued in papers filed last week with a U.S. district judge in Reno, Nevada, that Ahern Rentals failed to negotiate a reorganization plan in good faith after a year in Chapter 11 and accordingly had the exclusive right to solicit acceptances terminated by the bankruptcy court. The report recounts that U.S. Bankruptcy Judge Bruce T. Beesley in Reno ended Ahern's so-called exclusivity in December. Judge Beesley refused to halt the end of exclusivity pending appeal, sending Ahern to district court where U.S. District Judge Larry R. Hicks granted a stay pending appeal and reinstated exclusivity until the appeal is ended. According to the report, a noteholder group filed papers on Jan. 4 explaining why Judge Hicks should terminate the stay. The bondholders contend Judge Beesley was correct in allowing creditors to pursue plans of their own because Ahern's own plan is fatally flawed. They point out how Las Vegas-based Ahern would pay first-lien creditors 80% of their claims if they accept the plan. Otherwise, Ahern would cram down the plan, giving them a new four-year note at 4.25% interest compared with 16% under the current loan. Ahern was offering second-lien noteholders only 50% in cash, otherwise the company would attempt to cram down a plan where the debt would remain in full with interest accruing at 2%. No interest would be paid in cash for five years. The noteholders, the report discloses, quote Judge Beesley as saying he was skeptical the plan could be confirmed for violation of the so-called absolute priority rule, which doesn't allow shareholders to retain stock when a plan is crammed down on creditors. The group includes Nomura Corporate Research & Asset Management Inc. and Och-Ziff Capital Management Group. The 9.25% second-lien notes last traded on Jan. 4 for 68 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. 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. In its schedules, the Debtor disclosed $485.8 million in assets and $649.9 million in liabilities. 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. 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. 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. The Debtor's Plan lists $379.2 million in debt held by major lenders plus much smaller amounts held by others. According to The Review-Journal's report, Judge Beesley said he does not think Ahern's plan offers full repayment -- known as present value -- so the owners cannot hang on to their entire positions under bankruptcy law. 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. AJW OFFSHORE: Liquidating Cayman Islands Funds File Chapter 15 -------------------------------------------------------------- Liquidators of AJW Offshore, Ltd., and three affiliates filed Chapter 15 petitions in Central Islip, New York (Bankr. E.D.N.Y. Case No. 8-70078) on Jan. 7, 2013. Before succumbing to liquidation, the Offshore Funds were engaged in private investments in public equities (PIPE). They traded at the distressed end of the market, predominantly providing funding to businesses that could not obtain financing from traditional sources. By mid-to-late 2007, the PIPE investment strategy began to fail. Many of the companies that received financing from the Offshore Funds were struggling, on the verge of bankruptcy, or defunct. Many defaulted on their loan and conversion obligations. According to the liquidators, the funds' manager, Corey Ribotsky, rather than disclose these facts and write down the fair value of the funds, chose to "restructure" the outstanding debt by issuing new debenture to the same delinquent and nonperforming companies. Mr. Ribotsky allegedly rolled the outstanding principal, interest and default penalties into new debentures which provided even greater conversion discounts for the issuer's shares. The U.S. Securities and Exchange Commission instituted an investigation into the management of the Offshore Funds and certain U.S.-based funds. A lawsuit was filed against Mr. Ribotsky and NIR in September 2011 citing allegations of, among other things, artificially inflating the financial performance of the AJW Funds, and impermissibly transferring money from certain Offshore Funds to other funds to satisfy redemption requests. Because the funds were unable to pay their debts with interest for the next 12 months, the Cayman Islands Grand Court in 2011 ordered the entities' liquidation come under the court's supervision and appointed PwC Corporate Finance & Recovery (Cayman) Limited's Ian Stoke and David Walker as joint official liquidators. The liquidators are currently in the midst of a lengthy and complex liquidation process. Assets of the offshore Funds fall into four categories: 1. $427,000 in cash in bank and brokerage accounts in the U.S. and Cayman Islands. 2. callable secured convertible notes and warrants issued largely by U.S. entities for which U.C.C. filings are required to perfect securities interest over the assets; 3. causes of action against various issuers; 4. potential claims against Mr. Ribotky, NIR Group LLC, Offshore Funds professionals, almost all of whom are located in the U.S. The liquidators are asking the U.S. Bankruptcy Court to recognize the Cayman Islands Proceedings as foreign main proceedings to garner and administer the Offshore Funds' assets that may be located and held in the U.S. The liquidators note that, considering that the allegations in the SEC complaint predate 2007, the fear that the causes of action have imminent expiry date. Accordingly, they request an order that explicitly acknowledges that the statutory tolling and extension provided for in Sec. 108 of the Bankruptcy Code apply for the Offshore Funds. The liquidators note that the Cayman Islands Proceedings provide for a centralized process to assert and resolve claims against the Offshore Funds' estates, and to make distributions to the Offshore Funds' creditors. AMERICAN AIRLINES: Bondholders Review Info, Weigh on Merger ----------------------------------------------------------- The Wall Street Journal's Mike Spector reports that American Airlines bondholders this week signed confidentiality agreements so they can examine nonpublic information and weigh whether the airline should merge with rival US Airways Group Inc. or emerge from bankruptcy proceedings as an independent company, said people close to the talks. According to WSJ, the bondholders hold more than $2 billion in debt issued or backed by American and its parent, AMR Corp., making them an influential subset of creditors, who also include labor unions and suppliers. The bondholders own nearly enough of the airline's obligations to block any path out of bankruptcy protection that they dislike, according to the people and court documents. The upshot is American needs the bondholders to agree on the terms of whichever path it chooses. According to the report, the bondholders now in discussions with American and US Airways include J.P. Morgan Securities, Litespeed Management LLC and Pentwater Capital LP. Nuveen Investments, OppenheimerFunds and Blackrock Inc., are among those holding the airline's municipal bonds, people familiar with the investments told WSJ. Sources also told WSJ the bondholders on Tuesday met with American executives and advisers at the New York offices of the airline's bankruptcy lawyers at Weil, Gotshal & Manges to hear the company's views on a merger versus a stand-alone restructuring plan. They plan to meet with US Airways executives and advisers on Thursday, the people said. The sources told WSJ the bondholders include hedge funds that have formed an ad hoc committee and other investment firms that own American-backed bonds issued by municipalities for things such as airport facilities. The bondholders and their advisers coalesced in recent weeks to better influence the outcome of the Fort Worth, Texas-based airline's bankruptcy exit. The sources said the bondholders expect to take much of January to study American's choices. The report also notes American's board met Wednesday to discuss bankruptcy-exit options and hear updates on the airline's reorganization, according to people familiar with the matter. No significant decisions were expected to come out of the meeting. The sources told WSJ the bondholders haven't decided who should run American after it emerges from bankruptcy protection, according to people familiar with their thinking. They haven't endorsed Mr. Horton as the person to lead a merged or independent airline. The ad hoc bondholders in November sent a letter to American pilots saying they would only support American emerging from bankruptcy as an independent airline only if the company installed a new board of directors that selected a management team that would "maximize shareholder value." American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: US Airways Pilots' Union Backs Merger -------------------------------------------------------- The board of the union representing US Airways pilots unanimously backed a key labor proposal made by American Airline pilots, according to a January 4 report by Fox Business. The US Airline Pilots Association, which represents 5,200 US Airways pilots, said its board voted to recommend that its members support the measure, which governs how the two unions would be integrated if the airlines were to merge, Fox Business reported. AMR Corp. CEO Tom Horton said the company expects to reach a decision within weeks on whether to merge with US Airways Group Inc. or remain independent, according to a January 4 report by Bloomberg News. In a memo to employees, Mr. Horton said the company's board and the committee of unsecured creditors asked unions at American Airlines Inc. and US Airways to help evaluate the potential benefits, costs and risks of the proposed merger. American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: AEA Withdraws Bid to End Dispatchers' Contract ----------------------------------------------------------------- American Eagle Airlines Inc. withdrew its request to cancel its labor agreement with dispatchers. The move came after American Eagle won court approval for a new labor deal with dispatchers that could help the airline reduce its labor costs. No change to current pay scales was proposed for the dispatchers but the new deal provides for a 1.5% pay increase in 2015 and in 2016, according to court papers. American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Assumes Contract With NY Port Authority ---------------------------------------------------------- AMR Corp. filed a motion seeking court approval to take over a lease on three gates at the Newark Liberty International Airport used by its regional carrier. The company's regional carrier American Airlines Inc. currently operates from six gates at the Newark airport. Earlier, AMR reached an agreement with the Port Authority of New York and New Jersey to amend the terms of the lease that will allow the company to surrender three gates that are no longer needed for its operations. The amended lease, if approved, will save the company $25.4 million over the term of the lease, according to the court filing. As part of its assumption of the lease, the company also seeks approval for a slot lease agreement between American Airlines and Virgin America Inc. Under the deal, the airline will lease 15 airport slots to Virgin America. Two other companies, United Air Lines Inc. and Porter Airlines Inc., currently lease 14 of the 15 airport slots. AMR, however, said it has decided to cancel its existing lease contracts with both companies. The cancellation is subject to court approval. Judge Sean Lane of the U.S. Bankruptcy Court in Manhattan will hold a hearing on January 23. Objections are due by January 16. American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Assumes Contract With Airbus, IAE ---------------------------------------------------- AMR Corp. asked the U.S. Bankruptcy Court in Manhattan to approve the assumption of a pre-bankruptcy agreement between its regional carrier and Airbus S.A.S. The agreement dated July 20, 2011, allowed American Airlines Inc. to purchase 260 A320 family aircraft, and obtain options to buy an additional 365 planes from Airbus. As part of the assumption of the Airbus contract, the company also sought approval to take over an agreement with IAE International Aero Engines AG, a Connecticut-based engine supplier. IAE International supplies engines for the A321 aircraft that the airline may elect to purchase from the A320 family aircraft under the 2011 deal. Earlier, AMR agreed to revise its contracts with the aircraft and engine suppliers that will result in cost savings for the company. The company, however, did not disclose in court papers how much money it could save under the revised contracts. A court hearing is scheduled for January 23. Objections are due by January 16. American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Reports December 2012 Revenue & Traffic Results ------------------------------------------------------------------ AMR Corporation on Jan. 9 reported December 2012 consolidated revenue and traffic results for its principal subsidiary, American Airlines, Inc., and its wholly owned subsidiary, AMR Eagle Holding Corporation. Consolidated capacity and traffic were 2.0 percent and 2.1 percent higher year-over-year, respectively, resulting in a consolidated load factor of 80.2 percent, an increase of 0.1 points versus the same period last year. Domestic capacity and traffic were 1.6 percent and 2.4 percent higher year-over-year, respectively, resulting in a domestic load factor of 81.6 percent, 0.6 points higher compared to the same period last year. International load factor of 79.3 percent was 1.2 points lower year-over-year, as traffic increased 2.1 percent on 3.7 percent more capacity. The Atlantic entity recorded the highest load factor of 83.3 percent, an increase of 2.0 points versus December 2011. December's consolidated passenger revenue per available seat mile (PRASM) increased an estimated 1.6 percent versus the same period last year. On a consolidated basis, the company boarded 8.9 million passengers in December. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN INT'L GROUP: Lawmakers Warns Against Not Joining Lawsuit ----------------------------------------------------------------- As the board of the American International Group weighs whether to join a shareholder lawsuit against the United States government, several lawmakers have a simple message for the bailed-out insurer: Don't do it. Don?t even think about it, the New York Times DealBook blog reported yesterday, the American Bankruptcy Institute related. With A.I.G. having fully repaid its $182 billion bailout only weeks ago, the prospect of the company trying to claw back some of the $22 billion in profit that its rescue generated for shareholders doesn?t sit right with several members of Congress, Michael J. De la Merced of the New York Times DealBook reported. The report related that there is a possibility that AIG may join a lawsuit filed by its former chief executive, Maurice R. Greenberg, claiming that the 2008 bailout shortchanged investors and violated their Fifth Amendment rights. The AIG board is scheduled to meet today, Jan. 9, to hear presentations from Mr. Greenberg and representatives from the Treasury Department and the Federal Reserve Bank of New York, the architects of the bailout. In a letter to A.I.G.?s chairman, Robert S. Miller, three Democratic lawmakers sternly urged the company to avoid ?rubbing salt in the wounds? of taxpayers still furious about needing to bail out a public company. ?A.I.G. became the poster company for Wall Street greed, fiscal mismanagement, and executive bonuses ? the taxpayer and economy be damned,? Representatives Peter Welch of Vermont, Michael Capuano of Massachusetts and Luis V. Gutierrez of Illinois wrote in the letter. ?Now, A.I.G. apparently seeks to become the poster company for corporate ingratitude and chutzpah.? Senator Elizabeth Warren, the new Democratic senator from Massachusetts, added in her own statement: ?A.I.G.?s reckless bets nearly crashed our entire economy. Taxpayers across this country saved A.I.G. from ruin, and it would be outrageous for this company to turn around and sue the federal government because they think the deal wasn?t generous enough. Even today, the government provides an ongoing, stealth bailout, propping up A.I.G. with special tax breaks ? tax breaks that Congress should stop. A.I.G. should thank American taxpayers for their help, not bite the hand that fed them for helping them out in a crisis.? Representative Maxine Waters of California, the ranking member of the House Financial Services Committee, also weighed in, saying: ?I would urge the board to drop its consideration of the lawsuit, thank the American public for the $182 billion rescue package that prevented the company?s collapse and support the reforms in the Dodd?Frank Wall Street Reform and Consumer Protection Act that ensure that systemically important financial institutions can no longer hold our economy hostage.? And Representative Jan Schakowsky, Democrat of Illinois, sent a letter to A.I.G. chief executive Robert H. Benmosche urging him not to join in. She and other co-signers wrote: ?The federal government, and more importantly, American taxpayers, are solely responsible for your company?s existence today. We believe that the terms of the loan were not onerous and were designed to protect the public interest.? For his part, Mr. Benmosche said in a statement that Wednesday?s meeting is about listening to all of the involved parties, with a decision to come in the next several weeks. ?A.I.G. has paid back its debt to America with a profit, and we mean it when we say thank you to the American people,? he said. ?At the same time, the board of directors has fiduciary and legal obligations to the company and its shareholders to consider the demand served on us and respond in a fair, appropriate, and timely manner.? The full letter from Representatives Welch, Capuano and Gutierrez is below: Mr. Robert S. Miller Board Chairman American International Group, Inc. 180 Maiden Lane New York, NY 10038 Dear Mr. Miller: According to The New York Times, AIG is actively considering suing the U.S. government for monetary damages after American taxpayers rescued your company from its reckless conduct with a $182 billion bailout. Don?t do it. Don?t even think about it. AIG became the poster company for Wall Street greed, fiscal mismanagement, and executive bonuses ? the taxpayer and economy be damned. Now, AIG apparently seeks to become the poster company for corporate ingratitude and chutzpah. Taxpayers are still furious that they rescued a company whose own conduct brought it down. Don?t rub salt in the wounds with yet another reckless decision that is on par with the reckless decisions that led to the bailout in the first place. Sincerely, PETER WELCH Member of Congress MICHAEL CAPUANO Member of Congress LUIS V. GUTIERREZ Member of Congress Here?s the letter from Rep. Schakowsky: Robert H. Benmosche President and CEO American International Group, Inc. 180 Maiden Lane New York, NY 10038 Dear Mr. Benmosche: We write in response to reports that American International Group, Inc. (A.I.G.) is considering joining a lawsuit filed by Maurice Greenberg against the federal government over the terms of the record $182 billion bailout of your company. We urge you not to participate in that suit. Your company is now running commercials celebrating A.I.G.?s repayment of taxpayer-funded loans that helped the firm avoid bankruptcy. Clearly, you recognize that the $182 billion loan saved your company, and we are pleased that the loan was repaid. However, for our constituents, who continue to suffer the consequences of the subprime mortgage crisis, the impacts of your company?s actions are still being felt. As you are well-aware, A.I.G. played a major role in the collapse of the national mortgage market and the plummeting of home sales from which our country is only beginning to recover. The subprime mortgage market grew to almost $1.5 trillion by the time A.I.G. was bailed out, and over the past four years, nearly four million families lost their homes. A.I.G.?s sale of more than $400 billion in credit default swaps greatly exacerbated the mortgage crisis and facilitated the continued sale of highly-rated, poorly-vetted, and economy-crippling subprime loans and mortgage-backed securities. The federal government, and more importantly, American taxpayers, are solely responsible for your company?s existence today. We believe that the terms of the loan were not onerous and were designed to protect the public interest. We urge you to not to join the suit, and instead to continue to work to earn the trust and confidence of the American people. Sincerely, Jan Schakowsky About AIG American International Group, Inc. -- http://www.aig.com/-- is an international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services around the world. AIG common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. At the height of the 2008 financial crisis, AIG experienced a liquidity crunch when its credit ratings were downgraded below "AA" levels by Standard & Poor's, Moody's Investors Service and Fitch Ratings. AIG almost collapsed under the weight of bad bets it made insuring mortgage-backed securities. The Company, however, was bailed out by the Federal Reserve, but even after an initial infusion of $85 billion, losses continued to grow. The later rescue packages brought the total to $182 billion, making it the biggest federal bailout in U.S. history. AIG sold off a number of its businesses and other assets to pay down loans received from the U.S. government. AMERIFORGE GROUP: Moody's Corrects January 7 Rating Release ----------------------------------------------------------- Moody's Investors Service issued a correction to the January 7, 2013 rating release of Ameriforge Group Inc. Revised release follows: Moody's Investors Service has assigned a first time Corporate Family Rating and Probability of Default Rating of B2 to Ameriforge Group Inc. (Ameriforge), a manufacturer of products for the oil and gas, general industrial, power generation, and aerospace/transportation markets. Concurrently, Moody's has assigned a B1 rating to the company's new $82.5 million revolver and to its $350 million 7 year first lien term loan. The $150 million second lien term loan was rated Caa1. The rating outlook is stable. Proceeds from the transaction along with over $400 million in equity provided by First Reserve and its affiliates will go towards funding the acquisition of Ameriforge. Ratings Rationale The B2 CFR reflects the cyclical nature of the oil and gas markets, integration risks associated by the company's historical growth through acquisition strategy, and its small size relative to the market and relative to its larger competitors. Sales for 2011 only totaled $339 million although proforma for its 2011 acquisitions, total revenues for 2012 are expected to be above $600 million. The acquisitions support vertical integration and improve manufacturing and marketing scale. Nevertheless, the company competes against much larger players in a very large end market. The ratings reflect Moody's expectation for the company's 2013 Debt/EBITDA to be around 4 times with free cash flow generation between 5% and 8%. EBITDA coverage of interest for 2013 is estimated to be around 3 times. The rate of deleveraging is anticipated to initially be hindered by large expansion related capital expenditures and acquisitions. The following ratings/assessments have been assigned: Corporate Family Rating, B2 Probability of Default Rating, B2 $82.5 million revolver rated B1 LGD 3-36% $350 million term loan B rated B1 LGD 3-36% $150 million second lien term loan rated Caa1, LGD5-85% The rating outlook is stable. The facilities are jointly and severally guaranteed by the parent and each of the Borrower's existing and future direct or indirect domestic subsidiaries. The revolver and term loan are secured by a first priority interest in substantially all the tangible and intangible assets of the borrower and the guarantors while the second lien term loan is secured on the same assets on a second lien basis. The stable outlook reflects Moody's view that the company's performance is likely to strengthen within the current rating over the next 12 months. Ameriforge has grown meaningfully through acquisitions that were executed in 2011 and are still in the integration process. Moreover, Moody's anticipates further acquisitions and expansionary capital expenditures to constrain the level of cash flow available to reduce debt. The outlook also reflects the company's good liquidity due to its high revolver availability and good headroom under its covenants. What Could Pressure The Ratings If the company's leverage was to increase to above 5 times on a projected basis or EBITDA coverage of interest was anticipated to be sustained below 2 times, the ratings and/or outlook could be adversely affected. A decrease in year-over-year margins could also pressure the ratings, particularly if it is accompanied by revenue contraction. Additionally, a large debt financed acquisition could also pressure the ratings or the rating outlook. What Could Cause Positive Ratings Traction Sustained EBITDA coverage of interest above 3 times along with free cash flow to debt of over 7.5% and leverage under 3.5 times would be necessary for positive ratings traction to occur. The principal methodology used in rating Ameriforge Group, Inc. was the Global Manufacturing Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Ameriforge Group Inc., headquartered in Houston, Texas, is a manufacturer of mission-critical products for a number of segments within the oil and gas, general industrial, power generation, and Aerospace/Transportation segment. Revenues for the LTM period ended in September 20, 2012 totaled over $600 million when including the acquisitions executed in 2012. Reported revenues for 2011 totaled $339 million. AMPAL-AMERICAN: Creditors Given Right to File Competing Plan ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the official creditors' committee for Ampal-American Israel Corp. has the bankruptcy court's permission to file a Chapter 11 plan. The judge issued an order Jan. 7 ending the company's exclusive plan-filing rights. The report relates that although Ampal and the official creditors' committee agreed on the economic terms of a plan, they couldn't agree on details. The committee sought and eventually received permission to file a plan of its own. The company and the committee each drafted their own versions of a plan and disclosure materials. The report recounts that prior versions of the plans would pay unsecured creditors by giving them all of the new preferred stock with an aggregate stated value equal to all unsecured claims. The stock would pay 5% dividends. Shareholders would retain existing common stock. Within 90 days of emergence from bankruptcy, creditors would have the option of requiring the company to purchase the preferred stock for 75% of face value. If the so-called put is elected up until the first anniversary of plan approval, the repurchase price is 65% of stated value. The company will have the right to buy the preferred stock at the same prices. About Ampal-American Ampal-American Israel Corporation -- http://www.ampal.com/-- acquired interests primarily in businesses located in Israel or that are Israel-related. Ampal-American filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-13689) on Aug. 29, 2012, to restructure the Company's Series A, Series B and Series C debentures. Bankruptcy Judge Stuart M. Bernstein presides over the case. Ampal-American sought bankruptcy protection in the U.S. because bankruptcy laws in Israel would lead to the Company's liquidation. Michelle McMahon, Esq., at Bryan Cave LLP, serves as the Debtor's counsel. Houlihan Lokey serves as investment banker. The petition was signed by Irit Eluz, chief financial officer, senior vice president. The Company scheduled $290,664,095 in total assets and $349,413,858 in total liabilities. A three-member official committee of unsecured creditors is represented by Brown Rudnick as counsel. The Committee has proposed a Chapter 11 Plan for the Debtor pursuant to a settlement with the Debtor. ATWATER PUBLIC: S&P Removes 'BB+' Rating from CreditWatch --------------------------------------------------------- Standard & Poor's Ratings Services said it removed from CreditWatch with negative implications its 'BB+' underlying rating (SPUR) on Atwater Public Financing Authority, Calif.'s wastewater revenue bonds, issued for Atwater. The rating is affirmed at 'BB+' with a negative outlook. The CreditWatch action is based on S&P's view that the city is no longer considering a fiscal emergency declaration under California Assembly Bill 506 (AB 506), which allows for a Chapter 9 bankruptcy filing under the U.S. Bankruptcy Code without a neutral evaluation process. On Nov. 12, 2012, the city closed the public hearing on AB 506, which did not appear on city council meeting agendas in December. "The negative rating outlook reflects our opinion that Atwater will find it difficult to turn around its financial condition based on the city's Oct. 3, 2012, declaration of a state of fiscal emergency under case law," said Standard & Poor's credit analyst Scott Sagen. The emergency declaration reflects the structural deficits in nearly every major operating fund of the city and the reliance by those funds on the wastewater system for working capital. While the city can now act more unilaterally to reduce certain operating expenses, such as payroll, S&P anticipates large rate increases for water and sanitation funds to help these enterprise funds that are facing $300,000 and $600,000 in annual deficits, respectively in fiscal 2013 and 2014. A fiscal sustainability report released by Municipal Resources Group in October 2012 projects the general fund will end fiscal 2012 with at least a $3.7 million deficit, which is larger than the city's original $2.3 million deficit projection. The general, water, and sanitation funds have the ability to further weaken the wastewater fund through the additional drawdown of pooled cash reserves at a time when the wastewater system's debt service coverage has already declined to 1.19x -- as calculated by Standard & Poor's in fiscal 2011 -- and when the city had already used $5 million in cash as of fiscal 2012 as planned to complete a major treatment plant project. BANK OF THE COMMONWEALTH: Execs Charged for Understating Losses --------------------------------------------------------------- The Securities and Exchange Commission on Jan. 9 charged three former executives at Norfolk, Va.-based Bank of the Commonwealth for understating millions of dollars in losses and masking the true health of the bank's loan portfolio at the height of the financial crisis. The SEC alleges that Edward J. Woodard, who was CEO, president, and chairman of the board, was responsible along with CFO Cynthia A. Sabol and executive vice president Stephen G. Fields for misrepresentations to investors by the bank's parent company Commonwealth Bankshares. The consistent message in Commonwealth's public statements and SEC filings was that its portfolio of loans -- which comprised approximately 94% of the company's total assets in 2008 -- was conservatively managed according to strict underwriting standards aimed at keeping the bank's reserved losses low during a time of unprecedented economic turmoil. In reality, the SEC alleges that internal practice deviated significantly from what the public was being told. Woodard knew the true state of Commonwealth's rapidly-deteriorating loan portfolio, yet he worked to hide the problems and engineer the misleading public statements, particularly those made in earnings releases. Sabol knew of the activity to mask the problems with the company's loan portfolio and the corresponding effect these masking practices had on the bank's financial statements and disclosures, yet she signed the disclosures and certified to the investing public that they were accurate. Fields oversaw the bank's largest portfolio of construction and development loans and was involved in the masking practices. "During times of financial stress, it's more important than ever for executives to make full and honest disclosure to the investing public," said Scott W. Friestad, Associate Director of the SEC's Division of Enforcement. "Commonwealth's executives did the opposite and hid the company's worsening performance from shareholders through masking practices that understated the losses on its most troubled loans." According to the SEC's complaint filed in U.S. District Court for the Eastern District of Virginia, Commonwealth understated its allowance for loan and lease losses (known as ALLL) by approximately 17% to 25% from November 2008 to August 2010. This caused the bank to understate its reported loss before income taxes by approximately 64 percent for fiscal year 2008. Commonwealth also understated its losses on real estate repossessed by the bank (known as OREO) in two fiscal quarters, which caused the bank to understate its reported loss before income. For eight consecutive fiscal quarters, Commonwealth underreported its total non-performing loans. The SEC's complaint alleges that Commonwealth obtained an appraisal for its largest collateral-dependent loan that falsely inflated the value of the collateral. The bank executed hundreds of "change-in-terms agreements" at the end of the quarter to remove tens of millions of dollars of loans from its reported non- performing loans. Woodard, Sabol, and Fields helped enable the bank to artificially bring otherwise-delinquent loans current by permitting checking accounts associated with the guarantors of the delinquent loans to be overdrawn. The bank also disbursed loan proceeds without inspecting the property to confirm that the work requiring the disbursement had actually been performed. The SEC's complaint charges Woodard, Sabol, and Fields with violations of the antifraud, reporting, recordkeeping, internal controls, deceit of auditors, and Sarbanes-Oxley certification provisions of the federal securities laws. The SEC's investigation, which is continuing, has been conducted by Laura B. Josephs, Thomas D. Silverstein, David S. Karp, Lucas R. Moskowitz, and David Estabrook. The SEC's litigation will be led by Richard Hong. The SEC appreciates the cooperation of the Federal Bureau of Investigation, the U.S. Attorney's Office for the Eastern District of Virginia, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Board of Governors of the Federal Reserve Board, the Federal Reserve Bank of Richmond, the Federal Deposit Insurance Corporation, and the Bureau of Financial Institutions of the Virginia State Corporation Commission. BENJAMIN S. SISON: Wins Dismissal of Lender's Lawsuit ----------------------------------------------------- Bankruptcy Judge Thomas E. Carlson granted the defendants' request to dismiss the complaint, ARDEN M. INTENGAN, Plaintiff, v. BENJAMIN S. SISON and MARIA AGNES TOLOSA SISON, Defendants, Adv. Proc. No. 12-3081 TC (Bankr. N.D. Calif.). The court held a hearing Sept. 7, 2012 regarding the Defendants' motion to dismiss for failure to state a claim upon which relief can be granted. The Plaintiff made a loan to the Sisons secured by certain real properties. The Sisons failed to repay the loan and filed a petition under chapter 11 of the Bankruptcy Code (Bankr. N.D. Calif. Case No. 11-34331) before the Plaintiff could foreclose. The Plaintiff sued, seeking the following relief: (1) a determination that the Sisons' liability to the Plaintiff is excepted from any discharge the Sisons might receive in their chapter 11 case; and (2) declaratory relief regarding the Plaintiff's rights in the collateral securing the loan. The Plaintiff's exception-from-discharge claim must be dismissed without leave to amend because it was not timely filed. The deadline for such an action was March 12, 2012. The Plaintiff did not file the action by that date, and the court denied the Plaintiff's motion for extension of that deadline in an order entered on Sept. 13, 2012. The Court also ruled that the Plaintiff's claim for declaratory relief must also be dismissed without leave to amend, because the Sisons do not dispute the validity of the Plaintiff's deeds of trust or the loan they secure. The treatment of the Plaintiff's secured claim will be resolved in the chapter 11 case rather than the adversary proceeding, the Court said. A copy of the Court's Jan. 4, 2013 Memorandum is available at http://is.gd/Jn86uNfrom Leagle.com. BIG M INC: Meeting to Form Creditors' Panel on Jan. 16 ------------------------------------------------------ Roberta A. DeAngelis, the United States Trustee for Region 3, will hold an organizational meeting on Jan. 16, 2013, at 10:00 a.m. in the bankruptcy case of Big M, Inc. The meeting will be held at: United States Trustee's Office One Newark Center 1085 Raymond Blvd. 14th Floor, Room 1401 Newark, NJ 07102 The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' case. The organizational meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. A representative of the Debtor, however, may attend the Organizational Meeting, and provide background information regarding the bankruptcy cases. To increase participation in the Chapter 11 proceeding, Section 1102 of the Bankruptcy Code requires that the United States Trustee appoint a committee of unsecured creditors as soon as practicable. The Committee ordinarily consists of the persons, willing to serve, that hold the seven largest unsecured claims against the debtor of the kinds represented on the committee. Section 1103 of the Bankruptcy Code provides that the Committee may consult with the debtor, investigate the debtor and its business operations and participate in the formulation of a plan of reorganization. The Committee may also perform other services as are in the interests of the unsecured creditors whom it represents. Big M, Inc. filed a Chapter 11 petition (Bankr. D. N.J. Case No. 13-10233) on Jan 6, 2013 in Newark, New Jersey, Kenneth A. Rosen, Esq., at Lowenstein Sandler LLP, in Roseland, serves as counsel to the Debtor. The Debtor estimated up to $100 million in both assets and liabilities. BTA BANK: Kazakhstan Bank's Reorganization Enforced in U.S. ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that according to a Jan. 3 ruling by a bankruptcy judge in New York, BTA Bank JSC, Kazakhstan's third-largest lender by assets, has a reorganization plan entitled to enforcement in the U.S. In December the Kazakhstan court approved the bank's reorganization plan. The U.S. court ruled last week that it should be enforced in the U.S. About BTA Bank BTA Bank JSC, a Kazakhstan-based financial institution, again filed for creditor protection under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 12-12-13081) on July 16, 2012, in U.S. Bankruptcy Court in Manhattan. BTA Bank is asking the U.S. court to recognize the proceeding in the Specialized Financial Court of Almaty City in the Republic of Kazakhstan as a "foreign main proceeding." BTA Bank estimated both debt and assets of more than $1 billion. BTA Group -- comprised of BTA Bank and its subsidiaries and affiliated companies -- is one of the leading banking groups in the Commonwealth of Independent States and has affiliated banks in Russia, Ukraine, Belarus, Georgia, Armenia, Kyrgyzstan and Turkey. As of May 1, 2012, BTA Bank was the third largest bank in the Republic of Kazakhstan by total assets with a market share of 10.9%, serving approximately 710,218 retail customers, 73,200 small and middle business customers and 1,397 corporate customers, most of which reside or are registered, or maintain their operations, inside Kazakhstan. As of May 1, 2012, the Bank employed 5,290 people inside and 2 people outside Kazakhstan. In 2009, investigations and proceedings were launched in the Republic of Kazakhstan, the United Kingdom, and elsewhere in relation to fraudulent and unlawful transactions entered into by the Bank's former management prior to February 2009 which, it transpires, caused the Bank very significant losses. On Oct. 7, 2009, the Bank applied to the Financial Court for an order to commence a restructuring. The foreign representative in 2010 filed a petition (Bankr. S.D.N.Y. Case No. 10-10638) in Manhattan and the judge granted a petition for recognition of the Kazakhstan proceeding as "foreign main proceeding. The Kazakhstan proceedings were closed in August 2010 after all distributions were made. The Chapter 15 case was closed in January 2011. Creditors whose claims were restructured received a mixture of cash, senior debt, subordinated debt, other forms of debt, equity and so-called recovery units in consideration for the restructuring of their claims. Since the beginning of 2011, the Bank's financial situation, however, has deteriorated despite measures undertaken by management. A high cost of funding and fierce competition among Kazakhstan banks for business led to a steep deterioration in the Bank's net interest margin, the measure of the difference between the interest income generated by the Bank and the amount of interest paid out to its lenders, relative to the amount of its (interest-earning) assets. Due to the subdued business environment and cumbersome legal procedures, recoveries on non- performing loans were considerably lower than expected. As a result, the Bank showed a total negative equity under International Financial Reporting Standards of KZT 216 billion (US$1.5 billion) by June 30, 2011, which worsened to an estimated IFRS consolidated equity deficit of KZT 367 billion (US$2.5 billion) at year end and has continued to worsen in 2012. Considering the Bank's financial situation and the need to restore the IFRS Tier 1 capital position, the Bank commenced discussions with its creditors in order to effect a second restructuring of all or part of its financial indebtedness under Kazakhstan laws. The Bank on April 5, 2012, formally agreed to the creation of a steering committee of creditors to coordinate further discussions in relation to the Restructuring. The Steering Committee selected Houlihan Lokey and Deloitte as joint financial advisers and Baker & McKenzie as legal adviser. On April 25, 2012, the Bank's board of directors resolved to initiate the Restructuring. On April 28, the Bank entered into an agreement on restructuring with the National Bank of Kazakhstan pursuant to Article 59-3(3) of the Kazakhstan Banking Law. On April 28, after obtaining a review and comments from the Steering Committee's advisers, the Bank submitted a draft restructuring plan to the National Bank of Kazakhstan. After the National Bank of Kazakhstan completed its review, the way was clear for the Bank to seek a Financial Court order opening a restructuring proceeding under Kazakhstan law. The Bank made an application for restructuring under the Banking Law, the Civil Procedural Code and the Amending Law on May 2, 2012. The second restructuring will be effected through the restructuring of the existing claims arising from the financial instruments issued during the first restructuring. The Restructuring is expected to be completed by Sept. 27, 2012. The Chapter 15 petition was filed to prevent creditors from seeking to take action against the Bank or its assets in the United States. The Bank's principal assets in the United States are balances in accounts of correspondent banks located in New York City. Its major American creditors are financial institutions, such as Deere Credit Inc, Goldman Sachs Lending Partners LLC, LM Moore, L.P., PNC Bank N.A. (formerly National City Bank Cleveland). The Steering Committee of Creditors comprises Ashmore Investment Management Limited (as agent for and on behalf of certain funds and accounts for which it acts as investment adviser), the Asian Development Bank, D.E. Shaw Oculus International, Inc. and D.E. Shaw Laminar International, Inc., Gramercy Funds Management LLC, J.P. Morgan Securities Ltd., Nomura International plc, The Royal Bank of Scotland plc, SAM Salute Advisors Ltd., Swedish Export Credits Guarantee Board - EKN and VR Capital Group Ltd. in its capacity as General Partner of VR Global Partners, L.P BTA Bank is represented in the U.S. by Evan C. Hollander, Esq., at White & Case LLP. Judge James M. Peck oversees the Chapter 11 case. CHINA VILLAGE: Can Sell Commercial Property to APIC Coin -------------------------------------------------------- Judge Arthur S. Weissbrodt has granted China Village, LLC, authority to sell its commercial property to APIC Coin Tower LLC. The terms of the sale of commercial real estate property are: A. Property: Debtor's commercial real property in this Single Asset Real Property case, including Parcel-32: 5950-6016 Stevenson Boulevard & 40451-40495 Albrae Street; Parcel-34: 40525 Albrae Street; Parcel-35: 5960 Stevenson Boulevard & 40505-40545 Albrae Street, in Fremont, Calif. B. Purchaser: APIC Koin Tower, LLC C. Condition: The sale is conditioned upon Court approval of this Motion, the Commission Motion, and the Compromise Motion. In the event that any of the companion motions are not approved, or of the commission is approved and exceeds $200,000, the sale will not consummate. D. Sale Price: $36,100,000, subject to overbids. The purchase price is all cash and there are no financing contingencies. E. Deposit: $1,000,000 F. Closing Costs: The Purchaser will pay the closing costs except as specifically agreed by the Debtor and lien claimants. G. Escrow: The sale will proceed through an escrow opened at First American Title or such other title company as the parties select. H. Other Costs: Given the terms of the settlement among the Debtor and lien claimants, there is a specific distribution pursuant to which all parties have agreed to permit the sale to proceed. As such, the sale will require that any further costs, including operating costs and taxes shall be borne by the Purchaser, as otherwise the agreed-upon distribution scheme would fail. I. Misc.: The sale is subject to other customary terms and conditions, and the Parties are finalizing the documentation of the agreement, which has been negotiated between the Debtor, lien claimants, and Purchaser. The motion to sell commercial property is based on the grounds that a sound business purpose exists for proceeding with the sale in order to achieve the significant discount being provided on the secured claims (of approximately $15,000,000 collectively among the lien claimants); the Debtor has obtained a present cash buyer for the Property; the sale is coupled with a settlement that would resolve the Chapter 11 case and adversary proceeding, while providing an orderly distribution to those parties entitled to distributions; and the sales price is fair and consistent with the offers submitted during the past seven months that the Property was on the market. The Debtor has reached a settlement agreement with lien claimants Cathay Bank, Fremont Investment Property Co., LLC, Sarabjit Hundal and Gurdip Sekhon. Under the settlement agreement, the lien claimants will be paid: Cathay Bank $19,000,000 Fremont Investment Property Co., LLC $16,850,000 Sarabjit Hundal $475,000 Gurdip Sekhon $450,000 About China Village Milpitas, California-based China Village, LLC, is a limited liability company that was created on May 10, 2005. The members of the Debtor are Thomas Nguyen (8%), Joseph Nguyen (9%) and Tuyet Minh Le (83%). The Debtor is in the business of purchasing, leasing, renovating and selling commercial real property. The Debtor currently owns a significant commercial property in Fremont, California, that has 370,019 square feet of rentable space on 25.07 acres of land. China Village filed for Chapter 11 bankruptcy protection (Bankr. N.D. Calif. Case No. 10-60373) on Oct. 4, 2010. Lawrence A. Jacobson, Esq., and Sean M. Jacobson, Esq., at Cohen and Jacobson, LLP, assist the Debtor in its restructuring effort. R&K Interests, Inc. d/b/a Investors Property Services serves as the Debtor's property manager. The Debtor estimated assets and debts at $10 million to $50 million as of the Petition Date. CIT GROUP: Moody's Hikes Corp. Family Rating to 'Ba3'; ------------------------------------------------------ Moody's Investors Service upgraded the corporate family and senior unsecured ratings of CIT Group Inc. to Ba3 from B1. Moody's affirmed the Ba3 rating assigned to CIT's senior bank credit facility. The outlook for CIT's ratings is stable. Ratings Rationale The rating upgrade is based upon CIT's lower cost of funding and improved net finance margin, volume increases in core businesses that are strengthening franchise positioning, and successful efforts to further diversify funding sources. CIT's net finance margin, adjusted to exclude debt prepayment expense and fresh start accounting (FSA) net accretion, increased to 2.97% in the third quarter of 2012 from 1.58% one year earlier. The main driver of the improvement was a reduction in CIT's cost of borrowing. The firm's weighted average coupon rate of outstanding deposits and long-term debt declined to 3.28% at September 30, 2012 from 4.84% one year earlier, relating to efforts by management to repay high cost debt with proceeds from lower cost funding alternatives. Improvement in net finance margin has occurred in all commercial segments, with vendor finance and transportation finance returning to near pre-crisis levels but with corporate finance and trade finance lagging somewhat. In the intermediate term, CIT's continued transition to deposit funding will likely further reduce funding costs and improve margins. However, margins could come under pressure if pricing competition for new loan and lease originations continues to intensify or if the firm begins to face significant competitive pressure to offer higher savings rates to attract depositors. "To produce solid long-term profitability, CIT must sustain margin improvements and reduce operating costs," said Moody's senior analyst Mark Wasden. CIT has a smaller base of earning assets in commercial finance businesses than prior to its 2009 reorganization. Aligning operating costs to the firm's revised scale is an ongoing challenge. Sustainability of margins, balance in margin contribution from core segments, and effectiveness of operating expense control will be considerations in Moody's ongoing assessment of CIT's credit strength. CIT's funded volumes have modestly but steadily increased in recent quarters, to $2.2 billion in the third quarter of 2012 from $1.9 billion one year earlier. CIT's higher volumes and stronger financial condition are helping it to recover from the operational and competitive setbacks stemming from its 2009 bankruptcy. CIT's sub-sector specializations and relationships with sponsors have been the basis for volume growth, but pricing pressure from banks with lower funding costs has intensified in some businesses, such as traditional asset-based lending and vendor finance. Moody's believes that CIT must further strengthen its franchise positioning, particularly in the corporate finance segment, while maintaining a balanced risk appetite in order to demonstrate longer-term financial viability. CIT's funding and liquidity profiles have continued to strengthen and diversify, leading to lower cost of funds and greater financial flexibility. In the nine months ended September 2012, CIT repaid or refinanced about $15 billion of high cost indebtedness, accessed the public unsecured debt markets to issue $9.75 billion of notes, expanded its deposit base by $2.4 billion, and renewed secured multi-year funding arrangements for vendor finance and trade finance receivables. Deposits are becoming more diversified subsequent to CIT's launch of online bank CD's and high-yield savings products in the past 18 months. However, CIT's deposit products are non-core and are therefore subject to risk of non-retention relating to competitive pricing pressures or company developments that test investor confidence. CIT's reliance on market sources of funding, including non-core deposits, remains a constraint on the firm's credit profile. Risks to CIT's continued bank transformation relate to its ability to increase and retain deposits over the longer term given competition from better known financial institutions and the firm's relatively narrow array of products. The outlook for CIT's ratings is stable, reflecting Moody's expectation that CIT will continue efforts to strengthen margins and profitability while maintaining strong liquidity and capital buffers. In affirming the Ba3 rating assigned to CIT's senior bank credit facility, the one-notch uplift above CIT's corporate family rating previously afforded the facility is eliminated. The facility includes guarantees from certain CIT subsidiaries, a requirement that the guarantors maintain a minimum 2.0x asset coverage ratio, and a requirement that CIT maintain a minimum consolidated net worth of $6 billion. However, Moody's believes that these terms do not sufficiently differentiate the credit risk of the facility from the firm's corporate family rating to warrant the notching uplift. In its last rating action dated February 16, 2012, Moody's upgraded CIT's corporate family rating to B1 from B2. CIT Group, Inc. is a bank holding company primarily focused on serving the small business and middle market sectors with headquarters in New York City and Livingston, New Jersey. Upgrades: - Corporate Family Rating, to Ba3 from B1, stable outlook - Senior Unsecured Regular Bond/Debenture, to Ba3 from B1, stable outlook - Senior Unsecured Shelf, to (P)Ba3 from (P)B1, stable outlook Unchanged: - Guaranteed Senior Revolving Credit Facility, remains at Ba3, stable outlook The principal methodology used in this rating was Finance Company Global Rating Methodology published in March 2012. COCOPAH NURSERIES: Hires Hochman Salkin as Special Tax Counsel -------------------------------------------------------------- Cocopah Nurseries of Arizona, Inc., has sought permission from the U.S. Bankruptcy Court to employ Hochman, Salkin, Rettig, Toscher & Perez, P.C. as Special Tax Counsel. The Debtors have requested that Hochman assist Squire Sanders and the Debtors in connection with tax disputes under these potential project categories: (i) legal research of the California tax liabilities at issue; (ii) communications with the Debtors, Squire Sanders, the Board, and any other parties relevant to the Tax Dispute; (iii) contribution to briefs; (iv) trial preparation including discovery; (v) co-counsel at trial and in the Section 505 tax litigation; and (vi) fee application preparation. The Debtors have paid Hochman $15,000 for those services. Presently, the hourly rates for Hochman professionals and para- professionals range between $450 to $675 for partners, $350 to $375 for associates, and $175 for legal assistants. Kurt Kawafuchi attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Cocopah Nurseries Cocopah Nurseries of Arizona, Inc., and three affiliates sought Chapter 11 protection (Bankr. D. Ariz. Lead Case No. 12-15292) on July 9, 2012. The affiliates are Wm. D. Young & Sons, Inc.; Cocopah Nurseries, Inc.; and William Dale Young & Sons Trucking and Nursery. Cocopah Nurseries is a Young-family owned agricultural enterprise with operations in Arizona and California. The core business involves the cultivation of palm trees and other trees used for landscaping purposes, as well as the associated farming of citrus, dates, and other crops. The Debtors presently own more than 250,000 palm trees in various stages of the tree-growth cycle. Cocopah has 250 full-time salaried employees, and taps an additional 50 to 250 contract laborers depending on the season. Revenue in 2010 was $23 million, down from $57 million in 2006. Judge Eileen W. Hollowell presides over the case. The Debtors' counsel are Craig D. Hansen, Esq., and Bradley A. Cosman, Esq., at Squire Sanders (US) LLP. The petitions were signed by Darl E. Young, authorized representative. Attorneys for Rabobank, N.A., are Robbin L. Itkin, Esq., and Emily C. Ma, Esq., at Steptoe & Johnson LLP, and S. Cary Forrester, Esq., at Forrester & Worth, PLLC. Non-debtor affiliate Jewel Date Company, Inc., is represented by Michael W. Carmel, Ltd., as counsel. COLLEGE BOOK: Court Approves Howell & Fisher as Counsel ------------------------------------------------------- Robert H. Waldschmidt, the Chapter 11 trustee in the bankruptcy case of College Book Rental Company, LLC, has sought and obtained permission from the U.S. Bankruptcy Court to employ Howell & Fisher, PLLC as attorney. The Chapter 11 Trustee anticipates that Howell & Fisher's services will include the preparation of all legal documents, motions, orders, and deeds, necessary for the orderly administration or liquidation of any and all assets of the Debtor's estate; the collection of any outstanding accounts receivable; the pursuit of any and all the trustee's actions under Sec. 544, 546, 547, 548, or 549 of the Bankruptcy Code against the Debtor or third parties; and representation in any other legal actions the trustee may have against the debtor or third parties. The current hourly rates for the individuals who may perform services in this proceeding are: Professional Rates ------------ ----- Robert H. Waldschmidt (Attorney) $390 Lori Grahl (Paralegal) $155 Kim Turner, (Legal Assistant) $95 The firm attests that it is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. In a notice filed early in December, Bradley Arant Boult Cummings LLP withdrew as bankruptcy counsel for College Book Rental Company. Four creditors filed an involuntary Chapter 11 bankruptcy petition against Murray, Kentucky-based College Book Rental Company, LLC (Bankr. M.D. Ky. Case No. 12-09130) in Nashville on Oct. 4, 2012. Bankruptcy Judge Marian F. Harrison oversees the case. The petitioning creditors are represented by Joseph A. Kelly, Esq., at Frost Brown Todd LLC. The petitioning creditors are David Griffin, allegedly owed $15 million for money loaned; Commonwealth Economics, allegedly owed $15,000 for unpaid services provided; John Wittman, allegedly owed $158 for unpaid services provided; and CTI Communications, allegedly owed $21,793 for unpaid services provided. An agreed order for relief under Chapter 11 was entered on Oct. 15, 2012. Robert H. Waldschmidt was appointed as trustee the next day. COLLEGE BOOK: William Norton Approved as Special Counsel -------------------------------------------------------- Robert H. Waldschmidt, the Chapter 11 trustee in the bankruptcy case of College Book Rental Company, LLC, sought and obtained permission from the U.S. Bankruptcy Court to employ William L. Norton, III, as special counsel. Four creditors filed an involuntary Chapter 11 bankruptcy petition against Murray, Kentucky-based College Book Rental Company, LLC (Bankr. M.D. Ky. Case No. 12-09130) in Nashville on Oct. 4, 2012. Bankruptcy Judge Marian F. Harrison oversees the case. The petitioning creditors are represented by Joseph A. Kelly, Esq., at Frost Brown Todd LLC. The petitioning creditors are David Griffin, allegedly owed $15 million for money loaned; Commonwealth Economics, allegedly owed $15,000 for unpaid services provided; John Wittman, allegedly owed $158 for unpaid services provided; and CTI Communications, allegedly owed $21,793 for unpaid services provided. An agreed order for relief under Chapter 11 was entered on Oct. 15, 2012. Robert H. Waldschmidt was appointed as trustee the next day. COLLEGE BOOK: Court Approves Fowler as Accounting Consultant ------------------------------------------------------------ Robert H. Waldschmidt, the Chapter 11 trustee in the bankruptcy case of College Book Rental Company, LLC, sought and obtained permission from the U.S. Bankruptcy Court to employ Camille Fowler, as accounting consultant for the estate. The accounting consultant's services include (1) oversight of daily accounting and monthly financial reporting to U.S. Trustee, the court, and other governmental entities; (2) cash and bank reconciliations; (3) payment of invoices and expenses; and (4) budgeting and forecasting for future reorganization/restructuring purposes. Ms. Fowler'S hourly rate is $150, plus reimbursement of out of pocket expenses. The trustee anticipates the costs for Ms. Fowler's services to be: (1) $5,000 per week for the first 8 weeks employed; and (2) $3,000 per week thereafter. The trustee is negotiating a carve-out fund with which to pay professionals, and proposes to pay 60% of the fees incurred as to Ms. Fowler without application to the court. The 40% balance of Ms. Fowler's fees shall be paid upon motion to and approval by the court. Ms. Fowler attests that she is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Four creditors filed an involuntary Chapter 11 bankruptcy petition against Murray, Kentucky-based College Book Rental Company, LLC (Bankr. M.D. Ky. Case No. 12-09130) in Nashville on Oct. 4, 2012. Bankruptcy Judge Marian F. Harrison oversees the case. The petitioning creditors are represented by Joseph A. Kelly, Esq., at Frost Brown Todd LLC. The petitioning creditors are David Griffin, allegedly owed $15 million for money loaned; Commonwealth Economics, allegedly owed $15,000 for unpaid services provided; John Wittman, allegedly owed $158 for unpaid services provided; and CTI Communications, allegedly owed $21,793 for unpaid services provided. An agreed order for relief under Chapter 11 was entered on Oct. 15, 2012. Robert H. Waldschmidt was appointed as trustee the next day. COLONIAL BANCORP: Auditor Wants FDIC's $1B Malpractice Suit Axed ---------------------------------------------------------------- Maria Chutchian of BankruptcyLaw360 reported that Crowe Horwath LLP urged an Alabama federal court Monday to toss the Federal Deposit Insurance Corp.'s suit over Colonial Bank's $1 billion loss in the Taylor Bean & Whitaker Mortgage Corp. mortgage fraud scheme, saying it alleges no recoverable damages. In a motion to dismiss the case, which also targets PricewaterhouseCoopers LLP, auditor Crowe Horwath points to engagement letters between Crowe and Colonial parent Colonial BancGroup Inc., for whom it was performing the auditing work at issue, that prohibit the recovery of consequential and exemplary damages, the report added. As previously reported, the FDIC on October 31 sued Colonial's former auditors PwC and Crowe Horwath for the $1 billion that the now-defunct bank lost in the Taylor Bean & Whitaker mortgage fraud scheme. The FDIC, as receiver for Colonial Bank, claims external auditor PwC and internal auditor Crowe should have learned of the fraud perpetrated by Taylor Bean, the bank's largest client, by 2007 or early 2008, well before the August 2009 federal raid on Taylor Bean's headquarters. About The Colonial BancGroup Headquartered in Montgomery, Alabama, The Colonial BancGroup, Inc., (NYSE: CNB) owned Colonial Bank, N.A, its banking subsidiary. Colonial Bank -- http://www.colonialbank.com/-- operated 354 branches in Florida, Alabama, Georgia, Nevada and Texas with over $26 billion in assets. On Aug. 14, 2009, Colonial Bank was seized by regulators and the Federal Deposit Insurance Corporation was named receiver. The FDIC sold most of the assets to Branch Banking and Trust, Winston-Salem, North Carolina. BB&T acquired $22 billion in assets and assumed $20 billion in deposits of the Bank. The Colonial BancGroup filed for Chapter 11 bankruptcy protection (Bankr. M.D. Ala. Case No. 09-32303) on Aug. 25, 2009. W. Clark Watson, Esq., at Balch & Bingham LLP, and Rufus T. Dorsey IV, Esq., at Parker Hudson Rainer & Dobbs LLP, serve as counsel to the Debtor. The Debtor disclosed $45 million in total assets and $380 million in total liabilities as of the Petition Date. In September 2009, an Official Committee of Unsecured Creditors was formed consisting of three members, Fine Geddie & Associates, The Bank of New York Trust Company, N.A., and U.S. Bank National Association. Burr & Forman LLP and Schulte Roth & Zabel LLP serve as co-counsel for the Committee. Colonial Brokerage, a wholly owned subsidiary of Colonial BancGroup, filed for Chapter 7 protection with the U.S. Bankruptcy Court in the Middle District of Alabama in June 2010. Susan S. DePaola serves as Chapter 7 trustee. COLONIAL PROPERTIES: Fitch Withdraws 'BB+' Issuer Default Rating ---------------------------------------------------------------- Fitch Ratings has affirmed and withdrawn the Issuer Default Ratings (IDR) and issue ratings of Colonial Properties Trust (NYSE: CLP) and its operating partnership, Colonial Realty Limited Partnership. Fitch has decided to discontinue the ratings, which are uncompensated. Fitch affirms and withdraws the following ratings: Colonial Properties Trust -- IDR at 'BB+'. Colonial Realty Limited Partnership -- IDR at 'BB+'; -- Unsecured revolving credit facilities at 'BB+'; -- Senior unsecured term loans at 'BB+'; -- Senior unsecured notes at 'BB+'. The Rating Outlook was previously Positive. CONQUEST SANTA: U.S. Trustee Unable to Form Creditor's Committee ---------------------------------------------------------------- The United States Trustee for Region 14 has told the U.S. Bankruptcy Court the District of Arizona that it was unable to form an Official Committee of Unsecured Creditors in Conquest Santa Fe LLC's Chapter 11 case because an insufficient number of persons holding unsecured claims against the Debtor have expressed interest in serving on a committee. The U.S. Trustee said it reserves the right to appoint such a committee should interest develop among the creditors. About Conquest Santa Fe Conquest Santa Fe, LLC, filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 12-24937) in Tucson, Arizona, Nov. 16, 2012, estimating at least $10 million in assets and liabilities. Judge Eileen W. Hollowell presides over the case. Frederick J. Petersen, Esq., and Lowell E. Rothschild, Esq., at Mesch, Clark & Rothschild, P.C., preside over the case. The petition was signed by Morris Eigen, member. DAYSTAR TECHNOLOGIES: Gets Nasdaq Listing Non-Compliance Notice --------------------------------------------------------------- As previously noted, DayStar Technologies Inc. DSTI +1.21% (the "Company") received notice from Nasdaq that it was not in compliance with Nasdaq's Listing Rules due to a failure to hold an annual meeting within one year of the end of the Company's fiscal year ending on December 31, 2011. DayStar notified Nasdaq that it believed it had complied with the Listing Rule since it held an annual meeting of stockholders on December 19, 2012. Daystar has been notified that the annual meeting held on December 19, 2012 did not meet the requirements of Nasdaq's Listing Rules because the Company did not file a Proxy Statement on Form 14A prior to the meeting. Nasdaq noted that since the Company did not meet the listing requirement it would continue with the previously announced procedures to delist the Company's securities. Nasdaq has offered the Company an opportunity to request a hearing to appeal this determination. The Company intends to request this hearing from Nasdaq. In the event the Company's appeal is denied, the Company's shares would qualify for listing on the OTCBB. In addition, on November 20, 2012, Staff notified the Company that it had not received the Company's Form 10-Q for the period ended September 30, 2012, as required by Listing Rule 5250(c)(1), and requested the Company submit a plan to regain compliance by no later than December 5, 2012. The Company then provided Staff with its compliance plan on December 5, 2012, the Company citing that it was adversely affected by a change in its Chief Financial Officer in November 2012 which contributed to its late filing and the missed 14A. The Company filed its Quarterly Report on Form 10Q on January 7, 2013. The Company plans to appeal Staff's determination to a Hearings Panel, pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series. Hearings are typically scheduled to occur approximately 30-45 days after the date of the hearing request. About DayStar Technologies, Inc. DayStar Technologies -- http://www.daystartech.com/-- is a developer of solar photovoltaic products based upon CIGS thin film deposition technology and is currently embarked on a strategy of strategic partnerships to enter new markets within the global renewal energy industry including ownership and construction of solar and renewable power plants. DENNIS ATIYEH: E.D. Pa. District Court Affirms Case Dismissal ------------------------------------------------------------- District Judge Cynthia M. Rufe rejected a pro se appeal by Dennis Atiyeh from a March 1, 2012 bankruptcy court order dismissing his bankruptcy case. Mr. Atiyeh filed a voluntary petition under Chapter 12 of the Bankruptcy Code on March 1, 2010. On his own motion, the case was converted to a Chapter 11 proceeding on Sept. 8, 2011. The United States Trustee sought case dismissal, while Mr. Atiyeh filed a motion to convert his case back to Chapter 12. By separate orders on Jan. 12, 2012, the Court granted the U.S. Trustee's motion to dismiss and denied Mr. Atiyeh's motion to reconvert. Mr. Atiyeh asked the Court to reconsider his ruling, and after a hearing on March 1, 2012, the Bankruptcy Court denied the reconsideration motion. According to the District Court, Mr. Atiyeh, in his briefs on appeal, failed to address the standard for reconsideration, and presents no clear argument. The District Court noted that, to the extent that the briefs are comprehensible, Mr. Atiyeh argues in one brief that the U.S. Trustee, motivated by discrimination against Mr. Atiyeh's Christian faith, lied to the Bankruptcy Court that Mr. Atiyeh failed to meet with the U.S. Trustee and that "Portnoff Law Offices" violated the automatic stay. Mr. Atiyeh claimed the U.S. Trustee failed to respond when he wished the U.S. Trustee "Merry Christmas." In another brief, Mr. Atiyeh argues the conversion to Chapter 12 was forced by a fraudulent judgment against him obtained by MCI WorldCom, and that he attempted to meet with the U.S. Trustee, without success. Judge Rufe said none of Mr. Atiyeh's arguments provides a basis for reversing the Bankruptcy Court's order. "There is nothing at all in the record to support the accusation of religious bias, and no evidence that the Trustee lied to the Bankruptcy Court. Appellant had the opportunity to explain to the Bankruptcy Court why he had not met with the Trustee; it is uncontested that the meetings did not occur and that Appellant failed to file the required monthly reports and reorganization plan," Judge Rufe said. The case before the District Court is, DENNIS ATIYEH, Appellant, v. UNITED STATES TRUSTEE, Appellee, Civil Action No. 12-2014 (E.D. Pa.). A copy of the District Court's Jan. 3, 2013 Memorandum Opinion is available at http://is.gd/LNcP00from Leagle.com. DIGITAL GENERATION: Receives NASDAQ Notice of Potential Delisting ----------------------------------------------------------------- Digital Generation, Inc. on Jan. 9 disclosed that it has received a letter from NASDAQ notifying the Company that it is subject to delisting from the NASDAQ Capital Market for failure to hold its 2012 annual meeting of stockholders prior to December 31, 2012. The Company will appeal this determination of noncompliance and potential delisting pursuant to NASDAQ procedures by seeking a hearing before a NASDAQ hearing panel. The Company's request for a hearing will stay the suspension and delisting action pending the issuance of a written decision by the NASDAQ hearing panel. The Company cannot assure that the Company's appeal hearing will be successful. In connection with the NASDAQ hearing, the Company will inform NASDAQ about the special circumstances relating to the Company's continuing consideration of its strategic options and the Company's commitment to hold the annual meeting on February 21, 2013. As previously announced on November 30, 2012, the Company has scheduled its annual meeting of stockholders on February 21, 2013. In setting the stockholder meeting date for February 21, 2013, the Board of Directors considered the recommendation of its Special Committee reviewing strategic alternatives to defer the 2012 annual meeting of stockholders until the Company can report the results of the Company's strategic alternatives process. As previously announced, the Company has extended the period during which stockholders can give notice to the Company regarding nominations for the election of directors and stockholder proposals for consideration at the next annual meeting from its due date under the Company's bylaws until January 18, 2013. The strategic alternatives process is continuing and is expected to be completed in the near future. The Company does not intend to disclose developments in this process until such time as the Board of Directors determines to enter into any transaction or the Company otherwise deems further disclosure appropriate. The Company will make disclosures regarding the Special Committee process prior to the annual meeting on February 21, 2013. The record date for the annual meeting will be January 24, 2013. The location and time of the annual meeting will be included in the Company's definitive proxy statement which will be filed with the Securities and Exchange Commission and sent to the DG stockholders prior to the annual meeting. About DG DG -- http://www.DGit.com-- connects over 11,000 global advertisers and agencies with their targeted audiences through an expansive network of over 6,000 television broadcast stations and over 11,500 web publishers in 75 countries. The Company's television division utilizes best-in-class network and content management technologies, creative and production resources, digital asset management and syndication services that enable advertisers and agencies to work faster, smarter and more competitively. The Company's online division, MediaMind, allows marketers to benefit from optimized management of online advertising campaigns while maximizing data driven advertising. DREIER LLP: Trustee Nets Clawback Deal Over Penthouse Payments -------------------------------------------------------------- Linda Chiem of BankruptcyLaw360 reported that the trustee for bankrupt law firm Dreier LLP reached a $132,500 settlement Monday with the lien holder, mortgage servicer and contractor on a forfeited luxury apartment owned by convicted ex-lawyer Marc Dreier over claims they accepted $2.3 million in Ponzi scheme funds. If approved by a New York bankruptcy court, the settlement will end an adversary suit brought by Sheila M. Gowan, the court- appointed trustee in the Chapter 11 bankruptcy of Marc Dreier's once-prominent law firm, against HSBC Mortgage Corp., PHH Mortgage Corp. and NY Landmark, the report related. About Marc Dreier and Dreier LLP Marc Dreier founded New York-based law firm Dreier LLP -- http://www.dreierllp.com/-- in 1996. On Dec. 8, 2008, the U.S. Securities and Exchange Commission filed a suit, alleging that Mr. Dreier made fraudulent offers and sales of securities in several cities, selling fake promissory notes to hedge and other private investment funds. The SEC asserted that Mr. Dreier also distributed phony financial statements and audit opinions, and recruited accomplices in connection with that scheme. Mr. Dreier, currently in prison, was charged by the U.S. government for conspiracy, securities fraud and wire fraud (S.D.N.Y. Case No. 09-cr-00085). Dreier LLP sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 08-15051) on Dec. 16, 2008. Stephen J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, was tapped as counsel. The Debtor estimated assets of $100 million to $500 million, and debts between $10 million and $50 million in its Chapter 11 petition. Sheila M. Gowan, a partner with Diamond McCarthy, was appointed Chapter 11 trustee for the Dreier law firm. Ms. Gowan is represented by Jason Porter, Esq., at Diamond McCarthy LLP. Wachovia Bank National Association, the Dreier LLP Chapter 11 trustee, and Steven J. Reisman as post-confirmation representative of the bankruptcy estate of 360networks (USA) Inc. signed a petition that put Mr. Dreier into bankruptcy under Chapter 7 on Jan. 26, 2009 (Bankr. S.D.N.Y. Case No. 09-10371). Mr. Dreier, 60, pleaded guilty to fraud and other charges in May 2009. The scheme to sell $700 million in fake notes unraveled in late 2008. Mr. Dreier is serving a 20-year sentence in a federal prison in Minneapolis. DUNLAP OIL: U.S. Trustee Names Three-Member Creditor's Committee ---------------------------------------------------------------- Ilene J. Lashinsky, the U.S. Trustee for Region 14, has appointed three creditors to serve on an Official Committee of Unsecured Creditor for the Chapter 11 bankruptcy case of Dunlap Oil Company. The members of the Committee are: 1) EA SWEEN Attn: Linda Mack 16101 West 78th Street Eden Prairie MN 55344 Tel: 952-937-9440 Fax: 952-949-1407 Email: LMack@easween.com 2) MSC Distributing Inc. Attn: Craig Stevenson PO Box 1830 Phoenix, AZ 85001 Tel: 602-258-0122 Fax: 602-340-0049 Email: craig@mscdist.com 3) Pepsi Cola Bottling Co. of Safford Attn: Karl Schade PO Box 1076 Safford, AZ 85548 Tel: 928-428-2192 Fax: 928-428-9181 Email: Karl-Schade@qwestoffice.net About Dunlap Oil and Quail Hollow Inn Dunlap Oil Company, Inc., and Quail Hollow Inn, LLC, sought Chapter 11 protection (Bankr. D. Ariz. Case No. 12-23252 and 12-23256) on Oct. 24, 2012. Founded in 1958, Dunlap Oil is a Willcox, Arizona-based operator of 14 gasoline services stations. QOH owns the 89-room outside corridor Best Western Plus Quail Hollow hotel in Willcox. The two companies are owned and operated by the Dunlap family. Judge James M. Marlar presides over the case. John R. Clemency, Esq., and Lindsi M. Weber, Esq., at Gallagher & Kennedy, P.A., serve as the Debtors' counsel. Peritus Commercial Finance LLC serves as financial advisor. QOH declared assets of at least $1 million and debts exceeding $10 million. DOC estimated assets and debts of $10 million to $50 million. The petitions were signed by Theodore Dunlap, president. Equipment Acquisition Resources went bankrupt and eventually filed, in an adversary proceeding in bankruptcy, a first amended complaint seeking recovery of money that the company made to cover tax liabilities of its shareholders. The United States of America, on behalf of the Internal Revenue Service, moved to dismiss one of the counts (Count 4) that sought recovery of the money, arguing that sovereign immunity barred the claim. The bankruptcy court, however, denied the Government's motion to dismiss. On Friday, District Judge Edmond E. Chang affirmed the bankruptcy court's order. The District Court case is, UNITED STATES OF AMERICA, Appellant, v. EQUIPMENT ACQUISITION RESOURCES, INC. Appellee, No. 11 C 05045 (N.D. Ill.). A copy of the District Court's Jan. 4, 2013 Memorandum Opinion and Order is available at http://is.gd/TjKUNf from Leagle.com. Fraudulent-Transfer Immunity Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that, according to the Jan. 4 opinion by U.S. District Judge Edmond E. Chang, the U.S. government's sovereign immunity defense is waived for a fraudulent-transfer claim under state law. Mr. Rochelle recounts that the trustee sued the Internal Revenue Service for a fraudulent transfer under state law and Section 544 of the Bankruptcy Code because the relevant transfer was more than two years before bankruptcy. The case turned on Section 106(a) of the Bankruptcy Code which waives the sovereign-immunity defense for lawsuits under Section 544, among others. The IRS nonetheless contended there could be no state law claim to invoke Section 544 because, before bankruptcy, a creditor would be barred by sovereign immunity from suing the government for receipt of a fraudulent transfer. The report relates that Judge Chang, upholding the bankruptcy court, dismissed the IRS's argument, saying "Section 106(a)(1) simply eliminates the obstacle wherever it appears with respect to Section 544." By virtue of a settlement, the government agreed to pay about $860,000 as a result of losing the appeal. About Equipment Acquisition Palatine, Illinois-based Equipment Acquisition Resources, Inc., operated in the semiconductor equipment sales and servicing industry. It was designed to operate as a refurbisher of special machinery, a manufacturer of high-end technology parts, and a process developer for the manufacture of high-technology parts. The bulk of EAR's stated revenue derived from refurbishing and selling high-tech machinery; it was set up to purchase high-tech equipment near the end of its useful life at prices that were low relative to the cost of new units, and then refurbish using a propriety process the equipment for sale to end-users at substantial gross margins. EaR engaged in a massive fraud from 2005 to 2009. That fraud included, but was not limited to, selling semiconductor equipment at inflated prices, leasing the equipment back, misrepresenting the value of the equipment, and pledging certain pieces of equipment multiple times to various creditors to secure financing. It owned 2,000 pieces of semiconductor manufacturing equipment. First Premier Capital LLC, claiming to be owed $20 million, alleged that the scheme has cost creditors up to $175 million. EAR filed for Chapter 11 bankruptcy protection (Bankr. N.D. Ill. Case No. 09-39937) on Oct. 23, 2009. Barry A. Chatz, Esq., at Arnstein & Lehr LLP, served as the Company's counsel. The Company estimated $10 million to $50 million in assets and $100 million to $500 million in liabilities in its petition. Unsecured creditors were owed about $102 million. On July 15, 2010, the Court approved the Debtor's Second Amended Plan of Liquidation. William A. Brandt, Jr., the Debtor's chief restructuring officer, was named Plan Administrator. EASTMAN KODAK: Suit Claiming Kodak Hid Bankruptcy Plans Reopened ---------------------------------------------------------------- Richard Vanderford of BankruptcyLaw360 reported that a New York federal judge on Tuesday allowed an investor to refile a putative class action alleging Eastman Kodak Co.'s leadership intentionally hid plans to file for bankruptcy, after the investor said he had new confidential witnesses to bolster his allegations. U.S. District Judge Harold Baer said in a written order that investor Timothy Hutchinson could file a second amended complaint in a suit claiming Kodak CEO Antonio Perez and other officers knew about the company's bankruptcy plans before they were made public, the report related. About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. The Retirees Committee has hired Haskell Slaughter Young & Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC, as Bankruptcy Consultants and Financial Advisors; and the Segal Company, as Actuarial Advisors. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. Kodak intends to reorganize by focusing on the commercial printing business. Other businesses are being sold or shut down. EASTMAN KODAK: Nokia, Nintendo Object to Patent Sale Order ---------------------------------------------------------- Maria Chutchian of BankruptcyLaw360 reported that Nokia Corp. and Nintendo Co. Ltd. on Monday joined Kyocera Corp. in objecting to parts of Eastman Kodak Co.'s sale order for the divestiture of its digital imaging patent portfolio, which they say removed key language protecting their rights as patent licensees. The companies argue that the proposed final sale order is inconsistent with the conditional sale order the court approved in July as a settlement of objections filed by licensees of Kodak's digital-imaging patents in that it does not include the language protecting the licensees' rights, the BankruptcyLaw360 report related. As previously reported, Kyocera launched a patent suit against Kodak in New York bankruptcy court Friday, claiming Kodak began selling products infringing 15 of its patents after the film company filed for bankruptcy. Kyocera alleges that Kodak began making and selling electronics infringing Kyocera's U.S. patents on technology it uses in its digital cameras and printers after it filed for Chapter 11 bankruptcy protection last January. "Kodak also has been and is now contributing to and inducing others to infringe Kyocera's U.S. patents," Kyocera said in court papers, according to a prior BLaw360 report. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reported that Kyocera contends there are flaws in Kodak's $525 million sale of digital-imaging technology scheduled for court approval on Jan. 11. According to the Bloomberg report, Kyocera contends Kodak agreed when setting up the sale that the rights of licensees and others with interests in the technology wouldn't be altered. Now, according to Kyocera's filing in bankruptcy court, Kodak intends to terminate licenses previously granted to the technology. In addition, Kyocera filed a lawsuit in bankruptcy court Jan. 4 contending that Kodak is infringing patents it owns. The Bloomberg report relates that Kyocera's objection to the sale will be hashed out at the Jan. 11 hearing. Kodak arranged the sale with a group of buyers when the technology didn't command a price the company said might reach $2.5 billion. The buyers are 12 of the world's largest technology companies. Kodak's $400 million in 7% convertible notes due in 2017 last traded Jan. 3 for 11.25 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. The Retirees Committee has hired Haskell Slaughter Young & Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC, as Bankruptcy Consultants and Financial Advisors; and the Segal Company, as Actuarial Advisors. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. Kodak intends to reorganize by focusing on the commercial printing business. Other businesses are being sold or shut down. EURAMAX INTERNATIONAL: Moody's Corrects Dec. 11 Rating Release -------------------------------------------------------------- Moody's Investors Service issued a correction to the December 11, 2012 rating release of Euramax International, Inc. Revised release follows: Moody's Investors Service downgraded Euramax International, Inc.'s corporate family rating and probability of default rating to Caa2 from Caa1. The company's other existing debt ratings were also downgraded. The outlook remains stable. The following rating actions were taken: - Corporate Family Rating, downgraded to Caa2 from Caa1 - Probability of Default Rating, downgraded to Caa2 from Caa1 - $375 million senior secured notes due 2016, downgraded to Caa2 (LGD4, 51%) from Caa1 Ratings Rationale The downgrade reflects Moody's expectation that the turmoil in global financial markets and weakness in Europe will continue to hamper Euramax's revenues and operating margins as well as weaken key credit metrics. Moody's expects sustained weak profitability to diminish the company's free cash flow generation over the next 12 to 18 months, which may continue to increase usage on the revolving credit facility. Expectations for only moderately higher revenues, continued softness in operating margins and no significant reduction in balance sheet debt point to elevated adjusted debt leverage in excess of 8.0x over the next 12 to 18 months. The Caa2 corporate family rating considers the company's elevated adjusted debt leverage of approximately 14.4x debt-to-EBITDA, adjusted interest coverage below 1.0x, and weakening operating margins. (In arriving at EBITDA, Moodys includes non-cash foreign exchange losses which result from translating inter-company obligations between the company's US and foreign businesses). In addition, the rating reflects Moody's expectations for a slow recovery in the residential repair and remodeling and non- residential construction markets, exposure to commodity price volatility, and on-going uncertainty about the Euro Zone. The rating also takes into consideration the limited ability to reduce long-term debt, due largely to expectations for weak free cash flow generation over the next 12 to 18 months. However, the lack of significant debt maturities until 2015 supports the company's liquidity and gives it time to work toward restoring operating profitability. The ratings may be upgraded if the company is able to show improvement in operating margins such that adjusted EBITA margin improves to at least mid-single digits on an annual basis, adjusted EBITA-to-interest expense approaches 2.0x, and adjusted debt-to-EBITDA falls below 6.5x. The ratings may come under pressure if adjusted EBITA-to-interest expense falls below 0.5x or if the company is unable to achieve adjusted debt-to-EBITDA less than 8.0x. Also, if the company remains unable to meet its springing fixed charge coverage covenant in the event that availability under the revolver approaches the minimum threshold, the ratings could be affected. The principal methodology used in rating Euramax 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. Headquartered in Norcross, Georgia, Euramax International, Inc. is an international producer of value-added aluminum, steel, vinyl and fiberglass products. For the 12 months ended September 30, 2012, the company generated revenues of $861 million and a net loss of approximately $50 million. FANNIE MAE: Sued with Freddie Mac in Maryland for Unpaid Taxes -------------------------------------------------------------- Fannie Mae (FNMA) and Freddie Mac were sued for unpaid transfer taxes by a Maryland county, which argued in a federal court filing that the home-mortgage finance companies can?t claim a government exemption from property fees, Andrew Zajac of Bloomberg News reported. According to the Bloomberg report, Fannie Mae and Freddie Mac aren?t qualified for the exemption because they have been federally chartered, publicly traded, private-stock corporations since March 31, 2003, according to the complaint filed by Montgomery County yesterday in U.S. District Court in Beltsville, Maryland. The companies ?are not and have not been agencies, departments or instrumentalities of the United States for any time applicable to the claims made in the action,? according to the complaint. The complaint also names the Federal Housing Finance Agency, which took Fannie Mae and Freddie Mac (FMCC) into U.S. conservatorship in September 2008. Fannie Mae and Freddie Mac own or guarantee $5.2 trillion in mortgages and back more than two thirds of mortgages currently being originated. The complaint doesn?t specify potential liability, Bloomberg noted. According to Bloomberg, Montgomery County is the latest jurisdiction to sue Fannie Mae and Freddie Mac to recover transfer fees. Suits have been filed by Miami-Dade County and Hernando County, Florida; Bridgeport, Connecticut; and Montgomery County, Ohio, the news agency noted. Don Springmeyer, an attorney on the Maryland case, who said he is handling similar complaints in six other states including Tennessee, Kentucky, Georgia, South Carolina, Ohio and Connecticut, told Bloomberg that taxing jurisdictions could recover ?somewhere between $500 million and $1 billion.? The potential size of recoveries is limited by statutes of limitations and by the absence of a transfer tax in some states, including Texas, Mr. Springmeyer said, the report related. The case is Montgomery County, Maryland v. Federal National Mortgage Corp., 13-cv-00066, U.S. District Court, District of Maryland (Greenbelt). About Fannie Mae Federal National Mortgage Association, aka Fannie Mae, is a government-sponsored enterprise that was chartered by U.S. Congress in 1938 to support liquidity, stability and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold. Fannie Mae has been under conservatorship, with the Federal Housing Finance Agency acting as conservator, since September 6, 2008. As conservator, FHFA succeeded to all rights, titles, powers and privileges of the company, and of any shareholder, officer or director of the company with respect to the company and its assets. The conservator has since delegated specified authorities to Fannie Mae's Board of Directors and has delegated to management the authority to conduct day-to-day operations. The U.S. Department of the Treasury owns Fannie Mae's senior preferred stock and a warrant to purchase 79.9% of its common stock, and Treasury has made a commitment under a senior preferred stock purchase agreement to provide Fannie with funds under specified conditions to maintain a positive net worth. Fannie Mae reporte a net loss of $16.85 billion in 2011, a net loss of $14.01 billion in 2010, and a net loss of $72.02 billion in 2009. About Freddie Mac Based in McLean, Virginia, the Federal Home Loan Mortgage Corporation, known as Freddie Mac (OTCBB: FMCC) -- http://www.FreddieMac.com/-- was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters. Freddie Mac is under conservatorship and is dependent upon the continued support of Treasury and the Federal Housing Finance Agency acting as conservator to continue operating its business. FIRST DATA: Fitch Affirms B Issuer Default Rating; Outlook Stable ----------------------------------------------------------------- Fitch Ratings has affirmed the Issuer Default Rating (IDR) for First Data Corp. at 'B' and revised the Rating Outlook to Stable from Negative. The revision in Rating Outlook reflects the following: -- Since 2011, FDC has extended over $6 billion of secured term loans due in 2014 to 2017 and beyond. The company has approximately $1.5 billion in unsecured notes due in 2015 which Fitch believes can be reasonably extended and at least partially repaid. This has sufficiently extended the window the company has to grow EBITDA and look for an opportunity to access the public equity markets to effect a recapitalization of the company. Importantly, FDC does have $2.5 billion in subordinated notes as well as $2.7 billion (maturity value) in PIK notes at the parent company due 2016 which represents the next significant maturity wall. -- FDC achieved surprisingly strong EBITDA growth during the latest 12-month (LTM) period given numerous economic headwinds. Fitch estimates EBITDA of $2.35 billion for the LTM period, up 12.2% over the prior year period (up approximately 7.5% when excluding the impact lower debit network fees had on the business in the LTM). The strong EBITDA growth was achieved despite only 3.3% revenue growth (on a segment basis which excludes reimbursable expenses among other items). FDC has a high fixed cost structure which can generate significant operating leverage, positive and negative. In recent years management has successfully demonstrated its ability to drive operating leverage gains (while also reducing overall expenses) that did not materialize in the years initially following the leveraged buyout in 2007. Fitch estimates leverage at 9.6x currently, down from 10.9x a year ago. Fitch estimates free cash flow (FCF) for the LTM period at $423 million, roughly half of which was generated from working capital changes. Sustainable FCF of $200 million-plus, though, is stronger than what Fitch expected at the beginning of the year. When coupled with modest revenue growth expectations going forward, FDC could generate enough cash to repay a sizeable portion of its roughly $1.5 billion in 2015 maturities. Fitch believes that the 2016 maturities represent the next meaningful refinancing wall for the company. Fitch also believes that it is possible, given FDC's current growth trajectory, that it could potentially recapitalize in a public equity offering before those notes need to be refinanced. From an operational perspective, Fitch believes core credit strengths include: -- Stable end-market demand with below-average susceptibility to economic cyclicality; -- A highly diversified, global and stable customer base consisting principally of millions of merchants and large financial institutions; -- A significant advantage in scale of operations and technological leadership which positively impact the company's ability to maintain its leading market share and act as barriers to entry to potential future competitors. In addition, FDC's Financial Services business benefits from long-term customer contracts and generally high switching costs; -- Low working capital requirements typically enable a high conversion of EBITDA less cash interest expense into cash from operations. Fitch believes operational credit concerns include: -- Mix shift in the Retail Services segment, including a shift in consumer spending patterns favoring large discount retailers, has negatively affected profitability and revenue growth and could lead to greater than anticipated volatility in results; -- High fixed cost structure with significant operating leverage would typically drive volatility in profitability during business and economic cycles; -- Consolidation in the financial services industry and changes in regulations could continue to negatively impact results in the company's Financial Services segment; -- Potential for new competitive threats to emerge over the long term including new payment technology in the Retail Services segment, the potential for a competitor to consolidate market share in the Retail Services segment, and the potential for historically niche competitors in the Financial Services segment to move upstream and challenge FDC's relative dominance in card processing for large financial institutions.; -- Management is compensated in large part with equity. If FDC's outlook continues to deteriorate, the value of this compensation could decline considerably, which enhances the risk that executives could look to leave the company. Management turnover has been an issue for FDC over the past few years and additional turnover could be damaging. From a financial perspective, Fitch believes core credit strengths include expectations that FDC will use the majority of excess free cash flow for debt reduction. Credit concerns include a highly levered balance sheet that results in minimal financial flexibility and reduces the company's ability to act strategically in a business that has historically benefited from consolidation opportunities. Liquidity as of Sept. 30, 2012 was solid with cash of $470 million ($212 million of which was available to the company in the U.S.) and $1.46 billion available under a $1.52 billion senior unsecured revolving credit facility, approximately $500 million of which expires September 2014 and the rest in September 2016. Fitch estimates that FDC generated approximately $423 million in FCF over the LTM period which further adds to liquidity. Total debt as of Sept. 30, 2012 was $22.7 billion, which includes approximately $15.6 billion in secured debt, $4.5 billion in unsecured debt and $2.5 billion in subordinated debt (all figures approximate). In addition, a subsidiary of New Omaha Holdings L.P. (the direct parent company of First Data Corp.) has outstanding $1.75 billion senior unsecured PIK notes due 2016. These notes are not obligations of FDC and are not consolidated. For an in-depth review of Fitch's credit analysis and outlook for FDC, please see the report published June 6, 2012. Fitch has affirmed the ratings for FDC as follows: -- Long-term IDR at 'B'; -- $499 million senior secured revolving credit facility expiring September 2013 at 'BB-/RR2'; -- $1.0 billion senior secured revolving credit facility expiring September 2016 at 'BB-/RR2'; -- $252 million senior secured term loan B due 2014 at 'BB-/RR2'; -- $2.7 billion senior secured term loan B due 2017 at 'BB-/RR2'; -- $4.7 billion senior secured term loan B due 2018 at 'BB-/RR2'; -- $750 million senior secured term loan B due 2018 at 'BB-/RR2'; -- $1.6 billion 7.375% senior secured notes due 2019 at 'BB-/RR2'; -- $510 million 8.875% senior secured notes due 2020 at 'BB-/RR2'; -- $2.2 billion 6.75% senior secured notes due 2020 at 'BB-/RR2'; -- $2 billion 8.25% junior secured notes due 2021 at 'CCC+/RR6'; -- $1 billion 8.75%/10.0% PIK Toggle junior secured notes due 2022 at 'CCC+/RR6'; -- $784 million 9.875% senior unsecured notes due 2015 at 'CCC+/RR6'; -- $748 million 10.55% senior unsecured notes due 2015 at 'CCC+/RR6'; -- $3 billion 12.625% senior unsecured notes due 2021 at 'CCC+/RR6'; -- $2.5 billion 11.25% senior subordinated notes due 2016 at 'CCC/RR6'. The Rating Outlook is Stable. The Recovery Ratings (RRs) for FDC reflect Fitch's recovery expectations under a distressed scenario, as well as Fitch's expectation that the enterprise value of FDC, and hence recovery rates for its creditors, will be maximized in a restructuring scenario (as a going concern) rather than a liquidation scenario. In deriving a distressed enterprise value, Fitch applies a 15% discount to FDC's estimated operating EBITDA (adjusted for equity earnings in affiliates) of approximately $2.4 billion for the LTM ended Sept. 31, 2012 which is equivalent to Fitch's estimate of FDC's total interest expense and maintenance capital spending. Fitch then applies a 6x distressed EBITDA multiple, which considers FDC's prior public trading multiple and that a stress event would likely lead to multiple contraction. As is standard with Fitch's recovery analysis, the revolver is fully drawn and cash balances fully depleted to reflect a stress event. The 'RR2' for FDC's secured bank facility and senior secured notes reflects Fitch's belief that 71%-90% recovery is realistic. The 'RR6' for FDC's second lien, senior and subordinated notes reflects Fitch's belief that 0%-10% recovery is realistic. The 'CCC/RR6' rating for the subordinated notes reflects the minimal recovery prospects and inherent subordination in a recovery scenario. What Could Trigger A Rating Action Future developments that may, individually or collectively, lead to positive rating action include: -- Greater visibility and confidence in the potential for the company to access the public equity markets. Future developments that may, individually or collectively, lead to negative rating action include: -- The ratings could be downgraded if FDC were to experience sustained market share declines or if typical price compression accelerates; -- The ratings could also be downgraded if the U.S. economy were to experience a sustained recession. FIRSTFED FINANCIAL: Consummates Chapter 11 Stock Plan ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that FirstFed Financial Corp. implemented the Chapter 11 reorganization plan on Jan. 2 that the bankruptcy court in Los Angeles approved in November by signing a confirmation order. Holders of $157.8 million in debentures were to receive a recovery expected to be worth between 16.7% and 24% through distribution of new stock. The old stock was canceled. About FirstFed Financial Irvine, Calif.-based FirstFed Financial Corp. is the bank holding company for First Federal Bank of California and its subsidiaries. The Bank was closed by federal regulators on Dec. 18, 2009. FirstFed Financial Corp. filed for Chapter 11 protection (Bankr. C.D. Calif. Case No. 10-10150) on Jan. 6, 2010. Jon L. Dalberg, Esq., at Landau Gottfried & Berger LLP, represents the Debtor in its restructuring effort. Garden City Group is the claims and notice agent. The Debtor disclosed assets at $1 million and $10 million, and debts at $100 million and $500 million. FLORIDA INSTITUTE FOR NEUROLOGIC: Uses Ch. 11 to Avoid Receiver --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Florida Institute for Neurologic Rehabilitation Inc. filed a bare-bones petition for Chapter 11 protection after the bank lender sought appointment of a receiver in state court, alleging that patients are at risk because of financial problems and mismanagement. Lender Regions Bank, owed $31 million on a real estate loan, hadn't been paid since August. The Bloomberg News report notes that FINR has been resisting directives by Florida regulators to move about 50 patients to other facilities. Florida officials acted after Bloomberg News, citing investigative reports released under a court order, reported a history where caregivers beat patients and goaded them to fight each other and fondle female employees. The facility is in Wauchula, about 50 miles (80 kilometers) southeast of Tampa. FINR filed no papers along with the three-page printed-form petition other than a list of creditors. FINR and Traumatic Brain Education Adult Community Home Inc., sought Chapter 11 protection (Bankr. M.D. Fla. Case Nos. 13-00102 and 13-00097) on Jan. 4, 2012. Craig I Kelley, Esq., at Kelley & Fulton, P.A., in West Palm Beach, Florida, serves as counsel. FINR estimated under $50,000 in assets and at least $1 million in liabilities. Traumatic Brain estimated under $50,000 in assets and up to $500,000 in liabilities. GORDIAN MEDICAL: Has Exclusive Control of Case Until March ---------------------------------------------------------- Gordian Medical, Inc., dba American Medical Technologies, sought and obtained an extension until Jan. 14, 2013, of the deadline to file its Chapter 11 plan and disclosure statement. The Debtor's exclusive solicitation period is extended up to and including March 5, 2013. About Gordian Medical Gordian Medical, Inc., dba American Medical Technologies, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-12339) in Santa Ana, California, on Feb. 24, 2012, after Medicare refunds were halted. Irvine, California-based Gordian Medical provides supplies and services to treat serious wounds. The company has active relationships with and serves patients in more than 4,000 nursing facilities in 49 states with the heaviest concentration of the nursing homes being in the south and southeast sections of the United States. The Debtor estimated assets and debts of up to $50 million. It has $4.3 million in cash and $31.1 million in receivables due from Medicare. Judge Mark S. Wallace oversees the case. Pachulski Stang Ziehl & Jones LLP serves as the Debtor's counsel. GlassRatner Advisory & Capital Group LLC serves as the Debtor's financial advisor. The U.S. Trustee appointed five members to the Official Committee of Unsecured Creditors. The Committee is represented by Landau Gottfried & Berger LLP. GOSPEL RESCUE: DC Judge Clarifies Applicability of Rule 9006(f) --------------------------------------------------------------- Bankruptcy Judge S. Martin Teel, Jr., ruled that Fed.R.Bankr.P. 9006(f) is inapplicable to the computation of the 14-day period in Rule 4001(c). The Court's clarifying order was issued after Gospel Rescue Ministries Of Washington, D.C. Inc., served its Rule 4001(c) motion by regular mail. Rule 4001(c)(2) provides that a final hearing on a motion for authority to obtain credit may commence "no earlier than 14 days after service of the motion." Rule 9006(f) provides: "When there is a right or requirement to act or undertake some proceedings within a prescribed period after service and that service is by mail . . . three days are added after the prescribed period would otherwise expire under Rule 9006(a)." Judge Teel noted an issue has arisen whether Rule 9006(f) applies to alter the earliest permissible date for holding a hearing under Rule 4001(c)(2), but held that he will not apply Rule 9006(f) to change the earliest date on which the court can hold a hearing under Rule 4001(c)(2). A copy of Judge Teel's Jan. 7, 2013 Memorandum Decision and Order is available at http://is.gd/9rDigIfrom Leagle.com. About Gospel Rescue Ministries Gospel Rescue Ministries of Washington, D.C. Inc., filed a Chapter 11 petition (Bankr. D.C. Case No. 12-00405) on May 30, 2012, estimating assets of $10 million to $50 million and debts of up to $10 million. Judge S. Martin Teel, Jr. presides over the case. Paul Sweeney and the law firm of Yumkas, Vidmar & Sweeney LLC serve as bankruptcy counsel. According to the Web site http://www.grm.org, in the heart of Washington D.C., Gospel Rescue Ministries strives to be a shelter in the storm of substance abuse, hunger, and homelessness. GRM is a non-denominational Christian social service agency that provides hope, help, and healing to men and women in a variety of ways, from sheltering the homeless and feeding the hungry, to educating men and women, healing them from addictions, and providing them with the vocational skills and spiritual strength to change their lives. Michael J. Corttese, the CEO and president, worked at World Bank Group and International Finance Corp. for 30 years, before joining GRM as volunteer in 1998. HAMPTON CAPITAL: Gulistan Carpet Falls Into Chapter 11 ------------------------------------------------------ Gulistan Carpet -- an Aberdeen, N.C.-based manufacturer of residential and commercial tufted carpets -- has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Hampton Capital Partners, LLC, doing business as Gulistan Carpet, filed its Chapter 11 petition (Bankr. M.D.N.C. Case No. 13-bk- 80015) on Jan. 7, 2013. The Debtor estimated assets of $10 million to $50 million and liabilities of up to $100 million. The Debtor is represented by: John Paul H. Cournoyer, Esq. John A. Northen, Esq. NORTHEN BLUE, LLP Suite 435 1414 Raliegh Road Chapel Hill, NC 27517 Tel: 919-968-4441 Fax: 919-942-6603 E-mail: jpc@nbfirm.com jan@nbfirm.com Textile World reported that the company says the filing will allow it to investigate options to sell the business to a third party or to complete an orderly wind down of its operations. The company has been producing carpet under the Gulistan name since 1924, although it traces its roots back to 1818, when an Armenian textile importer established a business in Turkey. The company began manufacturing carpet in Aberdeen in 1957, and was acquired by J.P. Stevens & Co. Inc. in 1964. Over the last 25 years, Gulistan Carpet has undergone several ownership changes. In addition to its headquarters and manufacturing operations in Aberdeen, the company has a plant in Wagram, N.C. Textile World related that Gulistan has been impacted by a slowdown in the residential carpet market resulting from an extended downturn in the housing industry. According to company management, Gulistan "has been making substantial efforts over the past few years to restructure its debts or to restructure its business and continue to operate. The company has engaged in discussions and negotiations with a private equity group and other companies in the industry in an attempt to sell Gulistan's assets as a going concern. None of these efforts have proved successful to date," the report related. Textile World said Bank of America will provide Gulistan with a debtor-in-possession credit facility to improve liquidity and provide working capital, and Gulistan has stated it believes it has sufficient liquidity to operate during Chapter 11 and to continue providing goods and services to its customers. "Chapter 11 gives us the best opportunities to maximize the value of the Gulistan business and its assets," said Phillip Essig, CEO, Gulistan. "The Board of Directors, the senior management team and I would like to express our appreciation for the hard work and loyalty of our employees. We also want to thank our customers for their continued support and loyalty." If Gulistan is unable to find a buyer, approximately 395 full-time employees will be terminated over the next four months, Textile World noted. Specific closure dates have yet to be determined, as different company operations would cease at different times, management said, Textile World added. HAWKER BEECHCRAFT: Seeks Approval of Deal with Pilatus Aircraft --------------------------------------------------------------- Hawker Beechcraft Acquisition Company filed with the U.S. Bankruptcy Court a motion to assume the Pilatus Aircraft Agreement, effective upon the effective date of the Company's Chapter 11 Plan, BankruptcyData reported. Under the agreement, the Debtors are obligated to make certain payments to Pilatus for each aircraft sold that is on the same type certificate as the "Beech-Pilatus Trainer" aircraft, the report related. The agreement also provides, among other things, a license of certain intellectual property from Pilatus to the Debtors, the report added. According to the Debtors, current payments for each T-6 aircraft sold to the U.S. Government exceed $160,000 per aircraft, and the Debtors have paid Pilatus nearly $100 million on account of the Pilatus agreement, BankruptcyData related. The Court scheduled a January 31, 2013 hearing on the motion. About Hawker Beechcraft Hawker Beechcraft Acquisition Company, LLC, headquartered in Wichita, Kansas, manufactures business jets, turboprops and piston aircraft for corporations, governments and individuals worldwide. Hawker Beechcraft reported a net loss of $631.90 million on $2.43 billion of sales in 2011, compared with a net loss of $304.30 million on $2.80 billion of sales in 2010. Hawker Beechcraft Inc. and 17 affiliates filed for Chapter 11 reorganization (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan will give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit. Other claims include pensions underfunded by $493 million. Hawker's legal representative is Kirkland & Ellis LLP, its financial advisor is Perella Weinberg Partners LP and its restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Sidley Austin LLP serves as legal counsel and Houlihan Lokey Howard & Zukin Capital Inc. serves as financial advisor to the DIP Agent and the Prepetition Agent. Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of senior secured prepetition lenders holding 70% of the loans. Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee of holders of the 8.500% Senior Fixed Rate Notes due 2015 and 8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company. The members of the Ad Hoc Committee -- GSO Capital Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims or manage accounts that hold claims against the Debtors' estates arising from the purchase of the Senior Notes. Deutsche Bank National Trust Company, the indenture trustee for senior fixed rate notes and the senior PIK-election notes, is represented by Foley & Lardner LLP. An Official Committee of Unsecured Creditors appointed in the case has selected Daniel H. Golden, Esq., and the law firm of Akin Gump Strauss Hauer & Feld LLP as legal counsel. The Committee's financial advisor is FTI Consulting, Inc. On June 30, 2012, Hawker filed its Plan, which proposed to eliminate $2.5 billion in debt and $125 million of annual cash interest expense. The plan would give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. In July 2012, Hawker disclosed it was in exclusive talks with China's Superior Aviation Beijing Co. for the purchase of Hawker's corporate jet and propeller plane operations out of bankruptcy for $1.79 billion. In October 2012, Hawker unveiled that those talks have collapsed amid concerns a deal with Superior wouldn't pass muster with a U.S. government panel and other cross-cultural complications. Sources told The Wall Street Journal that Superior encountered difficulties separating Hawker's defense business from those units in a way that would make both sides comfortable the deal would get U.S. government clearance. The sources told WJS the defense operations were integrated in various ways with Hawker's civilian businesses, especially the propeller plane unit, in ways that proved difficult to untangle. Thereafter, Hawker said it intends to emerge from bankruptcy as an independent company. On Oct. 29, 2012, Hawker filed a modified reorganization plan and disclosure materials. Hawker said the plan was supported by the official creditors' committee and by a "substantial majority" of holders of the senior credit and a majority of holders of senior notes. Hawker said it will either sell or close the jet-manufacturing business. The revised plan still offers 81.9% of the new stock in return for $921 million of the $1.83 billion owing on the senior credit. Unsecured creditors are to receive the remaining 18.9% of the new stock. Holders of the senior credit will receive 86% of the new stock. The senior credit holders are projected to have a 43.1% recovery from the plan. General unsecured creditors' recovery is a projected 5.7% to 6.3%. The recovery by holders of $510 million in senior notes is predicted to be 9.2% to 10%. HOWREY LLP: Citi under Double-Barreled Attack Over Loan Programs ---------------------------------------------------------------- When a former Dewey & LeBoeuf partner alleged in August that Citi Private Bank defrauded him by hiding the now-defunct firm's true financial state when Citi loaned him money to cover his capital contribution obligations, it turns out he wasn't the first person to publicly lodge such accusations at Citi, Sara Randazzo of the American Law Daily reported. In the months following the March 2011 demise of Howrey LLP, an Am Law 100 firm, a pair of former partners of that firm sued Citibank and one of its executives in San Francisco state court claiming that the bank had duped them by concealing Howrey's financial instability as it was arranging capital loan agreements with the two lawyers, the report related. Unless a settlement is reached, that suit is scheduled to go to trial in March, AmLaw Daily noted. If it does, filings made in the 16 months since the litigation began that depict a firm relying on partners' money to stay afloat and a compliant bank keeping the scheme going -- first reported Tuesday by Reuters -- should provide the basis for some compelling courtroom drama, the report related. The plaintiffs in the suit, Stephen O'Neal and David Buoncristiani, joined Howrey in late 2008 as part of a group of construction litigators fleeing Thelen, which itself dissolved in October 2008 and filed for bankruptcy a year later. Thelen's failure -- which cost the two men a "significant" amount of compensation as well as 20 years' worth of capital contributions - - gave the lawyers a heightened sensitivity to the potential stability of the firm they were considering joining, according to their September 2011 suit, the report added. "O'Neal was Thelen's chairman at the time it collapsed, and knew that the end came when Thelen breached a loan obligation to Citi. Which is why, O'Neal says in court papers, he asked Citi representatives repeatedly once he joined Howrey how the firm was doing. According to the suit, he and Buoncristiani were told that Howrey was well-positioned for the coming months and poised to prosper despite the recession. What the Citi executives didn't say, O'Neal and Buoncristiani claim, is that Howrey had already defaulted on loan covenants in 2007 and 2008, and had borrowed $23 million more than its existing credit line entitled it to in 2009, again breaching a covenant," the AmLaw Daily report added. "Once they joined Howrey, O'Neal took out loans totaling $315,000, and Buoncristiani borrowed $420,000 to cover both an initial capital contribution and a second capital call required of all firm partners in spring 2009. The suit does not specify how much compensation the pair were promised," the report said. The money, according to the two lawyers, went directly to Howrey, according to filings related to the suit, and was even used to back Howrey's own loans to Citi. The pair argue bluntly: "The capital contribution loan program permitted Citibank to shift risk from Howrey to individual partners.? For its part, Citi claims it did not know about Howrey's 2009 loan default until May of that year, after the partners had signed their agreements, and that in any event the bank was under no obligation to tell them about the firm's financial condition, AmLaw Daily related. In court papers, Citi also blames Howrey's demise on a steady decline in billable hours over a number of years; a delay in carrying out cost-cutting measures, including layoffs; and an increase in contingency fee matters, the report added. AmLaw Daily related that the former Dewey lawyer, Steven Otillar, leveled his allegations against Citi when he countersued Citi in response to a bank-initiated legal action seeking to reclaim $207,000 Otillar borrowed when he joined Dewey's Houston office in 2011. Otillar, now with Akin Gump Hauer Strauss & Feld, declined to comment Tuesday on those suits, which are pending in New York federal court. Otillar remains the only known former Dewey partner to be targeted by Citi in a suit. About Howrey LLP Three creditors filed an involuntary Chapter 7 petition (Bankr. N.D. Calif. Case No. 11-31376) on April 11, 2011, against the remnants of the Washington-based law firm Howrey LLP. The filing was in San Francisco, where the firm had an office. The firm previously was known as Howrey & Simon and Howrey Simon Arnold & White LLP. The firm at one time had more than 700 lawyers in 17 offices. The partners voted to dissolve in March 2011. The firm specialized in antitrust and intellectual-property matters. The three creditors filing the involuntary petition together have $36,600 in claims, according to their petition. The involuntary chapter 7 petition was converted to a chapter 11 case in June 2011 at the request of the firm. In its schedules filed in July, the Debtor disclosed assets of $138.7 million and liabilities of $107.0 million. Representing Citibank, the firm's largest creditor, is Kelley Cornish, Esq., a partner at Paul, Weiss, Rifkind, Wharton & Garrison. Representing Howrey is H. Jason Gold, Esq., a partner at Wiley Rein. The Official Committee of Unsecured Creditors is represented in the case by Bradford F. Englander, Esq., at Whiteford, Taylor And Preston LLP. In September 2011, Citibank sought conversion of the Debtor's case to Chapter 7 or, in the alternative, appointment of a Chapter 11 Trustee. The Court entered an order appointing a Chapter 11 Trustee. In October 2011, Allan B. Diamond was named as Trustee. HOWREY LLP: Creditor Defends Bid to Bring Alter Ego Claims ---------------------------------------------------------- Ama Sarfo of BankruptcyLaw360 reported that an attorney for a Howrey LLP unsecured creditor on Monday blasted the Chapter 11 trustee's bid to stop a proposed class action targeting hundreds of equity security holders of the defunct law firm, saying the creditor has the right to file alter ego claims. Trustee Allan B. Diamond had argued that the suit would violate the bankruptcy's automatic stay, but William McGrane, counsel for Howrey Claims LLC, said the creditor's adversary proceeding would not breach the automatic stay, the BankruptcyLaw360 report related. About Howrey LLP Three creditors filed an involuntary Chapter 7 petition (Bankr. N.D. Calif. Case No. 11-31376) on April 11, 2011, against the remnants of the Washington-based law firm Howrey LLP. The filing was in San Francisco, where the firm had an office. The firm previously was known as Howrey & Simon and Howrey Simon Arnold & White LLP. The firm at one time had more than 700 lawyers in 17 offices. The partners voted to dissolve in March 2011. The firm specialized in antitrust and intellectual-property matters. The three creditors filing the involuntary petition together have $36,600 in claims, according to their petition. The involuntary chapter 7 petition was converted to a chapter 11 case in June 2011 at the request of the firm. In its schedules filed in July, the Debtor disclosed assets of $138.7 million and liabilities of $107.0 million. Representing Citibank, the firm's largest creditor, is Kelley Cornish, Esq., a partner at Paul, Weiss, Rifkind, Wharton & Garrison. Representing Howrey is H. Jason Gold, Esq., a partner at Wiley Rein. The Official Committee of Unsecured Creditors is represented in the case by Bradford F. Englander, Esq., at Whiteford, Taylor And Preston LLP. In September 2011, Citibank sought conversion of the Debtor's case to Chapter 7 or, in the alternative, appointment of a Chapter 11 Trustee. The Court entered an order appointing a Chapter 11 Trustee. In October 2011, Allan B. Diamond was named as Trustee. HYDROFLAME TECH: Files List of 20 Largest Unsecured Creditors ------------------------------------------------------------- HydroFlame Technologies LLC filed with the U.S. Bankruptcy Court for the Middle District of Louisiana a list of creditors holding the 20 largest unsecured claims: Type of Amount of Company Name Claim Claim ------------ ------- --------- Adams and Reese Legal Services $31,497 ADP Inc Payroll Services $559 Arthur R. Cooper Loan $51,590 Babineaux, Poche, Athony Legal Services $2,361 Slavich LLC Buchanan Ingersoll & Legal Services $941 Rooney PC Dinaker Deshini Unpaid Salary $15,384 Dr. Dandina N. Rao Intellectual Property $881,884 HydroFlame Prodcution LLC Unsec. Notes Payable $700,000 IPFS Corp. Insurance Premiums $10,357 James E. Landry Unpaid Salary $50,769 Louisiana Business and Facilities Rent $11,451 Mayuri Murugesu Unpaid Salary $25,846 Postlewaite & Netterville Tax Return Preparation $1,870 Powertech Industries LLC Consulting Services $8,344 Praxair Distributing Laboratory Supples $2,209 TRCG Advisors R&D Tax Return $5,712 Whitney Bank/Visa- Credit Credit Card Purchases $56,212 About Hydroflame Technologies Three employees sought to place Baton Rouge, Louisiana-based Hydroflame Technologies LLC in bankruptcy by filing an involuntary Chapter 11 petition (Bankr. M.D. La. Case No. 12-11250) on Aug. 24, 2012. Barry W. Miller, Esq., at Heller, Draper, Patrick & Horn, represent the petitioners. The petitioners assert roughly $23,000 in total claims for unpaid wages. The petitioners are James E. Landry of Lafayette, and Mayuri Murugesu and Dinaker Deshini of Baton Rouge. According to http://www.hydroflametech.com/HydroFlame Technologies LLC was established with the sole purpose of commercializing the HydroFlame novel direct contact combustion heat transfer process. In January 2007, a patent application was filed by HydroFlame Technologies in the United States and several other countries to protect the HydroFlame process. On Aug. 24, 2010, HydroFlame Technologies was issued the U.S. Patent No. 7,780,152 and granted a full 20 years of patent protection. The Mexican Patent No. 285319 was issued on April 1, 2011. The Debtor disclosed assets of $1,213,384, and liabilities of $3,331,980. INTERFACE SECURITY: Moody's Assigns '(P)B3' CFR; Outlook Stable --------------------------------------------------------------- Moody's Investor Service assigned a (P)B3 Corporate Family Rating ("CFR") to Interface Security Systems Holdings, Inc. Concurrently, Moody's assigned a (P)B3 rating to $225 million of proposed senior secured notes. This is a first time rating for Interface Security and is based on a proposed new financing. The ratings outlook is stable. The following ratings (and Loss Given Default assessment) were assigned: - Corporate Family Rating, (P)B3 - Proposed $225 million second lien notes due 2018, (P)B3 (LGD4, 56%) Proceeds from the new notes will be used to repay existing indebtedness, to pay fees and expenses, and for general corporate purposes. Moody's ratings are provisional and will be converted to definitive ratings upon closing of the transaction and review of final documentation. Moody's also expects to assign a B3 Probability of Default rating upon close. Moody's does not rate Interface Security's existing debt instruments. Ratings Rationale The (P)B3 CFR reflects Interface Security's modest revenue base of approximately $114 million (pro forma for an acquisition) despite organic revenue growth of 30% in 2011. The ratings are constrained by a short operating history at the current size and scale, significant customer concentration, and weak credit metrics calculated under generally accepted accounting principles (GAAP). Because of management's strategy to grow the commercial business, Moody's expects reported free cash flow to remain materially negative over the next 12-18 months. Interface Security intends to partially fund installations at new customer locations from drawings on a proposed $45 million revolver (unrated). Still, Moody's anticipates at least $20 million of revolver availability throughout 2013. If Interface Security were to instead maintain a flat or steady state recurring monthly revenue ("RMR") base, Moody's estimates that levered free cash flow would be modestly positive in 2013. Pro forma debt / RMR of approximately 29 times (excluding preferred stock) is comparatively lower than debt / RMR at other single B rated alarm monitoring issuers. The ratings are further supported by Interface Security's contracted backlog, the steady and predictable revenue streams provided by subscriber contracts, and the high mix (greater than 75% of RMR) of commercial revenues which inherently generate higher average rates per unit ("ARPU") and lower attrition rates than are typical with residential subscribers. The stable outlook reflects Moody's expectation that Interface Security will maintain an adequate liquidity profile over the next 12-18 months, despite some reliance on the revolver to partly fund expected double-digit revenue growth. The ratings could be upgraded if Interface Security can organically grow RMR, improve GAAP credit metrics and materially improve its liquidity profile while maintaining debt / RMR and commercial attrition rates at current levels. The ratings could be downgraded if liquidity deteriorates, debt/RMR approaches 35 times, ARPU declines meaningfully, or commercial attrition rates weaken. The principal methodology used in rating Interface Security Systems Holdings, Inc. was the Global Business & Consumer Service 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. Interface Security provides alarm monitoring and secured broadband services to approximately 107 thousand customers in the U.S.A. The company is majority-owned by affiliates of SunTX and reported revenues of $104 million in the twelve months ended September 30, 2012. INTERFACE SECURITY: S&P Assigns Prelim. 'B-' Corp. Credit Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B-' corporate credit rating to St. Louis, Mo.-based Interface Security Systems Holdings Inc. The outlook is stable. At the same time, S&P assigned a preliminary 'B-' issue rating with a preliminary recovery rating of '4' to the company's $225 million senior secured notes, which indicates S&P's expectation for (30% to 50%) average recovery for lenders in the event of default. The company also plans to issue a $45 million revolving credit facility (unfunded at closing), which S&P do not rate. Given the company's current capital structure, which matures in 2013, S&P decided to assign preliminary ratings to the company. "The preliminary rating on Interface reflects the company's 'highly leveraged' financial risk profile, with expected lease- adjusted pro forma debt to EBITDA of about 9x in 2013," said Standard & Poor's credit analyst Katarzyna Nolan. Our assessment of the company's "vulnerable" business risk profile takes into account the company's modest scale, its highly competitive industry, and its concentrated customer base. Positive factors include Interface's growing recurring revenue base, as well as its unique bundled service offering that combines physical security and secured network solutions and results in above-industry average revenue per user (ARPU). Interface provides physical security and secured network services to approximately 107,000 customer sites in the U.S. The company's customers include primarily large, commercial, multisite customers. Its physical security solutions include alarm/event monitoring, interactive video surveillance, managed access control and fire safety systems. Interface's secured network services include secured managed broadband (SMB), payment card industry (PCI) compliance, and managed digital voice services. The stable outlook reflects S&P's expectation that the company will achieve somewhat improved credit metrics from the current weak levels over the next year through revenue and EBITDA growth. An upgrade in the next 12 months is unlikely, given the company's highly leveraged financial profile and our view that it will continue using debt to finance growth rather than repay debt. S&P could lower the rating if account creation costs increase or if industry conditions deteriorate such that the company can't internally fund attrition, or if its financial covenants under the revolving facility are stressed. K-V PHARMACEUTICAL: Files Chap. 11 Plan --------------------------------------- K-V Pharmaceutical filed with the U.S. Bankruptcy Court a Chapter 11 Plan of Reorganization and related Disclosure Statement, BankruptcyData reported on Jan. 9. According to the Disclosure Statement, "The Plan is intended to enable the Debtors to continue present operations without the likelihood of a subsequent liquidation or the need for further financial reorganization. The Debtors believe that they will be able to perform their obligations under the Plan. The Debtors also believe that the Plan permits fair and equitable recoveries," the report related. The Disclosure Statement also explains, "In full satisfaction, settlement, release and discharge of the Allowed DIP Claims, on the Effective Date, all Allowed DIP Claims shall be paid in full in Cash on the Effective Date from the proceeds of the New First Lien Term Loan," the report added. 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, 2012, 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 employed 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 tapped 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 members to serve in the Official Committee of Unsecured Creditors. Kristopher M. Hansen, Esq., Erez E. Gilad, Esq., and Matthew G. Garofalo, Esq., at Stroock & Stroock & Lavan LLP, represent the Creditors Committee. Weil, Gotshal & Manges LLP's Robert J. Lemons, Esq., and Lori R. Fife, Esq., represent an Ad Hoc Senior Noteholders Group. KEOWEE FALLS: Plan Outline Approved; Feb. 26 Confirmation Hearing ----------------------------------------------------------------- Judge John E. Waites of the U.S. Bankruptcy Court for the District of South Carolina has approved the disclosure statement explaining the Chapter 11 plan filed by Keowee Falls Investment Group, LLC, dated Oct. 19, 2012. The hearing to confirm the plan is scheduled for Feb. 26, 2013, at 9:30 a.m. The last day to cast votes on the plan and to lodge written confirmation objections is Feb. 19. The Debtor's remaining assets comprise of $165,000 in cash, a potential recovery on a $16 million unsecured claim in Cliffs Club's Chapter 11 case, and recovery from loans to related entities or parties. With the secured claims paid in full from the approved sale, unsecured creditors will be paid a pro rata share of the net cash proceeds. Equity holders will receive the surplus from any residual recoveries after unsecured creditors have been paid in full. A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/Keowee_Falls_DS_101912.pdf W. Clarkson McDow, Jr., the U.S. Trustee for Region 4, previously filed an objection to the disclosure statement, saying it does not contain "adequate information." Linda K. Barr, Esq., representing the U.S. Trustee, says the disclosure statement appears to state that there are no claims senior to the general unsecured class. If this statement is correct, then no amendment needs to be made. However, if there are any administrative claims which would deplete the $165,000 available for distribution to the general unsecured creditors, those administrative claims should be disclosed. Ms. Barr notes that the disclosure statement provides that the debtor does not currently intend to pursue preferences, fraudulent conveyances or other avoidance actions, but fails to state whether any such actions exist. According to Mr. Barr, the plan provides for the release of all of the debtor's representatives, but the disclosure statement fails to disclose whether there are any potential claims against the releasees, what consideration the releasees have provided for the proposed release, or why the releases are necessary for the success of the liquidating plan. About Keowee Falls 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 schedules, the Debtor disclosed $32,671,753 in assets and $19,913,844 in liabilities as of the Chapter 11 filing. The Debtor owned The Cliffs at Keowee Falls South before giving up the assets to lenders in exchange for $17 million of debt. LAWRENCE DARWIN MCKAY: Court Converts Case to Chapter 7 ------------------------------------------------------- Bankruptcy Judge Terry L. Myers converted the Chapter 11 case of Lawrence Darwin McKay to a liquidation under Chapter 7 of the Bankruptcy Code, at the behest of the United States Trustee. Lawrence Darwin McKay filed a Chapter 11 bankruptcy petition (Bankr. D. Idaho Case No. 12-00902) on April 19, 2012. In September 2012, the Carmella Adams Trust and Darrell Adams, individually and as the trustee of that trust, as creditors, sought to establish a deadline for Mr. McKay to file a proposed plan and disclosure statement, noting that the Debtor's period of exclusivity under 11 U.S.C. Sec. 1121(b) had expired on Aug. 17, 2012. At a hearing on Sept. 24, Mr. McKay stipulated on the record that he would file his plan and disclosure statement by Nov. 16, 2012. No plan or disclosure statement was filed by the agreed date and, on Nov. 20, the Adams Trust moved to dismiss the case. Mr. McKay filed on Dec. 11 an objection to the Motion to Dismiss, and the next day filed a chapter 11 disclosure statement and chapter 11 plan. According to Judge Myers, the Debtor failed to abide by the agreed deadline, and cause for dismissal or conversion under 11 U.S.C. Sec. 1112(b)(4)(J) is thus clearly established. The U.S. Trustee, however, urged conversion based on the scheduled disclosure of assets, primarily the Debtor's ownership of and interests in several business entities. The Adams Trust argued for dismissal, contending that the businesses might have only nominal or negligible value. Judge Myers agreed with the U.S. Trustee that conversion best serves the interests of creditors and the estate. A copy of Judge Myers' Jan. 4, 2013 Memorandum of Decision is available at http://is.gd/jZZsEOfrom Leagle.com. LBI MEDIA: Moody's Cuts Rating on Sr. Secured Notes to 'Caa1' ------------------------------------------------------------- Moody's Investors Service repositioned LBI Media Inc.'s Probability of Default Rating (PDR) to Caa2/LD, from Caa2, to record the limited default following the company's exchange of approximately 76% of its 8.5% senior subordinated notes due 2017 for new notes plus warrants at a 40% discount to par and the exchange of roughly 74% LBI Media Holdings, Inc's 11% senior discount notes due 2013 (unrated) for new notes at a 60% discount to par. Moody's also assigned a Caa3, LGD5 - 75% rating to the new 11.5%/13.5% PIK toggle 2nd priority subordinated notes, downgraded the 9.25% senior secured notes due 2019 to Caa1 from B3 and downgraded the 8.5% senior subordinated notes due 2017 to Ca from Caa3. The company's Caa2 Corporate Family Rating (CFR) was affirmed and the rating outlook remains negative. The downgrade of the 9.25% senior secured notes reflects the reduced cushion provided by subordinated debt and the downgrade of the 8.5% senior subordinated notes reflects their structural subordination to the new 2nd priority secured notes. The "/LD" designation to the PDR indicates a limited default occurred as a result of the distressed exchange. The PDR will revert to Caa2 and the "/LD" designation will be removed in approximately three days. Issuer: LBI Media, Inc. Probability of Default Rating: Changed to Caa2/LD from Caa2 Assigned: Issuer: LBI Media, Inc. NEW 11.5%/13.5% PIK Toggle 2nd Priority Subordinated Notes due 2020 ($115.2 million outstanding): Assigned Caa3, LGD5 - 75% Downgraded: Issuer: LBI Media, Inc. 9.25% Senior Secured Notes due 2019 ($220 million outstanding): Downgraded to Caa1, LGD3 - 32% from B3, LGD2 - 27% 8.5% Senior Subordinated Notes due 2017 (roughly $54.2 million outstanding post exchange): Downgraded to Ca, LGD6 - 91% from Caa3, LGD5 - 75% Unchanged: Issuer: LBI Media, Inc. Corporate Family Rating: Affirmed Caa2 Outlook Actions: Issuer: LBI Media, Inc. Outlook is Negative Ratings Rationale The Caa2 corporate family rating reflects very high leverage with more than 14x debt-to-EBITDA estimated for December 31, 2012 despite the roughly $70 million reduction in funded debt balances from the distressed exchange. Ratings also reflect Moody's view that liquidity remains weak given only partial availability under the $50 million revolver and very tight EBITDA coverage of interest expense and capex. The new notes allow the company to PIK a portion of debt service; however, Moody's expects EBITDA coverage of interest expense to be approximately 1.0x over the next 12 months. In addition, $11 million of the remaining 11% sr discount notes mature in October 2013 putting additional pressure on liquidity absent completion of pending asset sales. In October 2012, LBI entered into an agreement to sell KTCY-FM (Ft. Worth, TX) for $6 million and to sell real estate located in Los Angeles for $13.6 million. The divestitures are expected to close by the end of 1Q2013 and 2Q2013, respectively. Debt ratings also reflect uncertainties related to the company's ability to address revenue deterioration in the radio segment and to capitalize on its investment in its television network. Despite management's efforts to restore audience ratings for radio stations and despite investments in television programming and expanded network reach, Moody's believes liquidity may be further strained absent significant margin improvement over the next 12 months and absent completion of pending asset sales. On December 31, 2012 the company reduced funded debt balances by approximately $70 million when $174.6 million (76% of outstandings) of its 8.5% senior subordinated notes due 2017 and $30.9 million (74% of outstandings not held by the company) of holdco's 11% senior discount notes due 2013 (unrated) were exchanged for a combined $115.2 million of new 11.5%/13.5% PIK toggle 2nd priority secured subordinated notes due 2020 and $21.1 million of 11% senior notes due 2017 (unrated) plus warrants. As indicated in Moody's announcement of July 30, 2012, the debt exchange resulted in a reduction in cushion provided by subordinated debt and a one notch downgrade in the rating of the 9.25% senior secured notes to Caa1. For the 12 months ended September 30, 2012, total revenues increased 3.6% compared to FY2011 as 7.8% revenue growth in television offset a 1% decline in the radio segment. Despite lower radio revenues, segment EBITDA grew 9% to $24 million for radio reflecting reductions in SG&A. As expected, television segment EBITDA decreased from $3.9 million in FY2011 to an EBITDA loss of ($2.4 million) for LTM September 30, 2012 due primarily to investments in programming intended to increase audience ratings. Management indicates that its network, Estrella TV, achieved improved results in the fall ratings season with an increase over both the May 2012 and November 2011 sweep periods for key demos during primetime hours. The negative outlook incorporates Moody's view that, notwithstanding potential revenue growth for radio or television operations over the next 12 months, financial leverage will remain very high, with debt-to-EBITDA ratios remaining above 12x, and liquidity may weaken further given the need to address the October 2013 maturity of the remaining 11% senior discount notes. Ratings could be downgraded if the company is unable to sustain a turnaround of the revenue decline in the radio segment or fails to improve the performance of the television operations resulting in further deterioration in liquidity. The outlook could be changed to stable if free-cash-flow is sustained at 1% or more, 2013 debt maturities are repaid from cash flow or asset sales, and Moody's is assured that leverage will no longer increase despite accretion of the new PIK notes and new discount notes. The principal methodology used in rating LBI was the Global Broadcast and Advertising Related Industry Methodology published in May 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Burbank, California, LBI Media, Inc. operates Spanish-language broadcasting properties including 19 radio stations (14 FM and 5 AM generating 47% of 2011 revenue) and 10 television stations plus the EstrellaTV Network (53% of 2011 revenue). EstrellaTV is a Spanish-language television broadcast network that was launched in the fall of 2009. Through EstrellaTV, the company is affiliated with television stations in 40 DMAs comprising 78% of U.S. Hispanic television households. Jose Liberman founded the company in 1987, together with his son, Lenard Liberman. Shareholders include Jose Liberman, Lenard Liberman, Oaktree Capital, and Tinicum Capital. The dual class equity structure provides the Liberman's with 94% of voting control between Jose Liberman (31%) and Lenard Liberman (63%). Revenues through the 12 months ended September 30, 2012 totaled approximately $122 million. LEHMAN BROTHERS: Stresses Tax Exemptions Amid $6.5B Archstone Sale ------------------------------------------------------------------ Sindhu Sundar of BankruptcyLaw360 reported that Lehman Brothers Holdings Inc. on Monday sought a bankruptcy court order clarifying that it will not face government taxes on transfers of securities and other such transactions with potential buyers, following the recent announcement of its $6.5 billion sale of apartment developer Archstone Enterprise LP. In a motion filed in New York bankruptcy court, the collapsed investment bank sought the order to alleviate its "administrative burden" in implementing its third amended Chapter 11 plan, the report noted. 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. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-700) LIGHTSQUARED INC: LP Lenders Balk at Conflict of Interest --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the reorganization of LightSquared Inc. has been marked by conflicts between the so-called LP lenders pitted against the company and its owner Harbinger Capital Partners LLC. A long-simmering dispute was slated to come before the bankruptcy judge in Manhattan at a hearing Jan. 9. The lenders want court permission to sue Harbinger over alleged defects in loans and security interests. They say they are suing because "Harbinger is misusing its control over the debtors to defend against claims that would benefit the estates." The LP lenders are an ad hoc group holding $1.08 billion of the $1.7 billion secured borrowing in October 2010 by LightSquared LP. 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. LIGHTSQUARED INC: Lenders Targeting Falcone, Not Company Officers ----------------------------------------------------------------- A group of LightSquared Inc.'s lenders reiterated its desire to go after Phil Falcone and Harbinger Capital Partners for a prebankruptcy loan made to the wireless satellite company, making it clear that the troubled venture's officers and directors won't be a target of the lawsuit, Joseph Checkler of Dow Jones Daily Bankruptcy Review reported. In a Friday filing with U.S. Bankruptcy Court in Manhattan, the lenders said that while they still want a court to let them challenge a July 2011 loan Harbinger made to LightSquared , they don't "at this time" seek any action against LightSquared itself. In a Dec. 12 filing, LightSquared said it was concerned that its officers and directors would be targets of the suit. "Each of [LightSquared 's] arguments is based on a misunderstanding that the ad hoc secured group seeks standing to sue directors and officers," the lenders said in their filing. "The Debtors are wrong." The lenders, owed more than $1 billion, have said since LightSquared's May 2012 bankruptcy filing that they thought the $263.8 million loan was preferential to Harbinger, calling it an "equity infusion" that was "incorrectly styled" as a loan, the report added. The lenders are also seeking to sue a unit of U.S. Bancorp, the agent on the loan. Both U.S. Bank and Harbinger are fighting the request, saying the lenders don't have standing to sue because they aren't creditors, but rather "creditors of a creditor." The lenders, who finally get their day in court on the matter this Wednesday, say the loan put Harbinger ahead of pre-existing lenders like themselves, and they want to pursue claims against Harbinger on behalf of LightSquared since the company itself won't sue the hedge fund, the news agency said. The matter has been pushed back several times over the past few months. The "ad hoc" lenders, who represent $1.1 billion of a $1.7 billion loan, plan to say LightSquared was insolvent at the time of the July 2011 loan from Harbinger, the report related. The lenders and Harbinger have also been wrangling in court over what documents Harbinger should be forced to turn over as part of the lenders' investigation. 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. LODGENET INTERACTIVE: Moody's Cuts PDR to 'D' After Default ----------------------------------------------------------- Moody's Investors Service downgraded LodgeNet Interactive Corporation's Probability of Default Rating (PDR) to D from Ca following the company's announcement that it failed to make interest and principal payments of approximately $10 million to its term loan and revolver lenders on December 31, 2012. The credit agreement provided a five day grace period to make the payment but the grace period has expired. LodgeNet's lender group has agreed to a forbearance agreement until February 5, 2013. The company is expected to enter into a restructuring plan that would result in a Chapter 11 bankruptcy filing in the near term which would extend the maturity date of its debt by five years and lead to the cancellation of its Series B Preferred stock and common stock. As part of the plan, LodgeNet has entered into an investment agreement with Colony Capital, LLC and its affiliate where Colony and other investors will invest $60 million of new capital in the company in exchange for 100% of the equity of the restructured company. Moody's plans to withdraw all ratings for the company post the filing of Chapter 11 consistent with the business practice for companies operating under the purview of the bankruptcy courts wherein information flow typically becomes much more limited. A summary of the rating actions: LodgeNet Interactive Corporation Corporate Family Rating, affirmed at Ca Probability of Default Rating, downgraded to D from Ca Senior Secured Bank Credit Facility, affirmed at Ca; LGD3, 45% Speculative Grade Liquidity Rating affirmed at SGL-4 Outlook, changed to Stable from Negative Ratings Rationale LodgeNet Interactive'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 LodgeNet Interactive's core industry and believes LodgeNet Interactive'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. Headquartered in Sioux Falls, South Dakota, LodgeNet Interactive Corporation (LodgeNet) provides interactive TV services, Network and Cable TV services, video-on-demand, advertising and video game entertainment services to the lodging industry and healthcare facilities. Its revenue for the LTM period ending September 2012 was approximately $379 million. LYMAN HOLDING: Files Supplemental Schedules of Assets and Debts --------------------------------------------------------------- Lyman Holding Company filed with the Bankruptcy Court for the District of Minnesota supplemental schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $0 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $19,027,000 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $86,924,151 ----------- ----------- TOTAL $0 $105,951,151 About Lyman Lumber Lyman Lumber Company sells building supplies, such as framing beams, roofing materials, siding and drywall to residential builders. The 113-year old company and several affiliates sought Chapter 11 petition (Bankr. D. Minn. Lead Case No. 11-45190) on Aug. 4, 2011. Judge Dennis O'Brien presides over the cases. Lyman Lumber estimated $50 million to $100 million in assets and $100 million to $500 million in debts. The petition was signed by James E. Hurd, president and chief executive officer. The affiliates that filed for Chapter 11 are: Lyman Holding Company; Automated Building Components, Inc.; Building Material Wholesalers; Carpentry Contractors Corp.; Construction Mortgage Investors Co.; Lyman Development Co.; Lyman Lumber of Wisconsin, Inc.; Lyman properties LLC; Mid-America Cedar, Inc.; Woodinville Lumber, Inc.; and Woodinville Construction Services LLC. Cynthia A. Moyer, Esq., Douglas W. Kassebaum, Esq., James L. Baillie, Esq., and Sarah M. Gibbs, Esq., at Fredrikson & Bryon, P.A., serve as bankruptcy counsel. BGA Management, LLC d/b/a Alliance Management, developed and executed a sale process and marketing strategy for the Debtors' assets. The Official Committee of Unsecured Creditors of Lyman Lumber Company tapped Fafinsky, Mark & Johnson, P.A., as its counsel. Alliance Management is the financial and turnaround consultant. When they filed for bankruptcy, the Debtors had in hand a term sheet with SP Asset Management, LLC, a unit of Steel Partners Holdings L.P., to serve as stalking horse bidder for the assets of the Debtors. New York City-based Steel Partners is a diversified holding company that owns and operates businesses in a variety of industries. LYMAN HOLDING: Court Approves Cairncross as Real Estate Counsel --------------------------------------------------------------- Lyman Lumber Company et.al., sought and obtained permission from the U.S. Bankruptcy Court to employ Cairncross & Hempelmann, P.S. as special real estate counsel. The Debtors wish to employ C&H to assist them with respect to access issues and rail crossing agreements related to the real property located in Woodinville, Washington. The Debtors propose that fees be paid on an hourly basis and that reasonable out-of-pocket expenses be fully reimbursed. Mr. Hanna's hourly rate is $325 and other professionals and paraprofessionals at C&H who may provide services to the Debtors bill at rates between $140 and $575 per hour. Matt Hanna attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Lyman Lumber Lyman Lumber Company sells building supplies, such as framing beams, roofing materials, siding and drywall to residential builders. The 113-year old company and several affiliates sought Chapter 11 petition (Bankr. D. Minn. Lead Case No. 11-45190) on Aug. 4, 2011. Judge Dennis O'Brien presides over the cases. Lyman Lumber estimated $50 million to $100 million in assets and $100 million to $500 million in debts. The petition was signed by James E. Hurd, president and chief executive officer. The affiliates that filed for Chapter 11 are: Lyman Holding Company; Automated Building Components, Inc.; Building Material Wholesalers; Carpentry Contractors Corp.; Construction Mortgage Investors Co.; Lyman Development Co.; Lyman Lumber of Wisconsin, Inc.; Lyman properties LLC; Mid-America Cedar, Inc.; Woodinville Lumber, Inc.; and Woodinville Construction Services LLC. Cynthia A. Moyer, Esq., Douglas W. Kassebaum, Esq., James L. Baillie, Esq., and Sarah M. Gibbs, Esq., at Fredrikson & Bryon, P.A., serve as bankruptcy counsel. BGA Management, LLC d/b/a Alliance Management, developed and executed a sale process and marketing strategy for the Debtors' assets. The Official Committee of Unsecured Creditors of Lyman Lumber Company tapped Fafinsky, Mark & Johnson, P.A., as its counsel. Alliance Management is the financial and turnaround consultant. When they filed for bankruptcy, the Debtors had in hand a term sheet with SP Asset Management, LLC, a unit of Steel Partners Holdings L.P., to serve as stalking horse bidder for the assets of the Debtors. New York City-based Steel Partners is a diversified holding company that owns and operates businesses in a variety of industries. MDC HOLDINGS: S&P Assigns 'BB+' Rating to Two Note Classes ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' issue-level rating and a '3' recovery rating to MDC's $250 million 6% senior notes due January 2043. At the same time S&P affirmed its 'BB+' corporate credit rating on the company and issue-level ratings on $750 million of debt. The outlook is stable. MDC plans to use the proceeds from the offering for general corporate purposes. The proceeds will bolster MDC's already strong liquidity that consists of cash and marketable securities, which the company could use to fund additional investments in land and prefund its 2014 debt maturity. "The ratings on MDC reflect the company's "fair" business risk profile, which is supported by a homebuilding platform that operates with a shorter than average inventory position (two-three years) that is showing some operating leverage as the housing market continues to recover," said credit analyst George Skoufis. "MDC has invested in new communities that, in concert with improving fundamentals, have produced strengthened absorption, which is driving volume higher to support a return to profitability. However, our "significant" financial risk profile reflects improving, but still weak EBITDA-based credit metrics, and we assume the company's capital requirements will increase as the company grows in tandem with a recovering housing market. We note that until EBITDA levels can more comfortably service debt, a strong liquidity profile will remain a critical support to ratings." "Our stable outlook reflects our view that the company will maintain a comparatively strong liquidity position as it shifts toward more aggressive growth. We further expect the company to deliver strengthened EBITDA from its smaller, but well positioned operating platform in the coming two years. We currently see no upside to current ratings, given increasing capital needs and still weak debt-to-EBITDA credit metrics. We would lower our ratings if 2013 performance is weaker than we expect and we conclude that MDC will be unable to achieve lower debt-to-EBITDA credit metrics that are more consistent with the current rating (debt-to-EBITDA in the 3x - 4x area) over the next 24 months. MF GLOBAL: Former Customers Lose Bid to Depose Corzine, Others -------------------------------------------------------------- Maria Chutchian of BankruptcyLaw360 reported that a New York bankruptcy judge on Tuesday rejected former MF Global Inc. customers' request to depose CEO Jon Corzine, Chief Financial Officer Henri Steenkamp and other executives on customer fund transfer issues, saying it would overlap with pending multidistrict litigation against the executives. The Commodity Customer Coalition Inc., which represents about 10,000 former MF Global customers, sought a court order in November to compel the executives to provide information about the commingling of customer funds with those of the broker-dealer's, the report related. About MF Global New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/-- is one of the world's leading brokers of commodities and listed derivatives. MF Global provides access to more than 70 exchanges around the world. The firm is also one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. It is easily the largest bankruptcy filing so far this year. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. U.S. regulators are investigating about $633 million missing from MF Global customer accounts, a person briefed on the matter said Nov. 3, according to Bloomberg News. MODERN PRECAST: U.S. Trustee Names Five-Member Creditor's Panel --------------------------------------------------------------- Roberta A. DeAngelis, the United States Trustee for Region 3, has appointed five unsecured creditors to serve on an Official Committee in the Chapter 11 bankruptcy case of Modern Precast Concrete Inc. and its debtor-affiliates. The members of the Committee are: 1) Sika Corporation Attn: Patrick O'Byrne, Corporate Attorney 201 Polito Avenue Lyndhurst, NJ 07071 Tel: (201) 508-6828 Fax: (201) 729-9877 Email: Obyrne.Patrick@us.sika.com 2) A L Patterson, Inc. Attn: Barry E. Fleck 300 Ben Fairless Drive Fairless Hills, PA 19030 Tel: (215) 736-2030 Fax: (215) 736-2652 Email: BarryF@AlPatterson.Com 3) Morgan's Welding Attn: John Larson 2121 Brooks Avenue Neenah, WI 54956 Tel: (920) 729-3696 Fax: (920) 729-3672 Email: John.Larson@neenahenterprises.com 4) Essroc Cement Corporation Attn: John Michael Josephson 3251 Bath Pike Nazareth, PA 18064 Tel: (610) 837-2567 Fax: (610) 837-2560 Email: Mike.Josephson@Essroc.com 5) ABE Materials - Easton Attn: Stephen Nelson c/o Haines and Kibblehouse P.O. Box 196 Skippack, PA 19424 Tel: (610) 584-8500 Email snelson@hkgroup.com Modern Precast Concrete, Inc. filed a Chapter 11 petition (Bankr. E.D. Penn. Case No. 12-21304) on Dec. 16, 2012, in Reading, Pennsylvania. Aaron S. Applebaum, Esq. and Barry D. Kleban, Esq., at McElroy Deutsch Mulvaney & Carpenter LLP, in Philadelphia, serve as counsel to the Debtor. The Debtor estimated up to $50 million in both assets and liabilities. West Family Associates, LLC (Case No. 12-21306) and West North, LLC (Case No. 12-21307) also sought Chapter 11 protection. The petitions were signed by James P. Loew, chief financial officer. NCL CORP: Moody's Reviews 'B2' CFR/PDR for Possible Upgrade ----------------------------------------------------------- Moody's Investors Service placed NCL Corporation Ltd.'s ratings on review for upgrade following the company's announcement that it is pursuing an initial public offering, the proceeds of which will be used to repay existing debt. This, combined with Moody's view that the company will continue to improve its operating results, is expected to result in an improvement in leverage and coverage -- the degree of improvement will depend upon the results of the IPO. Moody's adjusted debt/EBITDA for the latest 12-month period ended September 30, 2012 was about 5.9 times. Ratings placed on review for upgrade: NCL Corporation Ltd. Corporate Family Rating at B2 Probability of Default Rating at B2 $450 million 11.75% guaranteed senior secured notes due 2016 at B2 (LGD 3, 45%) $250 million senior unsecured notes due 2018 at Caa1 (LGD 6, 94%) $100 million senior unsecured notes due 2018 at Caa1 (LGD 6, 94%) NCL announced on Jan. 8 that its newly formed parent holding company, Norwegian Cruise Line Holdings Ltd, launched an initial public offering for approximately 23.5 million shares and intends to use the net proceeds to reduce debt. Assuming the mid-point of the estimated offering price range of $17 per share, net proceeds would be about $370 million. The review for upgrade will focus on the degree of improvement in credit metrics as a result of the IPO, specifically if debt/EBITDA will decline to 5.25 times, the company's ability to sustain it at this lower level, as well as overall demand trends for the cruising sector, and company's ability to generate a solid return on three new ships set for delivery through 2015. Any upgrade is not expected to result in a change to NCL's SGL-2 Speculative Grade Liquidity which already considers the lack of any material long-term debt maturities until 2015 when NCL's $563 million revolver expires and Moody's expectation that NCL will maintain covenant compliance during the next 12-18 month period as well as generate positive free cash flow. NCL also has a committed export financing in place that will be drawn to finance delivery of its new ships. The principal methodology used in rating NCL Corporation was the Global Lodging & Cruise Industry Rating 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. NCL Corporation Limited, headquartered in Miami, operates 11 cruise ships that offer itineraries in North and South America as well as Europe. The company has three ships on order for delivery in April 2013, January 2014 and the fourth quarter of 2015. Net revenues for the twelve months ended September 30, 2012 was approximately $1.7 billion. NEW PEOPLES: Richard Preservati Discloses 16% Equity Stake ---------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Richard G. Preservati and Karen Preservati disclosed that, as of Dec. 28, 2012, they beneficially own 3,589,999 shares of common stock of New Peoples Bankshares, Inc., representing 16.02% of the shares outstanding. A copy of the filing is available for free at http://is.gd/3Xv05G About New Peoples Bankshares New Peoples Bankshares, Inc., is a Virginia bank holding company headquartered in Honaker, Virginia. New Peoples subsidiaries include: New Peoples Bank, Inc., a Virginia banking corporation (the Bank) and NPB Web Services, Inc., a web design and hosting company (NPB Web). The Bank is headquartered in Honaker, Virginia and operates 27 full service offices in the southwestern Virginia counties of Russell, Scott, Washington, Tazewell, Buchanan, Dickenson, Wise, Lee, Smyth, and Bland; Mercer County in southern West Virginia and the eastern Tennessee counties of Sullivan and Washington. According to the Company's quarterly report for the period ended June 30, 2012, the Company and the Bank are subject to various capital requirements administered by federal banking agencies. "The Bank was well capitalized as of June 30, 2012, as defined by the capital guidelines of bank regulations, however, the Company continued to be below the minimum capital requirements as a result of the Tier 1 leverage ratio decreasing to 3.72%, which was below the minimum requirement of 4.00%. Subject to the conversion of the director notes, we expect to return to well-capitalized status at the holding company level in 2012. The Company's capital as a percentage of total assets was 3.27% at June 30, 2012, compared to 3.70% at Dec. 31, 2011." The Company's balance sheet at Sept. 30, 2012, showed $708.21 million in total assets, $680.10 million in total liabilities and $28.11 million in total stockholders' equity. NEW ENGLAND COMPOUNDING: DOJ Wants Chapter 11 Trustee ----------------------------------------------------- Rachel Slajda of BankruptcyLaw360 reported that the chief restructuring officer hired by New England Compounding Center to oversee its liquidation after the pharmacy was linked to a deadly meningitis outbreak is "hopelessly conflicted" and should be replaced with a court-appointed Chapter 11 trustee, the federal government said Tuesday. The U.S. Department of Justice asked a Massachusetts federal bankruptcy court to appoint a case trustee to take over NECC's restructuring, the report related. The DOJ argued that a trustee was warranted because of gross mismanagement by the company's directors before the bankruptcy was filed, the report added. The NECC, which declared bankruptcy in December, is located in Framingham, Mass. The outbreak linked to the pharmacy has killed 39 people and sickened 656 in 19 states, though no illnesses have been reported in Massachusetts, according to the U.S. Centers for Disease Control and Prevention. NEWLEAD HOLDINGS: Receives Investment of $236.4 Million ------------------------------------------------------- NewLead Holdings Ltd. on Jan. 9 disclosed that the Company received a capital contribution of industrial metal valued at $236.4 million for a 36.8% equity interest in NewLead. Michael Zolotas, President and Chief Executive Officer of NewLead, stated, "this significant investment demonstrates confidence in the management team and the future of NewLead. The investment will provide valuable collateral for loans funding our capital- intensive activities and provides a solid platform to execute on our diversified growth strategy." Upon completion of this transaction, it is expected that NewLead will have a total of 701,904,963 shares of common stock outstanding. NewLead will issue, following NASDAQ's approval, unregistered shares in exchange for the new investment. The new shareholder has agreed, subject to certain limited exceptions, not to pledge, borrow or dispose of the NewLead shares or otherwise transfer ownership of the shares until June 30, 2014. The new shareholder will not have board representation or other rights. The value of the industrial metal was established on January 7, 2013 by an independent appraiser. The foreign currency exchange rate on January 7, 2013 was used for currency translation. About NewLead Holdings NewLead Holdings Ltd. -- http://www.newleadholdings.com-- is an international, vertically integrated shipping company that owns and manages product tankers and dry bulk vessels. NewLead currently controls 22 vessels, including six double-hull product tankers and 16 dry bulk vessels of which two are newbuildings. N ewLead's common shares are traded under the symbol "NEWL" on the NASDAQ Global Select Market. PricewaterhouseCoopers S.A. in Athens, Greece, said in a May 15, 2012, audit report NewLead Holdings Ltd. has incurred a net loss, has negative cash flows from operations, negative working capital, an accumulated deficit and has defaulted under its credit facility agreements resulting in all of its debt being reclassified to current liabilities. These raise substantial doubt about its ability to continue as a going concern, PwC said. NORTEL NETWORKS: Delays Hearing to Approve Executive Bonuses ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that when Nortel Networks Inc. received an objection from the U.S. Trustee to approval of $1.875 million in executive bonuses, the company decided to postpone the hearing that was scheduled for Jan. 8. The report relates that if given sanction by the bankruptcy judge in Delaware, seven top officers would receive $1.1 million while three executives would be in line for $775,000. The U.S. Trustee said the bonuses would equal one year's salary. According to the report, the bankruptcy watchdog for the Justice Department said the bonus proposal is defective because it gives no description of how the executives' responsibilities increased as the liquidation winds down. She also faulted the proposal for not laying out each person's individual performance goals that must be met to qualify for a bonus. The hearing for bonus approval was rescheduled for Jan. 23. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation and its various affiliated entities provided next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel did business in more than 150 countries around the world. Nortel Networks Limited was the principal direct operating subsidiary of Nortel Networks Corporation. On Jan. 14, 2009, Nortel Networks Inc.'s ultimate corporate parent Nortel Networks Corporation, NNI's direct corporate parent Nortel Networks Limited and certain of their Canadian affiliates commenced a proceeding with the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act (Canada) seeking relief from their creditors. Ernst & Young was appointed to serve as monitor and foreign representative of the Canadian Nortel Group. That same day, the Monitor sought recognition of the CCAA Proceedings in U.S. Bankruptcy Court (Bankr. D. Del. Case No. 09- 10164) under Chapter 15 of the U.S. Bankruptcy Code. That same day, NNI and certain of its affiliated U.S. entities filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 09-10138). In addition, the High Court of England and Wales placed 19 of NNI's European affiliates into administration under the control of individuals from Ernst & Young LLP. Other Nortel affiliates have commenced and in the future may commence additional creditor protection, insolvency and dissolution proceedings around the world. On May 28, 2009, at the request of administrators, the Commercial Court of Versailles, France, ordered the commencement of secondary proceedings in respect of Nortel Networks S.A. On June 8, 2009, Nortel Networks UK Limited filed petitions in U.S. Bankruptcy Court for recognition of the English Proceedings as foreign main proceedings under Chapter 15. U.S. Bankruptcy Judge Kevin Gross presides over the Chapter 11 and 15 cases. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. In the Chapter 11 case, James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as the U.S. Debtors' general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The United States Trustee appointed an Official Committee of Unsecured Creditors in respect of the U.S. Debtors. An ad hoc group of bondholders also was organized. Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, and Christopher M. Samis, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, represent the Official Committee of Unsecured Creditors. An Official Committee of Retired Employees and the Official Committee of Long-Term Disability Participants tapped Alvarez & Marsal Healthcare Industry Group as financial advisor. The Retiree Committee is represented by McCarter & English LLP as Delaware counsel, and Togut Segal & Segal serves as the Retiree Committee. The Committee retained Alvarez & Marsal Healthcare Industry Group as financial advisor, and Kurtzman Carson Consultants LLC as its communications agent. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of Sept. 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of Sept. 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Since the commencement of the various insolvency proceedings, Nortel has sold its business units and other assets to various purchasers. Nortel has collected roughly $9 billion for distribution to creditors. Of the total, $4.5 billion came from the sale of Nortel's patent portfolio to Rockstar Bidco, a consortium consisting of Apple Inc., EMC Corporation, Telefonaktiebolaget LM Ericsson, Microsoft Corp., Research In Motion Limited, and Sony Corporation. The consortium defeated a $900 million stalking horse bid by Google Inc. at an auction. The deal closed in July 2011. Nortel has filed a proposed plan of liquidation in the U.S. Bankruptcy Court. The Plan generally provides for full payment on secured claims with other distributions going in accordance with the priorities in bankruptcy law. NORTHAMPTON GENERATING: Plan Outline Hearing Set for Jan. 15 ------------------------------------------------------------ The Hon. J. Craig Whitley of the U.S. Bankruptcy Court for the Western District of North Carolina will convene a hearing on Jan. 15, 2013, at 9:30 a.m., to consider the final approval of the disclosure statement explaining Northampton Generating Company, L.P.'s Plan of Reorganization. Objections, if any, are due Jan. 9. In an ex parte order, the Court conditionally approved the Disclosure Statement, solicitation procedures relating to plan voting and confirmation. Written ballots accepting or rejecting the Plan are due Jan. 9. According to the Disclosure Statement dated Dec. 21, 2012, the Plan provides for: -- the continued operation and growth of the Debtor's energy generating operations; -- the cancellation of existing equity interests and the issuance of new equity interests; -- an equity infusion by the beneficial owners which will provide additional liquidity to the Debtor; and -- payments to certain creditors. The estimated recoveries by creditors and interest holders under the Plan are: Claims Amount of Estimated Claim Recovery ------ ---------- --------- Senior Bond Claims $73,441,496 68% Junior Bond Claims $21,788,749 2% Claim of Horwith $1,500,000 100% Leasing Co., Inc. and Frank and Geraldine Horwith Convenience Class $58,000 100% Claims General Unsecured Claims $0 0% Debtor Subsidiary Claims $680,000 100% Intercompany Claims $2,937,000 100% Affiliate Service Claims and Affiliate Administrative Claims $29,840,000 8% Partnership Interests 0% Interests in Debtor Subsidiaries 100% Under the Plan, on the Effective Date, the reinvesting beneficial owner will fund to the Debtor to fund investments in the Reorganized Debtor of $10,000,000 which amount will be sufficient to fund the costs and expenses of the Plan and will provide the Reorganized Companies cash on hand, after accounting for payments made or reserved on the Effective Date, in an amount of not less than the sum of (i) $3,500,000 plus, (ii) a "Horwith Deferral Amount". A copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/NORTHAMPTON_GENERATING_ds.pdf About Northampton Generating Northampton Generating Co. LP is the owner of a 112 megawatt electric generating plant in Northampton, Pennsylvania. The plant is fueled with waste products, including waste coal, fiber waste, and tires. The power is sold under a long-term agreement to an affiliate of FirstEnergy Corp. Northampton Generating filed for Chapter 11 bankruptcy (Bankr. W.D.N.C. Case No. 11-33095) on Dec. 5, 2011. Hillary B. Crabtree, Esq., and Luis Manuel Lluberas, Esq., at Moore & Van Allen PLLC, in Charlotte, N.C., serve as counsel to the Debtors. Houlihan Lokey Capital, Inc., is the financial advisor. The Debtor disclosed $205,049,256 in assets and $121,515,045 in liabilities as of the Chapter 11 filing. No request for the appointment of a trustee or examiner has been made, and no statutory committee or trustee has been appointed in the case. OCALA FUNDING: Sovereign Strikes $9M Deal in Fund Transfer Suit --------------------------------------------------------------- Juan Carlos Rodriguez of BankruptcyLaw360 reported that Sovereign Bank NA has agreed to a $9 million settlement with bankrupt Taylor Bean & Whitaker Mortgage Corp. subsidiary Ocala Funding LLC over an allegedly fraudulent $22 million transfer made at the time TBW was insolvent, Ocala said Monday. Under the settlement agreement, Ocala and Sovereign will exchange blanket waivers and releases of all claims and causes of action that exist or may exist between them up to the date of the agreement, according to a motion to approve the deal filed by Ocala, the report related. About Ocala Funding Orange, Florida-based Ocala Funding, LLC, a funding vehicle once controlled by mortgage lender Taylor Bean & Whitaker Mortgage Corp., filed a Chapter 11 petition (Bankr. M.D. Fla. Case No. 12-04524) in Jacksonville on July 10, 2012. Ocala Funding used to be the largest originator and servicer of residential loans. Ocala was created by Taylor Bean to purchase loans originated by TBW and selling the loans to third parties, Freddie Mac. In furtherance of this structure Ocala raised money from noteholders Deutsche Bank AG and BNP Paribas Mortgage Corp. and other financial institutions, as secured lenders through sales of asset-backed commercial paper. Ocala disclosed $1,747,749,787 in assets and $2,650,569,181 in liabilities as of the Chapter 11 filing. Taylor Bean was forced to file for Chapter 11 relief (Bankr. M.D. Fla. Case No. 09-07047) on Aug. 24, 2009, amid allegations of fraud by Taylor Bean's former CEO Lee Farkas and other employees. Mr. Farkas is now serving a 30-year prison term for 14 counts of conspiracy and fraud for being the mastermind of a $2.9 billion bank fraud. Mr. Farkas allegedly directed the sale of more than $1.5 billion in fake mortgage assets to Colonial Bank and misappropriated more than $1.5 billion from Ocala. TBW's bankruptcy also caused the demise of Colonial Bank, which for years was TBW's primary bank. TBW and its joint debtor-affiliates confirmed their Second Amended Joint Plan of Liquidation on July 21, 2011, and the TBW Plan became effective on Aug. 10, 2011. The TBW Plan established the TBW Plan Trust to marshal and distribute all remaining assets of TBW. Neil F. Lauria, as CRO for TBW and trustee of the TBW Plan Trust, signed the Chapter 11 petition of Ocala. Ocala holds 252 mortgage loans with an unpaid balance of $42.3 million as of May 31, 2012. The Debtor also holds five "real estate owned" properties resulting from foreclosures. The Debtor also holds $22.4 million in proceeds of mortgage loans previously owned by it that are on deposit in an account in the Debtor's name at Regions Bank. It also has an interest in $75 million in cash, consisting of proceeds of mortgage loans previously owned by the Debtor, that are in an account maintained by Bank of America, N.A. as prepetition indenture trustee for the benefit of the Noteholders. The Debtor also holds a claim in the current amount of $1.6 billion against the estate of TBW. The largest unsecured creditors include the Federal Deposit Insurance Corp., owed $898,873,958; and Cadwalader, Wickersham & Taft LLP, owed $1,632,385. Judge Jerry A. Funk presides over Ocala's case. Proskauer Rose LLP and Stichter, Riedel, Blain & Prosser, serve as Ocala's counsel. Neil F. Lauria at Navigant Capital Advisors, LLC, serves as the Debtor's Chief Restructuring Officer. OXBOW MACHINE: First Amended Plan Outline Fails to Pass Muster -------------------------------------------------------------- Oxbow Machine Products, Inc., was required by the Bankruptcy Court to file an amended plan and disclosure statement by Jan. 2. Bankruptcy Judge Thomas J. Tucker ruled last month that the Debtor's First Amended Combined Chapter 11 Plan and Disclosure Statement filed Dec. 19 cannot be given preliminary approval due to problems that the Debtor must correct. Among those flaws, the Court said the Debtor must list all of the claims that are included in the "Allowed Administrative Expenses" Group, and must estimate the amount of each such claim (e.g., Debtor must state that the fees of Debtor's counsel is included in this Group and Debtor must estimate the amount of such fees). The Debtor also must correct all typographical errors. More importantly, the Debtor must explicitly state who will own the reorganized Debtor beginning immediately after confirmation, and who will own the reorganized Debtor if none of the five original shareholders actually repurchase the stock of the Debtor during the 60-day post-confirmation option period. A copy of the Court's Dec. 21, 2012 order is available at http://is.gd/8NHrzGfrom Leagle.com. Oxbow Machine Products, Inc., in Livonia, Michigan, filed for Chapter 11 bankruptcy (Bankr. E.D. Mich. Case No. 12-47404) on March 26, 2012. Judge Thomas J. Tucker oversees the case. David R. Shook Attorney At Law, PLLC -- ecf@davidshooklaw.com -- serves as the Debtor's counsel. In its petition, the Debtor estimated under $10 million in both assets and debts. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/mieb12-47404.pdf The petition was signed by Robert C. Tiano, president. PEMCO WORLD: WAS Sees Confirmation in Near Future ------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that although WAS Services Inc. received what it called creditors' "overwhelming support" for the Chapter 11 plan, the company can only say it hopes the reorganization proposal will be approved at a confirmation hearing "in the near future." According to the report, known as Pemco World Air Services Inc. before the business was sold, the company had a plan-confirmation hearing set for Dec. 19. Confirmation was rescheduled for a date to be determined. WAS said it is working to resolve objections to the plan. The report relates that at a Feb. 22 hearing, WAS will ask the Delaware bankruptcy judge for a three-month extension until April 4 of the exclusive right to propose a plan. Secured lender Sun Capital Partners Inc. bought the business after a prior sale fell through. The disclosure statement told unsecured creditors they shouldn't expect to recover more than 3% on claims that might total $72 million. About Pemco World Headquartered in Tampa, Florida Pemco World Air Services -- http://www.pemcoair.com/-- performs large jet MRO services, and has operations in Dothan, AL (military MRO and commercial modification), Cincinnati/Northern Kentucky (regional aircraft MRO), and partner operations in Asia. Pemco filed a Chapter 11 bankruptcy petition (Bankr. D. Del. Case No. 12-10799) on March 5, 2012. Young Conaway Stargatt & Taylor, LLP has been tapped as general bankruptcy counsel; Kirkland & Ellis LLP as special counsel for tax and employee benefits issues; AlixPartners, LLP as financial advisor; Bayshore Partners, LLC as investment banker; and Epiq Bankruptcy Solutions LLC as notice and claims agent. On March 14, 2012, the U.S. Trustee appointed an official committee of unsecured creditors. On April 13, 2012, Sun Aviation Services LLC (Bankr. D. Del. Case No. 12-11242) filed its own Chapter 11 bankruptcy petition. Sun Aviation owns 85.08% of the stock of Pemco debtor-affiliate WAS Aviation Services Holding Corp., which in turn owns 100% of the stock of debtor WAS Aviation Services Inc., which itself owns 100% of the stock of Pemco World Air Services Inc. Pemco also owes Sun Aviation $5.6 million. As a result, Sun Aviation is seeking separate counsel. However, Sun Aviation obtained an order jointly administering its case with those of the Pemco debtors. On June 15, the bankruptcy court approved sale of Pemco's business for $41.9 million cash to an affiliate of VT Systems Inc. from Alexandria, Virginia. Boca Raton, Florida-based Sun Capital was under contract to make the first bid at auction for the provider of heavy maintenance and repair services for commercial jet aircraft. The Debtor was renamed to WAS Services Inc. following the sale. PENNFIELD CORP: Aims to Keep Chapter 11 Control Pending Sale ------------------------------------------------------------ Marie Beaudette at Dow Jones' DBR Small Cap reports that livestock feed producer Pennfield Corp. is seeking to keep control over its Chapter 11 restructuring for another 120 days after its court- approved sale collapsed. As reported in the Jan. 3, 2012 edition of the TCR, Pennfield quickly assembled a sale to Cargill Inc. after the first buyer defaulted on a court-approved purchase agreement. Cargill is under contract to pay $8.5 million, compared with $15.6 million that Carlisle Advisors LLC would have paid had it carried out the contract. Pennfield declared Carlisle in default on Dec. 19 under the contract approved in late November by the U.S. Bankruptcy Court in Philadelphia. Pennfield had Cargill under contract a week later. There will be a Jan. 17 hearing in bankruptcy court both to conduct an auction and approve a sale to Cargill or whomever submits a better offer. Competing bids are due Jan. 15. About Pennfield Corp. Pennfield Corporation and Pennfield Transport Company filed a Chapter 11 petition (Bankr. E.D. Pa. Case No. 12-19430 and 12-19431) on Oct. 3, 2012, in Philadelphia. Founded in 1919, Pennfield is a Lancaster, Pennsylvania-based manufacturer of bulf and bagged feeds for dairy, equine and other commercial and backyard livestock. The company owns and operates three production mills located in Mount Joy, Martinsburg, and South Montrose, in Pennsylvania. The Debtors filed for bankruptcy to sell their assets to Carlisle Advisors, LLC, subject to higher and bettr offers. Carlisle has also agreed to provide a $2.0 million DIP Loan. Judge Bruce I. Fox presides over the case. Attorneys at Maschmeyer Karalis P.C., in Philadelphia, serve as the Debtors' bankruptcy counsel. Skadden, Arps, Slate, Meagher & Flom LLP is the special counsel. Groom Law Group, Chartered, is the employee benefits counsel. AEG Partners LLC is the financial advisor. Lakeshore Food Advisors, LLC, is the investment banker. Pennfield Corp. estimated $10 million to $50 million in assets and debts. Pennfield Transport estimated under $1 million in assets and debts. The petition was signed by Arnold Sumner, president. PINNACLE AIRLINES: Seeks OK for Various Agreements with Delta ------------------------------------------------------------- Pinnacle Airlines Corp and its wholly own subsidiary, Pinnacle Airlines, Inc., filed three motions with the Bankruptcy Court seeking authorization to enter into various agreements with Delta Air Lines, Inc., the Air Line Pilots Association, International, and the official committee of unsecured creditors in the Company's Chapter 11 proceedings, relating to a tentative collective bargaining agreement with Pinnacle's pilots, incremental liquidity and an enhanced debtor-in-possession financing with Delta, support for the Company's plan of reorganization, a restructured fleet, and amendments to its connection agreements with Delta. The agreements, and their material terms, are: (1) Sixth Amendment to Senior Secured Super-Priority Debtor-in- Possession Credit Agreement * increases the amount of post-petition financing available to the Company by up to an aggregate principal amount of $52 million, of which $22 million is reserved and available solely in order to make the Longevity Transition Payments required under the Bridge Agreement and payments to taxing authorities for employer taxes relating thereto * extends certain milestone deadlines, including an extension of the deadline for the Company to file a plan of reorganization and disclosure statement that are reasonably acceptable to Delta to Feb. 15, 2013, from Jan. 31, 2013 * modifies modifies certain financial covenant requirements. (2) Letter of Agreement with Air Line Pilots Association, International * nine-percent across-the-board wage reduction for Pinnacle's pilots, with annual contractual pay rate increases of one percent beginning in 2015 through 2019, and a lower top of scale wage for captains and first officers * restructuring of vacancy filling process, elimination of certain restrictions on utilizing reserve pilots (the long call reserve), changes in assigning and paying open time, and a reduction in pay during training events * increases in employee contributions for medical insurance, reductions in Pinnacle's 401(k) matching contributions and the establishment of a profit sharing plan * modifies certain other work rules and benefits * payment of ALPA's reasonable and documented professional fees up to $500,000, and specified indemnification for ALPA and its members and representatives * ALPA granted a non-priority general unsecured claim against each of the debtors in the Chapter 11 proceedings in the amount of $138,556,524 (3) Bridge Agreement by and Among Pinnacle Airlines Corp., Air Line Pilots Association, International, Delta Air Lines, Inc., and Pinnacle Master Executive Council * commitments by Delta to maintain at Pinnacle no fewer than 41 76-seat aircraft and to place and maintain at Pinnacle an incremental 40 76-seat aircraft deliveries above the current total (subject to certain conditions) * establishes enhanced career progression opportunities for Pinnacle's pilots with mainline Delta operations * provides specified enhanced furlough and pay benefits, to be paid by Pinnacle and reimbursed by Delta as pass- through costs, to eligible pilots who are furloughed from active service during a period commencing from entry into the Bridge Order through the six calendar months following the removal of the last CRJ-200 aircraft from Pinnacle's operations * provides that the Company will pay an aggregate of approximately $20 million to individual pilots on the Pinnacle Airlines Pilot Seniority List, ranging from $2,000 for pilots with one year of longevity to $26,000 for pilots with 20 or more years of longevity; Company will also pay employer taxes relating thereto (4) Restructuring Support Agreement By and Among Pinnacle Airlines, Corp., Delta Air Lines, Inc., and the Creditors Committee * The Company, Delta, and the Creditors Committee each agree, subject to certain conditions and termination events, and consistent with fiduciary duties, to support solicitation, approval, and consummation of a plan of reorganization of the Company consistent with terms set forth in the term sheet attached thereto. * The term sheet for the proposed plan of reorganization includes the following terms and conditions: () administrative and priority claims other than tax claims will be paid in full upon emergence; all priority tax claims will be paid in accordance with section 1129(a) (9)(C) of the Bankruptcy Code () a portion of Delta's claims on account of obligations outstanding under the Credit Agreement will convert into an exit facility; the remaining balance of the DIP Claims will convert into equity in the reorganized Company () the obligations under the Amended and Restated Credit Agreement, among certain of the Debtors, CIT Bank, and the other lenders party thereto from time to time, will be reinstated () holders of other secured claims will receive either (a) payment in full in cash (if payment is not then due, in accordance with the payment terms of the applicable agreement) or (b) delivery of the collateral securing their claims () a trust will be established and funded by Delta with $2.25 million (minus any fees and costs incurred by the Creditors Committee in connection with any investigation relating to specified causes of action) for the purpose of reconciling and making distributions on account of all unsecured claims; distributions from the Trust will be shared pro rata between all holders of unsecured claims (except that Delta waives the right to receive distributions on account of its unsecured claims) () existing equity interests in the Company will be canceled () broad general Company and third party releases from claims (excluding gross negligence and willful misconduct) will be granted to Delta, the Creditors Committee, the Company and the Reorganized Company, including specified affiliates, current and former employees, directors, and advisors, subject to specified limitations set forth in the Restructuring Term Sheet (5) Amendments to Delta Connection Agreements among Pinnacle Airlines, Inc. and Delta Air Lines, Inc. * Delta commits to place and maintain at Pinnacle an incremental 40 76-seat deliveries; * the new CRJ-900 aircraft will be subject to the same lease terms and conditions as the 41 CRJ-900 aircraft currently leased from Delta; * either: (a) Delta and Pinnacle will agree on a schedule for the early termination and return of the 140 leased CRJ-200 aircraft under their CRJ-200 flying agreement or (b) Delta may provide Pinnacle with 120 days advance written notice with respect to early termination and return of any CRJ-200 leased aircraft under such Agreement; and * Pinnacle will not need to comply with aircraft return conditions for such CRJ-200 aircraft and shall have no liability to Delta with respect to the early termination and return of such aircraft (other than related to the Pinnacle's intentional or willful misconduct or gross negligence). About Pinnacle Airlines Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/-- a $1 billion airline holding company with 7,800 employees, is the parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.; and Colgan Air, Inc. Flying as Delta Connection, United Express and US Airways Express, Pinnacle Airlines Corp. operating subsidiaries operate 199 regional jets and 80 turboprops on more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize. Corporate offices are located in Memphis, Tenn., and hub operations are located at 11 major U.S. airports. Pinnacle Airlines Inc. and its affiliates, including Colgan Air, Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012. Judge Robert E. Gerber presides over the case. Lawyers at Davis Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve as the Debtors' counsel. Barclays Capital and Seabury Group LLC serve as the Debtors' financial advisors. Epiq Systems Bankruptcy Solutions serves as the claims and noticing agent. The petition was signed by John Spanjers, executive vice president and chief operating officer. As of Oct. 31, 2012, the Company had total assets of $800.33 million, total liabilities of $912.77 million and total stockholders' deficit of $112.44 million. Delta Air Lines, Inc., the Debtors' major customer and post- petition lender, is represented by David R. Seligman, Esq., at Kirkland & Ellis LLP. The official committee of unsecured creditors tapped Morrison & Foerster LLP as its counsel, and Imperial Capital, LLC, as financial advisors. PRESSURE BIOSCIENCES: Has Exchange Agreement with Clayton Struve ---------------------------------------------------------------- Pressure BioSciences, Inc., entered into a Securities Purchase and Exchange Agreement with Clayton A. Struve, pursuant to which the Company agreed to exchange an aggregate of 10,000 shares of a newly created series of preferred stock, designated Series H Convertible Preferred Stock, par value $0.01 per share for 1,000,000 shares of the Company's common stock, par value $0.01 per share, held by Mr. Struve in a non-cash transaction. Mr. Struve originally purchased the common stock from the Company for $0.8025 per share. The closing price of the common stock on the date of the exchange was $0.24. The Series H Convertible preferred Stock was created by Amendment to the Company's Restated Articles of Organization, as amended, filed by the Company with the Secretary of the Commonwealth of Massachusetts on Dec. 28, 2012. The holders of Series H Convertible Preferred Stock will be entitled to receive dividends equal (on an as-if-converted into shares of Common Stock basis) to and in the same form as dividends paid on shares of Common Stock. Upon liquidation, dissolution or winding up of the Company, the holders of Series H Convertible Preferred Stock will be entitled to be paid out of the remaining assets of the Company available for distribution to the holders of Common Stock (on an as-if- converted into Common Stock basis) on a pari passu basis with the holders of Common Stock. The Series H Convertible Preferred Stock is junior to the shares of the Company's Series D Preferred Stock and pari passu with the Company's Series G Convertible Preferred Stock. A full-text copy of the Form 8-K is available for free at: http://is.gd/NkTdgz About Pressure Biosciences Pressure BioSciences, Inc., headquartered in South Easton, Massachusetts, holds 14 United States and 10 foreign patents covering multiple applications of pressure cycling technology in the life sciences field. As reported by the Troubled Company Reporter on March 2, 2012, Boston-based Marcum LLP, expressed substantial doubt about Pressure Biosciences' 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 had recurring net losses and continues to experience negative cash flows from operations. The Company's balance sheet at Sept. 30, 2012, showed $1.91 million in total assets, $2.64 million in total liabilities and a $730,839 total stockholders' deficit. QBEX ELECTRONICS: U.S. Trustee Names Three-Member Creditor's Panel ------------------------------------------------------------------ Donald F. Walton, the United States Trustee Region 21, appointed three creditors to serve on an Official Committee of Unsecured Creditors in the Chapter 11 case of QBex Electronics Corporation. The members of the Committee are: 1) Augusto Aragone Ingram Micro Inc. 2100 NW 88th Court Miami, FL 33172 Tel: 305-593-5900 Ext 43970 Fax: 305-921-6022 Email: augusto.aragone@ingrammicro.com 2) Ricardo Abad - Sr. Manager, Credit Department Canon Latin America, Inc. 703 Waterford Way, Suite 400 Miami, FL 33126 Tel: 305-260-7526 Fax: 305-260-7529 Email: rabad@cla.canon.com 3) Jorge Andres Torres LG Electronics Colombia LTDA Autopista Medellin KM 1,8 Coutado Sur Parque Ind.Soro Cota (Cundinamarca) Columbia Tel: 57-1-587-5436 Fax: 57-1-587-6240 Email: jorgeandres.torres@lge.com About QBEX QBEX Electronics Corporation, Inc., based in Miami, Florida, filed for Chapter 11 bankruptcy (Bankr. S.D. Fla. Case No. 12-37551) on Nov. 15, 2012. Judge Robert A. Mark oversees the case. Robert A. Schatzman, Esq., and Steven J. Solomon, Esq., at GrayRobinson, P.A., serve as the Debtor's counsel. QBEX scheduled assets of $11,027,058 and liabilities of $8,246,385. The petitions were signed by Jorge E. Alfonso, president. Qbex Colombia, S.A., also sought Chapter 11 protection (Bankr. S.D. Fla. Case No. 12-37558) on Nov. 15, listing $433,627 in assets and $5,792,217 in liabilities. QR PROPERTIES: Court Rejects Country Club Members' Claims --------------------------------------------------------- Bankruptcy Judge Melvin S. Hoffman sustained QR Properties, LLC's objection to 32 proofs of claim arising from country club membership subscription agreements between the claimants and Quail Ridge Country Club, LLC, a predecessor to the debtor in ownership of the Quail Ridge Country Club in Acton, Massachusetts. According to Judge Hoffman, the disclosure statement in support of QR Properties' plan of reorganization filed on March 3, 2011, provides that QR Properties operated the country club, including the 18-hole golf course, through a lessee known as QR Members, LLC, during the 2009 and 2010 golf seasons. The disclosure statement also indicates that the Debtor would "open and operate the golf course in 2011." Thus as of the chapter 11 petition date and well beyond, the golf course and country club remained in operation. Judge Hoffman said the claimants have not alleged -- nevermind offered -- evidence that the country club and its facilities had ceased operations on the bankruptcy petition date or thereafter. So long as Quail Ridge Country Club operates, the claimants have no claims against QR Properties for a refund of their membership deposits. QRCC, a Massachusetts limited liability company, was formed on Oct. 12, 2000, and thereafter acquired land in Acton to build a golf course and recreational facility. QRCC also marketed membership subscriptions to the public. Each claimant entered into a membership subscription agreement with QRCC. In connection with the agreements, claimants paid membership deposits to QRCC in amounts ranging from approximately $50,000 to $90,000. The agreements provide that pursuant to the bylaws of QRCC, under certain circumstances, membership deposits are refundable. The bylaws include an obligation of QRCC to refund a membership deposit if QRCC "recalls" a membership. The bylaws state that QRCC may not "permanently discontinue operation of the Club and Club's Facilities without recalling all Memberships." The bylaws define "Club" as the Quail Ridge Country Club and "Club Facilities" as "(i) an 18-hole golf course, (ii) a driving range, (iii) a golf practice facility, (iv) a clubhouse, (v) a Pro Shop, (vi) swimming pool, (vii) tennis courts, (viii) a fitness room and (ix) one or more overnight guest rooms." On Nov. 30, 2011, the Bankruptcy Court granted a motion by QR Properties to sell the Acton real estate and associated facilities, including the golf course, to Pulte Homes of New England LLC pursuant to Sections 363(b) and (f) of the Bankruptcy Code. Ronald Dunbar, Jr., Dunbar Law, PC, in Boston, argues for the claimants. A copy of Judge Hoffman's Jan. 7 Memorandum of Decision and Order is available at http://is.gd/3pZAtDfrom Leagle.com. About QR Properties, LLC Templeton, Massachusetts-based QR Properties, LLC, filed for Chapter 11 bankruptcy protection (Bankr. D. Mass. Case No. 10-45514) on Nov. 3, 2010. The Debtor estimated its assets and debts at $10 million to $50 million. The Debtor is represented by: Joseph G. Butler, Esq. LAW OFFICE OF JOSEPH G. BUTLER 355 Providence Highway Westwood, MA 02090 Tel: (781) 636-3638 E-mail: JGB@JGButlerLaw.com Mr. Butler was formerly with Barron & Stadfeld, P.C. RADIAN GUARANTY: Releases Dec. Mortgage Insurance Delinquency Data ------------------------------------------------------------------ Radian Guaranty Inc. on Jan. 9 released data for primary mortgage insurance delinquencies for December 2012 and for the years ended December 2012 and 2011, respectively. The information below regarding new delinquencies and cures is reported to Radian from loan servicers. The accuracy of these reports may be affected by several factors, including the date on which the report is generated and by the timing of servicing transfers. December 2012 2011 2012 -------- -------- -------- Primary New Insurance Written ($ in billions) $3.85 $37.1 $15.5 Beginning Primary Delinquent Inventory 92,770 110,861 125,470 (# of loans) ---------------------------------------------------- -------- -------- -------- Plus: New Delinquencies 6,740 73,517 94,817 ---------------------------------------------------- -------- -------- -------- Less: Cures (4,638) (61,906) (77,997) ---------------------------------------------------- -------- -------- -------- Less: Paids (1,638) (18,993) (24,479) (including those charged to a deductible or captive) ---------------------------------------------------- -------- -------- -------- Rescissions and Denials (65) (10,370) (6,950) ---------------------------------------------------- -------- -------- -------- Ending Primary Delinquent Inventory 93,169 93,169 110,861 (# of loans) ---------------------------------------------------- -------- -------- -------- Primary New Insurance Written totals for 2012 and 2011, respectively, reflect any adjustments to prior monthly reported NIW numbers. About Radian Guaranty Radian Guaranty Inc. is the mortgage insurance subsidiary of Radian Group Inc. As reported by the Troubled Company Reporter on February 2, 2012, Standard & Poor's Rating Services lowered its insurer financial strength ratings on Radian Guaranty Inc., Radian Mortgage Insurance Inc., and Amerin Guaranty Corp. (collectively Radian MI) by one notch to 'B' from 'B+'. (Amerin Guaranty is now known as Radian Mortgage Assurance Inc.) "At the same time, we lowered our issuer credit rating on Radian Group Inc. to 'CCC' from 'CCC+'. The ratings on Radian Asset Assurance Inc. -- Radian Group's bond insurance subsidiary -- are unaffected by this rating action. The outlook on all Radian-related entities is negative," S&P said. "According to our rating definitions, an insurer rated 'B' has weak financial security characteristics. Adverse business conditions will likely impair its ability to meet financial commitments. We believe that Radian currently fits this definition," S&P said. "The high level of losses in the mortgage insurance sector are occurring in an economy that is struggling to recover and that continues to exhibit significant weakness in the job and housing markets. The lack of significant improvement in payroll employment levels contributed to high levels of new notices of delinquency (NODs)," S&P said. RAHA LAKES: Files Schedules of Assets and Liabilities ----------------------------------------------------- Raha Lakes Enterprises, LLC, filed with the U.S. Bankruptcy Court for the Central District of California its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $26,000,000 B. Personal Property $107,381 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $8,737,301 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $369,597 ----------- ----------- TOTAL $26,107,381 $9,106,898 A copy of the Debtor's schedules is available for free at: http://bankrupt.com/misc/RAHA_LAKES_sal.pdf About Raha Lakes and Mehr in Los Angeles Raha Lakes Enterprises, LLC, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-43422) on Oct. 3, 2012, in Los Angeles. Raha Lakes, a single-asset real estate company, estimated assets of at least $10 million and debt of at least $1 million. The company's principal asset is at 900 South San Pedro Street in Los Angeles. Raha Lakes estimated $10 million to $50 million in assets, and $1 million to $10 million in debts. The petition was signed by Kayhan Shakib, managing member. Mehr in Los Angeles Enterprises, LLC, filed a bare-bones Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-43589) on Oct. 4, 2012, estimating assets of at least $10 million and liabilities of at least $1 million. The petition was signed by Yadollah Shakib, managing member. Judge Ernest M. Robles presides over the cases. The Debtors are represented by Michael S. Kogan, Esq., at Kogan Law Firm APC. John Choi, Esq., at Kim Park Choi, in Los Angeles, represents secured creditor San Pedro Investment, LLC, as counsel. REID PARK: Plan Docs. Again Amended After Confirmation Denied ------------------------------------------------------------- In response to the Bankruptcy Court's memorandum denying confirmation of the Debtor's Fourth Amended and Modified Plan, the Debtor filed a Fifth Amended and Modified Disclosure Statement in connection with the Debtor's Fifth Amended Plan of Reorganization dated Nov. 15, 2012. The Plan restructures and modifies the mortgage loan encumbering the major asset of the Debtor, the Doubletree Hotel, and other creditors. Debtor proposes to implement its Plan through an immediate investment of no less than $3,000,000, to be used to make improvements, renovations and upgrades to the hotel, for administrative expenses and operating reserves, and to be held by the Reorganized Debtor in reserve for plan payments, if needed. Some of the monies will be used for completion of a Product Improvement Plan (PIP) required by franchisor. The Reorganized Debtor intends to to operate the property as a Doubletree Hotel. The investor, HSL Properties, Inc., is providing the $3,000,000 new capital and will become 90% interest holder in the Reorganized Debtor. The current owners/principals of the Debtor will not receive or retain any interest in the Reorganized Debtor. The Debtor and its new money investor have proposed the following amendments to its Plan: 1. New capital contributions are increased from $2.1 million to $3 million; 2. The Hilton PIP will be completed within two years; 3. Class 16 Debtor's Unsecured Class in this Plan will be paid $800,000 on the Effective Date of Plan, plus any recovery from preferential transfers and retain a 10% interest in Reorganized Debtor; 4. The new secured debt will be due on sale of the hotel property; 5. The Debtor eliminates removal of due on sale clause; 6. The Debtor's new Plan proposes to convey 10% of equity in reorganized Debtor to unsecured creditors; 7. If the lender does not make the 1111(b) election the balance of its claim will be paid at the end of 10 years from the Effective Date of Plan; 8. If the lender makes the 1111(b) election the balance of its claim will be paid at the end of 18 years from the Effective Date of Plan; 9. All Surplus Cash Flow is held until reserves equal $2,500,000. Lender holds plan reserves; and 10. E2 Trading's deficiency claim (like all other under-secured claims) should be treated as an unsecured claim. The exclusive period for Debtor to propose and confirm its Plan of Reorganization has expired. Senior Lender WBCMT 2007-C32 South Alvernon Way, LLC, has filed its own disclosure statement and plan. According to the Debtor, that Plan primarily lets lender take the hotel and property from Debtor, change management at the hotel, with no provision for local management, decision making or retaining employees at the hotel. The debt to the Senior Lender was estimated as of Petition Datete to exceed $30,000,000. Pursuant to the Court's finding of value of the Hotel at $17,000,000, the Senior Lender's claim is not fully secured. A copy of the Debtor's Fifth Amended and Modified DS is available at http://bankrupt.com/misc/reidpark.doc375.pdf WBCMT 2007-C31 South Alvernon Way LLC's Objection WBCMT 2007-C31 has objected to Debtor's Fifth Amended Disclosure Statement, citing that the document fails to contain sufficient or accurate information for the following reasons: * First, Debtor estimates Class 14 general unsecured claims at $7.1 million and indicates that such claims will receive their pro rata portion of $800,000. Yet Debtor fails to note that if Lender does not make a section 1111(b) election, claims in this class will total more than $20 million, causing such creditors to receive less than a 4% distribution. * Second, the Fifth Disclosure Statement describes how Class 14 general unsecured creditors will receive a 10% membership interest in the entity acquiring the Hotel, but fails to adequately disclose the nature or value of such an interest. * Third, the Fifth Disclosure Statement estimates administrative claims at $50,000. Yet, Debtor's counsel acknowledged three months ago that his fees alone in this case exceed his pre-petition retainer by nearly $175,000. * Fourth, the Fifth Disclosure Statement fails to disclose the current status of HSL's agreements with Hilton, the Hotel's franchisor. * Fifth, the Fifth Disclosure Statement fails to reveal that Debtor has eliminated the $800,000 Debt Service Reserve for Lender from its prior plan and how that change will increase the risk of repayment for Lender. * Sixth, the Debtor's contention in the Fifth Disclosure Statement that "[t]he property continues to meet or exceed its financial forecast as set forth in Exhibit D" is false. * Seventh, the Debtor's discussion of its insider management company, Transwest Properties, Inc., is inaccurate. * Eighth, the Debtor's allegations regarding LNR Partners, LLC, and its purported involvement with an Embassy Suites hotel located in Phoenix, Arizona, are irrelevant and have been dispelled by uncontroverted evidence admitted by this Court in the related Saunders Hotels, Saunders Rudasill, and Trails End cases. About Reid Park Properties Reid Park Properties LLC is the owner of the Doubletree Hotel Tucson located in South Alernon Way in Tucson, Arizona. The nine- story property has 287 rooms. It was purchased for $31.8 million in 2007 by an affiliate of Transwest Properties Inc. Reid Park filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 11-15267) on May 26, 2011. According to its bankruptcy petition, Reid Park has $52 million in liabilities and $14 million in assets. The Law Offices of Eric Slocum Sparks, P.C., serves as its legal counsel. The U.S. Trustee Christopher Pattock said that an official committee of unsecured creditors has not been appointed because an insufficient number of persons holding unsecured claims against the Debtor have expressed interest in serving on a committee. REID PARK: Says Lender Plan Outline Devoid of Key Information ------------------------------------------------------------- Reid Park Properties LLC has filed a limited objection to the disclosure statement for lender WBCMT 2007-C31 South Alvernon Way, LLC's Chapter 11 for the Debtor dated Oct. 30, 2012. The Debtor tells the Court that the Disclosure Statement filed by the Lender lacks the following basic information: 1) Who is WBCMT 2007-C31 South Alvernon Way, LLC, the Plan Proponent? 2) What is current status of Debtor's Disclosure Statement and Plan of Reorganization? 3) How does Debtor's new Plan compare with Lender's Plan? 4) No history of the Plan Proponent as to its business activities in Arizona. 5) Plan Proponent does not disclose other interests it, the loan servicer or its management has in other properties or related entities or other properties in Arizona. 6) Does Plan Proponent, the loan servicer or its management own, manage or have liens or encumbrances on other hotels or properties in Arizona? 7) Plan Proponent fails to disclose what other bankruptcy cases the Plan Proponent or any of its related entities have been involved in the last five years. 8) Failure to disclose what impact confirmation of the Plan Proponent's Plan would have on the employees of the Debtor and the impact upon the community. 9) Failure to disclose Plan Proponent's "Comfort Letter" from Franchisor and what effect it would have on the property of the Debtor. In particular, does the Plan Proponent have to undertake a PIP upon the change of ownership? 10) Did Plan Proponent, or loan servicer foreclose or appoint a receiver on any hospitality properties in Arizona in the last five years? 11) Did Plan Proponent, or loan servicer close any hospitality properties in Arizona in the last five years? 12) Does Lender have to complete a Product Improvement Plan to retain franchise agreement? In addition, the Debtor says that Plan Proponent appears to be reserving its rights to object to and not pay any claims it deems unacceptable. For example, its treatment of Class 3, 4, 5, 6, 7, 8 and 9 is inconsistent on pages 5-6, and then 20-23, with a second discussion of various treatments creditor may receive from lender if lender's plan is confirmed. Lender should alao explain why its release language is broader than Debtor's Plan and should explain alternatives to its Plan. The Lender states it plans to terminate the existing management contract with Transwest Properties, Inc., and retain "a professional hotel management company." The Plan Proponent does not discuss what effect this change would have on existing employees or who the "professional management company" would be and what experience they have in the Tucson market. For example, there proposed management company said all employees would be terminated and most would be offered new positions for 60 days at possibly a lower pay rate. This should be explained in detail. Lender's Plan Dated Oct. 30, 2012 On the Effective Date, the Debtor will transfer all of its assets over to the Plan Transferee, who will employ a professional hotel management company to continue operating the Hotel as a DoubleTree Hotel. All distributions to Creditors will be made from the Effective Date Cash or cash contributed by the Lender. All of the Lender's collateral, including the Hotel and all related personal property, will be deeded and/or otherwise transferred on the Effective Date to the Plan Transferee, which will be an entity designated and controlled by the Lender. The Plan Transferee will receive the Hotel and all related personal property subject to the Class 2 Lender Secured Claim and will arrange for a professional hotel management company to continue operating the Hotel as a DoubleTree hotel pursuant to the Lender's Comfort Letter with Franchisor. Each holder of an Allowed Class 10 General Unsecured Claims, estimated to total $7,111,790.56, will receive a 10% distribution of the total amount of the allowed Claim on the the Effective Date, plus a pro rata distribution of any net proceeds from the Avoidance Actions. Class 11 Insider Claims, estimated at $2,799,090.77, will not receive any distribution. Class 12 Interests will be extinguished under the Plan and will not receive any distributions. A copy of the Lender Disclosure Statement is available at: http://bankrupt.com/misc/reidpark.lenderds.doc365.pdf About Reid Park Properties Reid Park Properties LLC is the owner of the Doubletree Hotel Tucson located in South Alernon Way in Tucson, Arizona. The nine- story property has 287 rooms. It was purchased for $31.8 million in 2007 by an affiliate of Transwest Properties Inc. Reid Park filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 11-15267) on May 26, 2011. According to its bankruptcy petition, Reid Park has $52 million in liabilities and $14 million in assets. The Law Offices of Eric Slocum Sparks, P.C., serves as its legal counsel. The U.S. Trustee Christopher Pattock said that an official committee of unsecured creditors has not been appointed because an insufficient number of persons holding unsecured claims against the Debtor have expressed interest in serving on a committee. RESIDENTIAL CAPITAL: To Make Annual Incentive Plan Payments ----------------------------------------------------------- In order to maintain stability in their workforce and thereby preserve the value in their operating platforms, Residential Capital and its affiliates have sought to maintain their employees' benefits as they existed before the bankruptcy filing, including the Residential Capital, LLC Annual Incentive Plan. Approximately 3,000 employees are eligible to participate in the AIP, including the 185 individuals who were also identified to participate in the Debtors' Key Employee Incentive Plan and Key Employee Retention Plan. During the hearing on June 12, 2012, on the final order approving the Debtors' Wages Motion, the Debtors advised the Court and parties-in-interest that they intended to continue administering the AIP during the Chapter 11 cases. However, pursuant to their agreement with the Official Committee of Unsecured Creditors, the Debtors agreed to come back before the Court and obtain approval of payments under the AIP. The Debtors now seek the Court's permission to make those cash payments so that they can adhere to their customary practice of delivering AIP payments to their employees in mid-February as well as address this issue before the close of the asset sales. The Debtors now seek authority from Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York to distribute payments under the ResCap AIP to the eligible employees so long as (i) the KEIP Participants do not receive more than 70% of the awards they received for their services in 2011 and (ii) the KERP Participants and all other eligible employees do not receive more than the award amount they received for their services in 2011. Gary S. Lee, Esq., at Morrison & Foerster LLP, in New York, explains that like most financial services companies, a portion of the overall take-home pay for three out of four of the Debtors' employees is delivered at year's end, and for certain of those employees, these year-end awards comprise a significant portion of their annual compensation, which is between 33% to 58%. In the Debtors' case, that variable element of take home pay is derived from the AIP. The award amount is based on a manager's evaluation of the employee's performance and their overall contribution to the business. Mr. Lee says the Debtors have utilized this compensation model for the past 20 years in order to motivate their employees to perform at optimal levels and reward them for their efforts. The Compensation Committee of the Debtors' Board of Directors, in an exercise of their reasonable business judgment, authorized the Debtors' business leaders to utilize a funding pool equivalent to 93.6% of the 2011 AIP funding pool amount in order to provide awards to the approximately 3,000 eligible employees -- a funding level lower than in years past, Mr. Lee notes. Before making its decision, the Compensation Committee considered the funding recommendation of the Debtors' Chief Executive Officer and also consulted with outside advisors as to the propriety of the funding levels for specific categories of employees, Mr. Lee adds. 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. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. The sale of the assets, subject to satisfaction of customary closing conditions including certain third party consents, is expected to close in the first quarter of 2013. The partnership of Ocwen and Walter defeated the last bid of $2.91 billion from Fortress Investment Group's Nationstar Mortgage Holdings Inc., which acted as stalking horse bidder, at an auction that began Oct. 23, 2012. The $1.5 billion offer from Warren Buffett's Berkshire Hathaway Inc. was declared the winning bid for a portfolio of loans at the auction on Oct. 25. 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 May Sue Wells Fargo, U.S. Bank ------------------------------------------------------------- Judge Martin Glenn authorized the Official Committee of Unsecured Creditors in Residential Capital's cases to prosecute, on behalf of the Debtors, claims against U.S. Bank, National Association, as indenture trustee for the junior secured noteholders, and Wells Fargo Bank, N.A., as collateral agent for the junior secured noteholders. The Committee has until Feb. 28, 2013, to file a complaint against U.S. Bank and Wells Fargo. In its motion seeking approval to pursue the suits, the Committee said that a successful prosecution of the claims against US Bank and Wells Fargo may yield hundreds of millions of dollars for unsecured creditors. Stephen D. Zide, Esq., at Kramer Levin Naftalis & Frankel, LLP, in New York, asserts that the Debtors cannot pursue this litigation because, among other reasons, they already stipulated to an expansive definition of the collateral securing the Junior Secured Notes and agreed to waive the claims at issue. This, Mr. Zide asserts, is a classic situation in which a creditors' committee is the only independent fiduciary that can properly act for the estates and thus should be granted standing under In re STN Enters., 779 F.2d 901 (2d Cir. 1985), as the Debtors themselves recognized by notifying the Committee that they consent to standing. 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. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. The sale of the assets, subject to satisfaction of customary closing conditions including certain third party consents, is expected to close in the first quarter of 2013. The partnership of Ocwen and Walter defeated the last bid of $2.91 billion from Fortress Investment Group's Nationstar Mortgage Holdings Inc., which acted as stalking horse bidder, at an auction that began Oct. 23, 2012. The $1.5 billion offer from Warren Buffett's Berkshire Hathaway Inc. was declared the winning bid for a portfolio of loans at the auction on Oct. 25. 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: RFC, et al., Amend SOFA for 90-Day Transfers ----------------------------------------------------------------- Five debtor-affiliates of Residential Capital, LLC, amended their statements of financial affairs to disclose payments or transfers made to creditors 90 days before the Petition Date and payments or transfers made to insiders 100 days before the Petition Date. Copies of the Amended Statements are available for free at: * GMACR Mortgage Products, LLC http://bankrupt.com/misc/gmacrdec11sofa3b.pdf * GMAC Residential Holding Company, LLC http://bankrupt.com/misc/gmacresdec11sofa3b.pdf * Passive Asset Transactions, LLC http://bankrupt.com/misc/passivedec11sofa3b.pdf * Residential Consumer Services, LLC http://bankrupt.com/misc/rescondec11sofa3b.pdf * RFC Asset Holdings II, LLC, http://bankrupt.com/misc/rfcassdec11sofa3b.pdf 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. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. The sale of the assets, subject to satisfaction of customary closing conditions including certain third party consents, is expected to close in the first quarter of 2013. The partnership of Ocwen and Walter defeated the last bid of $2.91 billion from Fortress Investment Group's Nationstar Mortgage Holdings Inc., which acted as stalking horse bidder, at an auction that began Oct. 23, 2012. The $1.5 billion offer from Warren Buffett's Berkshire Hathaway Inc. was declared the winning bid for a portfolio of loans at the auction on Oct. 25. 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: Burnett Files Suit vs. GMAC Mortgage --------------------------------------------------------- Conrad P. Burnett filed an adversary proceeding against Debtor GMAC Mortgage, LLC, asking the Bankruptcy Court to determine dischargeability of a debt. According to the complaint, GMAC alleges to control a certain trust which operated under RALI 2006QS5 and managed by trustee Deutsche Bank Trust Company and in concert with Susan Turner, an employee of GMAC. From Aug. 25, 2009, GMAC held in its possession 100% ownership of certain number of shares of Residential Funding Company, LLC common stock evidenced by a certificate in the name of Mr. Burnett, who endorsed the certificate to GMAC as security for a loan. Mr. Burnett, however, discovered that GMAC has sold the shares, collected the proceeds and willfully and maliciously converted those proceeds into its own use. 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. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. The sale of the assets, subject to satisfaction of customary closing conditions including certain third party consents, is expected to close in the first quarter of 2013. The partnership of Ocwen and Walter defeated the last bid of $2.91 billion from Fortress Investment Group's Nationstar Mortgage Holdings Inc., which acted as stalking horse bidder, at an auction that began Oct. 23, 2012. The $1.5 billion offer from Warren Buffett's Berkshire Hathaway Inc. was declared the winning bid for a portfolio of loans at the auction on Oct. 25. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RG STEEL: Still Studies Strategies to Exit Chapter 11 ----------------------------------------------------- WP Steel Venture LLC, et al., ask the U.S. Bankruptcy Court for the District of Delaware to extend the Debtors' exclusive periods to file a plan or plans and solicit acceptances of the plan or plans until April 26, 2013, and June 25, 2013, respectively. The Debtors relate that they have not yet had the opportunity to analyze fully all issues related to a potential plan filing. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that RG Steel has sold most of the assets, fully paid first-lien debt from the proceeds, and paid off financing for the bankruptcy. The exclusivity hearing will be held Feb. 26 in U.S. Bankruptcy Court in Delaware. The company said it is still studying the "viability of different exit strategies." About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. The Debtor has sold off the principal plants. The sale of the Wheeling Corrugating division to Nucor Corp. brought in $7 million. That plant in Sparrows Point, Maryland, fetched the highest price, $72.5 million. RG STEEL: Sale of Mineral Rights to Mineral Acquisition Closes -------------------------------------------------------------- Pursuant to the Court's Order establishing procedures for the sale or abandonment of excess assets without the need for further court approval, RG Steel Wheeling, LLC, served notice Oct. 2, served notice to the Bankruptcy Court that on Nov. 2, 2012, the sale of certain mineral rights of RG Steeling Wheeling located in Brooke County, West Virginia to Mineral Acquisition Company I, L.P., was consummated. Pursuant to the Letter Agreement, the Assets were sold for $2,800,000. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. The Debtor has sold off the principal plants. The sale of the Wheeling Corrugating division to Nucor Corp. brought in $7 million. That plant in Sparrows Point, Maryland, fetched the highest price, $72.5 million. RG STEEL: Wants to Pay Prepetition Claims of Trial Experts ---------------------------------------------------------- WP Steel Venture LLC, et al., ask the U.S. Bankruptcy Court for the District of Delaware for authorization to pay prepetition claims of trial experts totaling $81,039.90 in connection with the Complaint filed by a predecessor of RG Steel in the U.S. District Court for the District of Maryland against Kinder Morgan Bulk Terminals, Inc., for negligence and breach of contract following the loss of the No. 4 Bridge Crane and related damages. RG Steel asserts that the overall monetary damages resulting from the collapse of the Bridge Crane are in excess of $20 million. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. The Debtor has sold off the principal plants. The sale of the Wheeling Corrugating division to Nucor Corp. brought in $7 million. That plant in Sparrows Point, Maryland, fetched the highest price, $72.5 million. RG STEEL: Harvey Goodman Approved as Broker for Colorado Assets --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized WP Steel Venture LLC, et al., to employ Bray Commercial as broker in connection with the listing and sale of certain of the Debtors' real property located in Colorado. Bray will carry out a unique function and will use reasonable efforts to coordinate with other professionals retained in the cases to avoid unnecessary duplication of services. Bray will receive a commission of up to 6% of the gross purchase price upon the sale of the real property. To the best of the Debtor's knowledge, Bray does not hold or represent an interest adverse to the Debtors' estates. The Court has also approved the employment of Harvey Goodman Realtor/HGR Commercial as broker. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as it's financial advisor. RG STEEL: Goes After $100M in Flurry of Clawback Suits ------------------------------------------------------ Lance Duroni of BankruptcyLaw360 reported that the remnants of RG Steel LLC on Monday began unleashing hundreds of lawsuits aimed at clawing back more than $100 million in alleged preferential payments made to creditors immediately prior to the defunct steelmaker's bankruptcy filing. By Tuesday, the estate of RG Steel Sparrows Point LLC -- which operated the steelmaker's largest mill in Baltimore before it was sold for scrap in bankruptcy -- had filed nearly 300 of the so- called preference actions in Delaware bankruptcy court, the report related. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. The Debtor has sold off the principal plants. The sale of the Wheeling Corrugating division to Nucor Corp. brought in $7 million. That plant in Sparrows Point, Maryland, fetched the highest price, $72.5 million. RITZ CAMERA: Reduced Work Load for Weinsweig Amid Wind-Down ----------------------------------------------------------- Ritz Camera & Image, L.L.C., et al., filed with the U.S. Bankruptcy Court for the District of Delaware a second supplemental motion to modify the term of WeinsweigAdvisors' employment and waiving certain requirements of Local Rule 2016-2. The Debtors employed WeinsweigAdvisors LLC to provide chief restructuring officer, Marc Weinsweig and certain temporary employees. According to the Debtor, the first supplemental motion covered the period from Sept. 12, 2012, until Dec. 11, which sought to modify the terms of the WeinsweigAdvisors' compensation to adequately compensate WeinsweigAdvisors for the work ahead of them in the liquidation of additional asset and overseeing an orderly wind- down of the Debtors' estate. The Company was not sold as a going concern at the Sept. 6, 2012 main auction. As a result, WeinsweigAdvisors was required to commit additional resources and spend substantially more time in winding down the estates. The second supplemental letter provides for a reduction of services and related compensation terms for WeinsweigAdvisors. Pursuant to the second supplemental letter, the scope of services include, among other things: -- update weekly cash flow budget and monitor short-term cash flow; -- complete monthly operating reports; and -- update financial statements for trailing postpetition invoices. The compensation for the services of Mr. Weinsweig, well as the temporary employees, Jon Fick, Charles Reeves, and Ed Tedeschi, will consist of these weekly fees: Dec. 12 to Dec. 28 $35,000 Dec. 29, to Jan. 15 $15,000 Jan. 16, to Jan. 31 $10,000 The Debtors have also agreed to certain indemnification provisions. About Ritz Camera Beltsville, Maryland-based Ritz Camera & Image LLC -- http://www.ritzcamera.com-- sold digital cameras and accessories, and electronic products. It sought Chapter 11 protection (Bankr. D. Del. Case No. 12-11868) on June 22, 2012, to close unprofitable stores. Ritz claims to be the largest camera and image chain the U.S., operating 265 camera stores in 34 states as well as an Internet business. When it filed for bankruptcy, Ritz Camera intended to shut 128 locations and cut its staff in half. Included in the closing are 10 locations in Maryland and 4 in Virginia. Affiliate Ritz Interactive Inc., owner e-commerce Web sites that include RitzCamera.com and BoatersWorld.com, also filed for bankruptcy. RCI's predecessor, Ritz Camera Centers, Inc., sought Chapter 11 protection (Bankr. D. Del. Case No. 09-10617) on Feb. 22, 2009. Ritz generated $40 million by selling all 129 Boater's World Marine Centers. A group that included the company's chief executive officer, David Ritz, formed Ritz Camera & Image to buy at least 163 of the remaining 375 camera stores. The group paid $16.25 million in cash and a $7.8 million note. Later, Ritz sold a $4 million account receivable for $1.5 million to an owner of the company that owed the debt. In the 2009 petition, Ritz disclosed total assets of $277 million and total debts of $172.1 million. Lawyers at Cole, Schotz, Meisel, Forman & Leonard, P.A., served as bankruptcy counsel. Thomas & Libowitz, P.A., served as the Debtor's special corporate counsel and conflicts counsel. Marc S. Seinsweig, at FTI Consulting, Inc., served as the Debtor's chief restructuring officer. Kurtzman Carson Consultants LLC acted as claims and noticing agent. Attorneys at Cooley Godward Kronish LLP and Bifferato LLC represented the official committee of unsecured creditors as counsel. In April 2010, the Court approved a liquidating Chapter 11 plan proposed by the company and the official creditor's committee. Under the Plan, unsecured creditors were to recover 4% to 14% of their claims. Ritz Camera disclosed $43,692,961 in assets and $49,147,316 in liabilities as of the Chapter 11 filing. The Debtors owe not less than $16.32 million for term and revolving loans provided by secured lenders led by Crystal Finance LLC, as administrative agent. Attorneys at Cole, Schotz, Meisel, Forman & Leonard, P.A., serve as bankruptcy counsel. Kurtzman Carson Consultants LLC is the claims agent. WeinsweigAdvisors LLC's Marc Weinsweig has been appointed as Ritz's CRO. Mark L. Desgrosseilliers, Esq., and Ericka F. Johnson, Esq., at Womble Carlyle Sandridge & Rice, LLP, represent liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC. Crystal Finance, the DIP lender, is represented by Morgan, Lewis & Bockius and Young Conaway Stargatt & Taylor LLP. Roberta A. DeAngelis, U.S. Trustee for Region 3, pursuant to Section 1102(a)(1) of the Bankruptcy Code, appointed six persons to Official Committee of Unsecured Creditors. RITZ CAMERA: Jan. 15 Hearing on Case Conversion ----------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware will convene a hearing on Jan. 15, 2013, at 10 a.m.. to consider Ritz Camera & Image, L.L.C., et al.' request to convert their Chapter 11 case to one under Chapter 7 of the Bankruptcy Code. Objections, if any, are due Jan. 8, at 4 p.m. As reported in the Troubled Company Reporter on Dec. 27, 2012, the Debtors said that the going out of business sale concluded on Oct. 31, 2012, at which time the Debtors ceased all ongoing business operations other than those necessary and appropriate for the wind-up of their affairs and the pursuit efforts to liquidate the remaining assets of the Debtors' estates. The proceeds of the GOB sales and sales relating to certain of the Debtors' other assets have been used, among other things, to fund the Debtors' operations during the postpetition period and to pay down the obligations to the Debtors' secured lender, Crystal Financial LLC. The Debtors related that due to the illiquid nature of their remaining assets -- a warehouse located in Topeka, Kansas and certain substantial and complex litigation claims -- they have determined that the best interest of all creditors will be best served by converting the cases. The Debtors said the Chapter 7 trustee may complete the orderly liquidation of the remaining assets to maximize recoveries while reducing the continuing costs of the administration of the estates. About Ritz Camera Beltsville, Maryland-based Ritz Camera & Image LLC -- http://www.ritzcamera.com-- sold digital cameras and accessories, and electronic products. It sought Chapter 11 protection (Bankr. D. Del. Case No. 12-11868) on June 22, 2012, to close unprofitable stores. Ritz claims to be the largest camera and image chain the U.S., operating 265 camera stores in 34 states as well as an Internet business. When it filed for bankruptcy, Ritz Camera intended to shut 128 locations and cut its staff in half. Included in the closing are 10 locations in Maryland and 4 in Virginia. Affiliate Ritz Interactive Inc., owner e-commerce Web sites that include RitzCamera.com and BoatersWorld.com, also filed for bankruptcy. RCI's predecessor, Ritz Camera Centers, Inc., sought Chapter 11 protection (Bankr. D. Del. Case No. 09-10617) on Feb. 22, 2009. Ritz generated $40 million by selling all 129 Boater's World Marine Centers. A group that included the company's chief executive officer, David Ritz, formed Ritz Camera & Image to buy at least 163 of the remaining 375 camera stores. The group paid $16.25 million in cash and a $7.8 million note. Later, Ritz sold a $4 million account receivable for $1.5 million to an owner of the company that owed the debt. In the 2009 petition, Ritz disclosed total assets of $277 million and total debts of $172.1 million. Lawyers at Cole, Schotz, Meisel, Forman & Leonard, P.A., served as bankruptcy counsel. Thomas & Libowitz, P.A., served as the Debtor's special corporate counsel and conflicts counsel. Marc S. Seinsweig, at FTI Consulting, Inc., served as the Debtor's chief restructuring officer. Kurtzman Carson Consultants LLC acted as claims and noticing agent. Attorneys at Cooley Godward Kronish LLP and Bifferato LLC represented the official committee of unsecured creditors as counsel. In April 2010, the Court approved a liquidating Chapter 11 plan proposed by the company and the official creditor's committee. Under the Plan, unsecured creditors were to recover 4% to 14% of their claims. Ritz Camera disclosed $43,692,961 in assets and $49,147,316 in liabilities as of the Chapter 11 filing. The Debtors owe not less than $16.32 million for term and revolving loans provided by secured lenders led by Crystal Finance LLC, as administrative agent. Attorneys at Cole, Schotz, Meisel, Forman & Leonard, P.A., serve as bankruptcy counsel. Kurtzman Carson Consultants LLC is the claims agent. WeinsweigAdvisors LLC's Marc Weinsweig has been appointed as Ritz's CRO. Mark L. Desgrosseilliers, Esq., and Ericka F. Johnson, Esq., at Womble Carlyle Sandridge & Rice, LLP, represent liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC. Crystal Finance, the DIP lender, is represented by Morgan, Lewis & Bockius and Young Conaway Stargatt & Taylor LLP. Roberta A. DeAngelis, U.S. Trustee for Region 3, pursuant to Section 1102(a)(1) of the Bankruptcy Code, appointed six persons to Official Committee of Unsecured Creditors. RIVIERA DRILLING: Court Confirms Plan Proposed by Gunnison Energy ----------------------------------------------------------------- Bankruptcy Judge Howard R. Tallman confirmed the Chapter 11 plan, as amended proposed by Gunnison Energy Corporation for Riviera Drilling & Exploration Company. The Amended Chapter 11 Plan was filed Aug. 31, 2012. The Court held that GEC's Plan is feasible, proposed in good faith, and meets the applicable requirements of Sections 1129(a) and (b) of the Bankruptcy Code. The Court rejected the confirmation objection filed by Thurner Parties. The Court also denied the request of the Chapter 11 trustee to convert the case to a liquidation in Chapter 7. Riviera Drilling and Exploration Company owns 43.5% of the operating rights related to certain oil and gas leases located in the "Ragged Mountain" area in Gunnison and Delta counties, Colorado. Riviera Drilling is owned and operated by Scott Thurner and his sons, Jacob and Samuel Thurner. The remaining interest in the leases is primarily owned by the Thurner Parties -- Jacob Thurner, Thurner Explorations, Thurner Heat Treating Inc., Thurner Industries, Inc., Robert E. Thurner Family Trust, Doris Thurner Family Trust, 350 Saint Paul, LLC, and Scott Thurner. Gunnison Energy Corporation and other entities -- referred to as "SG" -- are the record title lessees of a small portion of the leases, and they own a gas transportation system, the Ragged Mountain Pipeline that they use to transport gas from the leases to market. The SG entities also include SG Interests I, Ltd., SG Interests VII, Ltd., and Margan Investments, LLC. Riviera Drilling also uses the Pipeline to transport its gas to market. In November 2008, Riviera Drilling sued GEC and SG in the United States District Court for the District of Colorado, alleging certain antitrust violations, but the suit was ultimately dismissed for the failure of Debtor to obtain counsel. Riviera Drilling filed for Chapter 11 as a small business (Bankr. D. Colo. Case No. 10-11902) on Feb. 2, 2010. The Debtor employed Kutner Miller Brinen, P.C., as bankruptcy counsel. On Aug. 2, 2010, Riviera Drilling filed its first Chapter 11 Plan of Reorganization. GEC filed a motion to convert to Chapter 7 on Aug. 31, 2010, and Riviera Drilling filed an Amended Plan on Nov. 29, 2010. On Dec. 16, 2010, the Court denied GEC's motion to convert, and ordered the appointment of the Chapter 11 Trustee, Kevin Kubie. Approximately a year later, after extensive negotiations, the Chapter 11 Trustee and the Thurner Parties agreed to sell 100% of the lease interests at auction, with a reserve minimum bid to account for underlying tax obligations that had to be recovered. At the auction, SG had the highest bid of roughly $3 million, but the auction failed because the bid was significantly below the minimum bid amount. The Chapter 11 Trustee then filed an adversary proceeding against the Thurner Parties and on June 14, 2012, filed a motion to convert to Chapter 7. Thereafter, GEC filed its own Plan and disclosure statement. The disclosure statement was approved and the Plan was noticed for confirmation hearing, which drew objections from the Thurner Parties. The Thurner Parties have filed unsecured claims totaling in excess of $36 million. An objection to confirmation also was filed by the United States on behalf of the Department of Interior, Office of Natural Resources Revenue, and the Bureau of Land Management. The objection has since been withdrawn. A copy of the Court's Dec. 19, 2012 Order is available at http://is.gd/rLxUPFfrom Leagle.com. ROCK ENERGY: Has Forbearance with Maximilian Until March 1 ---------------------------------------------------------- American Patriot Gold, LLC, a wholly owned subsidiary of Rock Energy Resources, Inc., signed a forbearance agreement and Rock Energy signed a share transfer agreement with Maximilian Investors LLC. Pursuant to the Forbearance Agreement, Maximilian agreed to forbear from exercising its rights and remedies under the Loan and Security Agreement dated as of Dec. 14, 2011. American Patriot and Rock Energy, together with their joint venture partner, Red Arrow Gold Corporation, are parties to the Loan Agreement, pursuant to which a current total of approximately $9,000,000 has been borrowed and dedicated over the past 12 months to the development and operations of the Red Arrow Mine in Mancos, Colorado. In order to obtain the Lender's forbearance in light of the existing defaults, Rock Energy signed the Share Transfer Agreement with the Maximillian, transferring all of its ownership interests in Santa Maria Pacific Holdings LLC, a California based oil and gas company, with a potential value in excess of $3,000,000, to the Lender. American Patriot is required to repay to Rock Energy the value of this asset by virtue of an intercompany, Subsidiary-Parent account. Provided that there are no further events of default, Maximilian agreed to a forbearance period through March 1, 2013, with the resumption of interest payments to begin on April 1, 2013. As conditions to the Forbearance Agreement, American Patriot agreed to provide to Lender weekly and monthly work, expense and progress reports on the operations of the Red Arrow Mine and permit core samplings by Maximilian's experts; in addition, American Patriot agreed to send all proceeds generated from the sale of minerals, including from gold sales, to the Maximilian's Blocked Account, as originally required under the Loan Agreement; in order to reduce the current interest rate to 14%, American Patriot must pay Maximilian $150,000 on or before March 1, 2013, provided those funds are not part of any Red Arrow Mine Proceeds. A copy of the Forbearance Agreement is available at: http://is.gd/a4Bkz1 About Rock Energy Houston-based Rock Energy Resources, Inc., an independent oil and natural gas company, explores, develops, and produces natural gas and crude oil properties in the United States. Rock Energy reported a net loss of $8.02 million for the nine months ended Sept. 30, 2012, compared with a net loss of$729,493 for the same period during the prior year. The Company's balance sheet at Sept. 30, 2012, showed $5.60 million in total assets, $12.89 million in total liabilities and a $7.28 million total stockholders' deficit. RUBY TUESDAY: Has $15.1 Million Net Loss in 2nd Qtr. Ended Dec. 4 ----------------------------------------------------------------- Ruby Tuesday, Inc. on Jan. 9 reported financial results for the fiscal second quarter ended December 4, 2012. Results for second quarter 2013 compared to second quarter 2012 include: -- Same-restaurant sales increased 0.3% at Company-owned Ruby Tuesday restaurants -- Restaurant-level operating margin of 16.1%, compared to 14.4% for the prior year, an improvement of 170 basis points primarily driven by cost savings -- Net loss of $15.1 million, or net loss of $4.6 million excluding the following: 1) Pre-tax impairment charges of $16.9 million incurred due to our decision to close and exit the Marlin & Ray's and Wok Hay concepts, close two Company-developed Lime Fresh restaurants, and seek a buyer for the Truffles Grill concept which we currently license, and 2) CEO transition expenses of $0.4 million primarily related to search fees. This compares to the prior-year net loss of $2.0 million. -- Diluted loss per share of ($0.24), or diluted loss per share of ($0.07) excluding the impact of the items noted above, compared to diluted loss per share of ($0.03) for the prior year JJ Buettgen, President and CEO, commented, "I am honored and excited to be leading this great company and look forward to working with the Board and the management team to drive profitable sales growth and create significant shareholder value going forward. We were pleased to report our second consecutive quarter of positive same-restaurant sales in this challenging economic environment and are intently focused on consistently and profitably growing same-restaurant sales at our Ruby Tuesday concept. However, given the uncertain and volatile consumer spending environment, as well as the level of competitive intensity we have seen in the restaurant sector over the last several months, we are projecting approximately flat same- restaurant sales for the year. Over the last several weeks I have been working with the Board and the senior management team to shape our long-term vision for the Company. Based on a significant amount of discussion and analysis, and a clear understanding that driving profitable same- restaurant sales at Ruby Tuesday is our first and most critical priority, we have decided to close our 13 Marlin & Ray's restaurants immediately. While this was a difficult decision to make, we have determined the Marlin & Ray's brand is not an optimal conversion vehicle for us going forward. For similar reasons, we also have decided to close and exit our one Wok Hay restaurant and seek a buyer for our two licensed Truffles Grill restaurants. Additionally, based on experience gained since our initial involvement in Lime Fresh, we have decided to close two Company-developed Lime Fresh restaurants that we have determined to be outside our updated site selection criteria for the concept. As we make these difficult decisions, we want to let the team members of these closed restaurants know that we appreciate their passion and commitment and we are working to ensure the employees affected by these planned closures are given opportunities at other Ruby Tuesday or Lime Fresh restaurants. In addition to the aggregate pre-tax impairment charges of $16.9 million incurred in the second quarter in connection with these decisions, we will also incur an estimated $2.0-$5.0 million in pre-tax lease reserves and other charges in the third quarter. Exiting these concepts will enable us to optimally allocate our time, capital, and resources to focus on the successful sales turnaround at our Ruby Tuesday restaurants, in addition to creating value with our Lime Fresh fast casual concept going forward. While these decisions are difficult, we are convinced that this action is appropriate, timely, and beneficial longer term to our shareholders." Other highlights from our second quarter results include: -- Total revenue decreased 1.0% from the prior-year primarily due to the permanent closure of 29 Company-owned Ruby Tuesday concept restaurants over the prior year, slightly offset by the same- restaurant sales increase at the Ruby Tuesday concept and unit growth of the Lime Fresh and Marlin & Ray's concepts -- Same-restaurant sales for domestic franchise restaurants increased by 0.2% -- Opened two Company-owned Lime Fresh restaurants during the quarter and now have 17 Company-owned and five franchised locations, with our Company-owned restaurant count being subsequently reduced to 15 as a result of our planned closures -- Permanently closed two Company-owned Ruby Tuesday restaurants -- Domestic and international franchisees opened one and closed two Ruby Tuesday restaurants -- RT Midwest Franchise successfully emerged from bankruptcy subsequent to the quarter end and is now operating 11 Ruby Tuesday franchised restaurants -- Repurchased 2.4 million shares of common stock at an average price of $7.33 per share during the quarter. Subsequent to quarter end, we repurchased an additional 400 thousand shares at an average price of $7.91. -- Repurchased $11.5 million of high yield bonds at a 5% discount to par, resulting in a pre-tax gain of $0.6 million -- Closed sale leaseback transactions on five restaurants during the quarter resulting in $11.7 million of gross proceeds. Subsequent to the end of the quarter, we closed sale leaseback transactions on an additional two restaurants resulting in $4.7 million of gross proceeds. Since the third quarter of fiscal 2012, we have completed sale leaseback transactions on 26 restaurants, resulting in $58.9 million of gross proceeds. -- Total capital expenditures were $12.1 million -- Total book debt of $309 million at the end of the second quarter compared to $342 million for the prior-year quarter, a decrease of $33 million. Additionally, we had $26 million of cash on the balance sheet at quarter end compared to $9 million in the prior year. Share repurchase authorization On January 8, 2013 the Board of Directors increased the share repurchase authorization amount by 10 million shares, resulting in 12.7 million shares now authorized for repurchase under the Company's share repurchase plan. Fiscal Year 2013 Guidance -- Same-Restaurant Sales - We estimate same-restaurant sales for Company-owned restaurants will be approximately flat for the year -- Company-Owned Restaurant Development - We plan to open 10 to 12 Lime Fresh restaurants, close two Lime Fresh restaurants, close 13 Marlin & Ray's restaurants, close one Wok Hay restaurant, sell two Truffles Grill restaurants, and close six to eight Company-owned Ruby Tuesday restaurants -- Franchise Restaurant Development - We estimate our franchisees will open 12 to 14 restaurants, up to 10 of which will be international, and close four to five restaurants -- Restaurant Operating Margins - We estimate margins will improve approximately 150-175 basis points due to cost savings initiatives -- Depreciation - Estimated to be in the range of $60-$62 million for the year -- Selling, General, and Administrative Expenses - Advertising expense is estimated to be in the range of $78-$82 million for the year compared to $47.9 million in fiscal 2012 primarily due to incremental television advertising expense which is largely funded by our cost savings initiatives and reduction in promotions expense. Excluding advertising expense, selling, general, and administrative expenses are estimated to be slightly lower primarily due to lower consulting fees and other cost savings initiatives being partially offset by the projected fourth quarter pension settlement expense attributable to our former CEO. -- Interest Expense - Estimated to be $26-$27 million for the year -- Tax Benefit - Based on our lower pre-tax income coupled with our employment-related tax credits, we anticipate a net tax benefit of $15 to $20 million for the year -- Diluted Earnings Per Share - Diluted earnings per share for the year is estimated to be in the ($0.03) to $0.03 range including the second quarter impairment charges and third quarter lease and other charges mentioned above, in addition to including the CEO pension settlement expense and new CEO transition expenses. Excluding the impact of these items, diluted earnings per share for the year are estimated to be in the $0.24 to $0.30 range. On a go-forward basis, exiting these non-core brands should result in an annual earnings improvement of approximately $0.03 per share. -- Fully-Diluted Weighted Average Shares Outstanding - Estimated to be approximately 60-61 million for the year -- Capital Expenditures - Estimated to be $38-$42 million for the year -- Free Cash Flow - Estimated to be $10-$20 million for the year. On an adjusted basis, free cash flow is estimated to be $22-$32 million after excluding the impact of our former CEO's pension payout (approximately $8 million) and estimated lease reserve settlements from restaurants closed in the fourth quarter of fiscal year 2012 and planned restaurant closures in the third quarter of fiscal 2013 (approximately $4 million). -- Sale Leaseback - We plan to pursue sale leaseback transactions on up to 20 additional properties representing estimated gross proceeds of approximately $40-$45 million which we estimate will take another five to six quarters to complete In closing, Mr. Buettgen said, "We enter the second half of our fiscal year with a clear focus on three key initiatives. First, we are focused on driving profitable same-restaurant sales growth at Ruby Tuesday. We will accomplish this by continuing to refine the quality of our menu, our in-restaurant experience, and the effectiveness of our advertising and promotion efforts. Second, we are focused on prudently growing our Lime Fresh fast casual concept. Our final key initiative is to increase shareholder value by investing our capital to yield attractive returns. While we are cautious near-term given the current economic environment, we believe there is significant opportunity ahead to strengthen our Company and create shareholder value." Reporting Reclassifications to Prior-Year Financial Statements Similar to the first quarter, we made several reporting reclassifications to our prior-year statements of operations for the 13 week period ended November 29, 2011 to better align our financial statement presentation with our peer group. These reclassifications, which had no effect on pre-tax or net loss were primarily in two key areas: 1) Amortization of deferred debt issuance costs and revolving credit facility commitment fees of $0.5 million were reclassified from other restaurant operating costs to interest expense, net; and 2) Corporate and field executive fringe benefits and payroll taxes of $2.0 million were reclassified from payroll and related costs to selling, general, and administrative, net, where the corresponding salary expenses are reported. In the current year quarter, these amounts were $0.8 million and $2.1 million, respectively." About Ruby Tuesday Ruby Tuesday, Inc. has Company-owned and/or franchise Ruby Tuesday brand restaurants in 45 states, the District of Columbia, 11 foreign countries, and Guam. As of December 4, 2012, we owned and operated 709 Ruby Tuesday restaurants and franchised 77 Ruby Tuesday restaurants, comprised of 33 domestic and 44 international restaurants. The Company-owned and operated restaurants are concentrated primarily in the Southeast, Northeast, Mid-Atlantic, and Midwest of the United States, which we consider to be our core markets. S.G.F. PROPERTIES: Updated Case Summary & Creditors' Lists ---------------------------------------------------------- Lead Debtor: S.G.F. Properties, LLC 22 Gadsen Court Albany, NY 12205 Bankruptcy Case No.: 13-10005 Chapter 11 Petition Date: January 2, 2013 Court: United States Bankruptcy Court Northern District of New York (Albany) Judge: Robert E. Littlefield Jr. Debtor's Counsel: Francis J. Brennan, Esq. NOLAN & HELLER, LLP 39 North Pearl Street Albany, NY 12207 Tel: (518) 449-3300 E-mail: fbrennan@nolanandheller.com Scheduled Assets: $1,165,000 Scheduled Liabilities: $1,231,192 Affiliate that simultaneously filed separate Chapter 11 petition: Debtor Case No. ------ -------- Faragon Properties, LLC 13-10006 Assets: $1,000,001 to $10,000,000 Debts: $1,000,001 to $10,000,000 The petitions were signed by Samuel G. Faragon, managing member. A. In its list of 20 largest unsecured creditors, S.G.F. Properties, LLC placed only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Communications Loan $4,500 FCU Corporate Headquarters, Attn: President 18 Computer Drive East Albany, NY 12205-1168 B. In its list of 20 largest unsecured creditors, Faragon Properties, LLC placed only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Communications Loan $4,500 FCU Corporate Headquarters, Attn: President 18 Computer Drive East Albany, NY 12205-1168 SATCON TECHNOLOGY: Judge Nixes $1.6M Bonus Plan ----------------------------------------------- Jamie Santo of BankruptcyLaw360 reported that a Delaware bankruptcy judge on Tuesday rejected Satcon Technology Corp.'s proposed $1.6 million executive incentive program, ruling the goals the solar-energy company must meet to trigger bonus payments were too easily attainable. Boston-based Satcon contended the key employee incentive plan was vital to motivate senior executives asked to handle additional responsibilities with a greatly reduced staff, while the official committee of unsecured creditors and the U.S. Trustee characterized the program as a means of providing top brass with extra pay for merely doing their jobs, the report related. About SatCon Technology Based in Boston, SatCon Technology Corporation (NasdaqCM: SATC) -- http://www.satcon.com/-- and its wholly owned subsidiaries provide utility-grade power conversion solutions for the renewable energy market, primarily for large-scale commercial and utility- scale solar photovoltaic markets. Satcon Technology Corporation, along with six related entities, filed Chapter 11 petitions (Bankr. D. Del. Case No. 12-12869) on Oct. 17, 2012. Satcon disclosed assets of $92.3 million and liabilities totaling $121.9 million. Liabilities include $13.5 million in secured debt owing to Silicon Valley Bank. There is another $6.5 million in secured subordinated debt. Unsecured liabilities include $16 million on subordinated notes. The Hon. Kevin Gross presides over the case. Dennis A. Meloro, Esq., at Greenberg Traurig serves as the Debtors' counsel. Fraser Milner Casgrain LLP acts as the general Canadian counsel. Lazard Middle Market LLC serves as the Debtors' financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors is represented by Holland & Knight LLP as counsel and Sullivan Hazeltine Allinson LLC as co-counsel. SAVE MOST: Files Schedules of Assets and Liabilities ---------------------------------------------------- Save Most Desert Rancho, Ltd., filed with the U.S. Bankruptcy Court for the Central District of California its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $9,900,000 B. Personal Property $234,997 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $14,567,956 E. Creditors Holding Unsecured Priority Claims $83,470 F. Creditors Holding Unsecured Non-priority Claims $223,344 ----------- ----------- TOTAL $10,134,997 $14,874,770 Save Most Desert Rancho, Ltd., filed a bare-bones Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-23173) in Santa Ana, California on Nov. 15. The Laguna Hills-based company estimated at least $10 million in assets and liabilities. The petition was signed by Charles Kaminskas for Brighton Park, LP, general partner. Michael G. Spector, Esq., in Santa Ana, Calif., represents the Debtor as counsel. SAVE MOST: Wants to Hire Michael G. Spector as Counsel ------------------------------------------------------ Save Most Desert Rancho, Ltd., seeks permission from the U.S. Bankruptcy Court for the Central District of California to employ the Law Offices of Michael G. Spector as Chapter 11 insolvency counsel. The Firm will, among other things, advise the Debtor with respect to its rights, powers, duties and obligations as a debtor in possession in the administration of this case, the management of its financial affairs and the management of its income and property, at these hourly rates: Michael G. Spector, Attorney $410 Vicki L. Schennum, Attorney $380 Paralegal $110 Law Clerk $110 To the best of the Debtor's knowledge, the Firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Save Most Headquartered in Laguna Hills, California, Save Most Desert Rancho, Ltd., is a limited partnership. Its general partner is Brighton Park, LP, and the Debtor has numerous limited partners. The Debtor owns multi-tenant office buildings in Laguna Hills, California, and Corona, California. Both properties are managed by Foremost Business Parks, LLC, an entity associated with the Debtor as it is 100%owned by Charles Kaminskas. Due to a decline in rents, the Debtor went into default on its obligations to the lenders on both properties, namely JP Morgan Chase and San Diego County Credit Union. On Nov. 15, 2012, the Debtor filed a bare-bones Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-23173) in Santa Ana, California. The Debtor estimated at least $10 million in assets and liabilities. Judge Catherine E. Bauer presides over the case. SEARCHMEDIA HOLDINGS: Had $5.9MM Profit for 1st 9 Mos. of 2012 -------------------------------------------------------------- Tiger Media, Inc., formerly known as SearchMedia Holdings Limited, reported profit attributable to shareholders of US$5.99 million on US$27.28 million of advertising service revenues for the nine months ended Sept. 30, 2012, compared with profit attributable to shareholders of US$1.06 million on US$45.53 million of advertising service revenues for the same period during the prior year. The Company's balance sheet at Sept. 30, 2012, showed US$39.88 million in total assets, US$35.41 million in total liabilities, and US$3.49 million in total shareholders' equity. Peter W.H. Tan, chief executive officer of Tiger Media remarked, "The results of the nine months of 2012 shows a trend of decreased revenue for the Company as we focus on improving the margins and the bottom line and continue to streamline our business by closing unprofitable offices and divesting certain subsidiaries and eliminating the underlying earnout liability in order to pursue more accretive concession opportunities. These actions however, resulted in reduced performance in the first nine month of 2012. Going forward, we believe that we will create significant shareholder value through strategic, long term proprietary concessions with prominent partners. We have additional potential concessions and acquisition opportunities in our pipeline and we expect additional announcements shortly." A copy of the press release is available for free at: http://is.gd/I4nNS2 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. SELECT TREE: Evans Bank Has Green Light to Foreclose ---------------------------------------------------- The Bankruptcy Court on Jan. 9 issued an order lifting the automatic stay in the Chapter 11 cases of Select Tree Farms, Inc., and its owners, George A. Schichtel and Debra G. Schichtel (deceased), and allowing Evans Bank N.A. to initiate foreclosure. In December, the Court denied Evans Bank's request for stay relief and, instead gave the Debtors a short extension -- until Dec. 31 -- to sell equipment. That sale was required under a March 2012 stipulation governing the Debtors' use of Evans Bank's cash collateral. As a condition to the use of cash collateral, the Debtors were required no later than Nov. 15 to sell sufficient items of equipment as is necessary to pay Evans Bank $200,000 to be applied to the principal amount of the bank debt. In the event Select Tree fails to comply with this provision, the stipulation provides that Evans will have the unqualified right to the immediate issuance of an order from the Bankruptcy Court terminating the automatic stay in favor of Evans "upon the expiration of three business days' prior telephonic or email notice to Select Tree (and/or its undersigned counsel), Farm Credit . . . and the Office of the United States Trustee. . . ." By Nov. 15, Select Tree Farms had failed either to liquidate any of its equipment or to pay any portion of the projected proceeds of $200,000 to Evans Bank. On Nov. 26, Evans Bank served notice that in three days, it would submit an order granting stay relief. Immediately upon receiving the notice, the Debtors moved to modify the provision, to extend for 45 days the deadline for sale and payment. The bank opposed the request, asserting that the language of the stipulation is clear and ambiguous. In his Decision & Order dated Dec. 20 available at http://is.gd/qvCIwEfrom Leagle.com, Bankruptcy Judge Carl L. Bucki cited a personal emergency on the Schichtels. Debra Schichtel suffered a stroke around October and became comatose and was intubated. She passed away Nov. 14. According to Judge Bucki, although the original deadline might have served to avoid "the risk of lethargy or even obstinacy," no reasonable creditor should reject a modest accommodation for an unexpected personal emergency. Judge Bucki noted that, "When George Schichtel signed the conditional stipulation for stay relief, no one could have anticipated that its liquidation schedule would coincide with a time of great personal crisis. Mere expressions of sympathy become meaningless unless they find company with an understanding response." According to Judge Bucki, "The debtors request only a modest extension of time, and have represented that they will seek no further extension. Meanwhile, interest at the negotiated rate will continue to accrue. If the equitable authority of 11 U.S.C. Sec. 105 is to have any meaning, it must apply to circumstances like those here present. This is not to say that we can cavalierly overrule the terms of a stipulation that the parties have negotiated in good faith. But in the present instance, a fair balancing of equitable considerations has provided overwhelming justification for the requested extension. By agreeing to the original stipulation, Evans Bank acknowledged that the debtors are qualified to implement a partial liquidation of equipment. The extension merely continues a liquidation process that offers a promise of mutual benefit." The Debtors, however, failed to make the $200,000 payment to Evans Bank by Dec. 31. The Debtors also failed to make the adequate protection payments of $4,250 each that were due the bank on Nov. 15, Dec. 1, Dec. 15 and Jan. 1. Evans on Jan. 3 provided notice required by the cash collateral stipulation that it would seek stay relief. In the Jan. 7 Order, Judge Bucki said Evans is entitled to pursue all its rights and remedies against the Debtors' real, personal and agricultural property in which the bank has been granted a security interest in or lien on to secure any portion of the bank debt. About Select Tree Farms Select Tree Farms, Inc., filed a Chapter 11 petition (Bankr. W.D.N.Y. Case No. 12-10669) on March 7, 2012. Select Tree Farms scheduled $11,450,989 in assets and $5,959,983 in liabilities. The petition was signed by George A. Schichtel, president. The Debtor's owner, George A. Schichtel and Debra G. Schichtel, filed for Chapter 11 bankruptcy on the same day (Bankr. W.D.N.Y. Case No. 12-10670). Judge Carl L. Bucki presides over the case. William F. Savino, Esq., and Beth Ann Bivona, Esq., at Damon Morey LLP, serve as the Debtors' counsel. NextPoint LLC serves as the Debtors' financial advisor. Garry M. Graber, Esq., and Steven W. Wells, Esq. -- swells@hodgsonruss.com -- at Hodgson Russ LLP, represent Evans Bank, N.A., the primary secured creditor. SELECT TREE: Sells New Jersey Trees to Down to Earth for $60K ------------------------------------------------------------- Select Tree Farms Inc. sought and obtained Bankruptcy Court permission to sell 3,200 trees located in the State of New Jersey, free and clear of liens, subject to the allocation of the gross sale proceeds with secured creditor, Farm Credit East, CSA, which holds a first lien on the tree inventory in New Jersey. An entity called "Down to Earth" has offered $60,000 to purchase the majority of the remaining tree inventory. In its Dec. 28 order, the Bankruptcy Court also permitted the Debtor to sell the balance of the trees in New Jersey to third parties in the ordinary course of business. The entire proceeds of any sales will be turned over to Farm Credit to be applied as adequate protection payment. About Select Tree Farms Select Tree Farms, Inc., filed a Chapter 11 petition (Bankr. W.D.N.Y. Case No. 12-10669) on March 7, 2012. Select Tree Farms scheduled $11,450,989 in assets and $5,959,983 in liabilities. The petition was signed by George A. Schichtel, president. The Debtor's owner, George A. Schichtel and Debra G. Schichtel, filed for Chapter 11 bankruptcy on the same day (Bankr. W.D.N.Y. Case No. 12-10670). Ms. Schichtel suffered a stroke around October 2012 and became comatose and was intubated. She passed away Nov. 14, 2012. Judge Carl L. Bucki presides over the case. William F. Savino, Esq., and Beth Ann Bivona, Esq., at Damon Morey LLP, serve as the Debtors' counsel. NextPoint LLC serves as the Debtors' financial advisor. Garry M. Graber, Esq., and Steven W. Wells, Esq., at Hodgson Russ LLP, represent Evans Bank, N.A., the primary secured creditor. SENTINEL MANAGEMENT: Trust Wins in Test Case for Clawback Lawsuits ------------------------------------------------------------------ District Judge James B. Zagel in Chicago directed FCStone, LLC, a former customer of Sentinel Management Group, Inc., to return $15,576,964, the full amount it received in proceeds from the sale of Citadel, to the Sentinel Liquidation Trust to be distributed pro rata in accordance with Sentinel's Fourth Amended Chapter 11 Plan of Liquidation. In September 2008, Frederick J. Grede, the Liquidation Trustee of the Sentinel Liquidation Trust, filed adversary proceedings in the Bankruptcy Court for the Northern District of Illinois for avoidance and recovery of pre and post-petition transfers made by Sentinel to or for the benefit of certain customers. On Oct. 29, 2008, the District Court withdrew the reference to the Bankruptcy Court, finding that the adversary proceedings raised "significant open and unresolved issues" of non-bankruptcy law regarding the applicability of common law trust principles to statutory trusts, and the duty of futures commission merchants to cover customer segregation shortfalls under the Commodity Exchange Act and its regulatory provisions. The adversary proceeding against FCStone was chosen as a "test case" (as least in part) to resolve common legal issues among the Trustee's actions. The Trustee seeks to avoid or reduce the transfer of approximately $15.6 million to FCStone, alleging five counts: (1) avoidance and recovery of post-petition transfers (11 U.S.C. Sections 549(a) and 550); (2) avoidance and recovery of preferential transfers (11 U.S.C. Sections 547(b) and 550); (3) declaratory judgment that cash and securities held by Sentinel in allegedly segregated bank accounts is property of the Debtor's estate; (4) unjust enrichment; and (5) disallowance or reduction of claims (11 U.S.C. Sec. 502(d)). FCStone is an Iowa limited liability company with its principal place of business in Chicago, Illinois. FCStone is a futures commission merchant. FCStone maintains accounts and clears trades for customers in the futures markets; FCStone acts as a financial intermediary between its customers and the futures markets. The case is, FREDERICK J. GREDE, not individually but as Liquidation Trustee of the Sentinel Liquidation Trust, Plaintiff, v. FCSTONE, LLC, Defendant, No. 09 C 136 (N.D. Ill.). A copy of the District Court's Jan. 4, 2013 Memorandum Opinion and Order is available at http://is.gd/GgDmzlfrom Leagle.com. Safe Harbor Protection Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the according to the ruling, so-called safe harbor under Section 546(e) of the U.S. Bankruptcy Code, protecting traders in securities, isn't absolute and can't be employed if invoking the rule runs counter to the intent of Congress. Mr. Rochelle recounts that Sentinel, a registered futures commission merchant, was required to keep customers' investments in segregated accounts. There were two accounts for two different types of customers, each governed by different federal statutes and different regulatory schemes. Sentinel improperly moved customers' deposits from one account to the other, U.S. District Judge Zagel took a group of lawsuits away from the bankruptcy judge. He selected one to serve as a test case deciding which group of customers could receive or keep money from the accounts. He ruled that no one group of customers should have first dibs on the accounts. Sentinel's trustee for creditors, the report discloses, sued futures commission merchant FCStone LLC for $15.6 million, representing money received from Sentinel just before and after the bankruptcy filing in August 2007. The trustee contended that the payments were fraudulent transfers before bankruptcy or unauthorized if they occurred after bankruptcy. If the Sentinel trustee wins all similar cases, "many tens of millions" will be recovered for people who didn't get recovery at the outset, said a lawyer involved in the case who didn't want to be identified because litigation is ongoing, according to the report. FCStone, the report adds, argued it was protected by the safe harbor because the payments were on account of securities transactions. Judge Zagel found it "inconceivable that Congress intended for the safe harbor provisions to apply to the circumstances of this case." Judge Zagel, the report explains, posited a hypothetical where a soon-to-be-bankrupt broker sends all remaining money to favored customers just before bankruptcy. Invoking the safe harbor, Judge Zagel said, "would render the courts powerless to do anything about it." Allowing the failing broker to make an "eleventh-hour" decision about who's paid "would fly in the face of justice and do nothing to advance any plausible congressional purpose," Judge Zagel said. Judge Zagel said the safe harbor also doesn't apply because there wasn't the requisite trading in securities. Judge Zagel made other rulings in favor of the Sentinel trustee in his decision culminating a trial in October. He said that equality of distribution is the fundamental principle of bankruptcy. Because money was improperly moved from one account to another, he ruled that customers of the two accounts must share pro rata in the pool of funds from both accounts. He also found that post-bankruptcy distributions to one group of customers was not permitted by bankruptcy law and wasn't authorized by the bankruptcy judge. About Sentinel Management Based in Northbrook, Illinois, Sentinel Management Group Inc. -- http://www.sentinelmgi.com/-- was a full service firm offering a variety of security solutions. The Company filed a voluntary Chapter 11 petition (Bankr. N.D. Ill. Case No. 07-14987) on Aug. 17, 2007. Ronald Barliant, Esq., Randall Klein, Esq., and Kathryn A. Pamenter, Esq., at Goldberg, Kohn, Bell & Black Rosenbloom & Moritz, Ltd., represented the Debtor. Lawyers at Quinn, Emanuel Urquhart Oliver & Hedges, LLP, represented the Official Committee of Unsecured Creditors. When the Debtor sought bankruptcy protection, it estimated assets and debts of more than $100 million. On Aug. 28, 2007, the Court approved Frederick Grede as the Debtor's Chapter 11 Trustee. Marc I. Fenton, Esq., at DLA Piper US LLP, and Vincent E. Lazar, Esq, at Jenner & Block LLP, represent the Chapter 11 Trustee. The Court confirmed the Fourth Amended Chapter 11 Plan of Liquidation for Sentinel on Dec. 15, 2008, which created a Liquidation Trust. The Plan became effective Dec. 17, 2008, and Mr. Grede was appointed Liquidation Trustee. SHELL'S DISPOSAL: Dist. Court Affirms Plan Feasibility Ruling ------------------------------------------------------------- The City of Lancaster failed to overturn bankruptcy court approval of the Third Amended Plan of Reorganization of Shell's Disposal and Recycling, Inc. District Judge Berle M. Schiller said the Bankruptcy Court did not err in finding that the Plan was feasible. The case before the District Court is, CITY OF LANCASTER, Appellant, v. SHELL'S DISPOSAL AND RECYCLING, INC., Appellee. Civil Action No. 12-4498 (E.D. Pa.). A copy of the District Court's Jan. 3, 2013 Memorandum is available at http://is.gd/pz48usfrom Leagle.com. Shell's Disposal and Recycling, Inc., is a Pennsylvania hauling and recycling business, of which the president and sole shareholder is Willie Shell, Sr. It filed for Chapter 11 bankruptcy (Bankr. E.D. Pa. Case No. 10-_____) on Aug. 23, 2010. The Bankruptcy Court confirmed Shell's Disposal's Plan of Reorganization on June 26, 2012. SHILOH INDUSTRIES: Debt Amendment No Impact on Moody's B1 Rating ---------------------------------------------------------------- Moody's Investors Service commented that Shiloh Industries, Inc.'s ("Shiloh"; B1 stable; SGL-3) acquisition of aluminum die cast producer Albany-Chicago Company LLC and the related amendment to its revolving credit facility are modestly credit positive, but do not impact Shiloh's short- and long-term credit ratings. The acquisition is credit positive as it improves Shiloh's scale and diversification, but not sufficiently to warrant a change in the B1 rating or stable outlook. In addition, the company's overall liquidity has not changed materially as a result of the amendment. Shiloh Industries, Inc., headquartered in Valley City, Ohio, is a supplier providing light weighting and noise, vibration and harshness (NVH) solutions to automotive, commercial vehicle and other industrial markets. Shiloh delivers these solutions through design engineering and manufacturing of first operation blanks, engineered welded blanks, complex stampings and modular assemblies. Shiloh had approximately $586 million of revenue for the twelve month period ending October 31, 2012. SPEEDWAY MOTORSPORTS: Moody's Affirms 'Ba1' CFR; Outlook Stable --------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to Speedway Motorsports, Inc.'s (SMI) proposed $100 million add-on to its guaranteed senior unsecured notes due 2019 and a Ba1 rating to SMI's proposed $350 million guaranteed senior secured credit facility. Moody's also affirmed SMI's Ba1 Corporate Family Rating (CFR), Ba1 Probability of Default Rating (PDR) and SGL-3 speculative-grade liquidity rating. The rating outlook is stable. SMI plans to utilize the net proceeds from the $100 million add-on to repay the $100 million remaining balance on its existing term loan. SMI plans to utilize the net proceeds from a new $250 million delayed draw term loan as well as revolver borrowings and/or existing cash to fund the redemption of its $275 million senior unsecured notes due 2016. The 2016 notes are callable at 104.375 on/after June 1, 2013 and Moody's expects redemption around that time. The transactions will favorably extend SMI's maturity profile and reduce annual cash interest expense by more than $10 million. Assignments: Issuer: Speedway Motorsports Inc. Senior Secured Bank Credit Facility (Revolver), Assigned a Ba1, LGD4 - 50% Senior Secured Bank Credit Facility (Delayed Draw Term Loan), Assigned a Ba1, LGD4 - 50% Senior Unsecured Regular Bond/Debenture (2019 notes), Assigned Ba2, LGD4 - 64% ($100 million add-on to existing $150 million notes) Rating Rationale SMI's Ba1 CFR reflects its strong market position within the motor sports industry, high operating margins, and revenue supported by entitlements to 13 NASCAR Sprint Cup races and other motor sports events at SMI's facilities, broadcast rights under NASCAR's national TV contract that runs from 2007 - 2014, and numerous multi-year corporate sponsorships. Admissions, race-day spending, and corporate sponsorships are vulnerable to cyclical downturns. SMI has a moderate revenue base, operates capital-intensive motorsports facilities, is exponsed to event risk related to future leveraging acquisitions and development projects, and has some weak qualitative factors (shareholder-oriented governance and the willingness to engage in non-core business activities such as bulk commodity trading) that constrain the rating to speculative- grade. SMI's debt-to-EBITDA leverage (3.6x LTM 9/30/12 incorporating Moody's standard adjustments) is high for the rating and weakly positions the company within the Ba1 CFR. The revenue pressures that are contributing to the elevated leverage are partially cyclical, but will take an extended time to recover given the slow expected improvement in the economy and labor markets and the sensitivity of the company's admissions and corporate sponsorship revenue to economic conditions. Moody's expects credit metrics to improve slowly through debt reduction and as the economy recovers with debt-to-EBITDA ultimately declining to a 3x or lower range that would more comfortably position the company within the Ba1 CFR. However, cash distributions to shareholders are aggressive financial management in the face of the operating pressures. Moody's is concerned that part of the attendance and television rating declines within NASCAR over recent years reflects shifts in fan interest and competition for discretionary consumer spending driven by technology advances, ongoing shifts in the demographic makeup of the country, and economic conditions. NASCAR continues to implement a number of changes to the competition rules and car specifications, invest in technology, and pursue a broader demographic range of drivers in an effort to maintain and grow the sport's appeal. Upcoming changes include a new Gen-6 car to be introduced in 2013 and a possible digital cockpit in 2014. However, previous changes have not stemmed the erosion in attendance and television ratings during and since the recession. Moody's believes generating a sustained recovery will be challenging as long as the economy remains soft or unless a broadly popular driver is successful or emerges to generate incremental fan interest. The NASCAR industry nevertheless continues to generate considerable consumer appeal. NASCAR's new eight-year (2015-2022) multi platform media rights agreement with FOX Sports Media Group (FSMG) announced in October 2012 demonstrates continued interest in the sport while securing ongoing growth in an important contractual revenue source. Moody's projects SMI's revenue and EBITDA will decline modestly in 2013 due to ongoing pressures on discretionary consumer spending on motor sports. There is downside risk if recently approved tax increases or other fiscal drag resulting from federal budget negotiations weaken the U.S. economy. However, SMI does not have to overcome the headwinds it faced in 2012 relating to a reduction in NASCAR ancillary rights fees from SiriusXM and the loss of the Infineon sponsorship. As a result, the decline in EBITDA should be smaller than the roughly 10% drop SMI experienced in 2012. Moody's expects SMI to generate $35-$40 million of free cash flow after an estimated $40 million of capital spending in 2013. The SGL-3 rating indicates adequate liquidity due to modest projected headroom under financial maintenance covenants. Moody's expects the covenant cushion to be below 10% over the next 12-18 months despite a delay in the step downs in the proposed credit facility. Moody's projects SMI will generate sufficient free cash flow in 2013 (approximately $35-$40 million) to fund the 5% (or $12.5 million) required annual term loan amortization on the proposed credit facility. SMI also maintains a sizable cash balance ($96 million as of 9/30/12) to support liquidity. The covenant cushion is a manageable liquidity risk as Moody's views prospects for a covenant amendment, if necessary, as good given the free cash flow and asset coverage. The proposed $350 million five-year senior secured credit facility ($100 million revolver and $250 million delayed draw term loan) will be guaranteed by operating subsidiaries and collateralized only by the stock of subsidiaries. If negotiated, the lenders could obtain a more comprehensive collateral package as a credit facility of up to $450 million is a permitted lien within the bond indenture. Moody's will withdrawal the ratings on the existing credit facility and 2016 notes once the instruments are retired in conjunction with the proposed refinancing actions. SMI's senior unsecured notes including the proposed $100 million add-on to the 2019 notes have senior unsecured guarantees from operating subsidiaries. Moody's believes the stock pledge on the credit facility provides limited support to the credit facility guarantee, and the credit facility and senior notes are ranked the same in Moody's loss given default notching model. However, the flexibility within the bond indenture to provide a broader security package on the credit facility, mandatory credit facility pay down from 100% of net asset sale proceeds (subject to a six month reinvestment window) and the lender control created by financial maintenance covenants provide protection to credit facility lenders that is not afforded to the senior note holders. Moody's therefore overrides the loss given default modeling template implied outcome to rate the senior notes Ba2, which is one notch below the Ba1 model implied rating for the notes. The stable rating outlook reflects Moody's expectation that SMI will continue to generate positive free cash flow, reduce debt, and maintain an adequate liquidity position. Leverage is expected to decline moderately over the next 12-18 months as the company continues to pay down debt. Debt-to-EBITDA leverage sustained above a 3x range due to debt- financed acquisitions, cash distributions to shareholders, major development projects, or a sustained decline in profitability from a deterioration in spectator interest in NASCAR or motor sports, extended cyclical downturn, or decline in fan attendance at sporting events due to acts of terrorism or other disruption could negatively affect the rating or outlook. Pressure on liquidity including failure to maintain sufficient covenant headroom could also lead to downward rating pressure. Negative corporate governance/qualitative factors and high leverage constrain the rating. However, mitigation of the qualitative risks along with a larger revenue base, a strong liquidity position, and debt-to-EBITDA sustained below 1.75x and free cash flow-to-debt above 12.5% after incorporating potential acquisitions and shareholder distributions, could lead to an upgrade. 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 $500 million revenue for the LTM ended 9/30/12. SPEEDWAY MOTORSPORTS: S&P Expects to Cut Sr. Notes Rating to 'BB-' ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its issue-level ratings on U.S.-based Speedway Motorsports' 6.75% and 8.75% senior notes on CreditWatch with negative implications. Upon closing of the 6.75% senior notes add-on and the new credit facilities, S&P expects to revise its recovery rating on the senior notes to '5' (10% to 30% recovery expectation) from '3' (50% to 70% expectation). In addition, S&P expects to lower its issue-level rating on the senior notes to 'BB-' from 'BB', in accordance with its notching criteria. Proceeds from the $100 million senior notes add-on will be used to repay the outstanding $100 million term loan. "Additionally, we are assigning the company's new $350 million credit facility (consisting of a $100 million revolver and $250 million delayed draw term loan, both due 2018) our 'BBB-' 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. The company will use the term loan proceeds to help fund the redemption of the $275 million 8.75% senior notes due 2016 when they become callable in June 2013. The net increase in the term loan results in a higher level of secured debt outstanding under our simulated default scenario versus our previous analysis. This reduces the recovery prospects for the senior notes enough to warrant a negative revision to our recovery rating on the senior notes. Our ratings on the 8.75% senior notes will be withdrawn when the issue is redeemed," S&P said. "The corporate credit rating on Charlotte, N.C.-based Speedway Motorsports (SMI) reflects Standard & Poor's Ratings Services' assessment of the company's business risk profile as "fair" and our assessment of the company's financial risk profile as "significant," according to our criteria," S&P added. "Our assessment of SMI's business risk profile as fair reflects its reliance on an event-driven business model, the susceptibility of much of its revenue base to the economic cycle, and the existence of substitute entertainment events. Partially offsetting these risks are the company's strong EBITDA margins, good market position in the motorsports industry, and high barriers to entry stemming from significant capital costs for new racetracks and a limited supply of high-margin NASCAR racing dates. Additionally, SMI's business risk profile benefits from good revenue visibility from contracted NASCAR broadcasting revenue. While the existing contract is set to expire in 2014, in October 2012, Fox agreed to increase its aggregate payment to NASCAR by approximately 36% for a new 2015-2022 contract that includes broadcasting rights to the first 13 Sprint Cup races of the season. However, NASCAR viewership can be volatile and was down about 10% in 2012, and Fox represents only one portion of the annual NASCAR television rights. NASCAR's contract with current partners ESPN and Turner also ends after the 2014 season, and there is yet no indication that those networks will negotiate similar payment increases," S&P noted. "Our assessment of SMI's financial risk profile as significant reflects leverage that we expect to remain in the mid-3x area through 2014, interest coverage of over 5x after giving effect to the interest savings associated with the proposed refinancing, and positive free operating cash flow. If the remainder of the 2015- 2022 NASCAR seasons are negotiated at least as favorably as the Fox contract, and admissions revenues stabilize, we would expect associated EBITDA improvement to lead," S&P said. STALLION OILFIELD: S&P Withdraws 'B' Rating on $500MM Secured Loan ------------------------------------------------------------------ Standard & Poor's Ratings Services withdrew its 'B' issue-level and '3' recovery ratings on Houston-based Stallion Oilfield Holdings proposed $500 million senior secured term loan facility. The 'B' issue rating and '3' recovery rating on the company's existing 10.5% senior secured notes are unaffected. The corporate credit rating and outlook remain unchanged. "The rating action is a result of Stallion's decision to terminate its proposed $500 million senior secured term loan facility," said Standard & Poor's credit analyst Stephen Scovotti. Proceeds were going to be used to redeem the remaining $134 million outstanding on the company's 10.5% senior secured notes and to pay a $385 million dividend. The company abandoned the proposed $500 million senior secured term loan facility to explore and evaluate strategic alternatives available to the company. For a detailed analysis on the issue-level and recovery ratings on the 10.5% senior secured notes, see the recovery report on Stallion Oilfield Holdings Inc., to be published on RatingsDirect following the release of this report. RATINGS LIST Stallion Oilfield Holdings Inc. Corporate credit rating B/Stable/-- Senior secured debt rating B Recovery rating 3 Rating Withdrawn To From $500 mil sr secd term loan facility NR B Recovery rating NR 3 STINSON PETROLEUM: $3.5MM Transfer to Community Bank Not Avoidable ------------------------------------------------------------------ Stinson Petroleum Company engaged in a check-kiting scheme using checking accounts Stinson held with Community Bank and Bank of Evergreen. Stinson perpetrated the kite by depositing worthless checks into its account with Community that were drawn on its account with Evergreen while simultaneously depositing worthless checks into the latter that were drawn on the former. By circulating worthless checks between the two accounts, and by taking advantage of provisional credits that both banks extended to deposits not yet collected, Stinson created the impression of a positive account balance while substantial debt accrued. As kites are prone to do, the scheme eventually collapsed. Evergreen was the first to uncover the kite, so it did not incur any losses. Community, by contrast, was not so lucky. Community ultimately determined that, because of the kite, Stinson accumulated an overdraft of between $6 million and $7 million in its account with Community. Community met with Stinson and Evergreen and agreed to receive two wire transfers worth $3.5 million from Stinson's Evergreen account. Stinson subsequently filed for bankruptcy under Chapter 11, and a committee of unsecured creditors commenced an adversary proceeding against Community seeking to avoid the two wire transfers as avoidable preferences under 11 U.S.C. Sec. 547(b). The bankruptcy was later converted to Chapter 7, and bankruptcy trustee Derek A. Henderson was substituted as the plaintiff. Ultimately, both the bankruptcy court and the district court concluded that the wire transfers were not avoidable preferences. The bankruptcy court found that, because Community granted provisional credit to Stinson and because Stinson took advantage of this credit, Community held a perfected, first-priority security interest in the 18 returned checks and their proceeds and that the Chapter 7 Trustee had failed to prove that the transfers were not intended to satisfy Community's security interest. The bankruptcy court ruled that the wire transfers did not deplete Stinson's bankruptcy estate and did not improve Community's position relative to how the bank would have fared via Chapter 7. The district court affirmed the bankruptcy court's ruling. The district court observed that the Chapter 7 Trustee had the burden of proving that Community would have received less than $3.5 million via Chapter 7 liquidation and concluded that "the record contains scant evidence to that effect." The Chapter 7 Trustee timely appealed. According to the U.S. Court of Appeals for the Fifth Circuit, given that the Chapter 7 Trustee concedes that Community was a fully secured creditor by operation of section 75-4-210 of the Mississippi Code, the prepetition payment Community received is, as a matter of law, not a preferential transfer avoidable under 11 U.S.C. Sec. 547(b). The Fifth Circuit also held that the relevant inquiry is whether Community, because of the $3.5 million wire transfers, improved its position relative to how well it would have fared in a hypothetical Chapter 7 liquidation. Specifically, the Chapter 7 Trustee has the burden of showing "that the payment enabled the creditor to receive more than the creditor would have received upon liquidation under Chapter 7 of the bankruptcy code." Phrased another way, the Chapter 7Trustee must prove that Community would have received less under Chapter 7. The district court did not improperly assume that Community would have recouped $3.5 million via Chapter 7; rather, the district court did not clearly err in concluding that the Chapter 7Trustee failed to satisfy his burden of proving that Community would not have received at least $3.5 million in a Chapter 7 liquidation. The Fifth Circuit affirmed the lower courts' judgment. The appellate case is, THE UNSECURED CREDITORS COMMITTEE, Plaintiff, v. COMMUNITY BANK, ELLISVILLE MISSISSIPPI, a/k/a Community Bank, Defendant-Appellee, v. DEREK A. HENDERSON, Trustee-Appellant, No. 12-60234 (5th Cir.). A copy of the Court's Jan. 7, 2013 per curiam decision is available at http://is.gd/qKinDBfrom Leagle.com. The appellate panel consists of Circuit Judges Rhesa Hawkins Barksdale, James L. Dennis, and James E. Graves Jr. About Stinson Petroleum Laurel, Mississippi-based Stinson Petroleum Company, Inc., which sold gasoline to convenience stores and other businesses, filed for Chapter 11 (Bankr. S.D. Miss. Case No. 09-51663) on Aug. 4, 2009. Harris Jernigan & Geno, PPLC, represented the Debtor in its restructuring efforts. In its petition, the Debtor estimated assets and debts both ranging from $10 million to $50 million. A committee of unsecured creditors was appointed by the United States Trustee for Region 5 in the Debtor's case. On Dec. 16, 2009, the Debtor's chapter 11 case was converted to a Chapter 7 case, and Derek A. Henderson was appointed as Chapter 7 Trustee. STOCKTON, CA: City Officers Protected From Lawsuit -------------------------------------------------- Bankruptcy Judge Christopher M. Klein has ruled that the additional automatic stay imposed by 11 U.S.C. Sec. 922(a) protects city officers at Stockton, Calif., from actions to enforce a claim against the city. The City of Stockton's fired Fire Chief is suing the City, the City Manager, and the Deputy City Manager on a variety of federal and state theories to redress his termination. Conceding that the automatic stay under Sec. 362 protects the City from his wrongful discharge lawsuit, he wants to keep proceeding against the City Manager and Deputy City Manager during the chapter 9 case. "For the same reason that geometry holds that the shortest distance between two points is a straight line, the additional automatic stay of [Sec.] 922(a), rather than the [Sec.] 362 automatic stay, directly protects municipal officers in chapter 9 cases without the need for a court to perform the mental gymnastics required to extend the [Sec.] 362 automatic stay," said Judge Klein. A copy of the Court's Dec. 18, 2012 decision is available at http://is.gd/hJgYS8from Leagle.com. About Stockton, Calif. The City of Stockton, California, filed a Chapter 9 petition (Bankr. E.D. Calif. Case No. 12-32118) in Sacramento on June 28, 2012, becoming the largest city to seek creditor protection in U.S. history. The city was forced to file for bankruptcy after talks with bondholders and labor unions failed. Stockton estimated more than $1 billion in assets and in excess of $500 million in liabilities. The city, with a population of about 300,000, identified the California Public Employees Retirement System as the largest unsecured creditor with a claim of $147.5 million for unfunded pension costs. In second place is Wells Fargo Bank NA as trustee for $124.3 million in pension obligation bonds. The list of largest creditors includes $119.2 million owing on four other series of bonds. The city is being represented by Marc A. Levinson, Esq., and John W. Killeen, Esq., at Orrick, Herrington & Sutcliffe LLP. The petition was signed by Robert Deis, city manager. Mr. Levinson also represented the city of Vallejo, Calif. in its 2008 bankruptcy. Vallejo filed for protection under Chapter 9 (Bankr. E.D. Calif. Case No. 08-26813) on May 23, 2008, estimating $500 million to $1 billion in assets and $100 million to $500 million in debts in its petition. In August 2011, Vallejo was given green light to exit the municipal reorganization. The Vallejo Chapter 9 plan restructures $50 million of publicly held debt secured by leases on public buildings. Although the Plan doesn't affect pensions, it adjusts the claims and benefits of current and former city employees. Bankruptcy Judge Michael McManus released Vallejo from bankruptcy on Nov. 1, 2011. Bloomberg News has noted that Stockton is trying to become the first American city since the Great Depression to use bankruptcy to force bondholders to take less than the principal they're owed. Vallejo, California, exited bankruptcy after persuading lenders to take less interest and extend repayment. The Bankruptcy Court in Sacramento, California, will hold a trial-like hearing in January over whether Stockton is legally entitled to remain in bankruptcy. SUNCOKE ENERGY: Moody's Assigns 'Ba3' CFR/PDR; Outlook Stable ------------------------------------------------------------- Moody's Investors Service assigned a Ba3 corporate family rating and probability of default rating to SunCoke Energy Partners, LP (SXCP), a subsidiary of SunCoke Energy Inc., and a B1 rating to $150 million in senior unsecured notes to be issued by SXCP and its wholly owned subsidiary -- SunCoke Energy Partners Finance Corp. -- as a co-issuer. An SGL-2 speculative grade liquidity rating was also assigned to SXCP. The rating outlook is stable. This is the first time Moody's has rated SXCP. At the same time, Moody's affirmed SunCoke Energy's (SunCoke) Ba3 corporate family and probability of default ratings, its Ba1 senior secured bank facility ratings, its B1 senior unsecured rating and its speculative liquidity grade rating of SGL-2. Its rating outlook is stable. SXCP, a newly formed Master Limited Partnership (MLP) is acquiring a 65% interest in certain of SunCoke's coke making facilities and related assets. The specific assets to be acquired are Haverhill 1, which provides coke to subsidiaries of ArcelorMittal (CFR Ba1 - negative outlook), which agreement is guaranteed by ArcelorMittal USA. SunCoke is also contributing Haverhill 2 and Middletown, each of which has offtake agreements with AK Steel (B2 CFR, negative outlook). These facilities have annual capacity of approximately 1.7 million tons of coke. Following completion of the transaction and a planned Initial Public Offering (IPO), SunCoke will own approximately 55.9% of SXCP with public unit holders holding the balance. SunCoke will also hold a 2% general partner interest. SunCoke will continue to own the Indiana Harbor (85% interest) and Jewell coke making facilities, which have long term agreements with ArcelorMittal as well as the Granite City facility, which has a long term contract with U.S. Steel (Ba3 corporate family rating, stable outlook). In addition, SunCoke operates a coke making facility in Brazil on behalf of affiliates of Arcelor Mittal and through its Jewel and Harold Keene Coal Co (HKCC) companies, has coal mining operations, principally metallurgical (met) coal, that support the met coal requirements for some of its coke making facilities. SunCoke, remaining business after the establishment of the MLP will have approximately 2.6 million tons of domestic coke making capacity. Consolidated capacity will be approximately 4.3 million tons. Proceeds from the initial equity issue and the note issue by SXCP will be used for a distribution to SunCoke of approximately $36 million for reimbursement of expenditures related to the assets being acquired. In addition, roughly $225 million will be used to repay a term loan assumed by SXCP from SunCoke. The balance will be used to fund specified environmental expenditures, sales discounts owed to customers, working capital replenishment and fees and expenses. Overall, on a consolidated basis, the transaction remains relatively debt neutral on the existing asset and earnings base. Ratings Rationale The Ba3 CFR for SXCP reflects the modest leverage for the entity based upon a pro-forma 2011 debt/EBITDA ratio of approximately 2.4x. In addition, Moody's believes that SXCP can generate sustainable EBITDA levels of at least $80 million, which would result in a moderate leverage position as measured, pro forma for the $150 million debt issue, by a debt/EBITDA ratio of approximately 1.8x. Improvement in earnings generation is reflective of the increased profitability derived from the Middletown contract with AK Steel, now that this operation has reached its full run rate level. The rating also reflects the long-term contract nature of SXCP's business model and ability to pass through most material costs including coal purchases (subject to specified coal-to-coke yields being met), operating and maintenance costs, and coke transportation costs among others. These contracts provide a certain level of stability to revenue and earnings generation. The rating also considers the importance of the operations for which coke is provided to both AK Steel and ArcelorMittal. The rating is constrained by SXCP's limited diversity and high customer concentration as well as by the nature of the MLP structure. The partnership agreement will require the distribution of all available cash, as defined, thereby limiting cash available for reinvestment in the business. Consequently, it is likely that additional financing will be necessary for meaningful strategic growth. Given the initial upfront investment required for new coke making facilities, this could be substantial. SXCP's ability to grow while maintaining an appropriate leverage and liquidity position will be key considerations in the rating going forward. SXCP's speculative grade liquidity rating of SGL-2 reflects the company's good liquidity position, supported by its cash flow generating capacity and a $100 million secured revolving credit facility maturing in 2018. While the company's liquidity is viewed as sufficient to support ongoing requirements, growth capital expenditures will need to be funded externally given that all excess cash will be distributed. The B1 rating on the senior unsecured notes reflects, under Moody's loss given default methodology, their weaker position in the capital structure behind the $100 million secured revolving credit facility. SunCoke's Ba3 corporate family rating reflects its moderately improved leverage position following a partial reduction in its term loan with proceeds received from SXCP. On a consolidated basis and based upon the company's EBITDA guidance ranges for 2013, Moody's expects leverage, as measured by the debt/EBITDA ratio to remain within a 3.0x to 3.3x range. As with SXCP, SunCoke's rating also reflects the long-term contract nature of its business model and ability to pass through most material costs including coal purchases (subject to specified coal-to-coke yields being met), operating and maintenance costs, and coke transportation costs among others. These contracts provide a certain level of stability to revenue and earnings, while distributions from SXCP will further augment earnings. Again, the limited customer diversity and substantive capital requirements for strategic growth are constraints to the rating. In addition, geological, operating and market conditions are proving challenging to the coal operations. SunCoke's SGL-2 speculative grade liquidity rating reflects the company's cash generating ability, which is further augmented by a $150 million secured revolving credit facility currently expiring in 2016 but being extended to 2017 in conjunction with the transactions contemplated by the MLP. Given the recently announced joint venture with VISA Steel in India for a coke making facility, and the initial investment required of approximately $67 million, negative free cash flow of roughly a similar amount is expected in 2013. This can be accommodated from the company's cash balances, which the company indicates are roughly $240 million at year-end 2012. The B1 rating on the senior unsecured notes reflects, under Moody's loss given default methodology, their weaker position in the capital structure relative to the secured revolver. The stable outlook for SXCP and SunCoke reflects Moody's expectation for stability in revenues and earnings at both companies due to their comparable business models and ability to pass through a majority of costs. The outlook also anticipates that the businesses will continue to be managed in such a way that solid liquidity is maintained and growth and distribution objectives are balanced with the use of debt in the capital structure. The outlook for SunCoke also anticipates that the company's metallurgical coal operations will continue to face challenges although actions taken by the company to improve operating efficiencies together with solid performance in the coke operations will result in performance and metrics appropriate for the rating. What Could Change The Rating -- UP Given the limited history of SunCoke and now SXCP as standalone companies, challenges facing the coal operations, and likely growth investment requirements, an upgrade is unlikely over the next 12 to 18 months. However, if the company is able to achieve and sustain EBIT-to-interest of 3.75 times, debt-to-EBITDA of 3.75 times and free cash flow-to-debt of at least 6%, the rating could be favorably impacted. What Could Change The Rating -- DOWN Should EBIT-to-interest track below 3.0 times, debt-to-EBITDA exceed 4.5 times, free cash flow be consistently negative, or liquidity tighten, the rating could be negatively impacted. The principal methodology used in rating SunCoke was the Global Steel 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. SUNCOKE ENERGY: S&P Assigns 'BB-' CCR, Stable Outlook ----------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'BB-' corporate credit rating to Lisle, Ill.-based SunCoke Energy Partners L.P. (SXCP), a master limited partnership (MLP) in the metals and mining sector. The outlook is stable. S&P also assigned a 'BB-' issue-level rating (same as the corporate credit rating) to the proposed $150 million senior unsecured notes due 2020 co-issued by SXCP and SunCoke Energy Partners Finance Co. The recovery rating on the proposed notes is '3', indicating S&P's expectation for meaningful (50% to 70%) recovery in the event of payment default. The notes are being issued under Rule 144A without registration rights. (For the complete recovery analysis, please see the recovery report on SunCoke Energy Inc. and SunCoke Energy Partners L.P., to be published on RatingsDirect shortly following the release of this report.) "We base our rating on SXCP on a consolidated approach with it and its general partner, parent SunCoke Energy Inc.," said Standard & Poor's credit analyst Marie Shmaruk. Under the proposed structure, SXCP will take a 65% interest in SXC's Haverhill and Middletown coke-making facilities, located in Franklin Furnace, Ohio, and Middletown, Ohio, respectively. SXC plans to own a general partner interest in SXCP, as well as all of the MLP incentive distribution rights and a portion of units representing limited partner interests in SXCP. Absent what S&P views as SXC's strong level of support, SXCP's stand-alone credit profile is slightly lower at 'B+'. The rating reflects S&P's view of SXCP and SXC's "weak" business risk and "aggressive" financial risk. S&P's view of the business takes into consideration that, as an independent producer of high- grade metallurgical (met) coke, SXCP has limited operating diversity, very high customer concentration, cyclical demand from customers, high capital requirements for new facilities, and a limited operating diversity. "The stable outlook reflects our view that SXCP and SXC will maintain consolidated leverage between 3x and 4x and FFO-to-debt of above 15%, metrics we consider to be in line with the 'BB-' rating. We also expect liquidity to remain adequate to both fund the MLP's cash distributions and the company's planned expansion projects," S&P said. "We would lower the rating if consolidated leverage increased and stayed above 4x, which could happen if coal cash margins decline further, and if the margins realized on its domestic coke business decline due to operating inefficiencies. This could occur if SXC is unable to meet its annual operating budget at any given facility, if steel markets deteriorate and the company's customers push back on their contracts, or if its capital projects face delays or cost overruns. A negative rating action could also occur if SXCP's ongoing cash distribution requirements cause the company to increase its debt levels. In addition, we could lower the rating on SXCP if we take a negative rating action on its parent, SXC," S&P noted. An upgrade is unlikely in the coming months, given SXCP and SXC's size, scope, and aggressive capital plans. An upgrade may also be constrained in the near term by SXCP's ongoing cash distribution requirements. However, longer term, we would consider a positive rating action if the company demonstrates steady operating performance, can maintain its operations to finance its growth initiative without adding significant leverage, and is able to diversify its customer base and operations. TEMPEL STEEL: S&P Cuts Corporate Credit Rating to 'B-' ------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Chicago, Ill.-based steel laminations producer Tempel Steel Co. to 'B-' from 'B'. At the same time, S&P placed the ratings on CreditWatch with negative implications. "The downgrade reflects weaker-than-expected operating performance," said Standard & Poor's credit analyst Carol Hom. "We expect that Tempel Steel will maintain limited headroom under covenants in the coming quarters. Free cash flow generation has been weaker than we expected, and we believe it could be negative in 2013 if operating fundamentals do not improve," S&P said. The ratings reflect Tempel Steel's "highly leveraged" financial risk profile and its "vulnerable" business risk profile. The business risk profile stems from Tempel Steel's limited business line diversity, the highly competitive and capital intensive nature of its business, and the company's exposure to steel price volatility. "We believe credit measures will remain weak in 2013 against the backdrop of a fragile economic recovery," said Ms. Hom. "We believe the company remains susceptible to volatility in steel prices that is inherent to its market, and to the potential for a continuation of volume declines that occurred during the third quarter of 2012." Standard & Poor's views Tempel Steel's liquidity as "less than adequate." Covenant headroom under the company's revolving credit facility is limited, and we believe the company may need to access the facility to meet its operating and financial needs, including working capital requirement and interest expenses. We view the company's management and governance profile as "fair." "The ratings are on CreditWatch with negative implications. We aim to resolve the CreditWatch listing within 90 days. We plan to hold discussions with management soon and reassess operating and financial prospects for 2013. The CreditWatch listing reflects the potential for a downgrade if we do not expect operating performance to improve sufficiently to provide adequate headroom under covenants that the company amended in late 2012. We could also lower the rating if we believe the company is unlikely to generate positive free operating cash flow and unlikely to improve credit measures from currently weak levels. We could affirm the ratings if we anticipate covenant headroom will remain adequate (on track to expand to about 10% or more), cash flow will be positive, and credit measures will not deteriorate further. THQ INC: Judge Approves Jan. 22 Auction for Assets -------------------------------------------------- THQ Inc. said it received approval from the U.S. Bankruptcy Court on the calendar to conduct bidding and complete the sale of the company following an agreement reached between the potential buyer and the committee representing unsecured creditors. The new calendar now calls for all bids to be received by Jan. 22, 2013 at 9:00 a.m. ET. The auction will be held later that day at 3:00 p.m. The hearing on the sale will be held at 9:30 a.m. Jan. 23, and the closing will occur Jan. 24. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the bankruptcy judge at a hearing Jan. 4 refused to allow videogame developer THQ Inc. to sell the business 21 days after filing for Chapter 11 reorganization. U.S. Bankruptcy Judge Mary F. Walrath ruled at the hearing Jan. 4 that THQ hadn't undertaken sufficient pre-bankruptcy marketing to justify a quick sale. The judge also declined to give final approval for a loan that would have locked in a quick-sale schedule. The new auction schedule was approved at a hearing on Jan. 7. Judge Walrath said the video-game developer can hold an auction 35 days after the filing for Chapter 11 reorganization. Objection to the original terms of the sale was lodged by the U.S. Trustee and an ad hoc group of unsecured noteholders. The noteholders said that an "unjustifiably accelerated sale timeline" was "designed specifically to thwart potential bidders from stepping forward." Judge Walrath also approved $37.5 million in financing for THQ's reorganization on Jan. 7. Mr. Rochelle notes that a different Delaware judge allowed Digital Domain Media Group Inc. in September to hold an auction and sell the business 10 days after filing bankruptcy. Clearlake Capital Group, L.P.'s bid for the entire company as the opening bid for an orderly auction process. When THQ's bankruptcy began, Clearlake was already under contract to buy the company at an advertised price of about $60 million. Clearlake is willing to pay $6.65 million in cash, along with a $10 million seven-year note bearing 2% interest. In addition, Clearlake would assume about $15 million in debt while paying off financing for the Chapter 11 effort estimated to be $29 million. THQ's unsecured notes last traded Jan. 7 for 16.375 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The price represents a 36.5% increase since the date of bankruptcy. About THQ THQ Inc. (NASDAQ: THQI) -- http://www.thq.com/-- is a worldwide developer and publisher of interactive entertainment software. The Company develops its products for all popular game systems, personal computers, wireless devices and the Internet. Headquartered in Los Angeles County, California, THQ sells product through its network of offices located throughout North America and Europe. THQ Inc. and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-13398) on Dec. 19, 2012. THQ has a deal to sell its video-game development business to Clearlake Capital Group LP for about $60 million, absent higher and better offers at an auction proposed for January 2013. Clearlake and existing lender Wells Fargo Capital Finance LLC are providing $10 million of DIP financing. Attorneys at Young Conaway Stargatt & Taylor, LLP and Gibson, Dunn & Crutcher LLP serve as counsel to the Debtors. FTI Consulting and Centerview Partners LLC are the financial advisors. Kurtzman Carson Consultants is the claims and notice agent. TORM A/S: Board Reports on Restructuring, Debt Moratorium --------------------------------------------------------- In connection with TORM A/S' Extraordinary General Meeting that was set to be held on Jan. 9, TORM published the Board of Directors' report on the restructuring of TORM which was completed on November 5, 2012 and related equity transactions including acquisition of treasury shares. BOARD OF DIRECTORS' REPORT BY THE CHAIRMAN OF THE BOARD N. E. NIELSEN Introduction "I am going to elaborate on the restructuring agreement under this item [Wednes]day. The agreement ensures TORM a substantial deferral of its bank credit facilities, new liquidity and significant cost savings from the restructuring of the fleet of chartered-in vessels, which in itself is positive. This allows TORM to become cash flow positive, even at the current freight rate levels. The Company has thereby been given time to secure its future, long-term capital structure." "I will provide a brief summary of the events leading up to the Company's Annual General Meeting held on April 23, 2012, at which I reported on the conditional agreement in principle between the bank group, the time charter partners and TORM." The summary will be followed by a report on the most significant events leading up to the completion of the final restructuring agreement on November 5, 2012 and the subsequent listing prospectus. Entering the conditional agreement in principle Since 2010, TORM has worked on improving the Company's capital structure and liquidity situation by seeking to tap into different corporate bond markets and through other measures. Mainly due to the Company's strategic position as a spot-oriented company, low freight rates and the generally challenging conditions in the capital markets, TORM was unable to obtain this type of financing. With the continuously low freight rates and cyclically low vessel values since fall 2011, TORM's Board of Directors did not find it prudent to inject new equity in the Company at the time without substantial amendments to the existing credit facilities. In October 2011, TORM therefore presented a proposal to the banks that combined an equity injection of US$100 million with subscription rights for existing shareholders and a bank moratorium. The proposal was not accepted by the banks, but the Company achieved a standstill agreement with the banks, which was extended several times during 2012 to ensure that a long-term, comprehensive financing solution was found and implemented. Throughout the whole process, TORM's Board of Directors and Executive Management have worked on avoiding bankruptcy or other in-court solutions in Denmark or abroad in order to best preserve value and put all stakeholders in the best possible position. However, the process also involved detailed negotiations and preparations for a suspension of payments, including under the US "Chapter 11" rules. In the spring of 2012, TORM also succeeded in obtaining conditional offers from reputable, international shipping investors as well as institutional investors, who were prepared to make new investments in the Company provided that substantially amended bank terms were agreed. However, the banks chose not to enter into substantive negotiations with any of these investors as they did not find the investor proposals sufficiently attractive. Since the fourth quarter of 2011 the Company's liquidity situation has been very tight, and the total bank debt could be called at any time at the banks' discretion due to non-compliance with certain financial covenants. Through negotiations with the bank group during 2012 it became clear that the only achievable solution with the bank group would not provide immediate debt relief in the balance sheet nor any new liquid equity contribution. A solution could be found where TORM gained time for a potential general market improvement in order to best preserve shareholder value. Therefore, TORM signed a conditional agreement in principle with the banks and the major time charter partners regarding a long-term financing solution as stated in announcement no. 14 dated April 4, 2012 and elaborated in announcement no. 20 dated April 23, 2012 and at the Annual General Meeting. Completion of the restructuring agreement The conditional agreement in principle formed the basis of the restructuring agreement, which is very comprehensive and contains a number of supplementary agreements with individual parties, including amendments to TORM's existing financing agreements. During the period from April to November 2012, the final contractual framework was detailed, documented and completed by the banks, the group of time charter partners and the Company. This prolonged process, including the period leading up to this, was very costly to the Company, but it was preferable to the alternative. I will now explain the details of the restructuring. Content of the restructuring agreement - Banks New facility As part of the restructuring, TORM has secured new working capital of US$100 million until September 30, 2014 with first lien in the majority of the Company's vessels. Amended terms and conditions Through the implementation of the restructuring, the Company's group of banks has aligned key terms and conditions and financial covenants across all existing debt facilities, and all maturities on existing credit facilities have been adjusted to December 31, 2016. The bank debt remained unchanged at US$1,794 million as of September 30, 2012. The book value of the fleet excluding vessels under finance leases as of September 30, 2012 was US$2,167 million. TORM's quarterly impairment test as of June 30, 2012 supported the carrying amount of the fleet based on the same test and principles as used by the Company since the Annual Report for 2009. Based on broker valuations, TORM's fleet excluding vessels under finance leases had a market value of US$1,316 million as of September 30, 2012, which was US$851 million lower than the carrying amount. The recognized equity amounted to US$358 million as of September 30, 2012. Going forward, interest on the existing debt will only be paid if the Company has sufficient liquidity, and otherwise the remainder will be accumulated until at least June 30, 2014 with potential extension until September 30, 2014. On average the interest margin will increase to approximately 240 basis points on the bank debt. The Company will pay interest on the new working capital facility until September 30, 2014. The new financing agreements provide for a deferral of installments on the bank debt until September 30, 2014, in which period rescheduled principal amortizations will only be payable if the Company has sufficient liquidity. Provided that the Company generates sufficient positive cash flows, certain cash sweep mechanisms will apply. Annualized minimum amortizations of US$100 million will commence with effect from September 30, 2014 until December 31, 2016. If vessels are sold, the related secured debt will fall due. Changed legal group structure As part of the restructuring agreement, TORM has implemented substantial changes to the Company's internal legal group structure, including transfers of vessels to separate legal entities in Denmark and Singapore based on the individual loan facilities. All legal entities are ultimately owned by TORM A/S. New financial covenants New financial covenants will apply uniformly across the bank debt facilities and will include: -- Minimum liquidity: Cash plus the available part of the new US$100 million working capital facility must exceed US$50 million to be tested from December 31, 2012. This will later be adjusted to a cash requirement of US$30 million by September 30, 2014 and US440 million by March 31, 2015. -- Loan-to-value ratio: A senior loan tranche of US$1,020 million has been introduced out of the total bank debt of US$1,793 million as of June 30, 2012. The senior tranche must have an initial agreed ratio of loan to TORM's fleet value based on broker valuations (excl. vessels under finance leases) at 85% to be confirmed from June 30, 2013. This will gradually be stepped down to 65% by June 30, 2016. The remaining bank debt of US$773 million has been divided into two additional debt tranches, both with collateral in the Company's fleet. -- Consolidated total debt to EBITDA: Initial agreed ratio of a maximum of 30:1 to be tested from June 30, 2013, gradually stepped down to a 6:1 ratio by June 30, 2016. -- Interest cover ratio: Agreed EBITDA to interest ratio of initially a minimum of 1.4x by June 30, 2014, gradually stepped up to 2.5x by December 31, 2015. Additional material covenants The terms of the credit facilities will include a catalogue of additional covenants, including amongst others: -- A change-of-control provision with a threshold of 25% of shares or voting rights. -- No issuance of new shares or dividend distribution without consent from the banks. Specific information on option rights for banks As part of the restructuring, certain specific option rights were agreed that may result in a sales process to be defined by TORM prior to January 31, 2013 for up to 22 vessels and repayment of the related secured debt. The options given to three bank consortiums, which are subject to certain agreed terms and conditions, have a duration until July 31, 2014. One bank consortium has given notice on five of the vessels. TORM will seek to maintain the vessels' association with the Company. I will revert to this subject later. Content of the restructuring agreement - Chartered-in tonnage As part of the restructuring agreement, the time charter partners have accepted that the existing time charter contracts will either be permanently changed and rates will be aligned to market level with upside/downside split or allow for termination of the contracts with return of vessels. These amendments will result in a significant reduction of the Company's future time charter commitments. TORM estimates that the changes in time charter contracts correspond to a total positive nominal mark-to-market impact on TORM of approximately US$270 million. A small number of owners of chartered-in tonnage do not take part in the restructuring. As part of the restructuring, TORM will return 22 vessels to the time charter partners ahead of the original contract schedule. Effective from November 5, 2012, the date of the restructuring, TORM's future time charter commitments were reduced by approximately US$590 million, from US$818 million to US$228 million, due to the freight rates being aligned to market level, as mentioned, or by redelivery of the vessels. As a result of the agreement, the Tanker Division has reduced the expected average time charter costs for the first quarter 2013 from US$/day 18,848 to US$/day 12,141, equal to a 36% reduction. In the same period, the Bulk Division will reduce the average time charter costs from US$/day 16,286 to US$/day 13,755, equal to a 16% reduction. Overall, the restructuring agreement has provided TORM with a moratorium on its bank debt and new liquidity, and it has reduced the time charter costs to the prevailing market level, against the banks and the time charter partners becoming shareholders of TORM holding an aggregate of 90% of the shares. New ownership structure as a result of the restructuring agreement The receivable that the time charter partners were given as a consequence of the amended contractual conditions as well as a fee to the banks, estimated at a total net present value of US$200 million, has been converted into shares in the Company, corresponding to 90% of the Company. In this way, the existing shareholders retained an ownership interest of 10.0% against the 7.5% announced at the Annual General Meeting held in April 2012. The equity allocation between the banks and the time charter partners has been agreed between them and is part of the restructuring agreement. "The conversion into new share capital will be described shortly. First, however, I will explain the basis of the Board of Directors' resolution to accept the restructuring agreement including the supplementary agreements. The basis of the Board of Directors' decision Since September 2011, TORM has retained the assistance of the international financial advisor Evercore Group LLC. In addition, the Board of Directors has obtained a valuation opinion letter from the international investment advisor Moelis & Company UK LLP and a valuation report from the accounting firm Ernst & Young with respect to the debt conversion and the issue of the new shares to the banks and the time charter partners in connection with the restructuring. Having carefully considered the financial and operational position of the Company and the opinion letter from Moelis & Company UK LLP, the Board of Directors assessed that it would be in the best interests of the Company, its shareholders, creditors, other stakeholders and other interested parties to issue the new shares in the Company against conversion of the total consideration of USD 200 million from time charter partners and banks to allow TORM to continue its operations without bankruptcy or similar in-court proceedings. The new shares were issued under the authorization given to the Board of Directors at the Annual General Meeting held on April 23, 2012." "I will now provide an account of the changes to the share capital that took place on November 5, 2012. Capital decrease At TORM's Annual General Meeting held on April 23, 2012 it was decided to reduce the share capital of TORM by a nominal value of DKK363,272,000 from DKK364,000,000 nominal value to DKK728,000 nominal value by transfer of the reduction amount to a special reserve fund and by changing the nominal amount per share (denomination) from DKK5.00 to DKK0.01 in accordance with section 188(1)(3) of the Danish Companies Act. One of the reasons for this was that new shares could not be issued at a price below the nominal value. Accordingly, TORM was unable to issue new shares prior to the capital reduction, as the share price was below DKK5. By publication of the resolution to reduce the Company's share capital via the IT system of the Danish Business Authority on April 23, 2012, TORM's creditors were notified of the resolution and given the statutory four-week period for filing claims from 23 April 2012 under section 192(1) of the Danish Companies Act. By the end of the statutory creditor notice period, TORM had not received notice of any claims outside the ordinary course of business which were not waived or settled in connection with the completion of the restructuring. On November 5, 2012, as part of the restructuring, the Board of Directors decided to complete the capital reduction pursuant to the resolution passed at TORM's Annual General Meeting held in April 2012. Capital increase At TORM's Annual General Meeting held on April 23, 2012 the Board of Directors was also among others also authorized to increase the share capital of TORM by up to a total nominal value of DKK2,400,000,000 by payment in cash, conversion of debt or contribution of assets other than cash without pre-emptive subscription rights for the existing shareholders at a rate discounted to the market price, as per article 2.14 of the Articles of Association. Following the decision to reduce the share capital as described above, the Board of Directors decided to exercise the authorization in article 2.14 of the Articles of Association to increase the share capital of TORM by a nominal value of DKK6,552,000 by issuance of 655,200,000 shares of a nominal value of DKK 0.01 each. The capital increase comprised a directed issue of new shares by conversion of debt of DKK1,174,100,581 in total (approximately US$200 million) pursuant to the terms of the restructuring agreement and supplementary agreements to TORM's banks and time charter partners or their assignees. The capital increase was fully subscribed for the aggregate of 655,200,000 new shares of a nominal value of DKK0.01 each, at a subscription price of DKK1.79 per share of DKK nominal value 0.01 each (approximately US$0.31 per share). The new shares issued corresponded to 90% of TORM's registered share capital and votes following the registration of the capital increase with the Danish Business Authority. TORM's issued share capital now amounts to DKK 7,280,000 nominal value, equal to 728,000,000 shares of a nominal value of DKK0.01 each. The same rights apply to the new shares as to the existing shares including that the new shares are also negotiable instruments, and no special restrictions apply to the transferability of the new shares under Danish company law. TORM's existing share option programs were subsequently adjusted in accordance with the capital increase, but exercise prices still remain significantly higher than the current share price, and the share option programs are therefore "under water". Acquisition of own shares On September 27, 2012, in connection with the restructuring, TORM signed a separate agreement to acquire own shares from certain time charter partners, who were also parties to the restructuring. The agreement concerned the acquisition of 3,739,840 shares in TORM with an aggregate nominal value of DKK37,398.40, corresponding to 0.5% of TORM's total share capital. The shares were transferred immediately after the completion of TORM's restructuring on November 5, 2012, against the release of a claim of an estimated value of US$0.6 million according to independent valuation. TORM's shares closed at DKK2.72 and DKK2.56 on NASDAQ OMX Copenhagen A/S on the date of the completion of the agreement and on the date of the share transfer, respectively. Following prolonged negotiations, and supported by statements from various advisers, the Board of Directors assessed that the agreement to acquire own shares was the Company's only real opportunity of securing participation by the involved parties in the overall restructuring and thus avoid the serious and imminent detrimental effects to TORM and its stakeholders of a potential bankruptcy or other insolvency proceedings, cf. section 199 of the Danish Companies Act. Listing prospectus The new shares were issued and registered with the Danish Business Authority on November 5, 2012 at the completion of the restructuring. The shares were issued under a temporary ISIN code, which was combined with the ISIN code for the existing shares after the publication of a listing prospectus in early December 2012. This prospectus describes in detail the Company's current situation after the restructuring agreement and provides an in- depth description of risk factors. Among other things, the prospectus states that with the restructuring TORM has gained time for a potential market improvement and to secure the Company's future, long-term capital structure. However, TORM currently has a considerable bank financing and in the absence of substantial market and rate improvements TORM will most likely continue to generate losses, thus eroding the equity. Moreover, the existing capital structure does not provide the necessary basis for the financing of TORM's operations and growth in the medium to long term, and additional financing, remission of debt or alternative actions will be required. Based on broker valuations, the market value of TORM's fleet, excluding finance leases, of US$1,316 million at September 30, 2012 was significantly lower than TORM's bank debt of US$1,906 million at the completion of the restructuring. If the underlying market conditions do not improve, there is a risk that the gap between the debt and the fleet market value will widen, simply because the vessels age. In case the freight rates remain low over a longer period, there will be a considerable risk of an impairment of the Company's fleet values. The same may apply in case the assumptions for the quarterly impairment test are changed. This is described in detail in note 2 of the Company's quarterly reports as well as in the listing prospectus. The prospectus also describes that TORM's financing agreements entered into in connection with the restructuring contain financial and operational covenants. If the difficult market conditions experienced during 2012 continue, TORM expects that the credit agreements may be breached at the time of testing of the financial covenants on June 30, 2013 and, under certain scenarios, before or after this date. In case of a risk of breach of covenants, TORM plans to initiate renegotiations with the secured lenders to obtain the necessary waivers and amendments. The prospectus also provides a detailed description of the individual option rights that I mentioned earlier for the lenders under three of the Company's bank facilities to request the sale of vessels being financed by the bank facilities in question. The options relate to bank facilities financing thirteen, five and four vessels, respectively. Under the options, the Company will be required to propose a sales strategy to be agreed with the relevant lenders for the vessels comprised by the options. The lenders under the bank facility financing five vessels have exercised their option and thus initiated the process set out in relation to these five vessels. The total outstanding debt relating to the bank facility financing five vessels was US$121 million as of the restructuring. The carrying amount of the five vessels was US$210 million at September 30, 2012 and the market value based on broker valuations was US$141 million at September 30, 2012. The average age of the five vessels was two years as of the restructuring. Based on the above-mentioned broker valuations, a sale of the five vessels would result in P&L loss of approx. US$69 million. The complete listing prospectus is available at the Company's Web site http://www.torm.com Substantial contact with public authorities As mentioned earlier, completing the contractual framework and finalizing preparations for the technical completion of the restructuring agreement has been a long, drawn-out process. Due to the complexity of the agreements, it was necessary to maintain substantial concurrent contact with, in particular, the Danish Business Authority, the Danish Securities Council and the Danish FSA, which have contributed very efficiently. For example, the banks and certain of the time charter partners behind the restructuring of TORM requested the Danish FSA to grant an exemption from the Danish rules on mandatory takeover bids in line with the advance indications to this effect previously received from the FSA. On December 3, 2012, TORM was informed that the FSA had issued exemption from the obligation to submit a takeover offer to the shareholders in TORM. The Danish Securities Council was asked to make a ruling on the planned accounting treatment of the restructuring with the Company's banks and time charter partners. The ruling is described in a separate company announcement dated November 15, 2012, and its net effects in the fourth quarter of 2012 are as follows: The capital increase of US$200 million by conversion of debt will be recognized as an increase in equity. A net loss of approx. US$150 million mainly related to cancelled time charter agreements (operating leases) and finance lease time charter agreements will be recognized in the income statement. Accordingly, the net impact on equity is an increase of US$50 million. There is no impact on liquidity. TORM hereafter forecasts a loss before tax for 2012 of US$500-530 million including the accounting effects of the restructuring and excluding further vessel sales and potential impairment charges and any consequences if the sales options are exercised. The significance of freight rates for TORM's future As everybody is well aware, shipping is a cyclical industry with very volatile freight rates. Looking back at the past decade, it was characterized by major freight rate fluctuations which gave us some five years with very high earnings, but also the past four years with very low freight rates resulting in significant losses. If the difficult tanker and bulk market conditions experienced in 2012 continue for an extended period, the Company expects to breach the new financial covenants during the course of 2013. If, however, the recent freight rate levels seen in the product tanker market in the fourth quarter of 2012 are maintained over a number of years, the Company will be able to meet its new financial covenants and in the future be able to service its debt as it falls due. If freight rates reach the ten-year historical average, TORM will be in a position of generating profits and it will be able to make considerable repayments on its bank debt. Simply put: With a substantial and fast improvement in freight rates, TORM will be able to service all its debt. Alternatively, a future agreement with TORM's lenders regarding a significant change in the capital structure of the Company is a necessity. TORM going forward The comprehensive restructuring agreement provides a financial safety net under TORM. This is in the interest of all concerned. The shareholders avoid losing all their assets . The banks avoid incurring the major losses that a potential bankruptcy would entail. TORM will remain a going concern based on the existing employees. A group of owners consisting of Nordic and international banks with large ownership interests can only be seen as an asset for the Company. At the beginning of 2014, TORM's owned fleet consisted of 65 product tankers and two dry bulk vessels. In addition to the owned vessels, TORM had chartered-in 12 product tankers and 28 dry bulk vessels. "TORM will once again be able to focus 100% on operations and its collaboration with customers and other important stakeholders. TORM has thus gained time to await improved market conditions and freight rates and to secure a final capital structure solution. "I am confident that, under the new ownership, with a new Board of Directors and a continuously dynamic management and staff in Denmark, abroad and onboard vessels, TORM will be able to define a new strategy that will ensure the Company's ability to benefit from the economic recovery, when it comes, and continue to make TORM an interesting and challenging place to work. Please give the new Board of Directors together with the management and employees time to present their plan for the future. "On behalf of the Board of Directors, I am pleased and content that the time charter partners and our banks have shown their confidence in TORM. I am certain that the Company will honor these expectations by delivering the best possible results for customers in terms of quality and costs, and thereby the owners." Proposals for the amendments to the Articles of Association The proposals for the amendments to the Articles of Association are a consequence of the restructuring. Proposal 2.a. will cancel the authorizations to increase the share capital, which were given at the Annual General Meeting in 2012 in order to conclude a restructuring agreement. Proposal 2.b. is editorial in nature due to the name change of the Danish Business Authority. Proposals 2.c. to 2.e. concern minority protection, which is a part of the agreement between the banks and the owners of the chartered-in tonnage. This can of course be a good thing, but may prove difficult to handle when TORM's final capital structure is to be determined. Proposal 2.f. to change the term of office of board members is part of the restructuring agreement. Thank you "On behalf of all the members of the Board of Directors, I would like to conclude this report by thanking all our stakeholders for their cooperation and strong commitment to finding a joint solution through this highly challenging period for the Company." About TORM With headquarters in Copenhagen, Denmark, TORM (NASDAQ: QMX) is one of the world's leading carriers of refined oil products as well as a significant player in the dry bulk market. The Company runs a fleet of approximately 110 modern vessels in cooperation with other respected shipping companies sharing TORM's commitment to safety, environmental responsibility and customer service. TRIZETTO GROUP: S&P Alters Outlook on 'B' CCR to Negative --------------------------------------------------------- Standard & Poor's Ratings Services said that it revised its outlook on Denver-based health care information technology (HCIT) provider TriZetto Group Inc. to negative from stable. In addition, S&P affirmed its 'B' corporate credit rating on the company. The outlook revision reflects weak operating performance in recent quarters, which has elevated adjusted leverage to above 9x. "The outlook revision is based on continued operating weakness that has resulted in trailing 12-month adjusted leverage of more than 9x and negative free operating cash flow (FOCF)," said Standard & Poor's credit analyst Andrew Chang. "Our expectation is that adjusted leverage will remain elevated in the near term due to continued operational challenges and accreting preferred stock, which we treat as debt," added Mr. Chang. The rating on TriZetto reflects Standard & Poor's expectation that the company will maintain its "weak" business risk profile despite continued investments in its business and transition toward "full stack solution" sales (as compared to historical perpetual software license sales), which has reduced profitability in recent quarters. S&P believes that the company will continue to have a "highly leveraged" financial risk profile, partly because of accreting preferred stock. TriZetto is an HCIT provider that develops enterprise software solutions and provides outsourcing and consulting services to health care payers and providers. The company is a relatively small participant in a market that features large health care plans with proprietary in-house solutions and large stand-alone software providers with greater financial resources. The acquisition of Gateway EDI, completed in early 2011, somewhat diversified its revenue base through penetration of the health care provider market, but this segment remains small overall despite good recent growth. However, TriZetto maintains good revenue visibility, with more than 60% of its revenues comprising recurring software maintenance contracts, outsourcing contracts, and consulting services, and it has long term relationships with its diversified customer base. USA BABY: District Court Dismisses Former President's Lawsuit ------------------------------------------------------------- District Judge Joan B. Gottschall dismissed a 40-count amended complaint filed by Scott Wallis on behalf of himself individually and as beneficiary of USA Baby, Inc. Mr. Wallis, the company's former president and a 5% stockholder, asserts claims against roughly 190 defendants, not all of whom have been served, seeking $500 million in damages for alleged breaches of an automatic bankruptcy stay, "interference in interstate commerce, trafficking in good or services bearing counterfeit marks, copyright infringement, the deprivation of civil rights, conspiracy to violate said civil rights," negligence in preventing civil rights violations, racketeering, and conspiracy to commit racketeering. According to Judge Gottschall, however, Mr. Wallis has failed to state a claim upon which relief can be granted. The case is, SCOTT WALLIS, Individually and as Sole Beneficiary of USA Baby Inc.'s Assets Plaintiff, v. ALAN LEVINE, et al., Defendants, Case No. 12 C 5285 (N.D. Ill.). A copy of the District Court's Jan. 2, 2013 Memorandum Opinion & Order is available at http://is.gd/Ys6Smsfrom Leagle.com. About USA Baby Based in Lombard, Illinois, USA Baby Inc. sold infant and children's furniture. USA Baby was formed in 2003 to franchise stores selling furniture and other products for babies and children. It operated no stores of its own. On Sept. 5, 2008, three creditors, Wallis Kraham of Binghamton, N.Y., Jack B. Whisler of Arlington Heights, Ill., and Leslie Ruess of San Diego, filed an involuntary Chapter 11 petition (Bankr. N.D. Ill. Case No. 08-23564), claiming breach of subscription agreement and seeking $122,875 in the aggregate. Abraham Brustein, Esq., at Dimonte & Lizak, LLC, represented Wallis Kraham, one of the petitioning creditors. The bankruptcy court entered an order for relief, leaving USA Baby in possession of the bankruptcy estate, but the corporation did not file the required bankruptcy schedules or statements. A group of franchisees, citing that failure and alleging a history of prepetition mismanagement by Scott Wallis, the company's president and a 5% stockholder, asked the bankruptcy court to appoint a trustee and convert the case to Chapter 7. While those motions were pending, the company filed a statement of affairs and the required schedules. The bankruptcy court appointed Barry Chatz as trustee but denied the franchisees' motion for conversion to Chapter 7. Days later, though, Mr. Chatz filed his own motion for conversion, citing lack of funding. The bankruptcy court converted the case but also allowed Mr. Chatz to continue operations for a limited time. In May 2009, Commerce Capital LP was granted relief from the automatic bankruptcy stay to foreclose on a lien against USA Baby's assets. On July 6, 2009, Commerce Capital conducted a foreclosure sale of the assets, which included USA Baby's trademarks and franchise agreements, and through credit bidding, purchased the assets itself for $1 million. On Nov. 18, 2009, Commerce Capital brought a claim against a franchisee group, the United Storeowners Association of Baby Stores, LLC, for unauthorized use of intellectual property formerly belonging to USA Baby and currently belonging to Commerce Capital. Commerce Capital subsequently settled a number of claims against the franchisees regarding the trademarks and franchise agreements. VITRO SAB: 5th Cir. Affirms Order Recognizing Mexican Proceeding ---------------------------------------------------------------- The U.S. Court of Appeals for the Fifth Circuit affirmed the lower courts' judgment recognizing Vitro S.A.B. de C.V.'s Mexican reorganization proceeding and the appointment of foreign representatives. The Fifth Circuit also affirmed the bankruptcy court's order denying enforcement of the Mexican reorganization plan. The Ad Hoc Group of Vitro Noteholders, a group of creditors holding a substantial amount of Vitro's debt, took an appeal from the district court's decision affirming the bankruptcy court's recognition of the Mexican reorganization proceeding and Vitro's appointed foreign representatives under Chapter 15 of the Bankruptcy Code. Vitro and one of its largest third-party creditors, Fintech Investments, Ltd., each took an appeal directly to the Fifth Circuit from the bankruptcy court's decision denying enforcement of the Mexican reorganization plan because the plan would extinguish the obligations of non-debtor guarantors. The Fifth Circuit appeals are: AD HOC GROUP OF VITRO NOTEHOLDERS, Appellant, v. VITRO SAB DE CV, Appellee; VITRO SAB DE CV, Appellant, v. AD HOC GROUP OF VITRO NOTEHOLDERS; WILMINGTON TRUST, NATIONAL ASSOCIATION, solely in its capacity as indenture trustee; U.S. BANK NATIONAL ASSOCIATION, Appellees; FINTECH INVESTMENTS, LIMITED, Appellant, v. AD HOC GROUP OF VITRO NOTEHOLDERS; WILMINGTON TRUST, NATIONAL ASSOCIATION, solely in its capacity as indenture trustee; U.S. BANK NATIONAL ASSOCIATION, Appellees. No. 12-10542, Consolidated with No. 12-10689., 12-10750 (5th Cir.). A copy of the Fifth Circuit's Jan. 7, 2013 decision is available at http://is.gd/h1Ah8Vfrom Leagle.com. The Fifth Circuit panel consists of Circuit Judges Carolyn Dineen King, Jerry Edwin Smith, and Rhesa Hawkins Barksdale. Judge King penned the decision. About Vitro SAB Headquartered in Monterrey, Mexico, Vitro, S.A.B. de C.V. (BMV: VITROA; NYSE: VTO), through its two subsidiaries, Vitro Envases Norteamerica, SA de C.V. and Vimexico, S.A. de C.V., is a global glass producer, serving the construction and automotive glass markets and glass containers needs of the food, beverage, wine, liquor, cosmetics and pharmaceutical industries. Vitro is the largest manufacturer of glass containers and flat glass in Mexico, with consolidated net sales in 2009 of MXN23,991 million (US$1.837 billion). Vitro defaulted on its debt in 2009, and sought to restructure around US$1.5 billion in debt, including US$1.2 billion in notes. Vitro launched an offer to buy back or swap US$1.2 billion in debt from bondholders. The tender offer would be consummated with a bankruptcy filing in Mexico and Chapter 15 filing in the United States. Vitro said noteholders would recover as much as 73% by exchanging existing debt for cash, new debt or convertible bonds. Concurso Mercantil & Chapter 15 Proceedings Vitro SAB on Dec. 13, 2010, filed its voluntary petition for a pre-packaged Concurso Plan in the Federal District Court for Civil and Labor Matters for the State of Nuevo Leon, commencing its voluntary concurso mercantil proceedings -- the Mexican equivalent of a prepackaged Chapter 11 reorganization. Vitro SAB also commenced parallel proceedings under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-16619) in Manhattan on Dec. 13, 2010, to seek U.S. recognition and deference to its bankruptcy proceedings in Mexico. Early in January 2011, the Mexican Court dismissed the Concurso Mercantil proceedings. But an appellate court in Mexico reinstated the reorganization in April 2011. Following the reinstatement, Vitro SAB on April 14, 2011, re-filed a petition for recognition of its Mexican reorganization in U.S. Bankruptcy Court in Manhattan (Bankr. S.D.N.Y. Case No. 11-11754). The Vitro parent received sufficient acceptances of its reorganization by using the US$1.9 billion in debt owing to subsidiaries to vote down opposition by bondholders. The holders of US$1.2 billion in defaulted bonds opposed the Mexican reorganization plan because shareholders could retain ownership while bondholders aren't being paid in full. Vitro announced in March 2012 that it has implemented the reorganization plan approved by a judge in Monterrey, Mexico. In the present Chapter 15 case, the Debtor seeks to block any creditor suits in the U.S. pending the reorganization in Mexico. Chapter 11 Proceedings A group of noteholders opposed the exchange -- namely Knighthead Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc., Davidson Kempner Distressed Opportunities Fund LP, and Brookville Horizons Fund, L.P. Together, they held US$75 million, or approximately 6% of the outstanding bond debt. The Noteholder group commenced involuntary bankruptcy cases under Chapter 11 of the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D. Tex. Case No. 10-47470) and 15 other affiliates on Nov. 17, 2010. Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation counsel to analyze the potential rights that Vitro may exercise in the United States against the ad hoc group of dissident bondholders and its advisors. A larger group of noteholders, known as the Ad Hoc Group of Vitro Noteholders -- comprised of holders, or investment advisors to holders, which represent approximately US$650 million of the Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not among the Chapter 11 petitioners, although the group has expressed concerns over the exchange offer. The group says the exchange offer exposes Noteholders who consent to potential adverse consequences that have not been disclosed by Vitro. The group is represented by John Cunningham, Esq., and Richard Kebrdle, Esq. at White & Case LLP. A bankruptcy judge in Fort Worth, Texas, denied involuntary Chapter 11 petitions filed against four U.S. subsidiaries. On April 6, 2011, Vitro SAB agreed to put Vitro units -- Vitro America LLC and three other U.S. subsidiaries -- that were subject to the involuntary petitions into voluntary Chapter 11. The Texas Court on April 21 denied involuntary petitions against the eight U.S. subsidiaries that didn't consent to being in Chapter 11. Kurtzman Carson Consultants is the claims and notice agent to Vitro America, et al. Alvarez & Marsal North America LLC, is the Debtors' operations and financial advisor. The official committee of unsecured creditors appointed in the Chapter 11 cases of Vitro America, et al., has selected Sarah Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Dallas, Texas, and Michael S. Stamer, Esq., Abid Qureshi, Esq., and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, as counsel. Blackstone Advisory Partners L.P. serves as financial advisor to the Committee. The U.S. Vitro companies sold their assets to American Glass Enterprises LLC, an affiliate of Sun Capital Partners Inc., for US$55 million. U.S. subsidiaries of Vitro SAB are having their cases converted to liquidations in Chapter 7, court records in January 2012 show. In December, the U.S. Trustee in Dallas filed a motion to convert the subsidiaries' cases to liquidations in Chapter 7. The Justice Department's bankruptcy watchdog said US$5.1 million in bills were run up in bankruptcy and hadn't been paid. On June 13, 2012, U.S. Bankruptcy Judge Harlin "Cooter" Hale in Dallas entered a ruling that precluded Vitro from enforcing its Mexican reorganization plan in the U.S. Vitro's appeal is pending. In November, the U.S. Court of Appeals Judge Carolyn King ruled that Vitro SAB won't be permitted to enforce its bankruptcy reorganization plan in the U.S. She said that Vitro "has not shown that there exist truly unusual circumstances necessitating the release" preventing bondholders from suing subsidiaries. VM ODELL'S: Colorado Court Issues Injunction Order -------------------------------------------------- Colorado District Judge William J. Martinez granted the request of Freshpack Produce, Inc., for preliminary injunctive relief against VM Wellington LLC, et al. Defendants (1) VM Operations LLC, (2) Village Markets Holding Ltd., LLC, (3) Savoy Income Fund I LP, (4) Samuel J. Mancini, and (5) Ronald S. Allen, and their officers, agents, servants, employees, attorneys, and financial institutions, are restrained from disbursing funds that are generated by or resulting from the sale of perishable agricultural commodities, except for payment in full to Freshpack's counsel. Between Jan. 2, 2012, and Sept. 25, 2012, Freshpack sold and delivered to VM Wellington fresh produce worth $263,835. Of that amount, $74,705 remains unpaid, and Freshpack has been unsuccessful in collecting payment from VM Wellington et al. Two entities related to VM Wellington et al. and who received produce from Freshpack, have filed for bankruptcy protection: VM Odell's LLC, which filed on Sept. 24, 2012; and VM Williams LLC, which filed on Sept. 25, 2012. VM Operations LLC owns and manages the two operating entities that are in bankruptcy. Prior to the bankruptcy petitions, VM Operations would pay the accounts receivable for those entities, including payments for produce received from Freshpack. Since filing for bankruptcy, VM Operations no longer receives monies from the bankrupt entities without court order. Freshpack filed the lawsuit on Dec. 4, 2012, alleging statutory violations under the Perishable Agricultural Commodities Act, 7 U.S.C. Sections 499 et seq. Two days later, Freshpack obtained a temporary restraining order against the Defendants. Among others, the Defendants have argued that injunctive relief in favor of Freshpack would be moot because Freshpack will soon receive payment via a Chapter 11 payment plan with respect to the bankrupt entities. Mr. Mancini represented to the Court that the bankrupt parties are currently in the midst of a "reorganization plan," which should be finalized towards the end of January 2013. While he did not agree to extension of the TRO until such time, Mr. Mancini did assert that the outstanding amounts of $74,705.95 would be paid to Freshpack. In this regard, the Court directed the parties to provide a status report regarding the reorganization on Jan. 31, 2013. The Court also directed the Defendants to deposit by Jan. 11, 2013, into an interest bearing escrow account with a federally- insured financial institution the amount of $74,705 to serve as Freshpack's security. The case is, FRESHPACK PRODUCE, INC., Plaintiff, v. VM WELLINGTON LLC, d/b/a BELLA'S MARKET WELLINGTON, VM OPERATIONS LLC, VILLAGE MARKETS HOLDING LTD., LLC, SAVOY INCOME FUND I LP, SAMUEL J. MANCINI, RONALD S. ALLEN, and ALAN CARMAN, Defendants, Civil Action No. 12-cv-3157-WJM-MJW (D. Colo.). A copy of the District Court's Jan. 3, 2013 Order is available at http://is.gd/RVW2AA from Leagle.com. VM Odell's LLC operates Bella's Market stores in Akron, Wray, Haxtun, Wiggins, Walden and St. Francis. The Company filed for Chapter 11 bankruptcy (Bankr. D. Colo. Case No. 12-29791) on Sept. 24, 2012, listing under $10 million in both assets and debts. Judge A. Bruce Campbell oversees the case. Brent R. Cohen, Esq., and Chad S. Caby, Esq., at Rothgerber Johnson & Lyons LLP, represent the Debtor as counsel. The petition was signed by Samuel J. Mancini, manager of Savoy Holdings Ltd. LLC. The holding company, Village Market Holdings Ltd., did not file for bankruptcy protection. VTE PHILADELPHIA: Files for Ch. 11 to Stop Sheriff's Sale --------------------------------------------------------- VTE Philadelphia, LP, filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 13-10058) in Manhattan on Jan. 7, 2013. The Debtor is a single asset real estate case consisting of a vacant land located at 709-717 North Penn Street, in Philadelphia, Pennsylvania. The Chapter 11 petition was filed on the eve of a sheriff's sale scheduled by the secured creditor, U.S. Bank National Association, which has obtained judgment for foreclosure from the Court of Common Please of Philadelphia County. The judgment amount owed to the bank is $16.9 million. The Debtor says the purpose of the Chapter 11 filing is to stay the Sheriff's foreclosure sale and allow the Debtor an opportunity to obtain investors which will enable it to complete the project. VTE blamed the poor real estate market for its failed attempt to build the 47-story Trump Tower Philadelphia along the Delaware River. The Debtor says it does not know the exact value of its property but believes that it is less than the amount owed to the bank. The Debtor attached a balance sheet to the petition. The Debtor disclosed $11.5 million in total assets and $29.8 million as of Jan. 6, 2013. The Debtor doesn't anticipate having a payroll or conducting any business operations during the next 30 days. The Debtor is required to submit a Chapter 11 plan and disclosure statement by May 7, 2013. The initial case conference is due by Feb. 6. The Debtor did not file any first day motions. VTE PHILADELPHIA: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: VTE Philadelphia, LP 44 Wall Street, 2nd Floor New York, NY 10005 Bankruptcy Case No.: 13-10058 Chapter 11 Petition Date: January 7, 2013 Court: U.S. Bankruptcy Court Southern District of New York (Manhattan) Debtor's Counsel: Alex Spizz, Esq. TODTMAN, NACHAMIE, SPIZZ & JOHNS, P.C. 425 Park Avenue New York, NY 10022 Tel: (212) 754-9400 Fax: (212) 754-6262 E-mail: aspizz@tnsj-law.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Joseph Tyrnauer, authorized representative of Leser Group, LP, general partner. Debtor's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Multi Capital Group -- $533,825 44 Wall Street, 2nd Floor New York, NY 10005 Case Foundation -- $443,700 850 Cassatt Road, Suite 370 Berwyn, PA 19312 Laval Corp. -- $404,861 1123 Broadway, Suite 807 New York, NY 10010 City of Philadelphia -- $294,473 Municipal Services Building 1401 JFK Boulevard Philadelphia, PA 19102 Alesker & Dundon Architects -- $210,281 Langan Engineering -- $154,008 Luxury Marketing and Sales -- $136,200 Sherman Advertising -- $120,472 Ballard Spahr Andrews & Ingersoll, -- $72,435 LLP BP Independent Reprographics -- $35,633 BSD Realty Worldwide Inc. -- $30,000 Cashman LLC -- $21,744 Keaton Building Corp. -- $21,467 Bradford -- $18,000 Tabas Funding -- $15,000 Kennedy Fabrications -- $12,047 Hudson Engineering -- $11,696 Grenwald Waldron Associates -- $11,517 Niche Media Holding, LLC -- $10,732 Crowell Moring -- $9,457 WINDSTREAM CORP: Fitch Rates New $700MM Sr. Unsecured Notes 'BB+' ----------------------------------------------------------------- Fitch Ratings has assigned a 'BBB-' senior secured debt rating to Windstream Corporation's (NASDAQ: WIN) proposed senior secured term loan, which could total up to $300 million, and a 'BB+' to its proposed offering of up to $700 million of senior unsecured notes. Windstream's Issuer Default Rating (IDR) is 'BB+'. The Rating Outlook is Stable. Proceeds from the offerings will be used to refinance existing debt and cover related refinancing fees and expenses. The proceeds from the proposed Tranche B4 term loan will be used to repay the outstanding amounts on its existing Tranche A2 and Tranche B term loans due in July 2013. The Tranche A2 and Tranche B term loans had $20 million and $282 million, respectively, outstanding as of Sept. 30, 2012. Covenants on the new term loan will be consistent with its existing credit agreement. Proceeds from the $700 million senior unsecured note offering will be used to fund a tender offer for the $650 million of 8.875% senior secured notes due 2017 previously issued by its subsidiary PAETEC Holding Corp. (PAETEC). The refinancing will result in material interest expense savings. Following the refinancing of the term loan, Windstream's only significant maturity in 2013 consists of an $800 million senior unsecured note maturing in August 2013. While Fitch believes Windstream will likely refinance the maturing debt prior to August, Fitch believes the capacity available on its $1.25 billion revolving credit facility (undrawn as of Sept. 30, 2012) provides the company with the flexibility to repay the $800 million due if market conditions do not permit refinancing prior to that date. KEY RATING DRIVERS Key rating factors which support the rating include: -- Expectations for the company to generate strong operating and free cash flows and to have access to ample liquidity; -- Revenues have become more diversified as recent acquisitions have brought additional business and data services revenue. Following the fourth quarter 2011 acquisition of PAETEC, business service and consumer broadband revenues, which both have solid growth prospects, were 69% of revenues in the third quarter of 2012; -- Prospects for improved free cash flow as certain investments wind down in 2013. The following concerns are embedded in the ratings: -- Higher leverage, which is expected to moderate through merger-related and other cost savings and debt reduction; -- Competition for consumer voice services; -- Integration risk, which is moderated by the company's experience in acquiring and incorporating small- and medium- sized acquisitions. Pro forma for the PAETEC acquisition and excluding non-cash actuarial losses on its pension plans, latest 12 months (LTM) leverage as of Sept. 30, 2012 was 3.75x (3.70x on a net leverage basis), somewhat above the upper end of the company's net leverage target of 3.2x-3.4x. Fitch also believes leverage is slightly high for the current rating category. For 2012, Fitch estimates leverage approximated 3.7x, and expects leverage to approximate 3.4x by 2013. Moderate EBITDA growth -- due to modest revenue growth and synergies from the PAETEC acquisition -- as well as debt reduction, support prospective leverage improvements. Approximately $50 million in cost savings from the PAETEC acquisition remain to be achieved in 2013, and a management reorganization completed in the third quarter of 2012 is expected to lead to approximately $40 million in annual cost savings. Acquisitions, which have pushed leverage higher, have diversified the company's revenue stream and improved its growth prospects. On Sept. 30, 2012, Windstream had $1.235 billion available on its $1.25 billion revolver due December 2015, net of letters of credit, and $115 million of cash on its balance sheet. Principal financial covenants in Windstream's secured credit facilities require a minimum interest coverage ratio of 2.75x and a maximum leverage ratio of 4.5x. The dividend is limited to the sum of excess free cash flow and net cash equity issuance proceeds subject to pro forma leverage of 4.5x or less. As of Sept. 30, 2012, debt maturities, including bank debt amortization, for the remainder of 2012 were nominal, and approximately $1.2 billion in 2013. Fitch estimates free cash flow (after dividends) for Windstream was in the $225 million to $275 million range in 2012. The company's guidance called for capital spending in the $1.005 billion to $1.105 billion range, including PAETEC integration capital spending. Fitch expects capital spending to be approximately $200 million lower in 2013 as spending on fiber to the tower projects and the company's portion of broadband stimulus investments winds down. Cash taxes are expected to remain low in 2013 (in the range of $40 million to $50 million), as tax planning and the American Taxpayer Relief Act of 2012 will cause 2013 cash taxes to be lower than previously expected by approximately $200 million, but higher than 2012 when there was a modest cash tax benefit. WINDSTREAM CORP: Moody's Rates $700MM Sr. Unsecured Notes 'Ba3' --------------------------------------------------------------- Moody's Investors Service has assigned a Baa3 (LGD2-13%) rating to Windstream Corporation's proposed $300 million Term Loan B-4 due 2020 and a Ba3 (LGD5-75%) rating to its proposed $700 million senior unsecured notes due 2023. The proceeds will be used to refinance $300 million of term loan debt that matures in 2013 and $650 million face value of 8.875% senior secured PAETEC notes due 2017. As part of the rating action, Moody's has also changed the company's outlook to negative from stable due to the lack of progress in reducing leverage and Moody's view that the company's competitive position may be undermined by its shareholder friendly capital allocation stance. Moody's has taken the following rating actions: Issuer: Windstream Corporation Assignments: $300 million Senior Secured Term Loan B-4 due 2020, Assigned Baa3, LGD 2--13% $700 million Senior Unsecured Notes due 2023, Assigned Ba3, LGD 5-75% Outlook Actions: Outlook, Changed to Negative from Stable Ratings Rationale "Windstream's high dividend consumes the majority of its discretionary free cash flow and pressures the company's ability to reinvest in capex or repay debt to materially reduce leverage," said Mark Stodden, Moody's analyst. Moody's believes that this underinvestment will erode the company's long term competitive position versus its telecom and cable peers. "Further, low capital spending could negatively impact margins and lead to weaker EBITDA, as the company may rely more heavily upon leased facilities outside its ILEC footprint," continued Stodden. Windstream's Ba2 corporate family rating broadly reflects Moody's expectations that the company's adjusted Debt/EBITDA leverage will move below 3.75x over the next 12 to 18 months after remaining elevated as result of the acquisition of Paetec. Moody's forecasts approximately flat revenues and EBITDA for the next two to three years, as modest growth in business services offsets consumer weakness. Moody's expects merger synergies from recent acquisitions and ongoing cost cutting efforts to offset the negative margin impact of an unfavorable product mix shift. However, should growth or cost cutting efforts stall, Windstream's EBITDA could face pressure, which would further delay the targeted leverage reduction. Following the refinancing of the $300 senior secured term loan, Windstream has $800 million of unsecured notes due in 2013. If the company chooses to refinance the unsecured debt with secured debt, in accordance with Moody's Loss Given Default framework, the Baa3 ratings on secured debt at Windstream Corp. are likely to remain unchanged (assuming no change to Windstream's corporate family rating.) Moody's views Windstream as having good liquidity, supported by $115 million of cash as of 9/30/12 and an undrawn $1.25 billion revolver. The company is expected to generate over $150 million of free cash flow in 2013, primarily due to lower capex and the cash tax benefits from the extension of bonus depreciation. The relative stability of the company's cash flow generation and good visibility into capital expenditures, eliminates a risk of unforeseen liquidity needs. The company has approximately $800 million in debt maturities in 2013, which Moody's expects could be paid down with the use of the revolver or through external refinancing. The company's ability to borrow under the facility is subject to leverage (total leverage ratio not exceeding 4.5x) and interest coverage (less than 2.75x) covenants. Moody's expects Windstream to have ample amount of cushion under both of its financial covenants. In an unlikely event of a liquidity crisis, Windstream does not have material, non-core assets to sell. Moody's could stabilize Windstream's outlook if the company can achieve better than expected EBITDA growth such that leverage is on track to fall below 3.75x (Moody's adjusted) over the next 12 to 18 months through debt repayment, the realization of cost cutting or an improvement in top line growth. Additionally, Moody's will assess the company's ability to sustain or improve its competitive position prior to restoring a stable outlook. Windstream's ratings could face downward pressure if free cash flow weakens, which could result from a failure to realize expected merger synergies or a deterioration in business fundamentals. Further, the ratings could be lowered if Moody's believes that leverage is not on track to fall below 3.75x (Moody's adjusted) on a sustainable basis over the next 12 to 18 months. The principal methodology used in rating Windstream was the Global Telecommunications Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Windstream Corporation, Inc. ("Windstream" or the "Company") is an Incumbent Local Exchange Carrier (ILEC) headquartered in Little Rock, AR. The company was formed by a merger of Alltel Corporation's wireline operations and Valor Communications Group in July 2006. Windstream has continued to grow through acquisitions and, following the acquisition of Paetec Holding Corp. ("Paetec") in 2011, Windstream provides services in 48 states. WINDSTREAM CORP: S&P Assigns 'BB+' Rating to $300MM Secured Loan ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' issue-level rating and '1' recovery rating to Little Rock, Ark.-based telecommunications service provider Windstream Corp.'s proposed $300 million senior secured term loan B-4 due 2020. The '1' recovery rating indicates expectations for very high (90% to 100%) recovery in the event of payment default. S&P also assigned a 'B' issue-level rating and '6' recovery rating to the company's proposed $700 million of senior notes due 2023. Proceeds from the notes will be used to tender for the $650 million of PAETEC senior secured notes while proceeds from the new term loan B tranche will be used to refinance upcoming bank maturities. At the same time, S&P raised the issue-level rating on subsidiary PAETEC Holding Corp.'s senior unsecured debt to 'BB-' from 'B' and revised the recovery rating to '3' from '6'. The '3' recovery ratings indicates S&P's expectation for meaningful (50% to 70%) recovery in a default scenario. The upgrade reflects the improved recovery prospects following the redemption of secured debt at that entity. S&P's 'BB-' corporate credit rating and stable outlook on Windstream are not affected by the new debt. Pro forma adjusted leverage of around 4.2x for the rolling-12-months ended Sept. 30, 2012, is somewhat high but still supportive of the company's "aggressive" financial risk profile. (For the corporate credit rating rationale, see the summary analysis on Windstream published on Oct. 25, 2012, on RatingsDirect.) The ratings on Windstream reflect an "aggressive" financial risk profile, incorporating the company's shareholder-oriented financial policy with a commitment to a substantial common dividend, which limits potential debt reduction. "We also expect leverage to remain high because of the company's aggressive acquisition strategy. We consider the business risk profile "weak," based on industry-wide competitive pressures from wireless substitution and cable telephony. In the third quarter of 2012, pro forma revenue and EBITDA declined 1% and 2%, respectively, year-over-year, due primarily to consumer voice access line losses of about 4%. Moreover, we expect secular industry declines to continue to hurt Windstream's overall operating and financial performance, despite growth in business services. Through a series of acquisitions, the company has increased its exposure to business segments with some growth potential but even greater competition, including competitive local exchange carriers (CLECs), which have lower margins and depend on the incumbent local telephone company to provide services," S&P said. Tempering factors include the company's solid market position as the leading provider of telecommunications services in somewhat less competitive and geographically diverse secondary and tertiary markets, growth from digital subscriber-line (DSL) services, still-healthy EBITDA margins, and solid free operating cash flow (FOCF). RATINGS LIST Windstream Corp. Corporate Credit Rating BB-/Stable/-- New Rating Windstream Corp. $300 Mil. Senior Secured Term Loan B-4 Due 2020 BB+ Recovery Rating 1 $700 Mil. Senior Unsecured Notes Due 2023 B Recovery Rating 6 Ratings Raised; Recovery Ratings Revised To From PAETEC Holding Corp. Senior Unsecured BB- B Recovery Rating 3 6 WSG DULLES: Lenders Win Dismissal of Chapter 11 Cases ----------------------------------------------------- Bankruptcy Judge Brian F. Kenney in Alexandria, Va., granted the requests of: -- LBCMT 2007-C3 Sterling Retail, LLC, to dismiss the bankruptcy cases of WSG Dulles, L.P., and WSG Dulles GL, LLC; -- LBCMT 2007-C3 Seminole Trail, LLC, to dismiss the WSG Charlottesville, LLC, bankruptcy case; and -- LBCMT 2007-C3 RHL Blvd. Limited Partnership, to dismiss the WSG Trace Fork L.P. bankruptcy case. The Creditors are represented by John H. Maddock III, Esq., at McGuire Woods LLP, in Richmond, Virginia. The four bankruptcy cases are being jointly administered, but not substantively consolidated. There are three properties at issue: Dulles Town Crossing, in Sterling, Virginia; Charlottesville Center, in Albemarle County, Virginia; and the Trace Fork shopping center, in Charleston, West Virginia. The Debtors filed Oppositions to the Dismissal Motions. The Debtors have filed a Plan of Reorganization, but have yet to file a Disclosure Statement. The Debtors acknowledge their Plan needs to be amended to gain confirmation. Judge Kenney held that the cases have been filed in bad faith. The Debtors stopped paying the secured debt in March or April 2011. Rather than escrow these funds, or set them aside in some way, the Debtors made a decision to up-stream them to WSG Management. The diverted funds totaled $738,484. The secured lenders inarguably had a lien on the funds. "The withholding of a secured lender's collateral in a substantial amount (here, over $700,000), and the payment of those funds to an insider management company for other than ordinary and necessary operating expenses such as management fees, is the very definition of bad faith in the context of a commercial real estate loan workout," Judge Kenney said. The Debtors share a common ownership structure, under the control of Eric Sheppard and Robert Kalman. Judge Kenney also noted that the Debtors concealed the diversion of the funds in their initial filings with the Court. Each of the three Debtors -- WSG Dulles, WSG Charlottesville and WSG Trace Fork -- filed Statements of Financial Affairs that did not disclose the payment of these amounts to WSG Management. It was not until after the first meetings of creditors that the Debtors amended their Statements of Financial Affairs to disclose the payments to WSG Management. "The Court might be inclined to consider the omission of the payment by one of the Debtors to WSG Management as being an inadvertent omission. But, the consistent failure to include the payments by all three Debtors to WSG Management evidences a conscious decision to conceal the diversion of the funds from the Court and the creditors," said Judge Kenney. "When Mr. Sheppard decided to pay the withheld rents -- totaling $738,484.90 -- to WSG Management, the Debtors irreversibly crossed into the territory of bad faith." WSG Dulles, L.P., in Miami Beach, Florida, filed for Chapter 11 bankruptcy (Bankr. E.D. Va. Case No. 12-11149) on Feb. 23, 2012. Lawrence Allen Katz, Esq. -- lkatz@ltblaw.com -- at Leach Travell Britt PC. Several affiliates also sought Chapter 11 protection. In its petition, WSG Dulles estimated $1 million to $10 million in both assets and debts. Affiliate WSG Dulles GL, LLC (Case No. 12-11151) estimated $1 million to $10 million in both assets and debts. The petitions were signed by Eric D. Sheppard, president of WSG Dulles GP, LLC, general partner. Each of the Debtors owns (or in the case of WSG Dulles, leases) a small strip-shopping center, each with two or three nationally recognized retail tenants. Mr. Sheppard's business model is to figure out where big box retailers (Target, Kohl's, Best Buy) are going, to buy properties in close proximity to their properties, and to lease his properties to nationally recognized retail tenants. Mr. Sheppard and Mr. Kalman have successfully developed numerous properties throughout the country, using this model as their mode of development. The three properties are part of a larger finance restructuring that took place in July 2007, with Lehman Brothers. Since Lehman Brothers' demise, the debt has been sold. It is being serviced by LNR Partners. There are seven WSG properties that are (or were) a part of this restructuring: WSG Dulles, WSG Charlottesville, WSG Trace Fork, WSG Monroe, WSG Short Pump, WSG ATL 2130, and WSG Snellville. Three of the properties have been foreclosed: Monroe, Snellville and Short Pump. It is unclear how much, if any, in the way of deficiency claims can be asserted as a result of the foreclosures. WSG ATL 2130 is the subject of its own Chapter 11 proceeding in Atlanta. ATL 2130 LP filed for Chapter 11 (Case No. 11-76017) on Sept. 6, 2011. A copy of the Court's Jan. 4, 2013 Memorandum Opinion is available at http://is.gd/ggq1hHfrom Leagle.com. * Banks, Bondholders Fight Argentina Injunction in U.S. Court ------------------------------------------------------------- Evan Weinberger of BankruptcyLaw360 reported that in a hotly contested bond exchange, a bank trade group and a group of European holders of bonds issued by the Republic of Argentina on Monday told the U.S. Court of Appeals for the Second Circuit that they should not be subject to an injunction against the South American nation making payments to participants in the country's debt restructuring. The report related that the Clearing House Association LLC and holders of euro-denominated bonds that were not subject to the restructurings at issue in the appeal filed separate amici briefs. * FINRA Plans to Expand its Focus --------------------------------- Richard G. Ketchum, the head of the Financial Industry Regulatory Authority, said in an interview on Tuesday that he would ramp up scrutiny of high-speed trading and a batch of complex products, Ben Protess of the New York Time's DealBook blog reported. Finra, Mr. Ketchum said, would take aim at so-called leveraged loans and collateralized loan obligations, along with the potential conflicts that brokerage firms face in pitching their own investments over rivals? products, according to the report. ?We?re going to be very focused on conflicts of interest,? said Mr. Ketchum, the chairman and chief executive of Finra. In a statement, Firna added that it would ?pursue potential cross- market abuses and refine its surveillance patterns based on new threat scenarios and regulatory intelligence.? The expanded focus comes as Finra announced on Tuesday that it filed more than 1,500 enforcement actions against financial firms and brokers in 2012, an all-time record for the regulator, the DealBook related. Finra, which barred nearly 300 people from the industry, levied more than $100 million in penalties. ?It?s nice to see an upward trajectory,? Mr. Ketchum told the DealBook. * Insurers Losses from Hurricane Sandy to Hit $20BB, Fitch Says --------------------------------------------------------------- The insurance industry will likely see losses of $20 billion or more from Hurricane Sandy, according to a new report by Fitch Ratings. Fitch based the expected total on the approximately $16-$17 billion in loss estimates reported by individual companies thus far. This would put the total industry loss just below the high end of the range of the most recent insured losses estimated by third-party catastrophe modelers. Fitch notes that the complexity of assessing insurance losses from such a large and intense storm over a widespread region, particularly with respect to the impact of flooding and business interruption claims, has created uncertainty in estimating ultimate insured losses from Sandy. As such, many (re)insurance companies were unable to release credible loss estimates until almost two months after the storm hit on Oct. 29, with several larger insurers still having not reported at the time of report publication. This could potentially add another $5 billion or more in losses to the industry. Due to the size and nature of Sandy, a larger proportion of losses were incurred from commercial lines versus personal lines. Primary writers with substantial Northeast catastrophe exposures are incurring the most significant losses, with reinsurers taking a more reduced, although still meaningful share. While many of the typical property lines of insurance are being impacted, it was a particularly outsized event for auto losses and marine insurance. In nearly all cases, Hurricane Sandy demonstrated the favorable spread of loss and limited concentration risk among individual insurance companies resulting in manageable losses to insurers. However, despite robust modeling available for the Northeast U.S., there were several areas related to flooding risk exposure that the models did not fully capture and companies did not fully anticipate. Based on Fitch's analysis, Hurricane Sandy is not likely to change market underwriting capacity and tip the balance to a hard property market. Initial reports on reinsurance pricing at the Jan. 1 renewals indicate that Sandy helped to stabilize rates, with U.S. property catastrophe pricing flat to up slightly overall, although loss impacted business experienced more significant rate increases. The full report, 'Hurricane Sandy Update' is available at 'www.fitchratings.com' under 'Insurance' and 'Research'. * AlixPartners Promotes 27 Professionals to Senior Positions ------------------------------------------------------------ AlixPartners, the global business-advisory firm, on Jan. 9 announced the promotions of 27 professionals to the senior positions of either managing director or director. The appointments were effective Jan. 1. "Even as AlixPartners continues its aggressive growth geographically and in terms of services offered, our 'unique selling proposition' remains the unparalleled talent and experience of our people, which is certainly exemplified in these 27 professionals," said Fred Crawford, chief executive officer of AlixPartners. "These newly appointed managing directors and directors help form the core of hands-on teams that are second to none in obtaining real, lasting and fast results for our clients. That is and always has been the AlixPartners' way, and in today's continuing uncertain times, clients -- whether companies, owners, creditors or attorneys -- deserve nothing less." All promotions are listed below, by city, starting with the four promoted managing directors: London Lisa Ashe, promoted to managing director in AlixPartners' Turnaround & Restructuring Services unit, has established a strong reputation as a leader in the turnaround industry, and is considered an expert in U.K. defined-benefit pension plan obligations. Also possessing operations-improvement expertise, she has helped AlixPartners increase its presence among clients throughout the U.K. and Europe. Her client work includes such engagements as Eastman Kodak, Fitness First Group and FCI. Ms. Ashe joined AlixPartners in 2007 from Mesirow Financial Consulting, where she was a managing director in that firm's New York office. She has a bachelor's degree in French and Latin from the University of Southampton in Great Britain, and is a chartered accountant and an associate corporate treasurer. She also is a member of the American Bankruptcy Institute, INSOL International (the International Association of Restructuring, Insolvency & Bankruptcy Professionals), IWIRC (the International Women's Insolvency & Restructuring Confederation) and the Turnaround Management Association. John Maloney, promoted to managing director in AlixPartners' Enterprise Improvement unit, has more than 24 years of experience in line management, interim management and strategic consulting spanning multiple sectors, including healthcare, financial institutions, consumer goods, energy, beverages, chemicals, government, construction and aerospace. Prior to joining AlixPartners, he spent more than 10 years in strategic, operations and IT consulting at A.T. Kearney, KPMG and Unisys Corp. Since joining AlixPartners in 2006, he has helped develop the firm's European Healthcare Practice and its global SG &A Practice. His clients at AlixPartners have included some of the most-recognized companies in the world. Mr. Maloney has an MBA from Cass Business School in London, and a bachelor's degree in physics from Edinburgh University. Nashville Bill Siren, promoted to managing director in AlixPartners' Financial Advisory Services unit, has more than 27 years of experience as a healthcare executive, including 18 years as a strategic, operations and financial consultant, and nine years in hospital administration including serving as a hospital administrator. He has advised more than 650 hospitals and healthcare companies. Prior to joining AlixPartners in 2010, he served as partner-in-charge of healthcare consulting for 10 years at a regional U.S. CPA firm, where he also co-chaired that firm's healthcare service area. Mr. Siren holds an MBA from Nova Southeastern University in Fort Lauderdale, Fla., with a concentration in healthcare finance. He also holds a master's degree from the United States Sports Academy in Daphne, Ala., and a bachelor's degree in sports medicine from Barton College in Wilson, N.C. Mr. Siren is an accredited valuation analyst through the National Association of Certified Valuation Analysts, and is a member of the American Healthcare Lawyers Association. Paris David Benichou, promoted to managing director in AlixPartners' Enterprise Improvement unit, joined AlixPartners in 2006 and was one of the first employees in the AlixPartners Paris office, doing much over the years to support the firm's growth. His expertise includes telecommunications, retail and aerospace & defense, and he is expert in sourcing and purchasing, procurement organization and process improvement, technical cost reduction and strategy. He also developed a technical cost reduction tool for removing costs from highly complex aerospace programs. Formerly with A.T. Kearney, Mr. Benichou has a master's degree in civil engineering from Ecole Nationale Superieure des Mines in Paris. The 23 AlixPartners professionals promoted to director are, by city: Boston Jill Nickerson, Information Management Services unit. Chicago Ryan Meadows, Financial Advisory Services unit. Kevin Negangard, Information Management Services unit. Dallas Bill Champine, Enterprise Improvement unit. Travis Phelan, Information Management Services unit. Brett Roberson, Information Management Services unit. Detroit Matthew Grimes, Financial Advisory Services unit. Dusseldorf Alban Baiker, Turnaround & Restructuring Services unit. Bastian Kuhl, Enterprise Improvement unit. Hong Kong Erin Plante, Financial Advisory Services unit. London Andy Searle, Enterprise Improvement unit. Los Angeles Andy He, Enterprise Improvement unit. Milan Alessandro Missaglia, Enterprise Improvement unit. Munich Matthias Hansch, Enterprise Improvement unit. New York Robert Albergotti, Turnaround & Restructuring Services unit. Courtney Davidson, Financial Advisory Services unit. Murali Gokki, Enterprise Improvement unit. Brian Jenkins, Financial Advisory Services unit. Matt Kelly, Enterprise Improvement unit. Jon Labovitz, Turnaround & Restructuring Services unit. Jim McGlynn, Information Management Services unit. Clifton Yen, Enterprise Improvement unit. Tokyo Takashi Ito, Enterprise Improvement unit. About AlixPartners AlixPartners, LLP -- http://www.alixpartners.com-- is a global business-advisory firm offering comprehensive services in four major areas: enterprise improvement, turnaround and restructuring, financial-advisory services and information-management services. Founded in 1981, the firm has offices around the world. * Dykema Opens Minneapolis Office with IP, Corporate Focus ---------------------------------------------------------- Dykema Gossett PLLC added a Minneapolis office to its national network, providing a foothold in a state that is home to many of its existing clients and where major players in the financial services and medical device sectors keep their headquarters, the firm said Monday. With its new office in Minneapolis -- the home base of major companies including Target Corp. and U.S. Bancorp, with others headquartered nearby 00 Dykema said it will dip into the business community to offer new and existing clients intellectual property, the BLaw360 report related. The Minneapolis office, Dykema's 12th nationwide, will be anchored by top corporate and commercial lawyer Joe Roach, who joins from Briggs and Morgan, and by top intellectual property lawyer Reed Heimbecher, formerly of St. Jude Medical. Dykema's new office will be located in the Wells Fargo Center. Minneapolis is a dynamic Midwestern city and one of the premier medical device centers in the country, according to the firm's press statement. The progressive business community is also home to numerous Fortune 500 companies including Target Corporation, UnitedHealth Group, 3M, US Bancorp, General Mills, and Xcel Energy, among others. Dykema's new office, according to its statement, will provide the "boots on the ground" for the firm's sophisticated practices in the areas of financial services, energy, biotech, life sciences and medical devices. The firm looks to add several intellectual property, litigation and corporate lawyers to the new office over the coming weeks. "Dykema has a long history of representing major industries rooted in Minneapolis, including counseling many financial institutions, medical device companies and energy facilities headquartered in the region," said Peter Kellett, Dykema's Chairman and Chief Executive Officer. "Joe and Reed bring decades of legal experience, successful practice group leadership, and respected community ties. Establishing a presence in Minneapolis at this time is a natural extension of our firm strategy to build our national platform with extremely talented and well-respected lawyers in key practice areas." The new lawyers bring practices that are highly complementary to Dykema nationally, while giving the firm an established presence in Minnesota, one of the largest legal markets in the country, the firm said. "As the legal industry and the needs of clients continue to evolve, I was looking for a platform with greater breadth and depth, and Dykema provides an ideal fit as a Midwest-based firm with a national presence," said Roach, who will serve as Dykema's office managing member in Minneapolis. "I believe Dykema's sophisticated practices, efficient platform and commitment to client service allows the firm to drive exceptional value to clients." "As an in-house lawyer for the past several years, I've worked with many law firms and believe Dykema provides a compelling value. The firm's lawyers are uniquely skilled and understand their clients' businesses beyond a purely legal focus. Additionally, the firm is unwavering in its institutional commitment and vigilance to client service. I am excited to join this impressive national team," stated Heimbecher. Advancing Dykema's National Strategy The Minneapolis announcement follows the firm's expansion in recent years into Charlotte, North Carolina and Dallas, Texas, as well as continued growth in key markets including Detroit, Chicago, Los Angeles and Washington, D.C. As a premier firm with Midwestern roots, Dykema has developed a national footprint focused on serving Fortune 1000 and middle- market companies. Building on its roots and driven by the needs of its clients, the firm has extended its platform nationally by developing sophisticated practices in areas including automotive, consumer financial services, energy and electric distribution, international counsel, infrastructure finance, intellectual property and pharmaceutical/medical device litigation. With over 350 lawyers, Dykema continues to engage in strategic expansion discussions with leading attorneys who can add further depth to key practices. About the Lawyers Joseph Roach counsels clients on commercial lending, corporate law, commercial real estate, bankruptcy, regulatory and mergers and acquisitions matters. He joined the Briggs and Morgan Business Law Department as a shareholder in 2007. Prior to his legal career, Roach worked for more than 10 years in commercial banking, where he was directly involved in lending and loan workouts, and also served in various management positions. Roach is admitted to practice in Minnesota, Wisconsin, Illinois, Indiana, Nebraska, North Dakota, South Dakota and Iowa, and the respective federal district courts. He is also admitted to practice before the U.S. Supreme Court, the U.S. Tax Court, and the U.S. Court of Appeals for the 7th and 8th circuits. He received a B.B.A. in finance and a B.S. in economics from Iowa State University and a J.D. from Hamline School of Law. Mr. Roach may be reached at: Joseph Roach, Esq. DYKEMA GOSSETT PLLC 4650 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Tel: (612) 486-1905 Email: jroach@dykema.com Reed Heimbecher joins Dykema from St. Jude Medical, where he served as Vice President, Intellectual Property and Chief Patent Counsel for the Atrial Fibrillation Division. A registered patent lawyer practicing for more than two decades, Heimbecher joined St. Jude in 2005 after working for several years as outside counsel for a division of the company. Prior to making the move in-house, Heimbecher was the founding member of Heimbecher & Assoc. and previously headed Dorsey & Whitney's patent practice group for Colorado, Montana and Utah. Heimbecher is admitted to practice in Minnesota, Colorado and California, and in federal district courts in Colorado and California. He is also admitted to practice before the U.S. Supreme Court and the U.S. Court of Appeals for Federal Circuit. A frequent author and lecturer on IP matters, Heimbecher earned a B.S. in aerospace engineering from the University of Colorado and a J.D. from the University of California, Hastings College of the Law. Mr. Heimbecher may be reached at: Reed Heimbecher, Esq. DYKEMA GOSSETT PLLC 4650 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Tel: (312) 627-2296 Email: rheimbecher@dykema.com * Hilco Opens Hong Kong Office for Asset Disposition Services ------------------------------------------------------------- Hilco Trading, LLC on Jan. 9 announced the opening of its Hong Kong office providing asset valuation and disposition services through China. Francis Yau, a 25+ year industry veteran has been named CEO-HilcoBid Hong Kong Ltd. He will be responsible for managing the Greater China Region for Hilco. The new HilcoBid office will provide industrial asset disposition services through auctions and negotiated sales, online capital asset redeployment services, and a complete platform of asset appraisal services throughout the greater China region, including Hong Kong, mainland China and Taiwan. Jeffrey B. Hecktman, Chairman and CEO of Hilco Trading, said of the new Hong Kong office, "We are fortunate to have Francis Yau representing Hilco in one of the world's most important economic regions. His team ensures that Hilco is now well-positioned to provide customers throughout the Asia-Pacific region with the highest quality asset valuation, repositioning and disposition services, and fast response to their needs." Hilco had been doing business in the Asia-Pacific region for many years. However, the opening of a full-service HilcoBid office in Singapore early in 2011 marked the beginning of an initiative to establish a region-wide physical presence. In February, 2012, a second HilcoBid office was opened in Bangkok, Thailand. Supanit Chaiyawat, a 15-year asset disposition and valuation industry veteran formerly with DoveBid, was named CEO-HilcoBid Thailand. Also in 2012, Hilco opened an office in Sydney, Australia. "Our presence in Asia, combined with operations in the United States, Canada, Mexico, Central and South America, and Europe, enables Hilco to provide a truly global platform that is unmatched in our industry," added Mr. Hecktman. Francis Yau began his career with the Henry Butcher Company in 1986 as Business Manager. He became a director in 1989 and remained with the company until 2000, when he joined DoveBid as Director of Auction and Valuation Services. During his career, Mr. Yau has amassed deep and broad experience in valuing and monetizing capital assets in several key industries, including electronics, paper, bio-pharma and mining. He has worked with leading companies in each of these sectors, including Nokia, Motorola, Thompson, Unilever, P&G, JDSU, Philips, Merck, Charles River, Taiwan Formosa and Ricoh. Commenting on the opening of the HilcoBid new office, Mr. Yau said, "I am pleased to be part of the Hilco organization and look forward to a long and productive relationship. Companies with manufacturing operations in the greater China region now have direct access to the world's most experienced capital asset appraisal practice and the most advanced 24/7/365 online auction and asset redeployment platform to manage and sell their surplus capital assets." About Hilco(R) Trading, LLC Hilco -- http://www.hilcotrading.com-- is a closely-held, diversified financial and operational services firm. Its principal competency is valuing and monetizing business assets, including retail, consumer and industrial inventory, machinery and equipment, real estate, accounts receivable and intellectual property. Through an integrated platform of more than 20 business units, Hilco helps companies and their professional advisors derive the maximum value for said assets through appraisals, asset disposition and acquisition services, private equity investments, advisory and consulting services. Hilco serves retailers, wholesalers, distributors and manufacturers, directly and through their lenders, investors and advisors, which can include private equity firms, hedge funds, investment banks, law firms, turnaround professionals, accounting professionals, bankruptcy trustees and receivers. * Recent Small-Dollar & Individual Chapter 11 Filings ----------------------------------------------------- In re Uyi Developmental Centers For Children, Inc. dba Uyi Developmental Centers For Children, Inc. Home Away From Home Bankr. D. Ariz. Case No. 12-27041 Chapter 11 Petition filed December 26, 2012 See http://bankrupt.com/misc/azb12-27041.pdf represented by: Carlos M. Arboleda, Esq. ARBOLEDA BRECHNER E-mail: arboledac@abfirm.com In re Aylin Kocoglu Bankr. C.D. Calif. Case No. 12-21017 Chapter 11 Petition filed December 26, 2012 In re A.J.A. Properties, LLC Bankr. C.D. Calif. Case No. 12-51906 Chapter 11 Petition filed December 26, 2012 See http://bankrupt.com/misc/cacb12-51906.pdf represented by: Joshua L. Sternberg, Esq. STERNBERG LAW GROUP E-mail: js@sternberglawgroup.com In re Lannie Truong Bankr. N.D. Calif. Case No. 12-59064 Chapter 11 Petition filed December 26, 2012 In re Phoenix Development Partners, LLC Bankr. N.D. Ill. Case No. 12-50294 Chapter 11 Petition filed December 26, 2012 See http://bankrupt.com/misc/ilnb12-50294.pdf represented by: Bruce E. de'Medici, Esq. E-mail: bdemedici@gmail.com In re Robbie Hopkins Bankr. W.D. Mich. Case No. 12-10995 Chapter 11 Petition filed December 26, 2012 In re Mekkatt Industries LLC Bankr. E.D.N.Y. Case No. 12-77327 Chapter 11 Petition filed December 26, 2012 See http://bankrupt.com/misc/nyeb12-77327.pdf Filed as Pro Se In re Steven White Bankr. D. Utah Case No. 12-35905 Chapter 11 Petition filed December 26, 2012 In re Macon Sims Bankr. E.D. Va. Case No. 12-17504 Chapter 11 Petition filed December 26, 2012 In re Bruce Kahn Bankr. W.D. Wash. Case No. 12-22735 Chapter 11 Petition filed December 26, 2012 In re MKM Enterprizes, Inc. Bankr. W.D. Wash. Case No. 12-22749 Chapter 11 Petition filed December 26, 2012 See http://bankrupt.com/misc/wawb12-22749.pdf represented by: Stephen J. Plowman, Esq. STEPHEN J. PLOWMAN, INC., P.S. E-mail: sjplowmanlaw@gmail.com In re American Optometric Society, Inc. Bankr. C.D. Calif. Case No. 12-38276 Chapter 11 Petition filed December 29, 2012 See http://bankrupt.com/misc/cacb12-38276.pdf represented by: Yoon O. Ham, Esq. Lewis & Ham LLP E-mail: hamy@lewishamlaw.com In re Corey Kupersmith Bankr. D. Conn. Case No. 12-52303 Chapter 11 Petition filed December 29, 2012 In re Richard Simonds Bankr. M.D. Pa. Case No. 12-07356 Chapter 11 Petition filed December 29, 2012 In re Edmond Betmaleck Bankr. C.D. Calif. Case No. 12-52215 Chapter 11 Petition filed December 30, 2012 In re Shirish Kothari Bankr. D. Ariz. Case No. 12-27287 Chapter 11 Petition filed December 31, 2012 In re Sergio Nunez Bankr. C.D. Calif. Case No. 12-16858 Chapter 11 Petition filed December 31, 2012 In re Brigitte von dem Hagen Bankr. C.D. Calif. Case No. 12-52291 Chapter 11 Petition filed December 31, 2012 In re Company Outlet L.B.V., LLC Bankr. M.D. Fla. Case No. 12-17309 Chapter 11 Petition filed December 31, 2012 See http://bankrupt.com/misc/flmb12-17309.pdf represented by: Jeffrey M. Johnston, Esq. JEFFREY M. JOHNSTON, P.A. E-mail: jmjohnstonlaw@aol.com In re Robert Mullis Bankr. M.D. Ga. Case No. 12-53690 Chapter 11 Petition filed December 31, 2012 In re Steven Burnett Bankr. D. Md. Case No. 12-33062 Chapter 11 Petition filed December 31, 2012 In re Jeannie Sutherland Bankr. D. Nev. Case No. 12-24096 Chapter 11 Petition filed December 31, 2012 In re Charles Snipes Bankr. E.D.N.C. Case No. 12-09098 Chapter 11 Petition filed December 31, 2012 In re Ivan Hantman Bankr. E.D. Pa. Case No. 12-21852 Chapter 11 Petition filed December 31, 2012 In re The Warwick Group, Inc. dba The PrintSource Group Bankr. D. R.I. Case No. 12-13978 Chapter 11 Petition filed December 31, 2012 See http://bankrupt.com/misc/rib12-13978.pdf represented by: Vincent A. Indeglia, Esq. INDEGLIA & ASSOCIATES E-mail: vincent@indeglialaw.com In re Jesse Sanders Bankr. D. S.C. Case No. 12-07952 Chapter 11 Petition filed December 31, 2012 In re Abdul Hameed Bankr. E.D. Tex. Case No. 12-43507 Chapter 11 Petition filed December 31, 2012 In re Paul Kramer Bankr. N.D. Tex. Case No. 12-46996 Chapter 11 Petition filed December 31, 2012 In re AB Interests, Inc. dba Castrol Service Center Bankr. S.D. Tex. Case No. 12-39545 Chapter 11 Petition filed December 31, 2012 See http://bankrupt.com/misc/txsb12-39545.pdf represented by: C. Michael Black, Esq. LAW OFFICE OF C. MICHAEL BLACK E-mail: cmb@cmblack-lawyer.com In re Dagger 1111, LLC Bankr. S.D. Tex. Case No. 12-70775 Chapter 11 Petition filed December 31, 2012 See http://bankrupt.com/misc/txsb12-70775.pdf represented by: John Kurt Stephen, Esq. CARDENAS AND STEPHEN, L.L.P. E-mail: kurtstep@swbell.net In re Benny Jay Bankr. W.D. Tex. Case No. 12-12847 Chapter 11 Petition filed December 31, 2012 In re Jane Doe Bankr. W.D. Wash. Case No. 12-22867 Chapter 11 Petition filed December 31, 2012 In re Mohammed Iqbal Bankr. C.D. Calif. Case No. 13-10001 Chapter 11 Petition filed January 1, 2013 In re Cigarettes Depot, a Calif. Partnership Bankr. N.D. Calif. Case No. 13-40001 Chapter 11 Petition filed January 1, 2013 See http://bankrupt.com/misc/canb13-40001.pdf represented by: Ted Z. Wolny, Esq. Miller Wolny Legal Group E-mail: tedwolny@gmail.com In re David Kelly Bankr. N.D. Fla. Case No. 13-40001 Chapter 11 Petition filed January 1, 2013 In re American Specialties Company, Inc. Bankr. M.D. Ga. Case No. 13-50002 Chapter 11 Petition filed January 1, 2013 See http://bankrupt.com/misc/gamb13-50002.pdf represented by: Wesley J. Boyer, Esq. Katz, Flatau, Popson and Boyer, LLP E-mail: wjboyer_2000@yahoo.com In re Ronald Conners Bankr. M.D. Ga. Case No. 13-50003 Chapter 11 Petition filed January 1, 2013 In re Richard Pleasant Bankr. W.D. La. Case No. 13-20001 Chapter 11 Petition filed January 1, 2013 In re Nou Khousakoun Bankr. D. Mass. Case No. 13-40001 Chapter 11 Petition filed January 1, 2013 In re Intel Investment Properties, LLC Bankr. S.D. Tex. Case No. 13-30002 Chapter 11 Petition filed January 1, 2013 See http://bankrupt.com/misc/txsb13-30002.pdf represented by: Samuel L. Milledge, Esq. Milledge Law Firm, PLLC E-mail: milledge@milledgelawfirm.com In re BL Pizza LLC Bankr. E.D. Ark. Case No. 13-10018 Chapter 11 Petition filed January 2, 2013 See http://bankrupt.com/misc/areb13-10018.pdf represented by: Sheila F. Campbell, Esq. SHEILA CAMPBELL, P.A. E-mail: campbl@sbcglobal.net In re Robert Stehlik Bankr. C.D. Calif. Case No. 13-10036 Chapter 11 Petition filed January 2, 2013 In re Janice Bartmess Bankr. C.D. Calif. Case No. 13-10068 Chapter 11 Petition filed January 2, 2013 In re Nancy Johnson Bankr. C.D. Calif. Case No. 13-10103 Chapter 11 Petition filed January 2, 2013 In re Olympian Way LLC Bankr. N.D. Calif. Case No. 13-30003 Chapter 11 Petition filed January 2, 2013 Filed as Pro Se In re NATA, LP Bankr. N.D. Calif. Case No. 13-50014 Chapter 11 Petition filed January 2, 2013 See http://bankrupt.com/misc/canb13-50014.pdf represented by: Stanley A. Zlotoff, Esq. LAW OFFICES OF STANLEY A. ZLOTOFF E-mail: zlotofflaw@gmail.com In re Bee Best Bee Removal, Inc. Bankr. S.D. Calif. Case No. 13-00025 Chapter 11 Petition filed January 2, 2013 See http://bankrupt.com/misc/casb13-00025.pdf represented by: Marjan Mortazavi, Esq. MORTAZAVI & ASSOCIATES E-mail: attorneymarj@aol.com In re Maria Freeman Bankr. S.D. Fla. Case No. 13-10017 Chapter 11 Petition filed January 2, 2013 In re Macon Emmitt Gooch Bankr. N.D. Ga. Case No. 13-50131 Chapter 11 Petition filed January 2, 2013 In re Douglas McConnaughey Bankr. D. Idaho Case No. 13-00001 Chapter 11 Petition filed January 2, 2013 In re Rock Solid Paving Rock Solid Paving & Excavating, Inc. Bankr. N.D. Ind. Case No. 13-20008 Chapter 11 Petition filed January 2, 2013 See http://bankrupt.com/misc/innb13-20008.pdf represented by: Andrew L. Kraemer, Esq. ANDREW L. KRAEMER, ATTORNEY AT LAW E-mail: kraemera@sbcglobal.net In re Alhagie Trawally Bankr. D. Kans. Case No. 13-20006 Chapter 11 Petition filed January 2, 2013 In re Michelle Barat-Anderson Bankr. S.D.N.Y. Case No. 13-22002 Chapter 11 Petition filed January 2, 2013 In re RLJ Family, LLC Bankr. W.D.N.Y. Case No. 13-20000 Chapter 11 Petition filed January 2, 2013 See http://bankrupt.com/misc/nywb13-20000.pdf represented by: John A. Belluscio, Esq. E-mail: jbelluscio@choiceonemail.com In re 2755 EHR I, LLC Bankr. W.D.N.Y. Case No. 13-20001 Chapter 11 Petition filed January 2, 2013 See http://bankrupt.com/misc/nywb13-20001.pdf represented by: John A. Belluscio, Esq. E-mail: jbelluscio@choiceonemail.com In re 5247 RRW, LLC Bankr. W.D.N.Y. Case No. 13-20003 Chapter 11 Petition filed January 2, 2013 See http://bankrupt.com/misc/nywb13-20003.pdf represented by: John A. Belluscio, Esq. E-mail: jbelluscio@choiceonemail.com In re NRW, LLC Bankr. W.D.N.Y. Case No. 13-20004 Chapter 11 Petition filed January 2, 2013 See http://bankrupt.com/misc/nywb13-20004.pdf represented by: John A. Belluscio, Esq. E-mail: jbelluscio@choiceonemail.com In re Shaffer Landscapes, Inc. Bankr. M.D. Pa. Case No. 13-00005 Chapter 11 Petition filed January 2, 2013 See http://bankrupt.com/misc/pamb13-00005.pdf represented by: Deborah A. Hughes, Esq. E-mail: dhughes@ssbc-law.com In re Yang Metcalf Bankr. M.D. Tenn. Case No. 13-00013 Chapter 11 Petition filed January 2, 2013 In re Donald R. Beverley Bankr. E.D. Va. Case No. 13-30009 Chapter 11 Petition filed January 2, 2013 In re Thomas Balzer Bankr. E.D. Va. Case No. 13-30018 Chapter 11 Petition filed January 2, 2013 In re Joy Von Wolffersdorff Bankr. C.D. Calif. Case No. 13-10236 Chapter 11 Petition filed January 3, 2013 In re Santiago Martinez Bankr. C.D. Calif. Case No. 13-10232 Chapter 11 Petition filed January 3, 2013 In re Edward Cain Bankr. N.D. Ga. Case No. 13-50208 Chapter 11 Petition filed January 3, 2013 In re Carlos Molina Bankr. N.D. Ill. Case No. 13-00209 Chapter 11 Petition filed January 3, 2013 In re Nina Williams Bankr. D. Md. Case No. 13-10107 Chapter 11 Petition filed January 3, 2013 In re Adalgisa Mendez Bankr. D. Mass. Case No. 13-10020 Chapter 11 Petition filed January 3, 2013 In re Executive Management LLC Bankr. W.D. Mo. Case No. 13-40019 Chapter 11 Petition filed January 3, 2013 represented by: Wainsworth Anderson, Esq. Anderson Law Group E-mail: wainswortha@hotmail.com In re William Bartlett Bankr. D. Mont. Case No. 13-60008 Chapter 11 Petition filed January 3, 2013 In re Gregory Schuff Bankr. D. Nev. Case No. 13-10049 Chapter 11 Petition filed January 3, 2013 In re Espino Realty Group Inc. Bankr. D.N.J. Case No. 13-10108 Chapter 11 Petition filed January 3, 2013 See http://bankrupt.com/misc/njb13-10108.pdf represented by: Robert J. Ferb, Esq. R.J. Ferb Law Offices E-mail: rjf1@bellatlantic.net In re Joseph Valente Bankr. D.N.J. Case No. 13-10107 Chapter 11 Petition filed January 3, 2013 In re Astro Ambulette Corp. Bankr. E.D.N.Y. Case No. 13-40021 Chapter 11 Petition filed January 3, 2013 See http://bankrupt.com/misc/nyeb13-40021.pdf represented by: Jerome G. Binder, Esq. Binder & Armao PLLC In re Full Circle Holdings, LLC Bankr. E.D.N.C. Case No. 13-00066 Chapter 11 Petition filed January 3, 2013 See http://bankrupt.com/misc/nceb13-00066.pdf represented by: James Oliver Carter, Esq. Carter & Carter, P.A. E-mail: joc@carterandcarterlaw.com In re James Lucido Bankr. N.D. Ohio Case No. 13-6006 Chapter 11 Petition filed January 3, 2013 In re Kekul & Ilu, Inc. Bankr. S.D. Ohio Case No. 13-50029 Chapter 11 Petition filed January 3, 2013 See http://bankrupt.com/misc/ohsb13-50029.pdf represented by: James E. Nobile, Esq. Nobile & Thompson Co., L.P.A. E-mail: lahennessy@ntlegal.com In re Iglesia Cristiana Logos y Rhema De Dios Bankr. D.P.R. Case No. 13-00014 Chapter 11 Petition filed January 3, 2013 See http://bankrupt.com/misc/prb13-00014.pdf represented by: Maria Mercedes Figueroa y Morgade, Esq. Figueroa y Morgade Legal Advisors E-mail: figueroaymorgadelaw@yahoo.com In re Alfred Simson Bankr. D.R.I. Case No. 13-10009 Chapter 11 Petition filed January 3, 2013 In re Crockett Street Bottle Shop, Inc. Bankr. N.D. Tex. Case No. 13-40034 Chapter 11 Petition filed January 3, 2013 See http://bankrupt.com/misc/txnb13-40034p.pdf See http://bankrupt.com/misc/txnb13-40034c.pdf represented by: Craig Douglas Davis, Esq. Davis, Ermis & Roberts, P.C. E-mail: davisdavisandroberts@yahoo.com In re Miriam De la Mora Bankr. S.D. Calif. Case No. 13-00079 Chapter 11 Petition filed January 4, 2013 In re Rosemarie Glas Bankr. D. Colo. Case No. 13-10098 Chapter 11 Petition filed January 4, 2013 In re Melissa Buchanan Bankr. M.D. Fla. Case No. 13-00034 Chapter 11 Petition filed January 4, 2013 In re Traumatic Brain Education Adult Community Home, Inc. Bankr. M.D. Fla. Case No. 13-00097 Chapter 11 Petition filed January 4, 2013 See http://bankrupt.com/misc/flmb13-00097.pdf represented by: Craig I. Kelley, Esq. Kelley & Fulton, P.A. E-mail: cik@kelleylawoffice.com In re Augusta Center, LLC dba Country Inn & Suites Bankr. S.D. Ga. Case No. 13-10026 Chapter 11 Petition filed January 4, 2013 See http://bankrupt.com/misc/gasb13-10026.pdf represented by: James C. Overstreet, Jr., Esq. Klosinski Overstreet, LLP E-mail: jco@klosinski.com In re Henrietta Smith Bankr. S.D. Ga. Case No. 13-40020 Chapter 11 Petition filed January 4, 2013 In re Spencer Livestock Sales, Inc. Bankr. N.D. Iowa Case No. 13-00013 Chapter 11 Petition filed January 4, 2013 See http://bankrupt.com/misc/ianb13-00013.pdf represented by: Donald H. Molstad, Esq. Molstad Law Firm E-mail: judylaw308@yahoo.com In re Samuel Umana Bankr. D. Mass. Case No. 13-10030 Chapter 11 Petition filed January 4, 2013 In re Gregory Jerz Bankr. W.D. Mich. Case No. 13-00045 Chapter 11 Petition filed January 4, 2013 In re Glenn Snyder Bankr. W.D. Pa. Case No. 13-70008 Chapter 11 Petition filed January 4, 2013 In re Charles Smith Bankr. D.S.C. Case No. 13-00091 Chapter 11 Petition filed January 4, 2013 In re Thomas Hudson Bankr. N.D. Calif. Case No. 13-10027 Chapter 11 Petition filed January 5, 2013 In re 31 N Walnut, LLC Bankr. E.D. Mich. Case No. 13-40214 Chapter 11 Petition filed January 5, 2013 See http://bankrupt.com/misc/mieb13-40214p.pdf See http://bankrupt.com/misc/mieb13-40214c.pdf represented by: Michael P. DiLaura, Esq. Mike DiLaura & Associates, PC E-mail: miked@mikedlaw.com In re Greg Mattingly Bankr. D. Nev. Case No. 13-50014 Chapter 11 Petition filed January 5, 2013 In re Dawn Martinson Bankr. D. Minn. Case No. 13-50008 Chapter 11 Petition filed January 6, 2013 In re Becky Spence Bankr. W.D. Mo. Case No. 13-60029 Chapter 11 Petition filed January 6, 2013 In re Greentree Associates, LLC Bankr. D. Md. Case No. 13-10274 Chapter 11 Petition filed January 7, 2013 See http://bankrupt.com/misc/mdb13-10274p.pdf See http://bankrupt.com/misc/mdb13-10274c.pdf represented by: Ronald M. Levin, Esq. GRAY SQUIRE, LLC E-mail: rlevin@graysquire.com In re Classic New York Realty 2009 LLC Bankr. S.D.N.Y. Case No. 13-10053 Chapter 11 Petition filed January 7, 2013 See http://bankrupt.com/misc/nysb13-10053.pdf represented by: Dennis Houdek, Esq. E-mail: denniswhoudek@aol.com In re 393 5th Avenue, LLC Bankr. S.D.N.Y. Case No. 13-22014 Chapter 11 Petition filed January 7, 2013 See http://bankrupt.com/misc/nysb13-22014.pdf represented by: Susan Schneider Lonergan, Esq. LAW OFFICE OF SUSAN SCHNEIDER LONERGAN E-mail: sschneiderlonergan@gmail.com In re Michael Haesche Bankr. S.D.N.Y. Case No. 13-22017 Chapter 11 Petition filed January 7, 2013 ********* 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., Washington, D.C., 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 2013. 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 $975 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 Peter A. Chapman at 215-945-7000 or Nina Novak at 202-241-8200. *** End of Transmission ***