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/raid1/www/Hosts/bankrupt/TCR_Public/130116.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, January 16, 2013, Vol. 17, No. 15 Headlines 23 EAST: Creditors' Liquidating Plan Has Conditional Approval 333-345 GREEN: Section 341(a) Meeting Slated for Feb. 11 360 GLOBAL: Files 2009 Form 10-K as Required by Plan A123 SYSTEMS: JCI Cites Free Speech in $5.5M Feud with Creditors A123 SYSTEMS: Committee Wins Approval to Hire Washington Lobbyist ACACIA DIVERSIFIED: Files Annual Report for 2010 AHERN RENTALS: To Appeal Court Ruling on Reorganization Stay Order AIRBORNE HOLDINGS: S&P Withdraws 'B' Corporate Credit Rating ALCO CORP: Association Wants Unsecured Priority ALCO CORP: Nevarez & Sanchez Okayed for Civil Case ALETHEIA RESEARCH: CIBC OK'd to Terminate Sub-Advisory Agreements AMERICAN AIRLINES: Wants Plan Deadline Moved to April 1 AMERICAN AIRLINES: Wins OK to Sell Townhouse for GBP14-Mil. AMERICAN AIRLINES: Shareholders' Committee Becoming More Likely AMERICAN AIRLINES: CRT Analyst Sees Equity Value AMERICAN AIRLINES: Continues Information Exchange With USAir AMERICAN COMMERCE: Incurs $50,400 Net Loss in Nov. 30 Quarter AMERICAN NANO: Incurs $2.1-Mil. Net Loss in Fiscal 2012 AMERICAN POWER: Kevin Tierney Quits Board of Directors AMERICAN SUZUKI: Judge Approves Chapter 11 Disclosure Statement AMF BOWLING: U.S. Trustee Opposing Bonus Proposal ATP OIL: To Auction Shallow-Water Gulf Wells in February BACK YARD BURGERS: Pharos Retains Business With New Investment BAKERS FOOTWEAR: Converting to Chapter 7 Liquidation BERKELEY COFFEE: Issues 13.6 Million Common Shares to Sean Tan BIG M INC: Sec. 341(a) Meeting of Creditors on Feb. 13 BIG M INC: Proposes $13.2MM DIP Financing From Salus BLOCK COMMUNICATIONS: S&P Raises Corporate Credit Rating to 'BB-' BLUE EARTH: Files for Chapter 7 Liquidation BOMBARDIER INC: Moody's Affirms 'Ba2' CFR; Outlook Negative BONTAN CORPORATION: Incurs Net Loss of C$2.5-Mil. in Fiscal 2012 BOSTON GENERATING: Creditors Defend Lawsuit v. US Power Gen BRIGHT HORIZONS: Moody's Reviews 'B2' CFR for Possible Upgrade BRIGHT HORIZONS: S&P Gives Prelim. 'B+' Rating to $915MM Facility C.P. HALL: Columbia Loses Appeal Over $4MM Integrity Settlement CENTRAL EUROPEAN: Moody's Downgrades CFR/PDR to 'Caa3' CLEAR CHANNEL: Bank Debt Trades at 16% Off in Secondary Market CLEMENT CARINALLI: Evidentiary Hearing on Bank Claim to Proceed COLONY BEACH: Resort Files Bankruptcy to Avert Foreclosure DAYBREAK OIL: Incurs $1.2 Million Net Loss in Nov. 30 Quarter DELUXE CORP: BlackRock Discloses 11.6% Equity Stake DETROIT, MI: Courts, Not Politicians, Should Control Bankruptcy DEWEY & LEBOEUF: ePlus Rule 2004 Bid Has March 28 Hearing DIGITAL DOMAIN: Balks at Walt Disney's Bid to Delay Patent Sale DIGITAL DOMAIN: Wants Until April 9 to Propose Reorganization Plan DIRECT MARKET: Files for Chapter 7 Liquidation ECOSPHERE TECHNOLOGIES: John Brewster Named CEO, Pres. & Chairman ELCOM HOTEL: Parties Dispute Control of Property ENVISION SOLAR: Has $1.2MM Selling Agreement with Allied Beacon EVELETH MINES: DC Cir. Affirms PBGC Decision on Thunderbird Plan FIBERTOWER CORP: Judge Clears Pay Raises for Workers FIRST DATA: CEO Jonathan Judge to Quit for Health Reasons FIRST QUANTUM: S&P Puts 'B+' Corp. Credit Rating on CreditWatch GENCORP INC: S&P Rates New $460MM 2nd Lien Secured Notes 'B-' GEOKINETICS INC: Enters Into Restructuring Support Agreement GLYECO INC: Selling Units for $0.65 Apiece GOLDEN GUERNSEY: OpenGate Milk Company Liquidating GRAYMARK HEALTHCARE: Closes Three Sleep Diagnostic Facilities GSC GROUP: Ex-Workers Want Trustee Booted for Cloaking Ties GSC GROUP: Kaye Scholer, Capstone Must Disgorge $15MM, UST Says HANDY HARDWARE: Proposes Donlin Recano as Claims Agent HAWKER BEECHCRAFT: JPMorgan Offers $600-Mil. Exit Financing HAWKER BEECHCRAFT: Bank Debt Trades at 47% Off in Secondary Market HELICOS BIOSCIENCES: Wins Final OK for Use of Cash Collateral HONK'S INC: Idaho Discount Retailer Files Chapter 11 HOSTESS BRANDS: Insurer Barred From Arbitrating on Dispute HOSTESS BRANDS: Proposes Flowers-Led Auction on Feb. 28 HOSTESS BRAND: Reaches Deal with Insurers Over Policy Collateral INOVA TECHNOLOGY: Amends Fiscal 2012 Annual Report INOVA TECHNOLOGY: Amends 375 Million Common Shares Prospectus JAYHAWK ENERGY: Incurs $663,200 Net Loss in Fiscal 2012 JUDO ASSOCIATES: Empty Lot on Canal Returns to Bankruptcy K-V PHARMACEUTICAL: Files Chapter 11 Plan LARSON LAND: Creditor Objects to Ch. 7 Conversion Absent Payment LEAR CORP: Moody's Affirms 'Ba2' CFR; Rates $500MM Notes 'Ba2' LEAR CORP: S&P Hikes CCR to 'BB+'; Rates $500MM Unsec. Notes 'BB' LEHMAN BROTHERS: Traxis Tests Rigidity of Plan LEHMAN BROTHERS: Delays March Payouts Amid Archstone Sale LIFECARE HOLDINGS: Hirings of Advisors Approved LODGENET INTERACTIVE: PAR Investment Sells Remaining Shares LODGENET INTERACTIVE: Mittleman Brothers No Longer Owns Shares MARIANA PORTS AUTHORITY: Fitch Keeps 'BB-' Rating on $31.6MM Bonds MARIANA PORTS AUTHORITY: Fitch Affirms 'B-' Rating on $14MM Bonds MEDICAL INTERNATIONAL: Provides Status Report to Investors METRO FUEL: Asks to Maintain Exclusive Chapter 11 Control MF GLOBAL: Customers Again Denied Ability to Investigate MF GLOBAL: Customers Must Give Releases Before Payouts MF GLOBAL: European Customers Seeing 60% Recovery MPG OFFICE: Peter Johnston Resigns as EVP, Leasing NEW ENGLAND COMPOUNDING: May Have Chapter 11 Trustee Appointed NNN CYPRESSWOOD: 341(a) Meeting Slated for Feb. 12 NORTEL NETWORKS: Creditors Make Another Stab at Settlement NORTEL NETWORKS: Litigation Pits Bondholders Against Retirees NORTEL NETWORKS: Former Executives Acquitted in Fraud Case NUSTAR LOGISTICS: Fitch Rates New Junior Subordinated Notes 'B+' NUSTAR LOGISTICS: Moody's Assigns 'Ba2' Subordinated Debt Rating NUSTAR LOGISTICS: S&P Rates New Subordinated Notes Due 2043 'B+' OCALA FUNDING: Recovers $9 Million From Sovereign in Lawsuit OCALA SHOPPES: Hiring Jennis & Bowen as Counsel ODYSSEY DIVERSIFIED: Court Confirms Odyssey VI, VII and IX's Plans OMEGA NAVIGATION: Insider Settlement Killed by Judge OMEGA NAVIGATION: Looks to Sell Assets After Judge Halts Deal OPEN SOLUTIONS: S&P Withdraws 'CCC+' Corporate Credit Rating OVERSEAS SHIPHOLDING: Becomes Maritime Law Test Case PATRIOT COAL: Hearing on Retiree Committee Adjourned to Feb. 26 PATRIOT PLACE: Court Nixes Rival Exit Plans, Sale to El Paso PEER REVIEW: Engages Drake Klein as New Accountant PENSON WORLDWIDE: Starts Rejecting Contracts as Part of Wind-Down PENSON WORLDWIDE: Proposes KCC as Claims and Notice Agent PENSON WORLDWIDE: S&P Lowers Issuer Credit Rating to 'D' PENSON WORLDWIDE: Case Summary & 30 Largest Unsecured Creditors PEREGRINE FINANCIAL: Regulator Turns to Execs for Fraud Fixes PETRON ENERGY II: Amends Q1 2012 to Respond to Comments of SEC PHI GROUP: Sets Aside 5.6 Million Common Shares for Dividend PINNACLE AIRLINES: Pilots Ratify Restructuring Agreement PINNACLE AIRLINES: Hearing on ALPA Tentative Deal Scheduled Today PINNACLE AIRLINES: Gets 90 More Days to File Chapter 11 Plan PRESTIGE BRANDS: Moody's Affirms 'B1' CFR; Outlook Stable PRIME HEALTHCARE: Moody's Affirms 'B2' CFR; Rates Revolver 'Ba3' QUIGLEY CO: Supreme Court Asks Govt.'s Opinion on Pfizer Appeal REGAL ENTERTAINMENT: Fitch Assigns 'B-' Rating to Sr. Unsec. Notes REGAL ENTERTAINMENT: Moody's Affirms 'B1' CFR; Rates Bonds 'B3' REGAL ENTERTAINMENT: S&P Affirms 'B+' CCR, Stable Outlook RESIDENTIAL CAPITAL: Ally Seeks to Enjoin Landon Suit RESIDENTIAL CAPITAL: JPM Drops Opposition to Stay Relief Protocol RESIDENTIAL CAPITAL: Committee's Pachulski Application Amended RESIDENTIAL CAPITAL: U.S. Trustee Objects to Proposed Bonus Plan RG STEEL: To Enter Into Compensation Agreements with 2 Sr. Staff RG STEEL: Can Apply PJMS Cash to Sparrows' Obligations RG STEEL: Time to Remove Actions Extended Until April 26 RYLAND GROUP: JPMorgan Chase Lowers Equity Stake to Less Than 1% RYLAND GROUP: BlackRock Hikes Equity Stake to 11.4% SMART ONLINE: Sells Additional $375,000 Convertible Note SNO MOUNTAIN: Ski Resort Planning for Feb. 28 Auction STANFORD INT'L: SEC Continues Fighting for Customers STEINWAY MUSICAL: S&P Raises CCR to 'B+'; Outlook Stable STEREOTAXIS INC: Regains Compliance with NASDAQ MVPHS Requirement STEREOTAXIS INC: Sophrosyne Capital Discloses 5.1% Equity Stake SUPERVALU INC: S&P Puts 'B' Corp. Credit Rating on CreditWatch TALON THERAPEUTICS: Issues 60,000 Pref. Shares to Warburg, et al TC GLOBAL: Starbucks Protests Losing Auction Bid TELETOUCH COMMUNICATIONS: To Settle $1.9MM Texas Tax Liability TERCON INVESTMENTS: Canadian Receiver Files Ch. 15 in Alaska TERCON INVESTMENTS: Chapter 15 Case Summary TERRESTAR CORP: Gets Approval to Incur $16.5 Million DIP Financing TEXAS RANGERS: Ex-Owner, JPMorgan Call Truce in Creditor Dispute TEXAS RANGERS: Ex-Owner, JPMorgan Call Truce in Creditor Dispute THREE LEGGED MONKEY: Exit Plan for Landlord Denied THQ INC: Common Stock Delisted from NASDAQ UNITED AMERICAN: "Put Exercise Period" to End on March 30 VANDERRA RESOURCES: OK'd to Implement Key Employee Incentive Plan VERTIS HOLDINGS: Wins Injunction Against Jay Schiller VIGGLE INC: Sillerman Line of Credit Hiked to $20 Million WAVE SYSTEMS: Has Until July 8 to Comply with Nasdaq Requirement WESTMORELAND COAL: Amends Bylaws to Update with Developments WILCOX EMBARCADERO: Has Access to WF Cash Collateral Until Jan. 31 ZACHRY HOLDINGS: Moody's Gives 'B1' CFR; Rates $250MM Notes 'B2' * Fitch Says Deal Ends Uncertainty for US Residential Servicers * First American Ducks Duty to Indemnify Lender in $100M Deal Row * Setting Aside Abandonment Is Governed by Rule 60(b) * Dorsey Adds Five Lawyers to West Coast Bankruptcy Practice * Lowenstein Sandler Elects Seven New Partners * Law360 Names Morrison Foerster Bankr. Practice Group of the Year * Upcoming Meetings, Conferences and Seminars ********* 23 EAST: Creditors' Liquidating Plan Has Conditional Approval ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York granted conditional approval to the proposed disclosure statement describing Secured Creditors SLC2 Holdings LLC and Seaway Capital Corp.'s Plan of Liquidation for 23 East 39th Street Developers, LLC, dated Nov. 30, 2012. The Plan provides for the liquidation of the Debtor through a sale of the Debtor's real property and improvements thereon located at 23 East 39th Street, New York, New York, subject to higher or better bids to be made at an auction to be conducted by SLC2 and Seaway prior to the confirmation hearing. The Debtor has entered into a contract to sell the Property to SLC2 for $12,300,000. At closing, SLC2 will pay Seaway $365,000 and Seaway will assign its claim to SLC2 and will release its lien upon the Property. Seaway will not assign any guaranties or other collateral. If the Property is sold to a purchaser other than SLC2, Seaway's recovery will be limited to $365,000 and the remaining $1,135,000 ($12,300,000 less $10,800,000 SLC2 Claim less $365,000 Seaway Claim) due at the closing will be paid to SLC2 in accordance with its instructions. If SLC2 is the prevailing bidder, it will fund distributions under the Plan. SLC2's first mortgage will be discharged or satisfied (from $10.9 million to $10.8 million). The $10,000 will be used to establish a fund for pro rata distribution to holders of allowed unsecured claims. If there is competitive bidding for the Property, the balance of the sale proceeds of a sale in excess of $12,550,000 ($12,300,000 and $250,000 break-up fee) will go to the holders of unsecured claims (excluding SLC2's and Seaway's deficiency claims). Each holder of an allowed unsecured claim will receive payment in cash equal to its pro rata share of the unsecured creditors fund to be established on the Effective Date in the amount of $10,000 plus $50,000 of the proceeds of a higher and better sale in the sum of $12,600,000 and all other amounts in excess of $12,600,000. SLC2 will waive its deficiency claim. Seaway's deficiency claim, if any, will be included in class for voting purposes. Interests in the Debtor will be canceled and are deemed to have rejected the Plan. A copy of the Disclosure Statement describing the Secured Creditors' Plan of Liquidation for the Debtor is available at: http://bankrupt.com/misc/23east.doc78.pdf About 23 East 39th Street 23 East 39th Street Developers LLC filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-11304) on March 30, 2012. The Debtor estimated assets and debts of $10 million to $50 million as of the Chapter 11 filing. The Debtor is a limited liability company that was formed to purchase real property and improvements thereon located at 23 East 39th Street, in New York City. The Property is encumbered by a first mortgage in the principal sum of $7,250,000 in favor of SLC2 Holdings LLC, as assignee of JPMorgan Chase Bank N.A., successor in interest to Washington Mutual N.A. and a second mortgage in favor of Seaway Capital Corp. as assignee of Madison Exchange LLC in the principal sum of $1,150,000. The Property consists of a vacant six story townhouse building. The Property was originally acquired by the Debtor for the sum of $10,400,000 on Oct. 9, 2007. Judge Robert E. Gerber oversees the case. James O. Guy, Esq., in Clifton Park, New York, serves as counsel to the Debtor. 333-345 GREEN: Section 341(a) Meeting Slated for Feb. 11 -------------------------------------------------------- The meeting of creditors in the Chapter 11 case of 333-345 Green LLC is scheduled for Feb. 11, 2013, at 11:00 a.m. The meeting will be held at 271 Cadman Plaza East, Room 4529, Brooklyn, New York. The meeting, which is required under Section 341(a) of the Bankruptcy Code, offers creditors a one-time opportunity to examine a bankrupt company's representative under oath about its financial affairs and operations that would be of interest to the general body of creditors. About 333-345 Green 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, which is 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. Marc A. Pergament, Esq., at Weinberg Gross & Pergament, LLP, serves as counsel to the Debtor. 360 GLOBAL: Files 2009 Form 10-K as Required by Plan ---------------------------------------------------- 360 Global Investments filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $150,000 on $0 of revenue for the year ended Dec. 31, 2009, compared with net income of $0 on $0 of revenue during the prior year. 360 Global's balance sheet at Dec. 31, 2009, showed $0 in total assets, $150,000 in total liabilities and a $150,000 total stockholders' deficit. The Hall Group, CPAs, in Dallas, Texas, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2009. The independent auditors noted that the Company has suffered significant losses and will require additional capital to develop its business until the Company either (1) achieves a level of revenues adequate to generate sufficient cash flows from operations; or (2) obtains additional financing necessary to support its working capital requirements. In addition, the Company has filed for Chapter 11 bankruptcy protection in order to reorganize and work out its debt arrangements. These conditions raise substantial doubt about the Company's ability to continue as a going concern. A copy of the Form 10-K is available for free at: http://is.gd/6d6BOJ On Dec. 12, 2008, 360 Global's Disclosure Statement and Plan of Reorganization was confirmed by United States Bankruptcy Court for the District of Nevada. As described in this Global Plan, the Company's business plan is made up of two activities. First, undertaking the administrative, accounting, SEC related, and all other work necessary to prepare and file updated financial statements and annual and quarterly reports with the SEC and any other governmental organizations, in order to re-establish Reorganized Global as a fully reporting public company and re-list its common stock on a nationally recognized stock exchange or market quotation system. In order to accomplish this goal, Reorganized Global's plan is to complete the following SEC filings (among other filings and reports), which Reorganized Global will complete as soon as practical taking into account the general economic climate: - 10K annual report for the year 2009 - 10Q for the 1st quarter of 2010 - 10Q for the 2nd quarter of 2010 - 10Q for the 3rd quarter of 2010 - 10K annual report for the year 2010 - 10Q for the 1st quarter of 2011 - 10Q for the 2nd quarter of 2011 - 10Q for the 3rd quarter of 2011 - 10K annual report for the year 2011 - 10Q for the 1st quarter of 2012 - 10Q for the 2nd quarter of 2012 - 10Q for the 3rd quarter of 2012 - 10K annual report for the year 2012 The second activity is to conduct the appropriate search, perform the necessary analysis, negotiate a price and structure, plan the financing, and raise the necessary capital to acquire an operating business or effect a merger or acquisition, or capital stock exchange, asset acquisition, or other similar business combination with an operating business. About 360 Global 360 Global Investments, formerly 360 Global Wine Company, is a publicly traded investment holding company that has invested in a number of diverse business activities and that has targeted a number of industries for future investment. 360 Global is domiciled in the state of Nevada and its corporate headquarters are located in Los Angeles, Calif. 360 Global Wine Company, Inc., filed for Chapter 11 protection (Bankr. D. Nev. Case No. 07-50205) on March 7, 2007. A123 SYSTEMS: JCI Cites Free Speech in $5.5M Feud with Creditors ---------------------------------------------------------------- Lance Duroni of BankruptcyLaw360 reported that Johnson Controls Inc., which recently lost an auction for bankrupt A123 Systems Inc., accused the battery maker's creditors Monday of trampling its First Amendment rights by fighting to withhold a $5.5 million breakup fee over Johnson Controls' lobbying efforts against the Chinese firm that won the auction. In an objection filed in Delaware bankruptcy court, Milwaukee- based Johnson Controls admitted to voicing its concerns to U.S. officials about Wanxiang Group Corp.'s bid for A123's lithium ion battery technology, the report said. About A123 Systems Based in Waltham, Massachusetts, A123 Systems Inc. designs, develops, manufactures and sells advanced rechargeable lithium-ion batteries and battery systems and provides research and development services to government agencies and commercial customers. A123 is the recipient of a $249 million federal grant from the Obama administration. Pre-bankruptcy, A123 had an agreement to sell an 80% stake to Chinese auto-parts maker Wanxiang Group Corp. U.S. lawmakers opposed the deal over concerns on the transfer of American taxpayer dollars and technology to China. A123 didn't make a $2.7 million payment due Oct. 15 on $143.75 million in 3.75% convertible subordinated notes due 2016. A123 and U.S. affiliates, A123 Securities Corporation and Grid Storage Holdings LLC, sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 12-12859 to 12-12861) on Oct. 16, 2012. A123 disclosed assets of $459.8 million and liabilities totaling $376 million. Debt includes $143.8 million on 3.75% convertible subordinated notes. Other liabilities include $22.5 million on a bridge loan owing to Wanziang. About $33 million is owed to trade suppliers. The Hon. Kevin J. Carey presides over the case. Lawyers at Richards, Layton & Finger, P.A., and Latham & Watkins LLP serve as the Debtors' counsel. Lazard Freres & Co. LLC acts as the Debtors' financial advisors, while Alvarez & Marsal serves as restructuring advisors. Logan & Company Inc. serves as the Debtors' claims and noticing agent. Wanxiang America Corporation and Wanxiang Clean Energy USA Corp. are represented in the case by lawyers at Young Conaway Stargatt & Taylor, LLP, and Sidley Austin LLP. JCI is represented in the case by Josh Feltman, Esq., at Wachtell Lipton Rosen & Katz LLP. An official committee of unsecured creditors has been appointed in the case. The Committee is represented by lawyers at Brown Rudnick LLP and Saul Ewing LLP. A123 sought bankruptcy protection with a deal to sell its auto- business assets to Johnson Controls Inc. The deal with JCI is valued at $125 million, and subject to higher offers at a bankruptcy auction. At an auction early in December, JCI's bid was topped by Wanxiang America's $256.6 million offer. The Bankruptcy Court approved the sale on Dec. 11. Wanxiang is buying most of A123, except for its government business. Navitas Systems, a Chicago-area company spun off from Sun MicroSystems, is buying A123's government business for $2.25 million. JCI has filed an appeal from the sale approval. A123 SYSTEMS: Committee Wins Approval to Hire Washington Lobbyist ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Washington lobbyists typically aren't among the professionals hired in a bankruptcy reorganization. The Chapter 11 case for A123 Systems Inc. is an exception to the rule. According to the report, the bankruptcy judge on Jan. 11 gave the A123 official creditor's committee authorization to hire Capitol Counsel LLC as lobbyist to counter opposition to government approval of the sale to China's Wanxiang Group Corp. A123 received approval from the bankruptcy court on Dec. 11 to sell the business to Wanxiang for $256.6 million. The sale must be approved by the Treasury Department's Committee for Foreign Investment in the U.S. The committee, the report discloses, said that Johnson Controls Inc., a loser at auction, hired a "seasoned political lobbyist" to fight against government approval of the sale. Milwaukee-based JCI also appealed the sale-approval order. JCI said it may be interested in buying the business if Wanxiang can't obtain government approval. About A123 Systems Based in Waltham, Massachusetts, A123 Systems Inc. designs, develops, manufactures and sells advanced rechargeable lithium-ion batteries and battery systems and provides research and development services to government agencies and commercial customers. A123 is the recipient of a $249 million federal grant from the Obama administration. Pre-bankruptcy, A123 had an agreement to sell an 80% stake to Chinese auto-parts maker Wanxiang Group Corp. U.S. lawmakers opposed the deal over concerns on the transfer of American taxpayer dollars and technology to China. A123 didn't make a $2.7 million payment due Oct. 15 on $143.75 million in 3.75% convertible subordinated notes due 2016. A123 and U.S. affiliates, A123 Securities Corporation and Grid Storage Holdings LLC, sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 12-12859 to 12-12861) on Oct. 16, 2012. A123 disclosed assets of $459.8 million and liabilities totaling $376 million. Debt includes $143.8 million on 3.75% convertible subordinated notes. Other liabilities include $22.5 million on a bridge loan owing to Wanziang. About $33 million is owed to trade suppliers. The Hon. Kevin J. Carey presides over the case. Lawyers at Richards, Layton & Finger, P.A., and Latham & Watkins LLP serve as the Debtors' counsel. Lazard Freres & Co. LLC acts as the Debtors' financial advisors, while Alvarez & Marsal serves as restructuring advisors. Logan & Company Inc. serves as the Debtors' claims and noticing agent. Wanxiang America Corporation and Wanxiang Clean Energy USA Corp. are represented in the case by lawyers at Young Conaway Stargatt & Taylor, LLP, and Sidley Austin LLP. JCI is represented in the case by Josh Feltman, Esq., at Wachtell Lipton Rosen & Katz LLP. An official committee of unsecured creditors has been appointed in the case. The Committee is represented by lawyers at Brown Rudnick LLP and Saul Ewing LLP. A123 sought bankruptcy protection with a deal to sell its auto- business assets to Johnson Controls Inc. The deal with JCI is valued at $125 million, and subject to higher offers at a bankruptcy auction. At an auction early in December, JCI's bid was topped by Wanxiang America's $256.6 million offer. The Bankruptcy Court approved the sale on Dec. 11. Wanxiang is buying most of A123, except for its government business. Navitas Systems, a Chicago-area company spun off from Sun MicroSystems, is buying A123's government business for $2.25 million. JCI has filed an appeal from the sale approval. ACACIA DIVERSIFIED: Files Annual Report for 2010 ------------------------------------------------ Acacia Diversified Holdings, Inc., formerly Acacia Automotive, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $216,921 on $1.75 million of total revenues for the year ended Dec. 31, 2010, compared with a net loss of $274,834 on $1.39 million of total revenues during the prior year. The Company's balance sheet at Dec. 31, 2010, showed $1.30 million in total assets, $1.09 million in total liabilities, and $212,140 in total stockholders' equity. KWCO, PC, in Odessa, Texas, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2010. The independent auditors noted that the Company has suffered recurring losses from operations and has limited capital resources that raise substantial doubt about its ability to continue as a going concern. In 2009, the Company's independent auditor indicated that the Company had three material weaknesses: (i) Reconciliations and account analysis were not performed in a timely manner as the Company did not have fully trained financial accounting personnel, which resulted in adjusting journal entries; (ii) The sales and accounts receivable software was not integrated with the financial accounting software and accounting personnel did not perform routine reconciliations of data entered on the sales reporting system to appropriate control accounts in the general ledger system with reconciliations made in the aggregate without individual account scrutiny regardless of materiality; and (iii) Before the audit sign off date the Company suffered a system failure. Even though there was no apparent loss of data, there was a failure of operations personnel to perform systematic and recurring data backups on a routine basis. Acacia Automotive notified the SEC on separate occasions regarding the delay in the filing of its periodic reports for the following periods: -- quarterly report for the period ended Sept. 30, 2010; -- annual report for the year ended Dec. 31, 2010; -- quarterly report for the period ended March 31, 2011; -- quarterly report for the period ended June 30, 2011; -- quarterly report for the period ended Sept. 30, 2011; -- annual report for the year ended Dec. 31, 2011; and -- quarterly report for the year ended March 31, 2012. The Company indicated in the filings that the financial information could not be assembled and analyzed without unreasonable effort and expense. On Oct. 18, 2012, the Company changed its name from Acacia Automotive, Inc., to Acacia Diversified Holdings, Inc. The Company will continue to file its annual reports 10-K through the period ended Dec. 31, 2011, and its quarterly reports 10-Q through the period ended Sept. 30, 2012, under the name Acacia Automotive, Inc. However, the Company will file any interim 8-K current reports or other special reports under the name Acacia Diversified Holdings, Inc., effective with the changing of its name. A copy of the Form 10-K is available for free at: http://is.gd/OA75tK About Acacia Diversified Acacia Diversified Holdings, Inc., does not have significant operations. It intends to acquire and operate businesses. Previously, it was engaged in the auctioning of automobiles, trucks, boats, motor homes, RVs, and related products. The Company was formerly known as Acacia Automotive, Inc., and changed its name to Acacia Diversified Holdings, Inc., in July 2012. Acacia Diversified Holdings, Inc., was founded in 1984 and is based in Ocala, Florida. AHERN RENTALS: To Appeal Court Ruling on Reorganization Stay Order ------------------------------------------------------------------ Ahern Rentals, Inc. disclosed that on Monday, January 14, 2013, the United States District Court Judge Larry R. Hicks dismissed Ahern's appeal and vacated his stay order entered on December 21, 2012, which stayed an order entered by Bankruptcy Judge Bruce T. Beasley refusing to extend the Company's exclusive right to file a plan of reorganization. Howard Brown, Chief Financial Offer for Ahern, stated, "Needless to say, we are very disappointed in the ruling by Judge Hicks and immediately filed an appeal with the Ninth Circuit Court of Appeals." 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. AIRBORNE HOLDINGS: S&P Withdraws 'B' Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services said that it withdrew its ratings on Airborne Holdings Inc., including the 'B' corporate credit rating, due to lack of information and at the company's request. ALCO CORP: Association Wants Unsecured Priority ----------------------------------------------- Association de Camioneros is asking the U.S. Bankruptcy Court for the District of Puerto Rico to consider in the next hearing its opposition to Alco Corporation's Chapter 11 Plan. The Association is composed of drivers to receive payment once the companies pay the Association. The Association also asks that the Court determine the Debtor's debt as unsecured priority debt. The Association relates that the debt was paid with a check that has no funds, which constitutes a felony in the Commonwealth of Puerto Rico. About Alco Corp. Alco Corporation in Dorado, Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 12-00139) on Jan. 12, 2012. Carmen D. Conde Torres, Esq., and C. Conde & Associates represent the Debtor in its restructuring effort. Alco tapped Jimenez Vasquez & Associates, PSC, as accountants. The Debtor scheduled $11.2 million in assets and $7.76 million in debts. The petition was signed by Alfonso Rodriguez, president. The Plan considers the full payment of all administrative, secured creditors and priority claims and a 50% dividend to the general unsecured creditors on monthly installments within 5 years from the effective date. ALCO CORP: Nevarez & Sanchez Okayed for Civil Case -------------------------------------------------- The U.S. Bankruptcy Court for the District of Puerto Rico authorized Alco Corporation to employ Jose A. Sanchez Alvarez and the Law Firm of Nevarez & Sanchez Alvarez PSC as special counsel. The special counsel is expected to continue its representation in civil case filed with the Puerto Rico Court of First Instance, in which the Bankruptcy Court allowed the modification of automatic stay in order to continue the state court litigation until final judgment and other matters that may specifically assign. The hourly rates of the firm's personnel are: Mr. Alvarez $225 Laura E. Alonzo-Monrouzeau $150 To the best of the Debtor's knowledge, Mr. Alvarez and the firm do not hold nor represent any interest adverse to the Debtor or the estate in the matters upon which they are to be engaged. About Alco Corp. Alco Corporation in Dorado, Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 12-00139) on Jan. 12, 2012. Carmen D. Conde Torres, Esq., and C. Conde & Associates represent the Debtor in its restructuring effort. Alco tapped Jimenez Vasquez & Associates, PSC, as accountants. The Debtor scheduled $11.2 million in assets and $7.76 million in debts. The petition was signed by Alfonso Rodriguez, president. The Plan considers the full payment of all administrative, secured creditors and priority claims and a 50% dividend to the general unsecured creditors on monthly installments within 5 years from the effective date. ALETHEIA RESEARCH: CIBC OK'd to Terminate Sub-Advisory Agreements ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Central District of California signed a stipulation between Aletheia Research and Management, Inc., and CIBC Asset Management, Inc., and CIBC World Markets Inc., resolving the motion for relief from the automatic stay. On Nov. 26, 2012, CIBC filed a motion for relief from stay seeking an order lifting the automatic stay to allow CIBC to terminate both Sub-Advisory Agreements between CIBC and the Debtor. The Debtor and CIBC are parties to a contract originally dated March 4, 2007, which as amended, is an investment consulting service sub-advisory agreement. The Client Account Assets under the Debtor's management pursuant to the ICS Sub-Advisory Agreement are approximately $97 million as of Nov. 30, 2012. The Court approved the stipulation and ordered that: -- CIBC is granted relief from the automatic stay to allow it to terminate both Sub-Advisory Agreements between CIBC and the Debtor, on the Effective Date -- the date when the Court approved the stipulation, without regard for any notice periods therein; -- CIBC will remit to the Debtor via wire transfer, the following amounts by the later of Dec. 15, 2012, or three business days after the Effective Date: a. Payment in the amount of C$369,072, representing the management fees that would come due for a period of 60 days from Nov. 30, 2012 under the Portfolio Sub-Advisory Agreement, assuming the amount of the Investment Fund Assets under the Debtor's management were to remain the same as it was on Nov. 30, 2012. b. Payment in the amount of C$63,590, representing the management fees that would come due for a period of 60 days from Nov. 30, 2012, under the ICS Sub-Advisory Agreement, assuming the amount of the Client Account Assets under the Debtor's management were to remain the same as it was on Nov. 30, 2012. c. Payment in the amount of C$196,231, representing management fees that are due and owing under the Portfolio Sub-Advisory Agreement for the period of Oct. 1, 2012, to Oct. 31, 2012, on the Investment Fund Assets. d. Payment in the amount of C$185,207, representing management fees that are due and owing under the Portfolio Sub-Advisory Agreement for the period of Nov. 1, 2012, to Nov. 30, 2012, on the Investment Fund Assets. e. Payment in the amount of C$125,149, representing management fees that are due and owing under the ICS Sub- Advisory Agreement for the period of Oct. 1, 2012, to Nov. 30, 2012, on the Client Account Assets. All outstanding amounts due and owing are resolved and all further payment obligations between the parties are released. CIBC will have no right to claw back or pursue refund of any amounts paid by CIBC that may be subject to Section 2, Paragraph 3 of the ICS Sub-Advisory Agreement, entitled Impact of Account Withdrawals or Termination. In the event that the Debtor's case is converted to a case under Chapter 7 or dismissed before the terms of the stipulation are fully executed, the stipulation is voidable at CIBC's election. About Aletheia Research Aletheia Research and Management, Inc., filed a bare-bones Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-47718) on Nov. 11, 2012. Attorneys at Greenberg Glusker represent the Debtor. The board voted in favor of a bankruptcy filing due to the Company's financial situation and ongoing litigation. According to the list of top largest unsecured creditors, Proctor Investments has unliquidated and disputed claims of $16 million on account of pending litigation. AMERICAN AIRLINES: Wants Plan Deadline Moved to April 1 ------------------------------------------------------- AMR Corp. asked the U.S. Bankruptcy Court for the Southern District of New York for additional time to file a Chapter 11 plan and solicit votes for that plan. In a motion jointly filed together with the Official Committee of Unsecured Creditors, AMR proposed to move the deadline for filing the plan to April 1, and the deadline for soliciting votes from creditors to May 31. The extension bars creditors and other parties from filing rival plans and maintains AMR's control over its restructuring. AMR attorney Stephen Karotkin, Esq., at Weil Gotshal & Manges LLP, in New York, said the company and the committee are pursuing collaborative review of strategic alternatives beneficial to the company. The request comes as AMR and US Airways Group Inc. are nearing completion of their joint exploration of a possible merger. This is the fifth delay requested since the company and its subsidiaries filed for bankruptcy protection on November 29, 2011, according to a January 11 report by Dallas Morning News. "American has made significant progress in its restructuring. This work, while progressing well, takes time, and American and the unsecured creditors' committee believe that the proposed extension to April 1, 2013, is appropriate for this process to continue in an orderly and efficient manner," AMR said in an email, according to The Wall Street Journal's Jack Nicas. A court hearing is set for February 14. Objections are due by February 7. 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: Wins OK to Sell Townhouse for GBP14-Mil. ----------------------------------------------------------- AMR Corp. obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to sell a townhouse to CG Property Nominees Limited for GBP14.15 million. A portion of the proceeds from the sale will be part of an asset pool to be distributed among creditors. AMR agreed to pay 1.5% of the purchase price to John D. Wood & Co. and GBP29,000 to Taylor Vinters LLP for assisting the company in marketing the property. The 5,242-square-foot townhouse in Kensington, London, has been owned by American Airlines Inc. for nearly 20 years. American Airlines employees say the townhouse has been a symbol of executive privilege and excess for more than a decade. James Little, president of the Transport Workers Union International, which represents about 5,000 workers at the company's Tulsa maintenance base, said it has been outrageous for American executives to be living in such a residence when its workers are being terminated and are losing their homes, according to a January 9 report by Tulsa World. "The sale of this asset is a step in the right direction and long overdue," Tulsa World quoted Mr. Little as saying. "This should have happened before the company entered bankruptcy." Michael Boyd, chairman of Boyd Group International, an airline analyst in Evergreen, Colo., questioned why American Airlines needed a townhouse in London. "A corporation has no business buying that kind of stuff -- at the time they bought it, American wasn't even a player in London," Tulsa World quoted him as saying. "They had two flights a day in London. It's really a blot on their reputation." Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports the sale was approved without an auction, which ordinarily would be held to determine if there is a better offer. The airline said the property was on the market for four months and was shown to 37 prospective buyers. 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: Shareholders' Committee Becoming More Likely --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports AMR Corp., the parent of American Airlines Inc., may have an official shareholders' committee within a matter of days. According to the report, the company's lawyer wrote the U.S. Trustee saying there is now a "reasonable possibility" there will be value left for shareholders of the AMR holding company after the parent's creditors are paid in full. The possibility of payment in bankruptcy is the pivotal issue U.S. Trustees address in deciding whether to form an official equity committee. A year ago, AMR took the position that there was no reasonable likelihood value would remain for shareholders. Since then, AMR's letter says, there has been "remarkable progress" in the bankruptcy reorganization resulting in "significant appreciation" in value. Although holding company creditors may be paid in full, with value left over for shareholders, it remains possible that all creditors of the American Airlines operating company may not be paid in full. The report recounts that last month, Kevin Starke from CRT Capital Group LLC said that $275 million could be left over at the AMR holding company after paying the parent's claims in full, leaving an 80 cent-per-share recovery for stockholders. Mr. Starke's analysis was based on so-called double-dip claims, where creditors with claims against the parent also have claims against the airline subsidiary based on guarantees. The contribution the airline makes toward payment of double-dip claims could mean full payment for creditors at the parent AMR, Starke said. Mr. Rochelle notes that shareholders' hopes of recovery could be dashed by the airline's creditors facing the possibility of less than full payment. They could argue that the parent's claims against the airline subsidiary should be treated as equity contributions, not debt. 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: CRT Analyst Sees Equity Value ------------------------------------------------ "Normally, outstanding common shares in a bankrupt company decline to zero and are cancelled on emergence from bankruptcy so that the company can issue new stock. But it is conceivable that an exception will occur in the case of AMR," Ted Reed, writing for TheStreet.com, reports. AMR Corp. shares closed Jan. 11 at $1.60. Since Jan. 1, when they traded at 80 cents, the shares have doubled, Mr. Reed reports. According to TheStreet, CRT Capital Group analyst Kevin Starke first wrote about the shares on Dec. 7, when they opened at 51 cents, saying in a report that an equity recovery "cannot be ruled out." TheStreet says Mr. Starke's report may have contributed to the steep climb in the shares' value. TheStreet recounts Mr. Starke wrote at the time that some of the members of an ad hoc bondholder group had "substantial holdings in the common stock" and might support a reorganization plan that benefitted equity holders and bondholders. TheStreet notes that Mr. Starke, in a subsequent report Dec. 14, reiterated his views. He wrote again that the claims against American Airlines include a $2.4 billion intercompany claim by AMR, meaning that creditors with claims against both companies could be in for a "double dip" recovery. In a reported offer by US Airways to turn over 70% of AMR stock to creditors, those "double dip" creditors could be entitled to more than the $2.8 billion value of their claims -- which would be illegal. The excess, Mr. Starke wrote, could go to the equity holders; it would be worth around 80 cents a share. TheStreet says Mr. Starke also described additional possible scenarios: -- US Airways turning over 80% of the company to creditors, which Mr. Starke considers more likely than 70%, using a valuation based on an AMR standalone plan. With creditors getting 80%, "double dip" creditors would be entitled to $1.2 billion more than they can legally collect. In the unlikely event that money all flowed to equity, shares could be valued at $3.65 each. But Mr. Starke said that "this would be seen as even more egregious to single-dip creditors," and that a negotiated deal would likely result in a lower -- perhaps far lower -- valuation. -- Single-dip creditors could challenge AMR's claim against American Airlines, obviously a closely related company. But since the double-dip creditors also hold common stock, they "may have little reason to oppose the recovery to equity," Mr. Starke said. TheStreet relates Mr. Starke's report included a warning to buyers of AMR common shares. He noted: "Anyone buying a bankrupt equity should know that being at the bottom of the food chain is generally going to be a very high-risk bet, and maybe be better as an adjunct to a position in the bonds or trade claims." Last week, in a regulatory filing of a letter to a U.S. Justice Department attorney, AMR bankruptcy attorney Harvey Miller appeared to lend a measure of support to Mr. Stark's analysis, TheStreet points out. In the letter, Mr. Miller said AMR has "made remarkable progress in stabilizing their businesses and improving their prospects. 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: Continues Information Exchange With USAir ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that AMR Corp. once again joined hands with the official creditors' committee seeking a 20-day extension of the company's exclusive right to propose a reorganization plan. If approved by the bankruptcy court at a Feb. 14 hearing, the deadline will be extended to April 1. The parent of American Airlines Inc. said the company and the committee are "pursing their collective review of strategic alternatives," a likely reference to discussions with US Airways Group Inc. about a merger. AMR also said it is continuing to exchange confidential information with US Airways. 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 COMMERCE: Incurs $50,400 Net Loss in Nov. 30 Quarter ------------------------------------------------------------- American Commerce Solutions, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $50,462 on $617,157 of net sales for the three months ended Nov. 30, 2012, compared with a net loss of $35,025 on $594,450 of net sales for the same period during the prior year. For the nine months ended Nov. 30, 2012, the Company reported net income of $46,483 on $1.82 million of net sales, compared with a net loss of $162,252 on $1.82 million of net sales for the same period a year ago. The Company's balance sheet at Nov. 30, 2012, showed $4.93 million in total assets, $4.38 million in total liabilities and $556,410 in total stockholders' equity. "The Company has incurred substantial operating losses since inception and has used approximately $53,800 of cash from operations for the nine months ended November 30, 2012. Additionally, the Company is in default on several notes payable. These factors raise substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon its ability to reverse negative operating trends, raise additional capital, and obtain debt financing." A copy of the Form 10-Q is available for free at: http://is.gd/4AXKeY About American Commerce American Commerce Solutions, Inc., headquartered in Bartow, Florida, is primarily a holding company with one wholly owned subsidiary; International Machine and Welding, Inc., is engaged in the machining and fabrication of parts used in heavy industry, and parts sales and service for heavy construction equipment. As reported in the TCR on May 28, 2012, Peter Messineo, CPA, of Palm Harbor, Florida, expressed substantial doubt about American Commerce's ability to continue as a going concern, following its audit of the Company's financial position and results of operations for the fiscal year ended Feb. 29, 2012. The independent auditors noted that the Company has incurred recurring losses from continuing operations, has negative working capital and has used significant cash in support of its operating activities. Additionally, as of Feb. 29, 2012 the Company is in default of several notes payable. AMERICAN NANO: Incurs $2.1-Mil. Net Loss in Fiscal 2012 ------------------------------------------------------- American Nano Silicon Technologies, Inc., filed on Jan. 11, 2013, its annual report on Form 10-K for the fiscal year ended Sept. 30, 2012. Friedman LLP, in New York, noted that the Company suspended its operations in May 2011. "In addition, the Company has suffered negative cash flows for the year ended Sept. 30, 2012, and has a net working capital deficiency as of Sept. 30, 2012, that raises substantial doubt about its ability to continue as a going concern." The Company reported a net loss of $2.1 million on $89,378 of revenues in fiscal 2012, compared with net income of $3.4 million on $16.1 million of revenues in fiscal 2011. "The significant decrease in revenue is primarily due to the fact that we moved our factory site during the second half of the fiscal year 2011 to facilitate product diversification capabilities. Production was suspended during the move. Through the date of this report, the equipment and production line in the new facility is still undergoing adjustments." The Company's balance sheet at Sept. 30, 2012, showed $27.0 million in total assets, $12.7 million in total liabilities, and stockholders' equity of $14.3 million. A copy of the Form 10-K is available at http://is.gd/wZrIVo About American Nano Silicon Based in Sichuan, China, American Nano Silicon Technologies, Inc., is a nano-technology chemical manufacturer. It manufactures and markets "Micro Nano Silicon?," its own proprietary product, in China. Micro Nano Silicon is an ultra fine crystal that can be utilized as a non-phosphorous additive in detergents, as an accelerant additive in cement, as a flame retardant additive in rubber and plastics and as a pigment for paint. In May 2011 the Company suspended operations in order to move its manufacturing to a new facility. Testing of the manufacturing systems in the new facility was completed at the end of 2012, and the Company will initiate manufacturing operations at the end of January 2013. With the expanded manufacturing capacity provided by the new facility, the Company is also replacing its product offering. For the immediate future, its only product will be a flame retardant additive incorporating Micro Nano Silicon, which will be marketed for use in rubber and plastic products. The first non-sample deliveries of the new flame retardant product will be made in February 2013, as the Company already has a substantial contract for the product. AMERICAN POWER: Kevin Tierney Quits Board of Directors ------------------------------------------------------ Kevin Tierney, Sr., resigned from the Board of Directors of the American Power Group Corporation, formerly known as GreenMan Technologies Inc., in anticipation of the requirement set forth in the Company's Restated Certificate of Incorporation, as amended, that the number of directors elected by the holders of the Company's Common Stock, voting as a separate class, be reduced from four to three effective on and after March 31, 2013. Mr. Tierney's resignation is not due to any disagreement known to the Company's executive officers with respect to any matter relating to the Company's operations, policies or practices. About American Power Group American Power Group's alternative energy subsidiary, American Power Group, Inc., provides a cost-effective patented Turbocharged Natural GasTM conversion technology for vehicular, stationary and off-road mobile diesel engines. American Power Group's dual fuel technology is a unique non-invasive energy enhancement system that converts existing diesel engines into more efficient and environmentally friendly engines that have the flexibility to run on: (1) diesel fuel and liquefied natural gas; (2) diesel fuel and compressed natural gas; (3) diesel fuel and pipeline or well-head gas; and (4) diesel fuel and bio-methane, with the flexibility to return to 100% diesel fuel operation at any time. The proprietary technology seamlessly displaces up to 80% of the normal diesel fuel consumption with the average displacement ranging from 40% to 65%. The energized fuel balance is maintained with a proprietary read-only electronic controller system ensuring the engines operate at original equipment manufacturers' specified temperatures and pressures. Installation on a wide variety of engine models and end-market applications require no engine modifications unlike the more expensive invasive fuel-injected systems in the market. See additional information at: www.americanpowergroupinc.com. American Power incurred a net loss available to common shareholders of $14.66 million for the year ended Sept. 30, 2012, compared with a net loss available to common shareholders of $6.81 million during the prior year. The Company's balance sheet at Sept. 30, 2012, showed $9.08 million in total assets, $4.11 million in total liabilities and $4.97 million in total stockholders' equity. AMERICAN SUZUKI: Judge Approves Chapter 11 Disclosure Statement --------------------------------------------------------------- American Suzuki Motor Corporation on Jan. 15 disclosed that the Disclosure Statement for its amended Chapter 11 Plan has been approved by Judge Scott Clarkson of the U.S. Bankruptcy Court of the Central District of California. The Court's approval of the Disclosure Statement allows ASMC to begin soliciting votes to accept the Plan. A confirmation hearing is currently scheduled for February 28, 2013. "The approval of our Disclosure Statement represents an important step in our realignment and restructuring process," said M. Freddie Reiss, ASMC's Chief Restructuring Officer. "We look forward to implementing our Plan upon emergence and advancing our business strategy in the continental U.S. of focusing on the long- term growth of our Motorcycles/ATV and Marine divisions, while continuing to provide Automotive parts and service through our dealer network." The Company's amended Plan further specifies how its Motorcycles/ATV and Marine divisions, along with its continued Automotive parts and service operation, will be sold to a newly organized, wholly-owned subsidiary of Suzuki Motor Corporation ("SMC"), enabling those operations to continue uninterrupted. The new entity will use the ASMC brand name and operate in the continental U.S. Votes on the Plan must be received by the Company's voting agent, Rust Omni, by February 21, 2013. Solicitation materials are expected to be mailed to all creditors entitled to vote on the Plan no later than January 24, 2013. A hearing to consider confirmation of the Plan is currently scheduled for February 28, 2013, at 9:00 a.m. Pacific Standard Time. A copy of the Plan and Disclosure Statement is available at: http://www.omnimgt.com Additional information regarding ASMC's business realignment can be found at the Company's Web site -- http://www.suzuki.com-- or via an information hotline at 1-877-465-4819. About American Suzuki Established in 1986, American Suzuki Motor Corporation is the sole distributor of Suzuki automobiles and vehicles in the United States. American Suzuki wholesales virtually all of its inventory through a network of independently owned and unaffiliated dealerships located throughout the continental United States. The dealers then market and sell the Suzuki Products to retail customers. Suzuki Motor Corp., the 100% interest holder in the Debtor, manufacturers substantially all of the Suzuki products. American Suzuki has 295 employees. There are approximately 220 automotive dealerships, over 900 motorcycle/ATV dealerships, and over 780 outboard marine dealerships. American Suzuki filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-22808) on Nov. 5, 2012, to sell the business to SMC, absent higher and better offers. SMC is not included in the Chapter 11 filing. The Debtor disclosed assets of $233 million and liabilities totaling $346 million. Debt includes $32 million owing to the parent on a revolving credit and $120 million for inventory financing. There is about $4 million owing to trade suppliers. The Debtor also filed a plan of reorganization together with the petition. Under the proposed Plan, the Motorcycles/ATV and Marine Divisions will remain largely unaffected including the warranties associated with the products. NounCo, Inc., a wholly owned subsidiary of SMC, will purchase the Motorcycles/ATV and Marine Divisions and the parts and service components of the Automotive Division. The restructured Automotive Division intends to honor automotive warranties and authorize the sale of genuine Suzuki automotive parts and services to retail customers through a network of parts and service only dealerships that will provide warranty services. Bankruptcy Judge Catherine E. Bauer signed an order Oct. 6 reassigning the case to Judge Scott Clarkson. ASMC's legal advisor on the restructuring is Pachulski Stang Ziehl & Jones LLP, and its financial advisor is FTI Consulting, Inc. Nelson Mullins Riley & Scarborough LLP is serving as special counsel on automobile dealer and industry issues. Further, ASMC has proposed the appointment of Freddie Reiss, Senior Managing Director at FTI Consulting, as chief restructuring officer, and has also added two independent Board members to assist it through this period. Rust Consulting Omni Bankruptcy, a division of Rust Consulting, Inc., is the claims and notice agent. The Debtor has retained Imperial Capital, LLC as investment banker. SMC is represented by lawyers at Klee, Tuchin, Bogdanoff & Stern LLP. AMF BOWLING: U.S. Trustee Opposing Bonus Proposal ------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Trustees in New York and Delaware aren't alone in challenging proposed bonuses for executives of bankruptcy companies. Their counterpart in Richmond, Virginia, is opposing court approval of a bonus program for the top nine executives of bowling-alley operator AMF Bowling Worldwide Inc. According to the report, the U.S. Trustee filed papers Jan. 14 contending that the bonuses for AMF Bowling's managers are "simply disguised retention awards" that Congress outlawed for officers of companies in bankruptcy. The Justice Department's bankruptcy watchdog said that the thresholds for receiving bonuses weren't sufficiently challenging because awards could be earned simply for generating cash flow enough to avoid default under loan agreements financing the bankruptcy. There will be a hearing on Jan. 17 where U.S. Bankruptcy Judge Kevin R. Huennekens will rule on the bonus program. Chapter 11 Plan The company proposed a reorganization plan where senior lenders would receive the new stock together with $150 million cash supplied by a subgroup of the lenders in the form of a term loan. There will be an auction on March 14 to learn if anyone will better the proposal. The debt swap or better alternative will be approved at a confirmation hearing for approval of the Chapter 11 reorganization plan. A group of the first-lien lenders are supporting the Chapter 11 case with $50 million in fresh financing. About AMF Bowling Worldwide AMF Bowling Worldwide Inc. is the largest operator of bowling centers in the world. The Company and several affiliates sought Chapter 11 protection (Bankr. E.D. Va. Case Nos. 12-36493 to 12-36508) on Nov. 12 and 13, 2012, after reaching an agreement with a majority of its secured first lien lenders and the landlord of a majority of its bowling centers to restructure through a first lien lender-led debt-for-equity conversion, subject to higher and better offers through a marketing process. At the time of the bankruptcy filing, AMF operated 262 bowling centers across the United States and, through its non-Debtor facilities, and 8 bowling centers in Mexico -- more than three times the number of bowling centers of its closest competitor. Debt for borrowed money totals $296 million, including $216 million on a first-lien term loan and revolving credit, and $80 million on a second-lien term loan. Mechanicsville, Virginia-based AMF first filed for bankruptcy reorganization in July 2001 and emerged with a confirmed Chapter 11 plan in February 2002 by giving unsecured creditors 7.5% of the new stock. The bank lenders, owed $625 million, received a combination of cash, 92.5% of the stock, and $150 million in new debt. At the time, AMF had over 500 bowling centers. Judge Kevin R. Huennekens oversees the 2012 case, taking over from Judge Douglas O. Tice, Jr. Patrick J. Nash, Jr., Esq., Jeffrey D. Pawlitz, Esq., and Joshua A. Sussberg, Esq., at Kirkland & Ellis LLP; and Dion W. Hayes, Esq., John H. Maddock III, Esq., and Sarah B. Boehm, Esq., at McGuirewoods LLP, serve as the Debtors' counsel. Moelis & Company LLC serves as the Debtors' investment banker and financial advisor. McKinsey Recovery & Transformation Services U.S., LLC, serves as the Debtors' restructuring advisor. Kurtzman Carson Consultants LLC serves as the Debtors' claims and noticing agent. Kristopher M. Hansen, Esq., Sayan Bhattacharyya, Esq., and Marianne S. Mortimer, Esq., at Stroock & Stroock & Lavan LLP; and Peter J. Barrett, Esq., and Michael A. Condyles, Esq., at Kutak Rock LLP, represent the first lien lenders. An ad hoc group of second lien lenders are represented by Lynn L. Tavenner, Esq., and Paula S. Beran, Esq., at Tavenner & Beran, PLC; and Ben H. Logan, Esq., Suzzanne S. Uhland, Esq., and Jennifer M. Taylor, Esq., at O'Melveny & Myers LLP. The petitions were signed by Stephen D. Satterwhite, chief financial officer/chief operating officer. The Committee tapped to retain Pachulski Stang Ziehl & Jones LLP as its lead counsel; Christian & Barton, LLP as its local counsel; and Mesirow Financial Consulting, LLC as its financial advisors. ATP OIL: To Auction Shallow-Water Gulf Wells in February -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports ATP Oil & Gas Corp. is being required by lenders financing the reorganization to sell shallow-water oil and gas properties in the Gulf of Mexico. The auction will take place Feb. 26 if the U.S. Bankruptcy Court in Houston approves sale procedures at a Jan. 24 hearing. ATP's deep-water properties will be sold later. According to the report, ATP will be selling properties in 18 blocks, seven of which are producing. The shallow-water properties have proved reserves of 2.5 million barrels of crude oil equivalent. There is an additional 544,000 in probable and possible barrels of crude equivalent. Buyers will be permitted to bid block-by-block or for the entire package. The report relates ATP wants bidders to submit initial indications of interest by Feb. 5, followed by a Feb. 19 bid deadline, the Feb. 26 auction, and a Feb. 28 hearing for approval of sale. The auction is required by a provision in the loan agreement compelling sale of the assets because a geologist's report came in below a specified threshold. No buyer is yet under contract. ATP will have the ability to designate a so-called stalking-horse. About ATP Oil Houston, Tex.-based ATP Oil & Gas Corporation is an international offshore oil and gas development and production company focused in the Gulf of Mexico, Mediterranean Sea and North Sea. ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP, serve as bankruptcy counsel. Porter Hedges LLP serves as local co-counsel. Munsch Hardt Kopf & Harr, P.C., is the conflicts counsel. Opportune LLP is the financial advisor and Jefferies & Company is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. Blackhill Partners, LLC, provided James R. Latimer, III as chief restructuring officer to the Debtor. Filings with the Bankruptcy Court and claims information are available at http://www.kccllc.net/atpog ATP disclosed assets of $3.6 billion and $3.5 billion of liabilities as of March 31, 2012. Debt includes $365 million on a first-lien loan where Credit Suisse AG serves as agent. There is $1.5 billion on second-lien notes with Bank of New York Mellon Trust Co. as agent. ATP's other debt includes $35 million on convertible notes and $23.4 million owing to third parties for their shares of production revenue. Trade suppliers have claims for $147 million, ATP said in a court filing. In its schedules, the Debtor disclosed $3,249,576,978 in assets and $2,278,831,445 in liabilities as of the Chapter 11 filing. An official committee of unsecured creditors has been appointed in the case. Evan R. Fleck, Esq., at Milbank, Tweed, Hadley & McCloy, in New York, represents the Creditors Committee as counsel. Duff & Phelps Securities, LLC, serves as its financial advisors. The Committee tapped Epiq Bankruptcy Solutions, LLC as its information agent. BACK YARD BURGERS: Pharos Retains Business With New Investment -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Back Yard Burgers Inc., a chain of 90 quick-service restaurants in 16 states, received approval of a Chapter 11 reorganization plan at a Jan. 11 confirmation hearing in Delaware. According to the report, the plan implements an agreement worked out before the bankruptcy filing in October with secured lender Harbert Mezzanine Partners II LP, owed $8.9 million on a mezzanine loan. After bankruptcy, the lender and the owner, Pharos Capital Partners II LP, negotiated with the official unsecured creditors' committee to come up with a plan where the $2 million in general creditor claims will have an estimated 26% recovery. Unsecured creditors are to have $125,000 cash initially along with 20% of excess cash flow up to a maximum of $500,000. Harbert is slated for full repayment by receiving restructured notes. The report discloses that private-equity investor Pharos in effect reacquired the company by converting $2.9 million of financing for the Chapter 11 case into all the new equity. Pharos invested $14 million to sustain the money-losing operations, according to a court filing. About Back Yard Burgers Back Yard Burgers -- http://backyardburgers.com/-- operates and franchises more than 150 quick-service restaurants in 20 states, primarily in markets throughout the Southeast region of the United States. Back Yard Burgers Inc. and three of its affiliates sought Chapter 11 protection (Bankr. D. Del. Case Nos. 12-12882 to 12-12885) on Oct. 17, 2012, with a pre-negotiated restructuring plan that has the support of both the Company's majority owner and secured lender. The debtor-affiliates are BYB Properties, Inc., Nashville BYB, LLC, and Little Rock Back Yard Burgers, Inc. Attorneys at Greenberg Traurig serve as bankruptcy counsel. Saul Ewing LLP is the conflicts counsel. GA Keen Realty Advisors is the real estate advisor. Rust Consulting/Omni Bankruptcy is the claims and notice agent. Back Yard Burgers estimated up to $10 million in assets and at least $10 million in liabilities. BAKERS FOOTWEAR: Converting to Chapter 7 Liquidation ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Bakers Footwear Group Inc. not only gave up hope of reorganizing around 56 remaining stores, the shoe retailer also abandoned the idea of trying to confirm a liquidating Chapter 11 plan. According to the report, the company admitted in a court filing Jan. 14 that the reorganization effort is "administratively insolvent," meaning there aren't enough unencumbered assets to pay professional expenses and other costs incurred since the bankruptcy began in October. Bakers arranged for the U.S. Bankruptcy Court in St. Louis to hold a hearing Jan. 16 for conversion of the case to liquidation in Chapter 7 where a trustee is appointed automatically. The report adds that the bankruptcy judge signed an order Jan. 15 allowing Bakers to conduct going-out-of-business sales at the remaining stores. Bakers conducted sales in the other 150 stores in November. The judge authorized Bakers to hire Great American Group LLC as consultant to run sales at the remaining stores. The sales are to be completed by the end of February. Great American will receive a fee of 1.45% of gross sales along with $560 a day for each supervisor. Bakers will pay all operating expenses during the sales. About Bakers Footwear Bakers Footwear Group Inc., a mall-based retailer of shoes for young women, filed for bankruptcy protection (Bankr. E.D. Mo. Case No. 12-49658) in St. Louis on Oct. 3, 2012, after announcing a plan to close stores and reduce costs. Bakers was founded in St. Louis in 1926 as Weiss-Kraemer, Inc., later renamed Weiss and Neuman Shoe Co., a regional chain of footwear stores. In 1997, Bakers was acquired principally by its current chief executive officer, Peter Edison, who had previously served in various senior management positions at Edison Brothers Stores Inc. In June 1999, Bakers purchased selected assets of the "Bakers" and "Wild Pair" footwear retailing chains from the bankruptcy estate of Edison Brothers. The "Bakers" footwear retailing chain was founded in 1924 and is the third-oldest soft goods retail concept still in operation in the United States. In February 2001, the Debtor changed its name to Bakers Footwear Group, Inc. In February 2004, Bakers conducted an initial public offering of its common stock. Bakers' common stock is quoted under the ticker symbol "BKRS" on the, the OTC Markets Group's quotation platform. As of the Petition Date, Bakers operates roughly 215 stores nationwide. In November 2012, the U.S. Bankruptcy Court in St. Louis authorized the company to hire a joint venture between SB Capital Group LLC and Tiger Capital Group LLC as agents to conduct closing sales for 150 stores. Bankruptcy Judge Charles E. Rendlen III presides over the case. Brian C. Walsh, Esq., David M. Unseth, Esq., and Laura Uberti Hughes, Esq., at Bryan Cave LLP, serve as the Debtor's counsel. Alliance Management serves as financial and restructuring advisors. Donlin, Recano & Company, Inc., serves as claims agent. The petition was signed by Peter A. Edison, chief executive officer and president. The Company's balance sheet at April 28, 2012, showed $41.90 million in total assets, $59.49 million in total liabilities and a $17.59 million total shareholders' deficit. Counsel for Crystal Financial, the DIP Lender, are Donald E. Rothman, Esq., at Riemer & Braunstein LLP; and Lisa Epps Dade, Esq., at Spencer, Fane, Britt & Brown, LLP. Bradford Sandler, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. BERKELEY COFFEE: Issues 13.6 Million Common Shares to Sean Tan -------------------------------------------------------------- The Board of Directors authorized the issuance of 13,600,000 shares of common stock to Sean Tan. Shares were issued upon conversion of a bond issued to Mr. Tan in the amount of $4,000,000, plus accrued interest of $80,000, for a total conversion of $4,080,000. The bond, plus accrued interest was converted into shares at a price of $0.30 per share. Shares were issued with a restrictive legend and in reliance on exemptions from registration under Section 4(2) of the Exchange Act. On Jan. 9, 2013, a majority of holders of the Company's common stock, and all of the Board of Directors, approved an amendment to the Company's Articles of Incorporation, changing its name to DTS8 Coffee Company, Ltd. The Company is proceeding with an application to FINRA to have a symbol change reflective of the name change and will be filing a Certificate of Amendment with the Nevada Secretary of State. About Berkeley Coffee Shanghai, China-based Berkeley Coffee & Tea Inc. was incorporated on March 27, 2009, in the State of Nevada. Berkeley Coffee expects to generate revenue from the marketing and sale of green coffee beans from Yunnan, China, into the United States. It plans to sell green bean coffee grown in China directly to coffee wholesalers, coffee brokers and coffee roasters in the United States. The Company's balance sheet at Oct. 31, 2012, showed $4.61 million in total assets, $4.59 million in total liabilities, and $19,961 in total shareholders' equity. As reported in the TCR on Aug. 14, 2012, MaloneBailey, LLP, in Houston, Texas, expressed substantial doubt about Berkeley Coffee & Tea Inc.'s ability to continue as a going concern, following the Company's results for the fiscal year ended April 30, 2012. The independent auditors noted that the Company has suffered recurring losses from operations. BIG M INC: Sec. 341(a) Meeting of Creditors on Feb. 13 ------------------------------------------------------ There's a meeting of creditors in the Chapter 11 case of Big M, Inc. on Feb. 13, 2013 at 9:00 a.m. The meeting will be held at Suite 1401, One Newark Center, in Newark, New Jersey. The meeting, which is required under Section 341(a) of the Bankruptcy Code, offers creditors a one-time opportunity to examine a bankrupt company's representative under oath about its financial affairs and operations that would be of interest to the general body of creditors. About Big M Totowa, New Jersey-based Big M, Inc., owner of Mandee, Annie sez, and Afazxe Stores, filed a Chapter 11 petition (Bankr. D.N.J. Case No. 13-10233) on Jan. 6, 2013 with Salus Capital Partners, LLC, funding the Chapter 11 effort. The Mandee brand is a juniors fashion retailer with 84 stores in Illinois and along the East Coast. Annie sez is a discount department-store retailer for women with 35 stores. Afaze is 10- store jewelry and accessory chain. 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. BIG M INC: Proposes $13.2MM DIP Financing From Salus ---------------------------------------------------- Big M, Inc., seeks approval from the bankruptcy judge to obtain postpetition financing on a senior secured and superpriority basis from Salus Capital Partners, LLC. The Debtor also seeks to use the cash collateral of Salus, which is already owed $3.2 million in original principal under a prepetition term loan. The Debtor needs cash to, among other things, continue to operate its business in an orderly manner, maintain business relationships with vendors, suppliers, and customers, pay employees, and satisfy other working capital and operation needs, all of which are necessary to preserve and maintain the Debtor's going-concern value and, ultimately, effectuate a successful reorganization. Salus is providing the Debtor a $13.2 million postpetition senior secured credit facility. The Debtors have yet to enter into a formal DIP financing agreement. The Debtor is negotiating the early days of the case the final terms of the DIP agreement. The parties though have agreed to a DIP term sheet. Pursuant to the term sheet, the DIP loan will comprise (i) a $10 million senior secured revolving, of which up to $3 million will be available prior to entry of the final DIP order, and (ii) a $3.2 million term loan. There will be a $500,000 back-end carve out for professionals. Interest on the loans would be Base Rate plus 5.75% for the revolving loans and 8% per annum for the term loans. The Debtor will be required to achieve certain milestones, including filing a sale motion, and consummating the sale within 180 days of the Petition Date. The Debtor will be required to begin soliciting bids not later than 90 days after the Petition Date, choose a winning bidder within 120 days after the Petition Date. In lieu of a Sec. 363 sale the Debtor may file a Plan, but must have the Plan consummated within 180 days of the Petition Date. Each milestone may be extended by 45 days subject to certain conditions. Postpetition collateral to be granted to the DIP lender will include all causes of action or proceeds thereof. About Big M Totowa, New Jersey-based Big M, Inc., owner of Mandee, Annie sez, and Afazxe Stores, filed a Chapter 11 petition (Bankr. D.N.J. Case No. 13-10233) on Jan. 6, 2013 with Salus Capital Partners, LLC, funding the Chapter 11 effort. The Mandee brand is a juniors fashion retailer with 84 stores in Illinois and along the East Coast. Annie sez is a discount department-store retailer for women with 35 stores. Afaze is 10- store jewelry and accessory chain. 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. BLOCK COMMUNICATIONS: S&P Raises Corporate Credit Rating to 'BB-' ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Block Communications Inc. to 'BB-' from 'B+'. The outlook is stable. At the same time, S&P raised the issue-level rating on the company's $250 million of senior unsecured notes due 2020 to `BB-' from 'B+'. The recovery rating on that unsecured debt remains at `4', indicating S&P's expectation for average (30% to 50%) recovery of principal in the event of a payment default. "The ratings on Block Communications Inc., a privately held diversified media company incorporate Standard & Poor's Ratings Services' view of a 'fair' business risk profile and our expectation that the company will be able to maintain financial metrics consistent with an 'aggressive' financial risk profile," said Standard & Poor's credit analyst Richard Siderman. "We view Block's small, but well-performing, core cable business as having a "satisfactory" business risk profile. Nonetheless, the overall business risk profile is dampened by the noncable units, particularly the newspaper segment, which generates material EBITDA deficits. We expect continued solid performance at the key, well-managed cable unit to effectively offset deterioration at the two daily newspapers, and enable Block to limit debt leverage (including our substantial adjustments) to around 4x and to maintain funds from operations (FFO) to debt of about 20%, both metrics fully supportive of an "aggressive" financial risk profile. We revised our assessment of Block's liquidity to "strong" from "adequate" based on an absence of scheduled debt amortization through the 2020 maturity of its $250 million of unsecured notes; our expectation of annual FFO in the $70 million area; and substantial revolving credit capacity. To reported debt of about $250 million as of Sept 30, 2012, we add about $150 million of adjustments, mostly for retiree benefit obligations related to the newspaper segment," S&P added. "The stable rating outlook largely reflects the good degree of revenue and cash flow visibility from the largely subscription- based business model of Block's core cable-TV properties, which generate the bulk of consolidated EBITDA. That incorporates our two major expectations; first, that growth in non-video RGUs and ARPU at the cable segment will at least offset modest basic video customer losses, and second, that the newspaper segment will continue to post substantial EBITDA deficits. We expect Block's debt leverage, including our adjustments, to be around 4x and FFO to debt to be about 20%; both metrics fully support an aggressive financial risk profile. Basic subscriber erosion in excess of low single digits in 2013 or EBITDA deficits at the newspaper segment in 2013 that are materially above $20 million, and resulted in debt leverage to above 5x on a consistent basis would lead to a rating downgrade. Conversely, we think it is highly unlikely that the company can curtail the secular decline of the newspaper business, at least over the next couple of years. Therefore, we expect continuing (and likely accelerating) cash consumption at the newspaper unit to effectively preclude consideration of a rating upgrade," S&P noted. BLUE EARTH: Files for Chapter 7 Liquidation ------------------------------------------- BankruptcyData reported that Blue Earth Solutions filed for Chapter 7 protection (Bankr. M.D. Fla. Case No. 13-00199) in Orlando. The Company engages in plastic recycling. The Debtor is represented by: Michael Scaglione, Esq. SCAGLIONE LAW FIRM, P.A. 2600 Douglas Road, Penthouse 10 Coral Gables, FL 33134 Tel: (305) 447-0392 Fax: (305) 447-0389 E-mail: mscaglione@sqblaw.com Clermont, Fla.-based Blue Earth Solutions (OTC BB: BESN) -- http://www.blueearthsolutions.com/-- is primarily engaged in the business of developing, implementing and marketing a practical, economical and safe means of recycling polystyrene foam, also known as Expanded Polystyrene using two distinct methodologies. BOMBARDIER INC: Moody's Affirms 'Ba2' CFR; Outlook Negative ----------------------------------------------------------- Moody's Investors Service upgraded Bombardier Inc.'s speculative grade liquidity rating to SGL-2 from SGL-3 and affirmed the company's Ba2 Corporate Family rating, Ba2-PD Probability of Default rating, and Ba2 senior unsecured ratings. Bombardier's rating outlook remains negative. The liquidity rating action recognizes the closing of Bombardier's $2 billion notes offering on Jan. 14, which will boost its consolidated cash position to an estimated $5 billion. Ratings Upgraded: Speculative Grade Liquidity Rating, to SGL-2 from SGL-3 Ratings Affirmed: Corporate Family Rating, Ba2 Probability of Default Rating, Ba2-PD Senior Unsecured, Ba2 (LGD4, 50%) Outlook: Remains Negative Ratings Rationale Bombardier's Ba2 rating is driven by its significant scale and diversity, strong global market positions, natural barriers to entry and sizeable backlog levels in both its Aerospace and Transportation business segments. Moody's expects Bombardier will realize modest earnings growth and about $750 million in consolidated free cash flow consumption in 2013 due to lingering economic weakness affecting its Aerospace division, spending associated with the company's sizeable aerospace programs, ongoing margin pressure from recent problem contracts in its Transportation segment and a continuing weak level of cash advances from customers. Consequently, the company's adjusted leverage is likely to remain very high (currently 7.5x pro-forma the debt issue) over the 12 to 18 month ratings horizon but liquidity is good and stronger growth should take hold by mid 2014, enabling the company to then quickly de-lever. Execution risks related to the development of Bombardier's new CSeries commercial aircraft are also incorporated in the rating as well as the increase in these risks associated with the recent six month delay in the aircraft's first flight to June 2013. Bombardier's SGL-2 liquidity rating incorporates pro-forma cash of $5 billion at the end of 2012 (Moody's estimate), $1.4 billion (USD equivalent) in unused revolvers and a near-absence of current debt maturities. These sources are ample to fund $750 million in expected cash consumption in 2013 as well as higher inter-periods usage due to seasonality, which Moody's estimates could reach $2 billion by the third quarter of 2013. Moody's view's Bombardier's bank financial covenants as cumbersome given the different agreements maintained by its Aerospace and Transportation segments. Nonetheless Moody's expects that Bombardier will maintain good headroom to its financial maintenance covenants through at least 2013. The outlook is negative because Bombardier has consumed more cash than Moody's expected in the past couple of years. A continuation of this trend would lead to a downgrade given that Bombardier's leverage is very high for the rating. Bombardier's rating could be downgraded if its free cash flow is significantly greater than Moody's expectations for 2013 and 2014 (negative $750 million and $0 respectively), the CSeries is further delayed or if its leverage is not expected to reduce below 6x through the ensuing 12-18 months with ongoing expected improvement beyond that timeframe. An upgrade would require evidence of a sustained cyclical upturn in Aerospace, resolution of recent operational challenges in Transportation, the successful entry into service of the CSeries, with a growing order book and leverage sustained below 3.5x. As well, the company would need to sustain its liquidity rating above SGL-3. Headquartered in Montreal, Quebec, Canada, Bombardier is a globally diversified manufacturer of business and commercial jets as well as rail transportation equipment. Annual revenues total roughly $17 billion. The principal methodology used in rating Bombardier was the Global Aerospace and Defense Industry Methodology published in June 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. BONTAN CORPORATION: Incurs Net Loss of C$2.5-Mil. in Fiscal 2012 ---------------------------------------------------------------- Bontan Corporation Inc. filed on Jan. 11, 2013, Amendment No. 1 on Form 20-F/A to its annual report on Form 20-F which was originally filed with the U.S. Securities and Exchange Commission on July 25, 2012. No explanatory note was provided in the filing to explain the purpose of the amendment. The Company reported a net loss of C$2.5 million for the year ended March 31, 2012, compared with a net loss of C$3.8 million for the year ended March 31, 2011. The Company's balance sheet at March 31, 2012, showed C$7.5 million in total assets, C$2.7 million in total current liabilities, and stockholders' equity of C$4.8 million. According to the regulatory filing, cash resources at March 31, 2012, are not sufficient to fund the Company's obligations over the next 12 months and this condition creates a material uncertainty that may cast a significant doubt about the Company's ability to operate as a going concern. "The Company has not generated any income since 2010 and has losses for the year in the amount of C$2.5 million (2011 - C$3.8 million) and accumulated deficit of approximately C$43.5 million (2011 - C$41.0 million). A copy of the Form 20-F/A is available at http://is.gd/0wE1df A copy of the consolidated financial statements for the year ended March 31, 2012, is available at http://is.gd/kHPmBU Bontan Corporation Inc. is incorporated in Ontario and its head office is located at 47 Avenue Road, Suite 200, Toronto, Ontario, Canada. The Company is a diversified natural resource company that invests in oil and gas exploration and development. The Company's shares trade on the Over the Counter Bulletin Board of NASDAQ under a trading symbol "BNTNF". The Company holds an indirect 4.70% working interest in two off- shore drilling licenses in the Levantine Basin, approximately forty kilometers off the West coast of Israel, through its holding of 76.79% equity interest in Israel Petroleum Company Limited ("IPC Cayman"). The Company agreed in December 2011 to dispose of this interest. This was disposed of on June 29, 2012. The Company does not currently own any oil and gas properties with proven reserves. BOSTON GENERATING: Creditors Defend Lawsuit v. US Power Gen ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that creditors of power producer Boston Generating LLC described for a bankruptcy judge in New York how they have plausible claims against the company's former owner, US Power Generating Co., and affiliate Astoria Generating Co. The report recounts that Bos Gen sold its five Boston-area power plants in January 2011 to Constellation Energy Group Inc. From the sale and other payments, first-lien secured lenders with $1.14 billion in claims received almost a full recovery. The company received creditor and court approval for a Chapter 11 plan later that year where the recovery by unsecured creditors would depend largely on the success of lawsuits prosecuted after emergence from Chapter 11. According to the report, one of the lawsuits by the creditors' liquidating trust targeted US Power and Astoria. The suit contends Bos Gen was forced to pay $60 million more for management services than the services were worth. US Power and Astoria filed papers in bankruptcy court in December saying the lawsuit should be dismissed because the allegations aren't "plausible." The creditors' trust, the report discloses, filed papers last week in defense of the suit. The trust contends the suit lays out facts the judge must accept as true showing that Bos Gen didn't receive equivalent value for what the company paid. The defendants will file another set of papers on Jan. 24. Later, U.S. Bankruptcy Judge Shelley C. Chapman will decide if the complaint contains enough facts on its face to survive, at least for the time being. The lawsuit is Jalbert v. US Power Generating Co. (In re Boston Generating LLC), 12-01848, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The bankruptcy case is In re Boston Generating LLC, 10-14419, U.S. Bankruptcy Court, Southern District of New York (Manhattan). About Boston Generating New York-based Boston Generating, LLC, owns nearly 3,000 megawatts of mostly modern natural gas-fired power plants in the Boston area. Privately held Boston Generating is an indirect subsidiary of US Power Generating Co., and considers itself as the third- largest fleet of plants in New England. Boston Generating filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 10-14419) on Aug. 18, 2010. Boston Generating estimated its assets and debts at more than $1 billion as of the Petition Date. EBG Holdings LLC; Fore River Development, LLC; Mystic, LLC; Mystic Development, LLC; BG New England Power Services, Inc.; and BG Boston Services, LLC, filed separate Chapter 11 petitions. D. J. Baker, Esq., at Latham & Watkins LLP, serves as bankruptcy counsel for the Debtors. JPMorgan Securities is the Debtors' investment banker. Perella Weinberg Partners, LP, is the Debtors' financial advisor. Brown Rudnick LLP is the Debtors' regulatory counsel. FTI Consulting, Inc., is the Debtors' restructuring consultant. Anderson Kill & Olick, P.C., is the Debtors' conflicts counsel. The Garden City Group, Inc., is the Debtors' claims agent. The Official Committee of Unsecured Creditors tapped the law firm of Jager Smith P.C. as its counsel. BRIGHT HORIZONS: Moody's Reviews 'B2' CFR for Possible Upgrade -------------------------------------------------------------- Moody's Investors Service placed Bright Horizons Family Solutions LLC's B2 corporate family rating and B2-PD probability of default rating under review for possible upgrade. At the same time, Moody's assigned B1 ratings to the proposed senior secured credit facilities consisting of a $100 million revolving credit facility due 2018 and an $815 million term loan B due 2020. Proceeds from the proposed credit facilities will be used to refinance existing debt. The ratings on the proposed bank debt anticipate closing of an IPO of common shares and a pending refinancing transaction. As such, the ratings for the proposed credit facilities are not under review for possible upgrade. The review for possible upgrade was prompted by the company's planned IPO of common shares, with proceeds being used to redeem the $199 million of 13% senior notes due 2018 (unrated), which are an obligation of holding company Bright Horizons Capital Corp. The conclusion of the ratings review depends on the company completing the IPO and refinancing as is currently contemplated. To the extent these transactions are completed, Moody's anticipates upgrading the corporate family one notch to B1. Conclusion of the ratings review is also subject to Moody's review of final terms and conditions. Ratings assigned: Proposed $100 million senior secured revolving credit facility due 2018 at B1 (LGD3, 31%) Proposed $815 million senior secured term loan B due 2020 at B1 (LGD3, 31%) Ratings placed under review for upgrade: Corporate family rating at B2 Probability of default rating at B2-PD Ratings to be withdrawn at closing: $75 million senior secured revolving credit facility due 2014 at Ba2 $346 million senior secured tranche B term loan due 2015 at Ba2 $84 million incremental term loan B facility due 2017 at Ba2 Ratings Rationale Moody's favorably views the IPO/refinancing to the extent that it reduces financial leverage, materially lowers interest expense, increases revolving credit facility capacity, and extends debt maturities. Moody's estimates that the transactions reduce pro forma financial leverage to 5.2 times from 5.6 times through the twelve months ended September 30, 2012 (Moody's adjusted). Moody's estimates pro forma leverage of approximately 4.9 times for 2012. The possible rating upgrade also reflects Moody's expectation that EBITDA will continue to expand from the ramp-up of new centers, growth in ancillary revenues, tuition increases, and slight improvements in mature centers enrollments as well as from the contribution from acquisitions such that debt to EBITDA declines to or below 4.5 times over the next 12 to 18 months. Moody's expects solid pro forma coverage metrics with EBITDA less capex to interest in the range of 2.5 times over the same period. Free cash flow as a percentage of debt in the high single-digits should accommodate some discretionary debt reduction. The rating action also incorporates material business risks, including a high capex expansion strategy that constrains free cash flow generation, ongoing acquisition activity, and continued pressure on mature center enrollments due to the soft macro environment and elevated unemployment rates. The principal methodology used in this rating was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Bright Horizons Family Solutions LLC, based in Watertown Massachusetts, is a leading provider of center-based child care and related services, summer camps, vacation care, college preparation and admissions counseling ("College Coach"), and other family support services. BRIGHT HORIZONS: S&P Gives Prelim. 'B+' Rating to $915MM Facility ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned Watertown, Mass.-based childcare center operator Bright Horizons Family Solutions LLC's $915 million senior secured credit facilities a preliminary 'B+' rating with a recovery rating of '3', indicating S&P's expectations for meaningful recovery (50% to 70%) in the event of a payment default. The senior secured credit facility consists of a $815 million term loan due 2020 and a $100 million revolving credit facility due 2018. Proceeds of the credit facility will be utilized to repay existing $430 million in term loans, $300 million of 11.5% senior subordinated notes due 2018, and $75 million undrawn revolving credit facility due 2014. Proceeds of the planned IPO will be used to repay the existing $198 million 13% pay-in-kind notes due 2018. At the same time, all other ratings, including the 'B' corporate credit rating, remain on CreditWatch with positive implications, where they were placed on Nov. 16, 2012. S&P expects to raise the corporate credit rating to 'B+', pending the completion of both the refinancing and IPO transactions. If the IPO is not completed on a timely basis, S&P will affirm the 'B' corporate credit rating. "We view Bright Horizons' business risk profile as "fair" because of its good position in employer-sponsored centers, some sensitivity of capacity utilization rates to high unemployment, and highly competitive conditions in the fragmented child care business. We view the company's financial risk profile as "highly leveraged" because of its high debt-to-EBITDA ratio, acquisitive growth strategy, and weak cash flow measures. We assess the company's management and governance as "fair", S&P said Bright Horizons is a midsize company that is the largest U.S. provider of employer-sponsored, workplace-based childcare, five times larger than its nearest competitor. Bright Horizons is also the third largest operator of childcare centers, allowing for clustering and economies of scale in marketing and management. Childcare services are provided by clients to their employees to enhance employee retention. Employer-sponsored centers, which account for two-thirds of the total, have been less volatile than retail-based competition. Fixed costs are relatively high, because of significant lease costs and the company's commitment to maintaining high center staffing levels to provide superior customer service. Bright Horizons serves clients across a diverse group of industries, in 42 states, and also a growing presence in the U.K., which accounts for about 15% of EBITDA. In the third quarter, revenue and EBITDA outperformed S&P's expectations, growing 10% and 29%, respectively. The EBITDA margin was relatively high at 15.4% for the 12 months ended Sept. 30, 2012, continuing a more than 200 basis-point increase over the past three years. Margin gains reflect steady 3% to 4% tuition rate increases, improving critical mass of international operations, and growth of higher-margin back-up care services, which account for about one-third of EBITDA versus 25% in 2009. "We expect to raise the corporate credit rating to 'B+' and remove the ratings from CreditWatch listing upon successful completion of both the planned refinancing and the IPO. If the company is unable to complete the IPO, we would likely affirm the 'B' corporate credit rating and revise the outlook to stable," S&P noted. C.P. HALL: Columbia Loses Appeal Over $4MM Integrity Settlement --------------------------------------------------------------- District Judge John W. Darrah tossed out an appeal taken by Columbia Casualty Company from a Bankruptcy Court order granting C.P. Hall Co.'s motion to approve a settlement agreement with Integrity Insurance. The District Judge said there is no clear error in the Bankruptcy Court's ruling. Columbia has no direct interest in the Integrity Settlement. Columbia's sole interest with respect to the Debtor is its potential liability to the Debtor as an insurer. C.P. Hall Co. was a former distributor of Johns Manville raw asbestos. The Debtor terminated its operations in 1986. Since the late 1980s, the Debtor has been named as a defendant in thousands of underlying asbestos claims in Illinois and elsewhere. The Debtor had primary and excess liability coverage that paid for its defense and indemnity of these claims. Columbia issued the Debtor a single second-layer excess liability insurance policy in effect from Oct. 1, 1984 to Oct. 1, 1985. The Columbia insurance policy has aggregate limits of $6 million, which remains unpaid, in excess of two underlying policies with limits of at least $5 million. Since 2005, the Debtor has submitted asbestos claims to Integrity, an insurance company in liquidation in New Jersey. The Debtor has received over $25 million in payments from Integrity for covered claims and alleges that it has proven up and identified roughly $10 million in remaining coverage under the Integrity policy. But the recovery of the $10 million in claims is possible if the Debtor is successful on its appeal in New Jersey state court, contending that the liquidator for the Integrity Estate should have applied state law other than New Jersey in allocating asbestos claims. Other policyholders that are further along in the appeals process have not been successful with this argument. In light of the uncertainty of litigation, the Debtor negotiated a settlement with Integrity for $4.125 million. The case before the District Court is, COLUMBIA CASUALTY COMPANY, Appellant, v. C.P. HALL CO., Appellee, Case No. 12 C 2978 (N.D. Ill.). A copy of the District Court's Jan. 10, 2013 Memorandum Opinion and Order is available at http://is.gd/eUqsMCfrom Leagle.com. Appellate Standing Rules Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. District Judge John W. Darrah from Chicago ruled in a Jan. 10 opinion that the "direct pecuniary interest standard" governing standing to take an appeal was properly applied to decide if someone has standing to object to a settlement in bankruptcy court. The report discloses that on appeal, Judge Darrah rejected the argument that the appellate standing threshold of direct pecuniary interest was being applied improperly to proceedings in bankruptcy court. Judge Darrah said that being a party in interest isn't sufficient. Judge Darrah, the report adds, relied on a 2012 opinion from the U.S. Court of Appeals in Chicago in a case called Holly Marine Towing. Holly Marine applied the direct interest test to decide if there was standing to appeal, not standing in bankruptcy court in the first place. Judge Darrah also cited a 1996 bankruptcy court decision from North Dakota holding that the right to appear and be heard is not the same as standing. C.P. Hall Co. filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 11-26443) on June 24, 2011, listing under $1 million in both assets and debts. A copy of the petition is available at http://bankrupt.com/misc/ilnb11-26443.pdf CENTRAL EUROPEAN: Moody's Downgrades CFR/PDR to 'Caa3' ------------------------------------------------------ Moody's Investors Service has downgraded the corporate family rating (CFR) and probability of default rating (PDR) of Central European Distribution Corporation (CEDC) to Caa3 from Caa2. Concurrently, Moody's has downgraded to Caa2 from Caa1 the rating on the senior secured notes due in 2016 issued by CEDC Finance Corporation International. All ratings are under review for downgrade. Ratings Rationale "The downgrade follows CEDC announcement on the 28 of December that it had agreed with Russian Standard a revised transaction to repay its $310 million of convertible notes due March 2013 which, in Moody's view, has increased the risk of potential loss for existing bondholders", says Paolo Leschiutta, a Moody's Vice President - Senior Credit Officer and lead analyst for CEDC. "The downgrade also reflects CEDC's failure so far to secure adequate financing to repay the convertible notes and Moody's understanding that the old strategic alliance agreement between Russian Standard and CEDC, which was previously supporting the rating, will now expire on the 21 of January", continued Mr. Leschiutta. Under the new agreement, Russian Standard has released US$50 million in cash previously invested in CEDC, that are now available for working capital and general corporate purposes, agreed to provide a new $15 million revolving credit facility to CEDC, and agreed to provide up to $107 million in new capital to CEDC subject to and conditional upon an overall restructuring of CEDC's capital structure that is acceptable to CEDC and Russian Standard. Despite the renewed support and despite the limited details so far on what the restructuring of CEDC's capital structure might involve, the rating agency is concerned about an increase likelihood of default for the group. The ratings are under review for further downgrade in light of the uncertainty regarding the potential restructuring of CEDC capital structure. The review will focus on (1) the likelihood that the Russian Standard proposal will progress; (2) the impact that a capital restructuring might have on current creditors of the group; (3) the liquidity profile of CEDC over the coming weeks; and (4) CEDC's operating performance in Q4 2012. What Could Change The Rating UP/DOWN Given the current review for downgrade, Moody's does not currently expect upward rating pressure. A further rating downgrade could result from (1) any transaction that could qualify as a distressed exchange under Moody's definitions, leading to potential losses for bondholders; or (2) failure on the part of CEDC to demonstrate progress in addressing its refinancing needs over the next few weeks. Moody's methodology for evaluating a distressed exchange considers inter alia whether (1) the issuer is offering creditors a new package of security or cash, and whether this amounts to a diminished financial obligation relative to the original obligation prescribed by the notes' indentures; and (2) the exchange is being offered to allow the issuer to avoid a bankruptcy or payment default. Downgrades: Issuer: Central European Distribution Corporation Corporate Family Rating, Downgraded to Caa3 from Caa2; Placed Under Review for Downgrade Probability of Default Rating, Downgraded to Caa3 from Caa2; Placed Under Review for Downgrade Issuer: CEDC Finance Corporation International US$380M 9.125% Senior Secured Bond, Downgraded to Caa2 from Caa1; Placed Under Review for Downgrade EUR380M 8.875% Senior Secured Bond, Downgraded to Caa2 from Caa1; Placed Under Review for Downgrade Outlook Actions: Outlooks, Changed To Rating Under Review From Negative Principal Methodology The principal methodology used in rating Central European Distribution Corporation and CEDC Finance Corporation International was the Global Alcoholic Beverage Rating Industry Methodology published in September 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Warsaw, Poland, CEDC is one of the largest vodka producers in the world, with annual sales of around 33.2 million nine-litre cases, mainly in Russia and Poland. Following investments in Russia over the past two years and the consolidation since February 2011 of Whitehall Group, an importer and distributor of premium spirits and wine, CEDC generated net revenues of around US$830 million during financial year-end December 2011. CLEAR CHANNEL: Bank Debt Trades at 16% Off in Secondary Market -------------------------------------------------------------- Participations in a syndicated loan under which Clear Channel Communications, Inc., is a borrower traded in the secondary market at 84.40 cents-on-the-dollar during the week ended Friday, Jan. 11, 2013, an increase of 1.56 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 365 basis points above LIBOR to borrow under the facility. The bank loan matures on Jan. 30, 2016, and carries Moody's Caa1 rating and Standard & Poor's CCC+ rating. The loan is one of the biggest gainers and losers among 190 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About Clear Channel San Antonio, Texas-based CC Media Holdings, Inc. (OTC BB: CCMO) -- http://www.ccmediaholdings.com/-- is the parent company of Clear Channel Communications, Inc. CC Media Holdings is a global media and entertainment company specializing in mobile and on-demand entertainment and information services for local communities and premier opportunities for advertisers. The Company's businesses include radio and outdoor displays. For the six months ended June 30, 2012, the Company reported a net loss attributable to the Company of $182.65 million on $2.96 billion of revenue. Clear Channel reported a net loss of $302.09 million on $6.16 billion of revenue in 2011, compared with a net loss of $479.08 million on $5.86 billion of revenue in 2010. The Company had a net loss of $4.03 billion on $5.55 billion of revenue in 2009. The Company's balance sheet at June 30, 2012, showed $16.45 billion in total assets, $24.31 billion in total liabilities, and a $7.86 billion total shareholders' deficit. Bankruptcy Warning At March 31, 2012, the Company had $20.7 billion of total indebtedness outstanding. The Company said in its quarterly report for the period ended March 31, 2012, that its ability to restructure or refinance the debt will depend on the condition of the capital markets and the Company's financial condition at that time. Any refinancing of the Company's debt could be at higher interest rates and increase debt service obligations and may require the Company and its subsidiaries to comply with more onerous covenants, which could further restrict the Company's business operations. The terms of existing or future debt instruments may restrict the Company from adopting some of these alternatives. These alternative measures may not be successful and may not permit the Company or its subsidiaries to meet scheduled debt service obligations. If the Company and its subsidiaries cannot make scheduled payments on indebtedness, the Company or its subsidiaries, as applicable, will be in default under one or more of the debt agreements and, as a result the Company could be forced into bankruptcy or liquidation. * * * As reported in the TCR on Oct. 17, 2012, Fitch Ratings has affirmed the 'CCC' Issuer Default Rating (IDR) of Clear Channel Communications, Inc. The Rating Outlook is Stable. Fitch's ratings concerns center on the company's highly leveraged capital structure, with significant maturities in 2016; the considerable and growing interest burden that pressures FCF; technological threats and secular pressures in radio broadcasting; and the company's exposure to cyclical advertising revenue. The ratings are supported by the company's leading position in both the outdoor and radio industries, as well as the positive fundamentals and digital opportunities in the outdoor advertising space. CLEMENT CARINALLI: Evidentiary Hearing on Bank Claim to Proceed --------------------------------------------------------------- The trustee charged with liquidating and distributing the bankruptcy estate of Clement and Ann Marie Carinalli has asked the court to estimate the claim of North Coast Bank at zero because the claim is based on a guarantee. The Trustee asserts that the primary obligor is current on the obligation, the value of the property exceeds the obligation, and there are other solvent guarantors. If all this is true, the Court will probably estimate the claim at zero. However, the Court believes that an evidentiary hearing is necessary to make proper findings. Relying on In re Kreisler, 407 B.R. 321 (Bkrtcy.N.D.Ill. 2009), the Trustee argues that the Court should summarily estimate the claim at zero. The Court notes that Kreisler is a Chapter 7 case, not a Chapter 11 case with a confirmed plan which specifically deals with contingent claims. The Court finds the first part of that decision accordingly not applicable to the Carinallis' case. The Court agrees with the second part, that the Court has wide discretion as to how a contingent claim is estimated -- and the Court elects to estimate the claim after an evidentiary hearing. "In support of its position, North Coast Bank has cited a 78-page tome apparently drafted by a court with way too much time on its hands. Moreover, that case appears to have involved an estimation of a claim for voting purposes, not distribution. The court does not find it helpful in deciding whether the court in this case should penalize all the other creditors merely because in some alternative universe there is a remote possibility that the Bank might suffer a loss on the loan at issue," said Bankruptcy Judge Alan Jaroslovsky. "For the foregoing reasons, the evidentiary hearing set by the court will proceed as scheduled." A copy of the Court's Jan. 11, 2013 Memorandum on Objection is available at http://is.gd/PsdpnNfrom Leagle.com. About Clem Carinalli An involuntary chapter 7 bankruptcy petition was filed against Sonoma, California's biggest real estate investor Clement C. Carinalli and his wife, Ann Marie Carinalli (Bankr. N.D. Calif. Case No. 09-12986) on Sept. 14, 2009. The case was converted to Chapter 11 on Sept. 29, 2009. Judge Alan Jaroslovsky presides over the case. The Debtors are represented by Meyers Law Group, P.C. The Creditors Committee is represented by Pachulski, Stang Ziehl & Jones LLP. On Nov. 16, 2010, the Court confirmed the Second Amended Joint Plan of Reorganization proposed by the Debtors and the Official Committee of Unsecured Creditors. The Plan was declared effective Dec. 1, 2010. COLONY BEACH: Resort Files Bankruptcy to Avert Foreclosure ---------------------------------------------------------- Steve Reid, writing for Longboat Key News, reports that former Colony Beach & Tennis Resort Chairman Dr. Murf Klauber placed three companies into chapter 11 bankruptcy to thwart foreclosure efforts by their lender. The three companies are: * Resort Management Inc., * Colony Inc. and * Colony Beach & Tennis Inc. The companies, according to the report, represent collateral on a $13 million debt to Colony Lender, which is owned by Longboaters Randy Langley and David Siegal. Mr. Siegal told Longboat Key News on Friday that placing the entities into chapter 11 is a "final act of desperation and the last thing Klauber can do in stalling an inevitable foreclosure." According to the report, Colony Lender -- represented by Michael Assaf, Esq., as counsel -- will seek conversion of the bankruptcy cases to a chapter 7 liquidation, and also seek to lift the stay which shields Mr. Klauber from foreclosure. Mr. Seigal said the reason Colony Lender will move to have Mr. Klauber's bankruptcy shifted to chapter 7 is he contends that they are not even real or viable businesses. Mr. Siegal said the total of $13 million owed to Colony Lender represents taxes, interest and the principal. Mr. Siegal also told Longboat Key News that Colony Lender's foreclosure hearing was postponed early last week when Sarasota Judge Rick DeFuria recused himself. The report notes Colony Lender, not wanting any further delay in foreclosing on its collateral, filed an emergency motion to have the matter tried. On Thursday, Judge Williams granted Colony Lender's motion and the matter was to be heard at 9 a.m. June 14. According to the report, Mr. Siegal said that once Colony Lender forecloses on Mr. Klauber, the assets pledged will be liquidated and Colony Lender will then pursue a deficiency judgment. He said Colony Lender is secured in the $25 million judgment awarded by Steven D. Merryday, United States District Judge, last year. The report also relates that Mr. Klauber, when reached for comment, said Colony Lender was only focused on trying to extract money from a difficult situation and he is trying to stay focused on the creative challenge of redeveloping the Colony. The report notes the 18-acre Gulf-front property which ceased operating as a resort in August 2010. The closing was part of the ongoing dispute over ownership and management control of the resort as well as who is responsible -- the unit owners or the former management company run by Mr. Klauber -- for the millions of dollars in deferred maintenance. DAYBREAK OIL: Incurs $1.2 Million Net Loss in Nov. 30 Quarter ------------------------------------------------------------- Daybreak Oil and Gas, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $1.24 million on $229,913 of oil and gas sales for the three months ended Nov. 30, 2012, compared with a net loss of $408,318 on $290,912 of oil and gas sales for the same period during the prior year. For the nine months ended Nov. 30, 2012, the Company reported a net loss of $1.79 million on $742,034 of oil and gas sales, compared with a net loss of $822,246 on $1 million of oil and gas sales during the previous year. The Company reported a net loss of $1.43 million for the year ended Feb. 29, 2012, compared with a net loss of $1.21 million for the year ended Feb. 28, 2011. The Company's balance sheet at Nov. 30, 2012, showed $2.52 million in total assets, $5.44 million in total liabilities and a $2.92 million total stockholders' deficit. MaloneBailey, LLP, in Houston, Texas, issued a "going concern" qualification on the financial statements for the year ended Feb. 29, 2012, citing losses from operations and negative operating cash flows, which raise substantial doubt about the Company's ability to continue as a going concern. A copy of the Form 10-Q is available for free at: http://is.gd/0xlhMk About Daybreak Oil Daybreak Oil and Gas, Inc. is an independent oil and natural gas exploration, development and production company. The Company is headquartered in Spokane, Washington and has an operations office in Friendswood, Texas. The Company's common stock is quoted on the OTC Bulletin Board market under the symbol DBRM.OB. Daybreak has over 20,000 acres under lease in the San Joaquin Valley of California. DELUXE CORP: BlackRock Discloses 11.6% Equity Stake --------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, BlackRock, Inc., disclosed that, as of Dec. 31, 2012, it beneficially owns 5,897,022 shares of common stock of Deluxe Corp. representing 11.58% of the shares outstanding. A copy of the filing is available for free at: http://is.gd/b3hw0c About Deluxe Corp Shoreview, Minnesota-based Deluxe Corporation offers a wide range of products and services including customized checks and forms as well as web-site development and hosting, search engine marketing, search engine optimization, logo design and business networking. For financial institutions, Deluxe offers industry-leading programs in checks, customer acquisition, regulatory compliance, fraud prevention and profitability. Deluxe is also a leading printer of checks and accessories sold directly to consumers. Deluxe Corporation's balance sheet at Sept. 30, 2012, showed $1.46 billion in total assets, $1.06 billion in total liabilities and $397.99 million in total shareholders' equity. Deluxe Corporation carries a Ba2 Corporate Family Rating from Moody's Investors Service and a 'BB-' corporate credit rating from Standard & Poor's Ratings Services. DETROIT, MI: Courts, Not Politicians, Should Control Bankruptcy --------------------------------------------------------------- Shikha Dalmia of Bloomberg News reported on Jan. 12 that Michigan Governor Rick Snyder has postponed his decision to appoint an emergency manager to deal with Detroit's fiscal crisis. He was expected to act after a state audit last month found that the city's long-term debt was $12 billion, $2 billion more than previously reported, the report noted. But the delay won't postpone Detroit's inevitable date with insolvency, Bloomberg said. Bloomberg said the main issue that Snyder, a Republican, will ultimately have to confront is whether to put Detroit through a political managed bankruptcy or a conventional Chapter 9 court process. The audit pegged the city's annual debt-service costs alone at $597 million, while its three biggest sources of revenue generate only $538 million, Bloomberg reported. Worse, the value of the city's net assets, which in 2010 were worth $265 million, has collapsed and they now have a negative value. More urgently, Detroit will run out of operating cash before the fiscal year ends in June, Bloomberg said, although that didn't stop it from handing out year-end bonuses to nonunion employees. Snyder, the report added, had allowed Detroit to borrow $137 million through a municipal-bond sale on the state credit card last summer. Before the funds could be released from escrow, however, the city was supposed to meet prescribed restructuring goals under a consent agreement. Bloomberg added that the city failed due to squabbling between a dysfunctional city council and Mayor Dave Bing. The council even blocked Bing's effort to hire a private law firm to help overhaul contracts with unions and vendors, even though the city has little in-house expertise to handle something this technical and complex, the same report pointed out. The upshot was that the state has halted the release of $30 million of the bond money. Bing is planning to stretch out his meager resources by furloughing the city's 11,000 workers for long periods, starting this month, but no one believes this will delay the inevitable, Bloomberg added. Short of a federal bailout or divine intervention, Detroit will be insolvent within a matter of months. In a "prepackaged" bankruptcy, as opposed to a conventional process, deals are cut with as many creditors as possible in advance of a court filing and followed quickly with a plan for reorganization, the Bloomberg report pointed out. This would put the burden on Snyder for negotiating "haircuts" with public- employee unions, investors and vendors. Detroit, Bloomberg noted, would be the largest U.S. city to undergo anything like this, and Snyder would be in uncharted legal territory. Bloomberg also pointed out that every decision Snyder makes would be politically fraught. President Barack Obama was criticized for offering a better deal to the United Auto Workers than to secured creditors during the auto-industry bankruptcy, the report recounted. Should Snyder do the opposite and favor secured creditors over public unions -- either because it is legally the right thing to do or to keep Detroit's future borrowing costs low -- he will be accused of crony capitalism, especially given his background as a business executive, Bloomberg said. Indeed, city leaders regarded even the original consent agreement, which came backed by the state credit card, as an affront just because it required them to clean up their books under state oversight, Bloomberg added. Protests broke out. Jesse Jackson flew in to join a coalition of pastors, civil-rights leaders and local officials condemning the alleged assault on the city's democratic rights. "We are prepared to go from education, mobilization, litigation, legislation, demonstration and civil disobedience," Bloomberg quoted Mr. Jackson as saying. That showdown would pale compared with what would happen when Snyder tries to get public unions to accept pennies on the dollar in order to reduce the city's crippling legacy costs, Bloomberg said. Many in Detroit still believe that the city is going broke not because it overpromised but because of meddling from Lansing, Michigan's capital. Consider what a union representative, Ed McNeil, said at a recent city council meeting. "We're going to get the people out of Lansing out of Detroit," Bloomberg quoted Mr. Lansing as saying. "If we get them the heck out of here, we won't be broke." Bloomberg related that a conventional Chapter 9 bankruptcy would be legally arduous because each side will mount pitched court battles to get a bigger portion of the spoils. But unions will have a harder time protesting the final outcome. And if they do and enhanced security becomes necessary -- not a remote possibility given the fierce public-union demonstrations that erupted in Lansing when the Legislature passed a right-to-work law -- it would be much better if a judge orders it rather than Snyder. "Politicians, even well-meaning ones, can't save Detroit. Any salvation will have to come directly from the courts," the report said. DEWEY & LEBOEUF: ePlus Rule 2004 Bid Has March 28 Hearing --------------------------------------------------------- On Aug. 17, 2012, ePlus Group, inc., a creditor of Dewey & LeBoeuf LLP, filed a motion for an order authorizing it to conduct a Rule 2004 examination of the Debtor, including the production of documents. A hearing to consider the motion was originally scheduled for Sept. 20, 2012, at 10:00 a.m. The hearing was previously adjourned on the consent of ePlus and the Debtor until the omnibus hearing date set in the case for Jan. 24, 2013, at 10:00 a.m. By consent of ePlus and the Debtor, the hearing to consider the motion has been further adjourned until the omnibus hearing date set in this case for March 28, 2013, at 10:00 a.m. The deadline for the Debtor to file objections to the motion has been adjourned on the consent of the parties until March 18, 2013, at 4 p.m. As disclosed in the ePlus motion, ePlus leased various telephone and computer equipment and information technology to the Debtor in reliance on financial information provided by or on behalf of the Debtor. ePlus says the Debtor has neither accounted for nor returned all of the property leased under the Lease (excluding certain ePlus leased property for which ePlus and the Debtor have agreed on a compensation arrangement, subject to court approval). ePlus believes that its resulting injury could amount to more than approximately $5 million ePlus seeks to examine the Debtor, pursuant to Rule 2004, concerning, inter alia, the state of its financial state and affairs, including payments, promises, obligations and commitments to make payments or distributions to the Debtor's current and former for periods from and after Jan. 1, 2010, and projections of such payments, promises, obligations and commitments into the future. About Dewey & LeBoeuf Dewey & LeBoeuf LLP sought Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the wind-down of its operations. The firm had struggled with high debt and partner defections. Dewey disclosed debt of $245 million and assets of $193 million in its chapter 11 filing late evening on May 29, 2012. Dewey & LeBoeuf LLP operated as a prestigious, New York City- based, law firm that traced its roots to the 2007 merger of Dewey Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird -- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in 1929. In recent years, more than 1,400 lawyers worked at the firm in numerous domestic and foreign offices. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for $6 million. The Pension benefit Guaranty Corp. took $2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The creditors committee hired Brown Rudnick LLP led by Edward S. Weisfelner, Esq., as counsel. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. Dewey filed a Chapter 11 Plan of Liquidation and an accompanying Disclosure Statement on Nov. 21, 2012. It filed amended plan documents on Dec. 31, in an attempt to address objections lodged by various parties. A second iteration was filed Jan. 7, 2013. The plan is based on a proposed settlement between secured lenders and Dewey's official unsecured creditors' committee. It also incorporates a settlement approved by the bankruptcy court in October where 440 former partners will receive releases in return for $71.5 million in contributions. DIGITAL DOMAIN: Balks at Walt Disney's Bid to Delay Patent Sale --------------------------------------------------------------- DDMG Estate, et al., previously known as Digital Domain Media Group Inc., et al., prior to the sale of their principal assets, objected to Walt Disney Motion Picture Production and certain of its affiliates' motion for stay pending appeal of the Bankruptcy Court's order approving the sale of certain of the patents of the Debtors. RealD Inc. was granted approval last month to buy 3D conversion technology for $5.45 million from Digital Domain, known as DDMG Estate now that most of the assets have been sold. Disney, based in Burbank, California, unsuccessfully objected to the RealD sale, contending it purchased a license for the technology from a company that sold the patents to DDMG. Bill Rochelle, the bankruptcy columnist for Bloomberg News, previously reported that Disney appealed and filed papers Jan. 2 in U.S. District Court in Delaware seeking a stay pending appeal. Disney is afraid that completion of the sale will extinguish its rights in the technology even if it wins the appeal. Disney contends the appeal raises "an issue of first impression" regarding the interplay of patent and bankruptcy law. Disney wants a district judge to hold up the sale until the appeal is completed in two or three months. The Debtors, in their objection to Disney's request, stated that Disney has not, and cannot, meet the standards for obtaining a stay pending appeal. There are four factors the Court must consider in deciding whether to grant a stay pending appeal. If any one factor is not satisfied, the Court may deny a stay. 1. Disney cannot establish a strong likelihood of success on the merits; 2. there is no irreparable harm to Disney; 3. the estate will suffer harm if a stay is granted; and 4. the public interest is served by allowing the Debtors to proceed with the sale and their other orderly liquidation efforts, which are nearing finality. About Digital Domain Port St. Lucie, Florida-based Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/-- engaged in the creation of original content animation feature films, and development of computer-generated imagery for feature films and trans-media advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11, 2012, to sell its business for $15 million to Searchlight Capital Partners LP, subject to higher and better offers. At a bankruptcy auction, the principal part of the business was purchased by a joint venture between Galloping Horse America LLC, an affiliate of Beijing Galloping Horse Co., and an affiliate of Reliance Capital Ltd., based in Mumbai. The $36.7 million total value of the contact includes $3.6 million to cure defaults on contracts and $2.9 million in reimbursement of payroll costs. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. An official committee of unsecured creditors appointed in the case is represented by lawyers at Sullivan Hazeltine Allinson LLC and Brown Rudnick LLP. The company disclosed assets of $205 million and liabilities totaling $214 million. Debt includes $40 million on senior secured convertible notes plus $24.7 million in interest. There is another issue of $8 million in subordinated secured convertible notes. The Debtors also have sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. DIGITAL DOMAIN: Wants Until April 9 to Propose Reorganization Plan ----------------------------------------------------------------- The Bankruptcy Court for the District of Delaware will convene a hearing on Feb. 7, 2013, to consider DDMG Estate, et al.'s motion for an extension of their exclusive periods. Objections, if any, are due Jan. 31, at 4 p.m. The Debtors are requesting that Court extend their exclusive periods to propose a plan of reorganization until April 9, and solicit acceptances of that plan until June 3. About Digital Domain Port St. Lucie, Florida-based Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/-- engaged in the creation of original content animation feature films, and development of computer-generated imagery for feature films and trans-media advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11, 2012, to sell its business for $15 million to Searchlight Capital Partners LP, subject to higher and better offers. At a bankruptcy auction, the principal part of the business was purchased by a joint venture between Galloping Horse America LLC, an affiliate of Beijing Galloping Horse Co., and an affiliate of Reliance Capital Ltd., based in Mumbai. The $36.7 million total value of the contact includes $3.6 million to cure defaults on contracts and $2.9 million in reimbursement of payroll costs. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. An official committee of unsecured creditors appointed in the case is represented by lawyers at Sullivan Hazeltine Allinson LLC and Brown Rudnick LLP. The company disclosed assets of $205 million and liabilities totaling $214 million. Debt includes $40 million on senior secured convertible notes plus $24.7 million in interest. There is another issue of $8 million in subordinated secured convertible notes. The Debtors also have sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. DIRECT MARKET: Files for Chapter 7 Liquidation ---------------------------------------------- Direct Market Holdings and two affiliated Debtors filed Chapter 7 petitions (Bankr. S.D.N.Y. Lead Case No. 13-10089) on Jan. 11, 2013. The Debtors are represented by: Mark S. Lichtenstein, Esq. CROWELL & MORING LLP 590 Madison Avenue 20th Floor New York, NY 10022-2544 Tel: (212) 895-4267 Fax: (212) 223-4134 Email: mlichtenstein@crowell.com New York City-based Direct Markets Holdings Corp. (NASDAQ: MKTS) provides investment banking services and automated electronic transaction securities' trading platforms. Its subsidiaries include Direct Markets, Inc., and Rodman & Renshaw, LLC. ECOSPHERE TECHNOLOGIES: John Brewster Named CEO, Pres. & Chairman ----------------------------------------------------------------- Ecosphere Technologies, Inc., appointed John Brewster as the Company's Chief Executive Officer, President and Chairman of the Board. From September 2012 until this appointment, Mr. Brewster served as a consultant to the Company on energy applications for Ecosphere's patented Ozonix(R) technology. Since Jan. 1, 2013, Mr. Brewster has served as a director of the Company. From June 2010 until August 2012, Mr. Brewster served as President and Chief Executive Officer of NAES Corporation, the world's largest third party power plant operating company. From December 2009 until June 2010, Mr. Brewster served as the Chief Commercial Officer of Composite Technology Corporation (OTC: CPTCQ) and President of its subsidiary CTC Cable Corporation, a developer of innovative energy efficient and renewable energy products for the electrical utility industry. Prior to that, Mr. Brewster was the Chief Operating Officer of Calera Corporation, a Khosla Venture funded startup company dedicated to reversing global warming by capturing and storing greenhouse gasses in the build environment. Between 2000 and 2008, Mr. Brewster served as Executive Vice President of Plant Operations and Development Engineering, Procurement and Construction divisions for NRG Energy Inc. (NYSE: NRG), one of the country's largest power generation and retail electricity business, where he was responsible for the implementation of the new build and repower program along with plant operations worldwide. Mr. Brewster presently serves as an advisor to Concentric, a commercial power generation startup company located in California. Mr. Brewster is 59 years old. Mr. Brewster and the Company entered into a two-year Employment Agreement whereby Mr. Brewster receives: (i) an annual salary of $325,000, (ii) 5,000,000 five-year stock options exercisable at $0.40 per share, vesting quarterly in eight equal increments over a two-year period with the first vesting date being April 8, 2013, subject to continued employment on each applicable vesting date, and (iii) a target bonus equal to 50% of his base salary with terms to be set by the Board of Directors. As part of his consulting services, which were terminated upon Mr. Brewster becoming an officer of the Company, Mr. Brewster was paid $6,000 per month. Mr. Brewster replaced Mr. Charles Vinick who will remain a director. Mr. Vinick will also serve as a consultant to the Company for a one-year period. In connection with his Consulting Agreement, Mr. Vinick will be paid fees of $275,000 and reimbursed for health insurance costs. Additionally, Mr. Vinick was granted 1,000,000 five-year stock options exercisable at $0.40 per share. The options will vest quarterly in four equal increments over the one-year consulting period with the first vesting date being April 8, 2013, subject to continuing to provide consulting services on each applicable vesting date. On Jan. 8, 2013, the Company and Dean Becker LLC, an entity controlled by Dean Becker, a director of the Company, entered into a Consulting Agreement. The Agreement can be terminated on 30 days' notice. Under the Agreement, the Consultant will assist the Company in accelerating the deployment of the Company's patented Ozonix(R) technology in fields beyond U.S. onshore energy production. In addition, the Consultant will assist in further monetizing the Company's ownership interest in its energy subsidiary. In consideration for its services, the Consultant will be paid a fee of $250,000 per year. Additionally, the Consultant has been granted 3,000,000 five-year stock options exercisable at $0.37 per share. The options will vest quarterly in 12 equal increments over the three year term of the Agreement with the first vesting date being March 31, 2013, subject to continuing to provide consulting services on each applicable vesting date. As additional compensation, the Consultant will receive 2% of all revenues generated from the sale or license of the Company's intellectual property that was consummated as a result of introductions from the Consultant or negotiation assistance from the Consultant. About Ecosphere Technologies Stuart, Fla.-based Ecosphere Technologies, Inc. (OTC BB: ESPH) -- http://www.ecospheretech.com/-- is a diversified water engineering, technology licensing and environmental services company that designs, develops and manufactures wastewater treatment solutions for industrial markets. Ecosphere, through its majority-owned subsidiary Ecosphere Energy Services, LLC ("EES"), provides energy exploration companies with an onsite, chemical free method to kill bacteria and reduce scaling during fracturing and flowback operations. The Company reported a net loss of $5.86 million in 2011, following a net loss of $22.66 million in 2010, and a net loss of $19.05 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $11.70 million in total assets, $4.41 million in total liabilities, $4.05 million in total redeemable convertible cumulative preferred stock, and $3.22 million in total equity. ELCOM HOTEL: Parties Dispute Control of Property ------------------------------------------------ Elcom Hotel & Spa filed with the Bankruptcy Court an emergency motion to compel Jorge Perez, the prepetition state court receiver, to immediately comply with his turnover obligations under 11 U.S.C. Sec. 543. The Debtors say the case was not filed in bad faith. It intended to generate a sale of the property outside of bankruptcy, but the sale was conditioned on timely resolution of state court litigation, a condition which became impossible to fulfill due to the intractability of certain parties. The Debtors add that the receiver was appointed as a result of allegations of misconduct and mismanagement by the Debtor. But the individual responsible for those problems, Jorge Arevalo, has long since been removed from any role or connection with the Debtor. The 100% owner, Thomas Sullivan, kept the Debtors afloat by financing their operations during the term of the receivership. The Debtors are seeking to retain Benchmark Management Company continue running the hotel portion of their property, and have Alvarez & Marsal provide the services of a CRO. Excused From Compliance Jorge J. Perez, the receiver, on the other hand, filed a motion to be excused from compliance of his turnover obligations. Mr. Perez points out that the Debtors are seeking to regain control of the property despite the fact that control was lost because of prior, egregious conduct. Mr. Perez says the request to hire a CRO and Benchmark will not cure the harm will be revisited upon the Debtors' creditors if the Debtors regain control of the Property for two reasons: During the pendency of the motion, the receiver will provide the Debtors information regarding critical vendors and property positions and will continue to operate the property to preserve its value for two reasons: (a) hiring of the CRO will create unnecessary cost; (b) the turnover will place the Debtors once again in control of the Property. The receiver notes he was appointed because of the mismanagement and the fraudulent, deliberate, self-serving dealing by certain principals of the Debtors. He is still investigating potential recoveries against the Debtors and their principals. Should the Bankruptcy Court determine that the Debtors should regain control of their property or if a trustee is appointed, the Debtor will cooperate fully in the turnover. Chapter 11 Trustee Sought 10295 Collins Avenue, Residential Condominium Association, Inc., says the allegations contained in the turnover motions warrant the appointment of an independent fiduciary, without which the creditors of the estate face probable disaster from either of these parties. Accordingly, the Residential Association wants the Court to order the appointment of a Chapter 11 trustee. Like the receiver, the Residential Association rejects claims that Mr. Sullivan is the "greatest victim." The Association says it's inconceivable that Mr. Sullivan would invest more than $17 million in Elcom without occasionally talking a look at the books. Prepetition the state court found sufficient evidence of gross mismanagement and fraud while the properties were under the control of the Debtors' principals and neglectful watch of Mr. Sullivan. The Association also doesn't want the receiver to maintain control on grounds that he's only making the situation worse. According to the Association, the receiver has mismanaged One Bal Harbour, has already received massive fees, and is seeking even more substantial fees and costs that must be investigation. A hearing on the emergency motions was scheduled for Jan. 15, 2013. The Residential Association is represented by: Charles M. Tatelbaum, Esq. Steve E. Seward, Esq. HINSHAW & CULBERTSON LLP One East Broward Boulevard, Suite 1010 Ft. Lauderdale, FL 33301 Tel: 954-467-7900 Fax: 953-476-1024 The Receiver is represented by: Raquel A. Rodriquez McDONALD HOPKINS LLC 200 S. Biscayne Blvd., Suite 3130 Miami, Florida 33131 Tel: 305-704-3990 Fax: 305-704-3990 E-mail: rrodriquez@mdonaldhopkins.com About Elcom Hotel Elcom Hotel & Spa LLC and Elcom Condominium LLC sought Chapter 11 protection (Bankr. S.D. Fla. Case Nos. 13-10029 and 13-10031) on Jan. 2, 2013, with plans to sell their hotel and condominium property. Elcom Condominium owns nine of the hotel condominium units at the One Bal Harbor Resort & Spa. The resort is located on five acres of land in Bal Harbor, Florida. The building and improvements consist of 185 luxury residential condominium units and 124 hotel condominium units. Elcom Hotel owns the hotel lot. Elcom Hotel estimated assets and liabilities of less than $50 million. The Debtor owes OBH Funding, LLC, $1.8 million on a mortgage and F9 Properties, LLC, formerly known as ANO, LLC, $9 million on a mezzanine loan secured by a lien on the ownership interests in the project's owner. OBH Funding and ANO are owned by Thomas D. Sullivan, the manager of the Debtors. Attorneys at Kozyak Tropin & Throckmorton, P.A., serve as bankruptcy counsel to the Debtor. Duane Morris LLP is the special litigation, real estate, and hospitality counsel. Alvarez & Marsal Real Estate Advisory Services, LLC's Embree C. "Chuck" Bedsole is the chief restructuring officer of the Debtor. ENVISION SOLAR: Has $1.2MM Selling Agreement with Allied Beacon --------------------------------------------------------------- Envision Solar International, Inc., entered into a selling agreement, dated Jan. 8, 2013, with Allied Beacon Partners, Inc., pursuant to which Allied Beacon has agreed to assist the Company on a "best efforts" basis with a private offering of up to $1,200,000 to be made by the Company. Allied Beacon will receive compensation equal to (i) an 8% cash fee and (ii) common stock purchase warrants equal to 5% of the shares issued with respect to any investment brought into the offering by Allied Beacon. Those common stock purchase warrants will be exercisable at an exercise price of $0.25 per share for a period of five years from the date of issuance. A copy of this agreement is available at http://is.gd/flxjvX Pursuant to this private placement, the Company is offering up to 4,000,000 units for a purchase price of $0.30 per unit. Each unit consists of two shares of the Company's common stock and one warrant to purchase an additional share of common stock at an exercise price of $0.20 per share exercisable for a period of one year from the date of issuance. The sales termination date for the offering is March 15, 2013, but may be extended for up to an additional 90 days. As of Jan. 10, 2013, the Company has not yet raised any capital pursuant to this offering. GreenCore Consulting Agreement On Jan. 10, 2013, Envision entered into a consulting agreement with GreenCore Capital, LLC, pursuant to which GreenCore will provide professional services to the Company in addition to acting as a sales channel for the Company's products. Jay Potter, the Company's director, is the chief executive officer of GreenCore. In consideration for providing these services to the Company, GreenCore will be receive (i) $250 per hour for all services which are preauthorized and directed by the Company's management and (ii) a cash fee equal to 5% of the Sales Price received by the Company from customers who are referred to the Company by GreenCore. A copy of the Consulting Agreement is available for free at http://is.gd/zOIIqP Extension Agreement with Gemini Effective Dec. 31, 2012, the Company entered into a Third Extension and Amendment Agreement with Gemini Master Fund, Ltd, and Gemini Strategies, LLC, the investor and collateral agent respectively, with respect to a series of convertible notes payable owed by the Company to Gemini. The Extension Agreement (1) extends the maturity date of the convertible notes to Dec. 31, 2013, (2) adds $20,000 to the outstanding balance of the notes to settle previous expenses owed, and (3) includes a $5,000 cash payment to be paid to Gemini by the Company for legal costs incurred by Gemini related to this Extension Agreement. Additionally, the Company has agreed to cause Robert Noble, the Company's Chairman and the Company's principal stockholder, to deliver a lock-up agreement pursuant to which Mr. Noble will agree to not sell or otherwise dispose of his stock until 75% of the loan balance is paid or the Company's stock price meets certain milestones, as defined. Mr. Noble has agreed to enter into the lock-up agreement. The principal amounts of the debt outstanding to Gemini amount to $1,406,325 immediately after this Extension Agreement. About Envision Solar San Diego, Calif.-based Envision Solar International, Inc., is a developer of solar products and proprietary technology solutions. The Company focuses on creating high quality products which transform both surface and top deck parking lots of commercial, institutional, governmental and other customers into shaded renewable generation plants. The Company's balance sheet at Sept. 30, 2012, showed $1.1 million in total assets, $2.7 million in total current liabilities, and a stockholders' deficit of $1.6 million. As reported in the TCR on April 9, 2012, Salberg & Company P.A., in Boca Raton, Fla., expressed substantial doubt about Envision Solar's ability to continue as a going concern. The independent auditors noted that the Company reported a net loss of $2,547,493 and $2,360,851 in 2011 and 2010, respectively, and used cash for operating activities of $1,970,831 and $1,112,794 in 2011 and 2010, respectively. "At Dec. 31, 2011, the Company had a working capital deficiency, stockholders' deficit and accumulated deficit of $2,657,976, $2,482,203 and $22,340,460, respectively." EVELETH MINES: DC Cir. Affirms PBGC Decision on Thunderbird Plan ---------------------------------------------------------------- The U.S. Court of Appeals for the District of Columbia Circuit upheld the district court's judgment affirming the decision of the Pension Benefit Guaranty Corporation to deny early retirement benefits requested by participants in the Thunderbird Mining Company Pension Plan. Thunderbird Mining Company and its parent, Eveleth Mines LLC, doing business as EVTAC Mining, filed for bankruptcy in 2003 after a drastic reduction in orders of taconite pellets. Eveleth ceased production and laid off all but four of its hourly employees. The PBGC determined that Eveleth's pension plan had a "funded ratio" of only 52% and that Eveleth had "no realistic prospect of adequately funding it"; and concluded the plan would be unable to pay benefits when due. On July 24, 2003, the agency filed an action in federal district court, pursuant to 29 U.S.C. Sec. 1342(c), seeking to terminate the plan and establish July 24, 2003, as the plan termination date. The agency asked that the court appoint it as plan trustee. While neither Eveleth, as plan administrator, nor the union opposed termination of the plan or the agency's appointment as trustee, the union intervened in the action to oppose the proposed termination date as "not . . . in the best interests of the participants of [the] plan." Later the union withdrew its opposition to the proposed termination date after reaching an agreement with Eveleth relating to the sale of Eveleth's assets. On Aug. 19, 2004, the district court issued an order terminating the plan, appointing the agency as trustee, and establishing July 24, 2003, as the plan termination date. From December 2006 to May 2007, the agency issued benefit- determination letters setting forth the monthly payment each plan participant was entitled to receive. None of the benefits determinations included shutdown benefits. The union filed an administrative appeal on behalf of roughly 240 participants who believed they were eligible for shutdown benefits. On Nov. 30, 2007, the agency's Appeals Board issued a final decision concluding that the agency would not guarantee shutdown benefits for plan participants because Eveleth had not permanently shut down before the plan was terminated on July 24, 2003. The union, on behalf of employees who claimed to be eligible for shutdown pension benefits, and several individual employees, sued in district court to challenge the agency's decision. The district court rejected the plaintiffs' contention that the agency's decision is subject to de novo review, holding instead that the agency's decision is entitled to deference and should be reviewed under the Administrative Procedure Act's "arbitrary or capricious" standard. Applying that standard, the district court granted summary judgment in favor of the agency. The agency's "determination that the [Eveleth] plant had not permanently shut down prior to July 24, 2003," the court ruled, "is supported by the record . . . and is rationally connected to the facts in this case." "Although we might well be able to uphold as reasonable a finding in favor of plaintiffs' position, the record provides sufficient support for the agency's determination that Eveleth had not permanently shut down before July 24, 2003. Accordingly, the district court's grant of summary judgment in favor of the agency is affirmed," said Senior Circuit Judge Arthur Raymond Randolph, who penned the ruling. The case is, UNITED STEEL, PAPER AND FORESTRY, RUBBER, MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND SERVICE WORKERS INTERNATIONAL UNION, AFL-CIO-CLC, ON BEHALF OF THE PARTICIPANTS AND BENEFICIARIES OF THE THUNDERBIRD MINING CO. PENSION PLAN, ET AL., Appellants, v. PENSION BENEFIT GUARANTY CORPORATION, Appellee, No. 12-5116 (D.C. Cir.). The Panel consists of Senior Circuit Judge Randolph and Circuit Judges Merrick B. Garland and Brett M. Kavanaugh. A copy of the D.C. Circuit's Jan. 11, 2013 Opinion is available at http://is.gd/xZnxrwfrom Leagle.com. Eveleth Mines LLC, doing business as EVTAC Mining, and its wholly owned subsidiary, Thunderbird Mining Company, produced taconite pellets in a plant in Minnesota. Taconite pellets are used in the production of iron and steel. Eveleth Mines filed for Chapter 11 relief (Bankr. Minn. Case No. 03-50569-MLM) on May 1, 2003. Thunderbird Mining filed for bankruptcy two weeks later, on May 15, 2003. The two cases were jointly administered. Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA represented the Debtors as counsel. On July 5, 2003, Eveleth's president and the local union president met with Jim Oberstar, then a congressman from Minnesota, and discussed Eveleth's failure to secure new sales contracts. The congressman, who knew the Chinese ambassador to the United States, recommended that Eveleth negotiate with Laiwu, a Chinese corporation, to either secure new sales contracts or sell the company's assets. In early October, Laiwu Steel Group of China and Cleveland-Cliffs Inc., an Ohio mining company, offered to purchase Eveleth's assets, with the intention of operating the plant and producing taconite pellets. The proposed sale terms required Eveleth "to restore its mining operations to operating condition consistent with industry practice" in advance of the proposed closing on Dec. 1, 2003. The bankruptcy court approved the sale on Nov. 25, 2003, and the transaction closed on Dec. 1, 2003. During the month of December, the purchasers hired substantially all of the company's former hourly employees under the terms of a new collective bargaining agreement. The bankruptcy cases were later converted to Chapter 7. FIBERTOWER CORP: Judge Clears Pay Raises for Workers ---------------------------------------------------- Jacqueline Palank and Katy Stech at Dow Jones' DBR Small Cap report that a bankruptcy judge said FiberTower Corp. can grant pay raises to its remaining workers, who are trying to wind down the San Francisco telecommunication company's operations without disrupting cell phone service in major U.S. cities. As reported in the Dec. 14, 2012 edition of the TCR, FiberTower sought to implement employee salary increases in an aggregate of $516,000. The Debtors said that an exodus of employees at this point would cause them to be unable to operate their business through the shut-down date. About FiberTower Corp. FiberTower Corporation, FiberTower Network Services Corp., FiberTower Licensing Corp., and FiberTower Spectrum Holdings LLC filed for Chapter 11 protection (Bankr. N.D. Tex. Case Nos. 12-44027 to 12-44031) on July 17, 2012, together with a plan support agreement struck with prepetition secured noteholders. FiberTower is an alternative provider of facilities-based backhaul services, principally to wireless carriers, and a national provider of millimeter-band spectrum services. Backhaul is the transport of voice, video and data traffic from a wireless carrier's mobile base station, or cell site, to its mobile switching center or other exchange point. FiberTower provides spectrum leasing services directly to other carriers and enterprise clients, and also offer their spectrum services through spectrum brokerage arrangements and through fixed wireless equipment partners. FiberTower's significant asset is the ownership of a national spectrum portfolio of 24 GHz and 39 GHz wide-area spectrum licenses, including over 740 MHz in the top 20 U.S. metropolitan areas and, in the aggregate, roughly 1.72 billion channel pops (calculated as the number of channels in a given area multiplied by the population, as measured in the 2010 census, covered by these channels). FiberTower believes the Spectrum Portfolio represents one of the largest and most comprehensive collections of millimeter wave spectrum in the U.S., covering areas with a total population of over 300 million. As of the Petition Date, FiberTower provides service to roughly 5,390 customer locations at 3,188 deployed sites in 13 markets throughout the U.S. The fixed wireless portion of these hybrid services is predominantly through common carrier spectrum in the 11, 18 and 23 GHz bands. FiberTower's biggest service markets are Dallas/Fort Worth and Washington, D.C./Baltimore, with additional markets in Atlanta, Boston, Chicago, Cleveland, Denver, Detroit, Houston, New York/New Jersey, Pittsburgh, San Antonio/Austin/Waco and Tampa. As of June 30, 2012, FiberTower's books and records reflected total combined assets, at book value, of roughly $188 million and total combined liabilities of roughly $211 million. As of the Petition Date, FiberTower had unrestricted cash of roughly $23 million. For the six months ending June 30, 2012, FiberTower had total revenue of roughly $33 million. With the help of FTI Consulting Inc., FiberTower's preliminary valuation work shows that the Company's enterprise value is materially less than $132 million -- i.e., the approximate principal amount of the 9.00% Senior Secured Notes due 2016 outstanding as of the Petition Date. The preliminary valuation work is based upon the assumption that FiberTower's spectrum licenses will not be terminated. Fibertower Spectrum disclosed $106,630,000 in assets and $175,501,975 in liabilities as of the Chapter 11 filing. Judge D. Michael Lynn oversees the Chapter 11 case. Lawyers at Andrews Kurth LLP serve as the Debtors' lead counsel. Lawyers at Hogan Lovells and Willkie Farr and Gallagher LLP serve as special FCC counsel. FTI Consulting serve as financial advisor. BMC Group Inc. serve as claims and noticing agent. The petitions were signed by Kurt J. Van Wagenen, president. Wells Fargo Bank, National Association -- as indenture trustee and collateral agent to the holders of 9.00% Senior Secured Notes due 2016 owed roughly $132 million as of the Petition Date -- is represented by Eric A. Schaffer, Esq., at Reed Smith LLP. An Ad Hoc Committee of Holders of the 9% Secured Notes Due 2016 is represented by Kris M. Hansen, Esq., and Sayan Bhattacharyya, Esq., at Stroock & Stroock & Lavan LLP. Wells Fargo and the Ad Hoc Committee also have hired Stephen M. Pezanosky, Esq., and Mark Elmore, Esq., at Haynes and Boone, LLP, as local counsel. U.S. Bank, National Association -- in its capacity as successor indenture trustee and collateral agent to holders of the 9.00% Convertible Senior Secured Notes due 2012, owed $37 million as of the Petition Date -- is represented by Michael B. Fisco, Esq., at Faegre Baker Daniels LLP, as counsel and J. Mark Chevallier, Esq., at McGuire Craddock & Strother PC as local counsel. William T. Neary, the U.S. Trustee for Region 6 appointed five members to the Official Committee of Unsecured Creditors in the Debtors' cases. The Committee is represented by Otterbourg, Steindler, Houston & Rosen, P.C., and Cole, Schotz, Meisel, Forman & Leonard, P.A. Goldin Associates, LLC serves as its financial advisors. FIRST DATA: CEO Jonathan Judge to Quit for Health Reasons --------------------------------------------------------- Jonathan J. Judge, chief executive officer and a member of the Board of Directors of First Data Corporation, informed the Company that he is resigning from those positions for health reasons. The effective date of the resignation will be agreed upon by the Company and Mr. Judge at a later date but is anticipated to be no later than March 31, 2013. Mr. Judge will continue to serve as CEO and a director until the Effective Date while the Board of Directors conducts a search for a new CEO. Mr. Judge will enter into a Retention and Transition Agreement with First Data Holdings Inc. and the Company. Under the terms of the Agreement, Mr. Judge's current compensatory arrangement will continue until the Effective Date. Thereafter, subject to the conditions outlined in the Agreement, he will receive salary continuation for a period of 24 months, with the sum total of payments equal to 2 times his base pay plus target bonus totaling $7,500,000; insurance coverage in accordance with COBRA paid for by the Company and thereafter provided Company-funded health insurance until age 65; and continue to vest in previously granted awards of equity in Holdings for one year following the Effective Date. Holdings also has agreed not to exercise previously granted call rights for any equity in Holdings held by Mr. Judge without his approval subject to the conditions outlined in the Agreement. About First Data Based in Atlanta, Georgia, First Data Corporation, with over $10 billion of revenue for the 12 months ended June 30, 2010, provides commerce and payment solutions for financial institutions, merchants, and other organizations worldwide. The Company reported a net loss of $336.10 million in 2011, a net loss of $846.90 million in 2010, and a net loss of $1.01 billion on $9.31 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $43.90 billion in total assets, $40.99 billion in total liabilities, $66.6 million in redeemable noncontrolling interest, and $2.84 billion in total equity. * * * The Company's carries a 'B3' corporate family rating, with a stable outlook, from Moody's Investors Service, a 'B' corporate credit rating, with stable outlook, from Standard & Poor's, and a 'B' long-term issuer default rating from Fitch Ratings. FIRST QUANTUM: S&P Puts 'B+' Corp. Credit Rating on CreditWatch --------------------------------------------------------------- Standard & Poor's Ratings Services said that it has placed its 'B+' corporate credit rating on Canada-listed First Quantum Minerals Ltd. (FQM) on CreditWatch with negative implications. S&P simultaneously put the 'B+' rating on Inmet Mining Corp. on CreditWatch negative. The CreditWatch placement follows FQM's announcement on Jan. 9, 2013, that it has sent its C$5.1 billion takeover offer for Inmet Mining Corp. (B+/Watch Neg) to its shareholders. S&P understands that FQM will use a mix of cash balances, undrawn credit facilities of $1.25 billion, and an ad hoc $2.5 billion acquisition facility to fund this 50% cash, 50% shares transaction. The CreditWatch placement reflects primarily the refinancing risk of the transaction for the combined entity if it goes ahead, but also a potential increase in debt and the possible escalation of the bid price. Refinancing risks would arise from the acquisition facility, which S&P expects to be short-term, as well as the change of control clause in Inmet's $2 billion bonds. "In our base-case scenario, we take into account that both FQM and Inmet have major investment projects in the next several years and will generate material negative free operating cash flow (FOCF)," S&P said. "We expect this transaction to materially lift FQM's gross debt from the currently low level of $55 million as reported on Sept. 30, 2012, because it will need to pay a $2.5 billion cash portion of the transaction price and consolidate Inmet, which reported debt of $1.5 billion in the same period. However, this will be partly offset by cash balances of $375 million at FQM, and at Inmet, $1.2 billion in cash balances, a $2.1 billion investment portfolio of bonds and other securities, and EBITDA of $0.6 billion for the rolling 12 months to Sept. 30," S&P noted. However, S&P believes the acquisition could improve FQM's diversification and reduce its exposure to Zambian country risks, which S&P currently see as a key constraint for the rating. Inmet currently produces 85,000 metric tons of copper in three mines located in Spain, Finland, and Turkey; and is developing a 80%-owned greenfield copper project in Panama, Cobre Panama, the main catalyst for FQM's bid. Inmet estimates the project development cost at $6.2 billion, and it entails substantial execution risks in S&P's view. "We aim to resolve the CreditWatch on FQM and Inmet once shareholders approve the transaction or FQM calls it off. We will focus on an analysis of its final terms, including price and liquidity, of the combined company. We will also evaluate management's business strategy, integration plans and financial policy, namely with regard to capex," S&P added. GENCORP INC: S&P Rates New $460MM 2nd Lien Secured Notes 'B-' ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' issue-level rating to GenCorp Inc.'s proposed $460 million second-lien secured notes with a '5' recovery rating, indicating expectations of modest (10%-30%) recovery in a simulated payment default scenario. At the same time, S&P affirmed its existing 'CCC+' issue-level rating on GenCorp's outstanding $200 million in convertible notes, which carry a recovery rating of '6', indicating negligible (0%- 10%) recovery in the event of a payment default. GenCorp has indicated that it will use proceeds from the proposed debt issuance along with cash on hand to fund the $550 million purchase of Pratt & Whitney Rocketdyne (PWR; not rated) from United Technologies Corp. (A/Stable/A-1). The acquisition is pending regulatory approval, which S&P expects in the first half of 2013. The additional debt will likely result in a modest deterioration in credit protection measures, with pro forma funds from operations (FFO) to debt declining to about 11% from 17%. "We do not expect material improvement in credit metrics over the next 12 months because of declining defense and NASA budgets," said Standard & Poor's credit analyst Chris Mooney. "We revised our financial risk profile assessment to "highly leveraged" from "aggressive" in December 2012. We believe the improvement in market position and diversity offsets higher debt. We revised our business risk profile assessment to "fair" from "weak" in December 2012 as well," S&P added. "We expect GenCorp's liquidity will remain "adequate" pro forma for the proposed acquisition. We believe sources of liquidity will exceed uses by at least 1.2x over the next 12 months and sources would exceed uses even if EBITDA were to decline by 15%. These are minimum requirements for an "adequate" designation," S&P noted. The outlook is stable. S&P expects credit ratios to deteriorate but remain appropriate for the rating, pro forma for the acquisition and likely pressure on the Department of Defense and NASA funding. GEOKINETICS INC: Enters Into Restructuring Support Agreement ------------------------------------------------------------ Geokinetics Inc. on Jan. 15 disclosed that it has entered into a restructuring support agreement regarding the terms of a comprehensive recapitalization of the Company with holders of more than 70% in aggregate principal amount of its 9.75% senior secured notes due 2014 and the largest holder of the Company's preferred stock. Under the terms of the restructuring support agreement: -- The entire $300 million of the Company's senior secured notes will be converted into common equity and the noteholders will become the majority equity owners of the Company at the consummation of the restructuring -- Holders of senior secured notes will provide up to $25 million of financing that will be converted to equity at consummation of restructuring -- Company operations are expected to remain unaffected David J. Crowley, Geokinetics President and Chief Executive Officer, commented, "We are pleased to announce that this agreement has been reached consensually, affording us the ability to expedite the restructuring process. With new backing from our strong and experienced sponsors, we are confident in our ability to seamlessly deliver quality service in the near term. We are also very excited at the long term prospects for Geokinetics, with the restructured company having a substantially de-levered balance sheet, reduced interest expense and a number of compelling prospects for growth on the horizon in all three product lines; Seismic Acquisition, Multi-Client seismic services and seismic Processing and Interpretation." Under the terms of the restructuring support agreement, the stakeholder parties to the agreement have agreed to vote in favor of either a pre-negotiated or a pre-packaged restructuring plan under chapter 11 of title 11 of the U.S. Code in the United States Bankruptcy Court for the District of Delaware. The plan will provide for the conversion of the Company's senior secured notes into newly issued common equity of the Company representing 100% of the Company's issued and outstanding common stock after the issuance (subject to dilution for a management incentive plan and conversion of the debtor in possession financing described below), the repayment of the existing revolving credit facility in full, the payment in full of unsecured creditors, including trade vendors, and a cash payment to certain of the Company's preferred stockholders. As a result, the Company's existing common stock and all classes of preferred stock will be canceled. The recapitalization is not expected to have an impact on the Company's operations and it will seek to pay unsecured trade and other creditors in full either in the ordinary course of business or at the conclusion of the chapter 11 case. A special committee of the Company's board of directors unanimously approved entering into the restructuring support agreement. As part of the restructuring process, the Company expects to enter into a new credit facility to provide the Company with liquidity for operations after the restructuring. During the restructuring process, subject to conditions in the restructuring support agreement, certain holders of the senior secured notes have agreed to backstop up to $25 million in a debtor-in- possession financing facility to allow the Company to finance its operations. On the effective date of the Company's chapter 11 plan, the debtor-in-possession financing facility will be converted to common stock of the reorganized Company at a discount to chapter 11 plan value. The parties' commitment under the restructuring support agreement and the completion of the transactions contemplated by the restructuring support agreement are subject to a number of closing conditions, termination rights and approvals, including the majority of the noteholders reaching an agreement with respect to various corporate governance arrangements, the approval of the bankruptcy court, and the finalization of definitive documentation. It is the Company's intention to request court approval to emerge from bankruptcy by the end of the first quarter of 2013. About Geokinetics Inc. Headquartered in Houston, Texas, Geokinetics Inc., a Delaware corporation founded in 1980, is provides seismic data acquisition, processing and integrated reservoir geosciences services, and land, transition zone and shallow water OBC environment geophysical services. These geophysical services include acquisition of 2D, 3D, time-lapse 4D and multi-component seismic data surveys, data processing and integrated reservoir geosciences services for customers in the oil and natural gas industry, which include national oil companies, major international oil companies and independent oil and gas exploration and production companies worldwide. The Company's balance sheet at June 30, 2012, showed $410.85 million in total assets, $580.10 million in total liabilities, $88.19 million of Series B-1 Senior Convertible Preferred Stock, and a stockholders' deficit of $257.44 million. * * * In the Oct. 5, 2011, edition of the TCR, Moody's Investors Service downgraded Geokinetics Holdings, Inc.'s (Geokinetics) Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to Caa2 from B3. "The downgrade to Caa2 is driven by Geokinetics' lower than expected margins in its international markets, constrained liquidity and weak leverage metrics," commented Andrew Brooks, Moody's Vice-President. "The negative outlook highlights the company's continuing tight liquidity and weak financial metrics even in an improved oil and gas operating environment." As reported by the TCR on Oct. 3, 2011, Standard & Poor's Ratings Services lowered its corporate credit and senior secured ratings on Geokinetics Holdings Inc. (Geokinetics) to 'CCC+' from 'B-'. The rating action reflects uncertainty surrounding the costs, damage to reputation, and effect on operations following a liftboat accident in the Southern Gulf of Mexico that led to four fatalities, including two Geokinetics employees and two subcontractors. GLYECO INC: Selling Units for $0.65 Apiece ------------------------------------------ GlyEco, Inc., has retained its placement agent and has initiated a new offering that contains terms that are materially different than the terms of the Company's previous offering. The Company's new offering is for a purchase price of $0.65 per Unit. Each Unit consists of (i) one share of common stock, par value $0.001 per share, of the Company, and (ii) one warrant to purchase one share of common stock of the Company from the date of issuance until the third anniversary of such date for a purchase price of $1.25 per share. The Offering will be made to accredited investors only, in accordance with Rule 506 of Regulation D of the Securities Act of 1933. The Offering commences on Jan. 11, 2013, and will close on Feb. 28, 2013, or at such later date as may be determined by the Company. About GlyEco, Inc. Phoenix, Ariz.-based GlyEco, Inc., is a green chemistry company formed to roll-out its proprietary and patent pending glycol recycling technology that transforms waste glycols, a hazardous material, into profitable green products. Jorgensen & Co., in Lehi, Utah, expressed substantial doubt about GlyEco's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has not yet achieved profitable operations and is dependent on the Company's ability to raise capital from stockholders or other sources and other factors to sustain operations. The Company's balance sheet at Sept. 30, 2012, showed $1.55 million in total assets, $2.24 million in total liabilities and a $685,243 total stockholders' deficit. GOLDEN GUERNSEY: OpenGate Milk Company Liquidating -------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports private-equity investor OpenGate Capital LLC put one of its portfolio companies, milk processor Golden Guernsey LLC, into bankruptcy. OpenGate didn't even attempt to reorganize the diary. It put Golden Guernsey into a liquidating Chapter 7 bankruptcy (Bankr. D. Del. Case No. 13-10044) where a trustee is appointed automatically to sell the assets. Los Angeles-based OpenGate had Waukesha, Wisconsin-based Golden Guernsey file in Delaware. OpenGate said in a statement that it acquired the company in September 2011 from Dean Foods Co. The U.S. Justice Department required Dean to sell in resolution of antitrust concerns related to school milk sales. Bankruptcy was the result of "lower prices and seemingly non- negotiable operating expenses," OpenGate said. The petition stated that assets and debt both exceed $10 million. GRAYMARK HEALTHCARE: Closes Three Sleep Diagnostic Facilities ------------------------------------------------------------- Graymark Healthcare, Inc., implemented a plan to close three of its sleep diagnostic and therapy facilities. The facilities are located in Oklahoma and Texas and are being closed because the revenue from these facilities has not met expectations and is not adequate to offset the fixed operating costs of these locations. It is anticipated that two of the facilities will be operated through Jan. 11, 2013, and the third facility will be operated through Jan. 31, 2013. The Company expects to record restructuring charges in connection with the closure of these facilities with respect to the remaining lease obligations for the facilities, severance payments to affected employees and other write-downs. The remaining lease obligations, severance payments and other write-downs are estimated to be approximately $1.2 million, $0.1 million and $0.1 million, respectively, and are expected to be recorded in the first quarter of 2013. All cash payments related to the severance costs are expected to be paid during the first quarter of 2013. The cash payments for the remaining lease obligations will continue for the life of the respective leases which extend through January 2018. Meanwhile, the NASDAQ Stock Market LLC filed a Form 25-NSE with the U.S. Securities and Exchange Commission regarding the removal from listitng or registration of Graymark's common stock under the NASDAQ Exchange. About Graymark Healthcare Graymark Healthcare, Inc., headquartered in Oklahoma City, Okla., provides care management solutions to the sleep disorder market. As of June 30, 2012, the Company operated 107 sleep diagnostic and therapy centers in 10 states. The Company's balance sheet at Sept. 30, 2012, showed $19.68 million in total assets, $24.29 million in total liabilities and a $4.60 million total deficit. As of Sept. 30, 2012, the Company had an accumulated deficit of approximately $44.5 million and reported a net loss of approximately $9.4 million for the nine months then ending. In addition, the Company used approximately $3.7 million in cash from operating activities from continuing operations during the nine months ending Sept. 30, 2012. In August 2012, the Company executed a definitive agreement to purchase Foundation Surgery Affiliates, LLC and Foundation Surgical Hospital Affiliates, LLC, for 35 million shares of the Company's common stock and a warrant for the purchase of 4 million shares of the Company's common stock at an exercise price of $1.50 (assuming conversion of the preferred stock which was to be issued at closing). The Foundation acquisition has not closed and management does not believe that it will close in its current form due to certain external factors including the inability to obtain the consent of certain preferred interest holders of certain subsidiaries of Foundation. Management is working on an alternative structure for the Foundation transaction, but there is no assurance that the Foundation acquisition will be closed. On Nov. 12, 2012, the Company executed a subscription agreement with Graymark Investments, LLC, in which OHP agreed to purchase 1,444,445 shares of the Company's common stock for $650,000 ($0.45 per share). The proceeds from OHP were received on Nov. 13, and will be used to fund the operations of the Company. Including the stock proceeds from OHP, management estimates that the Company has enough cash to operate through Dec. 31, 2012. Management also plans on raising equity capital or issuing additional debt in the near term to meet the Company's additional cash needs in 2013. In addition, management has initiated a cost reduction plan that is estimated will save the Company in excess of $2 million in 2013. The cost reduction plan includes a reduction in the labor force and general corporate expenses as well as process improvements that will result in lower bad debt expense. During the fourth quarter of 2012, management also anticipates developing a plan to close certain non-profitable lab locations. Historically, management has been able to raise the capital necessary to fund the operation and growth of the Company, but there is no assurance that the Company will be successful in raising the necessary capital to fund the Company's operations. "These uncertainties raise substantial doubt regarding the Company's ability to continue as a going concern," the Company said in regulatory filings. GSC GROUP: Ex-Workers Want Trustee Booted for Cloaking Ties ----------------------------------------------------------- Maria Chutchian of BankruptcyLaw360 reported that four former employees of investment firm GSC Group Inc. on Friday urged a New York bankruptcy court to remove liquidating trustee Robert J. Manzo from the case, saying they have received none of the money they are owed and that he hid Kaye Scholer LLP's allegedly unethical conduct. Unsecured creditors in the Chapter 11 case -- Thomas Libassi, Philip Raygorodetsky, Seth Katzenstein and Nicholas Petrusic -- allege Kaye Scholer, GSC's primary counsel; Capstone Advisory Group LLC, GSC's financial adviser during its insolvency; and Manzo withheld their relationships, the report said. About GSC Group Florham Park, New Jersey-based GSC Group, Inc. -- http://www.gsc.com/-- was a private equity firm that specialized in mezzanine and fund of fund investments. Originally named Greenwich Street Capital Partners Inc. when it was a subsidiary of Travelers Group Inc., GSC became independent in 1998 and at one time had $28 billion of assets under management. Market reverses, termination of some funds, and withdrawal of customers' investments reduced funds under management at the time of bankruptcy to $8.4 billion. GSC Group, Inc., filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 10-14653) on Aug. 31, 2010. Michael B. Solow, Esq., at Kaye Scholer LLP, served as the Debtor's bankruptcy counsel. Epiq Bankruptcy Solutions, LLC, is the Debtor's notice and claims agent. Capstone Advisory Group LLC served as the Debtor's financial advisor. The Debtor estimated its assets at $1 million to $10 million and debts at $100 million to $500 million as of the Chapter 11 filing. Since Jan. 7, 2011, the Debtors have been operated by James L. Garrity Jr., as Chapter 11 trustee for the Debtors. The Chapter 11 trustee tapped Shearman & Sterling LLP as his counsel, and Togut, Segal & Segal LLP as his conflicts counsel. No committee of unsecured creditors has been appointed in the case. The Chapter 11 trustee completed the sale of business in July 2011 and filed a liquidating Chapter 11 plan and explanatory disclosure statement in late August. The bankruptcy court authorized the trustee to sell the business to Black Diamond Capital Finance LLC, as agent for the secured lenders. Proceeds were used to pay secured claims. The price paid by the lenders' agent was designed for full payment on $256.8 million in secured claims, with $18.6 million cash left over. Black Diamond bought most assets with a $224 million credit bid, a $6.7 million note, $5 million cash, and debt assumption. A minority group of secured lenders filed an appeal from the order allowing the sale. Through a suit in state court, the minority lenders failed to halt Black Diamond from completing the sale. The Chapter 11 Trustee and Black Diamond have filed rival repayment plans for GSC Group. As reported in the TCR on Dec. 16, 2011, Hilary Russ at Bankruptcy Law360 related that the Chapter 11 trustee for GSC Group, Inc., reached a handshake deal on Dec. 13, 2011, ending a bitter dispute with Black Diamond that delayed a $235 million asset sale. Adam Goldberg, Esq., and Douglas Bacon, Esq., at Latham & Watkins, represent Black Diamond Capital Management, LLC, as counsel. Patrick J. Nash, Jr., Esq. and Paul Wierbicki, Esq. of Kirkland & Ellis LLP serve as counsel to Black Diamond Capital Management, LLC. GSC GROUP: Kaye Scholer, Capstone Must Disgorge $15MM, UST Says --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that in the opinion of the U.S. Trustee in New York, law firm Kaye Scholer LLP and financial adviser Capstone Advisory Group LLC should give up about $15 million in fees earned working for GSC Group Inc.. According to the report, the bankruptcy watchdog for the Justice Department contends the firms knew Capstone had an undisclosed fee-sharing agreement prohibited in bankruptcy law. The disgorgement hearing is scheduled for argument before U.S. Bankruptcy Judge Shelley C. Chapman on Feb. 11. The report relates that the story laid out in the U.S. Trustee's 112-page paper describes how Capstone filed 10 papers in bankruptcy court saying there were no agreements to share fees. On multiple occasions there were court filings where Robert Manzo, who headed the engagement for Capstone, was described as a Capstone employee and an executive director. The U.S. Trustee Tracy Hope Davis says she learned two years after GSC's bankruptcy that Mr. Manzo wasn't an employee and that there was an agreement for him to share some of the fees paid to Capstone. Rather than an employee, the documents describe him as a contractor. Mr. Rochelle notes that bankruptcy law allows the sharing of fees within a firm. Sharing fees with someone outside the firm is barred, absent court approval. Ms. Davis contends Mr. Manzo's status as a contractor makes him an outsider barred from sharing fees awarded to Capstone by the bankruptcy court. The U.S. Trustee says the proper sanction for faulty disclosure calls for forcing both firms to repay all fees they received, known as disgorgement. She says the law firm should suffer disgorgement because Kaye Scholer partner Michael B. Solow, Esq., representing GSC, knew Mr. Manzo's status and similarly knew about his fee- sharing arrangement. Mr. Solow was cited as saying in court filings that he was unaware of the fee-sharing arrangement. Ms. Davis disagrees. Mr. Solow is Kaye Scholer managing partner, co-chairman of the executive committee and co-chairman of the firm's bankruptcy department, according to the firm's Web site. The U.S. Trustee's allegations "are without merit and we will establish that in responding to the motion," Kaye Scholer spokeswoman Sandi Sonnenfeld said in an e-mailed statement, according to Bloomberg. Mr. Manzo was named as trustee to handle the creditors' trust created when the plan was approved. Although Mr. Manzo was an outside contractor, not an employee, Ms. Davis describes an agreement where Mr. Manzo would receive 80% to 100% of his individual billings to GSC plus half of any success fee and 15.5% of fees generated by Capstone employees. In addition to disgorgement, Ms. Davis wants the two firms barred from further representation of GSC. She also wants Manzo removed as trustee for the creditors' trust. According to Ms. Davis, Kaye Scholer incurred fees of $6.13 million, while Capstone's are $6.07 million. Capstone has a pending request for an additional amount of about $3 million, mostly a so-called success fee. About GSC Group Florham Park, New Jersey-based GSC Group, Inc. -- http://www.gsc.com/-- was a private equity firm that specialized in mezzanine and fund of fund investments. Originally named Greenwich Street Capital Partners Inc. when it was a subsidiary of Travelers Group Inc., GSC became independent in 1998 and at one time had $28 billion of assets under management. Market reverses, termination of some funds, and withdrawal of customers' investments reduced funds under management at the time of bankruptcy to $8.4 billion. GSC Group, Inc., filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 10-14653) on Aug. 31, 2010. Michael B. Solow, Esq., at Kaye Scholer LLP, served as the Debtor's bankruptcy counsel. Epiq Bankruptcy Solutions, LLC, is the Debtor's notice and claims agent. Capstone Advisory Group LLC served as the Debtor's financial advisor. The Debtor estimated its assets at $1 million to $10 million and debts at $100 million to $500 million as of the Chapter 11 filing. Since Jan. 7, 2011, the Debtors have been operated by James L. Garrity Jr., as Chapter 11 trustee for the Debtors. The Chapter 11 trustee tapped Shearman & Sterling LLP as his counsel, and Togut, Segal & Segal LLP as his conflicts counsel. No committee of unsecured creditors has been appointed in the case. The Chapter 11 trustee completed the sale of business in July 2011 and filed a liquidating Chapter 11 plan and explanatory disclosure statement in late August. The bankruptcy court authorized the trustee to sell the business to Black Diamond Capital Finance LLC, as agent for the secured lenders. Proceeds were used to pay secured claims. The price paid by the lenders' agent was designed for full payment on $256.8 million in secured claims, with $18.6 million cash left over. Black Diamond bought most assets with a $224 million credit bid, a $6.7 million note, $5 million cash, and debt assumption. A minority group of secured lenders filed an appeal from the order allowing the sale. Through a suit in state court, the minority lenders failed to halt Black Diamond from completing the sale. The Chapter 11 Trustee and Black Diamond have filed rival repayment plans for GSC Group. The Chapter 11 trustee reached a handshake deal on Dec. 13, 2011, ending the dispute with Black Diamond that delayed a $235 million asset sale. Adam Goldberg, Esq., and Douglas Bacon, Esq., at Latham & Watkins, represent Black Diamond Capital Management, LLC, as counsel. Patrick J. Nash, Jr., Esq., and Paul Wierbicki, Esq. of Kirkland & Ellis LLP serve as counsel to Black Diamond Capital Management, LLC. HANDY HARDWARE: Proposes Donlin Recano as Claims Agent ------------------------------------------------------ Handy Hardware Wholesale, Inc. seeks approval from the Bankruptcy Court to hire Donlin, Recano & Company as claims administrator and noticing agent to, among other things (a) prepare and serve required notices and documents in the Chapter 11 case, (b) process all proofs of claim received; and (c) maintain and update the official claims register for the Debtor. The Debtor will pay DRC a flat monthly fee of $7,850 per month exclusive of out-of-pocket expenses. Prepetition, the Debtor paid DRC a retainer of $7,500. DRC is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About Handy Hardware Handy Hardware Wholesale, Inc., filed a Chapter 11 petition (Bankr. D. Del. Case No. 13-10060) on Jan. 11, 2013. Handy Hardware is engaged in the business of buying goods from vendors and selling those goods at a discounted price to its members for sale in their retail stores. Handy Hardware, which has 300 employees, is operating on a cooperative basis and is completely member-owned, with over 1,000 members. The Debtor's warehouse facilities are located in Houston, Texas, and in Meridian, Mississippi. Trucking services are provided by Averitt Express, Inc., and Trans Power Corp. Its members operate 1,300 retail stores, home centers, and lumber yards. The members are located in 14 states throughout the U.S. as well as in Mexico, South America, and Puerto Rico. HAWKER BEECHCRAFT: JPMorgan Offers $600-Mil. Exit Financing ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Hawker Beechcraft Inc. nailed down a commitment where JPMorgan Chase Bank NA and J.P. Morgan Securities LLC will provide $600 million in financing to enable an exit from Chapter 11 following the Jan. 31 confirmation hearing for approval of the reorganization plan. According to the report, JPMorgan made the best offer to provide a $375 million secured term loan and a $225 million asset-based revolving credit. Hawker will use the loans to repay the $400 million loan financing the reorganization. The loan will also be used to make settlement payments and cure breaches of contracts in connection with the plan, in addition to providing working capital. Hawker expects the revolver won't be drawn immediately after emerging from bankruptcy. Hawker, the report discloses, wants the bankruptcy judge to hold a Jan. 24 hearing to approve payment of fees for the loan commitment. If approved by the court, Hawker's reorganization plan will give 81.9% of the new stock to lenders in return for $921 million of the $1.83 billion owing on the senior secured credit. Unsecured creditors are in line for the remaining 18.9% of the new stock. Hawker's $183 million in 8.5% senior unsecured notes due 2015 last traded on Jan. 8 for 8.25 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. 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. HAWKER BEECHCRAFT: Bank Debt Trades at 47% Off in Secondary Market ------------------------------------------------------------------ Participations in a syndicated loan under which Hawker Beechcraft is a borrower traded in the secondary market at 53.17 cents-on- the-dollar during the week ended Friday, Jan. 11, 2013, a drop of 0.42 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 200 basis points above LIBOR to borrow under the facility. The bank loan matures on March 26, 2014. The loan is one of the biggest gainers and losers among 190 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About Hawker Beechcraft Hawker Beechcraft Acquisition Company, LLC, headquartered in Wichita, Kansas, manufactures business jets, turboprops and piston aircraft for corporations, governments and individuals worldwide. Hawker Beechcraft reported a net loss of $631.90 million on $2.43 billion of sales in 2011, compared with a net loss of $304.30 million on $2.80 billion of sales in 2010. Hawker Beechcraft Inc. and 17 affiliates filed for Chapter 11 reorganization (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan 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. HELICOS BIOSCIENCES: Wins Final OK for Use of Cash Collateral ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports Helicos Biosciences Corp. received final approval from a bankruptcy judge in Boston to use cash representing collateral for secured lenders' claims. About Helicos BioSciences Helicos BioSciences Corporation is a publicly traded life science company headquartered in Cambridge, Massachusetts focused on genetic analysis technologies for the research, drug discovery and diagnostic markets. The firm's Helicos Genetic Analysis Platform was the first DNA sequencing instrument to operate by imaging individual DNA molecules. Helicos was co-founded in 2003 by life science entrepreneur Stanley Lapidus, Stephen Quake, and Noubar Afeyan with investments from Atlas Venture, Flagship Ventures, Highland Capital Partners, MPM Capital, and Versant Ventures. Since inception in 2003, revenue aggregated $13.3 million. For six months ended June 30, revenue of $1.13 million resulted in a net loss of $1.38 million. Helicos Biosciences filed a Chapter 11 petition (Bankr. D. Mass. Case No. 12-19091) in Boston on Nov. 15, 2012. The Debtor estimated assets of at least $1 million and liabilities of at least $10 million. HONK'S INC: Idaho Discount Retailer Files Chapter 11 ----------------------------------------------------- Honk's Inc. a seven-store Idaho retailer doing business as Honk's $1.00, filed a bankruptcy petition on Jan. 11 in Boise (Bankr. D. Idaho Case No. 13-00054) for protection from creditors under Chapter 11. According to Bloomberg's Bill Rochelle, the chain had $16.8 million in revenue in 2011 and $12.8 million in 2012, according to a court filing. Assets were listed with a value of $1.7 million against debt totaling $4.2 million, including $1.1 million owing to secured creditors. HOSTESS BRANDS: Insurer Barred From Arbitrating on Dispute ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports Ace American Insurance Co. can't force Hostess Brands Inc. to arbitrate, even though the insurance policy contains a provision calling for the dispute to be decided in arbitration. The report recounts that the issue arose in November, when Hostess was running short on cash. The baker of Wonder bread sought court approval to use some of the cash on deposit with Ace to cover liabilities under insurance policies. According to the report, U.S. Bankruptcy Judge Robert D. Drain in White Plains, New York, filed an opinion on Jan. 7 originally delivered in court. He said that whether a company has the right to use a secured lender's so-called cash collateral is a decision Congress intended for bankruptcy courts to make, not arbitrators. Judge Drain said that use of cash collateral is "central to the bankruptcy process" and involves the rights of all creditors, not just Hostess and Ace. In November, the bakery workers' union and the union's pension fund filed a motion asking Drain to appoint a Chapter 11 trustee, ousting Hostess management for the duration of the liquidation. The hearing on the motion is now set for Jan. 25. About Hostess Brands Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known for iconic brands such as Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution centers and 570 outlets in 49 states. Hostess filed for Chapter 11 bankruptcy protection early morning on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through 12-22056) in White Plains, New York. DHostess Brands disclosed assets of $982 million and liabilities of $1.43 billion as of the Chapter 11 filing. The bankruptcy filing was made two years after predecessors Interstate Bakeries Corp. and its affiliates emerged from bankruptcy (Bankr. W.D. Mo. Case No. 04-45814). In the new Chapter 11 case, Hostess has hired Jones Day as bankruptcy counsel; Stinson Morrison Hecker LLP as general corporate counsel and conflicts counsel; Perella Weinberg Partners LP as investment bankers, FTI Consulting, Inc. to provide an interim treasurer and additional personnel for the Debtors, and Kurtzman Carson Consultants LLC as administrative agent. Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry Wilson, the head of turnaround and restructuring firm MAEVA Advisors, are representing the Teamsters union. Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and Bakery & Confectionery Union & Industry International Pension Fund are Jeffrey R. Freund, Esq., at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright & Jaworski L.L.P. The official committee of unsecured creditors selected New York law firm Kramer Levin Naftalis & Frankel LLP as its counsel. Tom Mayer and Ken Eckstein head the legal team for the committee. Hostess Brands in mid-November opted to pursue the orderly wind down of its business and sale of its assets after the Bakery, Confectionery, Tobacco and Grain Millers Union (BCTGM) commenced a nationwide strike. The Debtor failed to reach an agreement with BCTGM on contract changes. Hostess Brands said it intends to retain approximately 3,200 employees to assist with the initial phase of the wind down. Employee headcount is expected to decrease by 94% within the first 16 weeks of the wind down. The entire process is expected to be completed in one year. HOSTESS BRANDS: Proposes Flowers-Led Auction on Feb. 28 ------------------------------------------------------- Hostess Brands Inc. signed Flowers Foods Inc. to $390 million in contracts to be the lead bidder at auctions on Feb. 28 for most of the bread business, including 20 plants, 38 depots and brands including Wonder bread. Flowers isn't taking any of the plants that go along with the Beefsteak brand. The bankruptcy judge in New York will approve auction and sale procedures at a Jan. 25 hearing. If the judge agrees, other bids will be due Feb. 25. A hearing to approve the sales will be March 5. The Feb. 28 auction determines if there is a better bid than Flowers' offer. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports Hostess says the sales must occur quickly because the Hostess brands already lost shelf space to competitors. The remaining bread assets and the snack-cake business will be sold separately. The purchase price will be paid in cash. Proceeds will be applied to payment of Hostess's secured debt. Thomasville, Georgia-based Flowers' best known brands are Nature's Own and Tastykake. The 44 bakeries generate about $3 billion a year in sales, Flowers said. Flowers said the Hostess acquisition will increase earnings per share. The stock closed on Jan. 11 at $24.83, down 5 cents in New York Stock Exchange Trading. For three quarters ended Oct. 6, Flowers reported net income of $97.6 million on revenue of $2.3 billion. About Hostess Brands Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known for iconic brands such as Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution centers and 570 outlets in 49 states. Hostess filed for Chapter 11 bankruptcy protection early morning on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through 12-22056) in White Plains, New York. DHostess Brands disclosed assets of $982 million and liabilities of $1.43 billion as of the Chapter 11 filing. The bankruptcy filing was made two years after predecessors Interstate Bakeries Corp. and its affiliates emerged from bankruptcy (Bankr. W.D. Mo. Case No. 04-45814). In the new Chapter 11 case, Hostess has hired Jones Day as bankruptcy counsel; Stinson Morrison Hecker LLP as general corporate counsel and conflicts counsel; Perella Weinberg Partners LP as investment bankers, FTI Consulting, Inc. to provide an interim treasurer and additional personnel for the Debtors, and Kurtzman Carson Consultants LLC as administrative agent. Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry Wilson, the head of turnaround and restructuring firm MAEVA Advisors, are representing the Teamsters union. Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and Bakery & Confectionery Union & Industry International Pension Fund are Jeffrey R. Freund, Esq., at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright & Jaworski L.L.P. The official committee of unsecured creditors selected New York law firm Kramer Levin Naftalis & Frankel LLP as its counsel. Tom Mayer and Ken Eckstein head the legal team for the committee. Hostess Brands in mid-November opted to pursue the orderly wind down of its business and sale of its assets after the Bakery, Confectionery, Tobacco and Grain Millers Union (BCTGM) commenced a nationwide strike. The Debtor failed to reach an agreement with BCTGM on contract changes. Hostess Brands said it intends to retain approximately 3,200 employees to assist with the initial phase of the wind down. Employee headcount is expected to decrease by 94% within the first 16 weeks of the wind down. The entire process is expected to be completed in one year. The bankruptcy judge signed a formal order on Nov. 30 giving final approval to wind-down procedures. The latest budget projects the $49 million loan for the Chapter 11 case being paid down to $21.2 million by Feb. 22. HOSTESS BRAND: Reaches Deal with Insurers Over Policy Collateral ---------------------------------------------------------------- Megan Stride of BankruptcyLaw360 reported that Hostess Brand Inc. has reached a proposed deal with ACE American Insurance Co. and its ESIS Inc. affiliate to resolve the bankrupt snack company's motion to dip into cash collateral provided as security for workers' compensation and auto insurance policies, according to a Friday filing in New York bankruptcy court. Under the tentative deal, the parties agreed that once they win the bankruptcy court's final approval, ACE will withdraw from the collateral holdings and pay to Hostess the sum of all deductible payments it has made, the report said. About Hostess Brands Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known for iconic brands such as Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution centers and 570 outlets in 49 states. Hostess filed for Chapter 11 bankruptcy protection early morning on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through 12-22056) in White Plains, New York. DHostess Brands disclosed assets of $982 million and liabilities of $1.43 billion as of the Chapter 11 filing. The bankruptcy filing was made two years after predecessors Interstate Bakeries Corp. and its affiliates emerged from bankruptcy (Bankr. W.D. Mo. Case No. 04-45814). In the new Chapter 11 case, Hostess has hired Jones Day as bankruptcy counsel; Stinson Morrison Hecker LLP as general corporate counsel and conflicts counsel; Perella Weinberg Partners LP as investment bankers, FTI Consulting, Inc. to provide an interim treasurer and additional personnel for the Debtors, and Kurtzman Carson Consultants LLC as administrative agent. Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry Wilson, the head of turnaround and restructuring firm MAEVA Advisors, are representing the Teamsters union. Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and Bakery & Confectionery Union & Industry International Pension Fund are Jeffrey R. Freund, Esq., at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright & Jaworski L.L.P. The official committee of unsecured creditors selected New York law firm Kramer Levin Naftalis & Frankel LLP as its counsel. Tom Mayer and Ken Eckstein head the legal team for the committee. Hostess Brands in mid-November opted to pursue the orderly wind down of its business and sale of its assets after the Bakery, Confectionery, Tobacco and Grain Millers Union (BCTGM) commenced a nationwide strike. The Debtor failed to reach an agreement with BCTGM on contract changes. Hostess Brands said it intends to retain approximately 3,200 employees to assist with the initial phase of the wind down. Employee headcount is expected to decrease by 94% within the first 16 weeks of the wind down. The entire process is expected to be completed in one year. INOVA TECHNOLOGY: Amends Fiscal 2012 Annual Report -------------------------------------------------- Inova Technology, Inc., filed an amendment no. 1 to the annual report on Form 10-K for the year ended April 30, 2012, which was filed with the Securities and Exchange Commission on July 30, 2012. The amendment reflects the cover page being filled out completely, in terms of answering all questions on the page. The Company also amended the language pertaining to its CEO's services. A copy of the amended filing is availble at: http://is.gd/2K41Ow About Inova Technology Based in Las Vegas, Nevada, Inova Technology, Inc. (OTC BB: INVA) -- http://www.inovatechnology.com/-- through its subsidiaries, provides information technology (IT) consulting services in the United States. It also manufactures radio frequency identification (RFID) equipment; and provides computer network solutions. The company was formerly known as Edgetech Services Inc. and changed its name to Inova Technology, Inc., in 2007. The Company reported a net loss of $1.24 million for the year ended April 30, 2012, compared with a net loss of $3.35 million during the prior year. The Company's balance sheet at Oct. 31, 2012, showed $7.46 million in total assets, $18.58 million in total liabilities and a $11.11 million total stockholders' deficit. MaloneBailey, LLP, in Houston, Texas, issued a "going concern" qualification on the consolidated financial statements for the year ended April 30, 2012. The independent auditors noted that Inova incurred losses from operations for the years ended April 30, 2012, and 2011 and has a working capital deficit as of April 30, 2012, which raise substantial doubt about Inova's ability to continue as a going concern. INOVA TECHNOLOGY: Amends 375 Million Common Shares Prospectus ------------------------------------------------------------- Inova Technology, Inc., filed with the U.S. Securities and Exchange Commission amendment nos. 4, 5, and 6 to the Form S-1 registration statement relating to the offering of up to 375,000,000 shares of common stock of the Company in a self- underwritten direct public offering, without any participation by underwriters or broker-dealers. The shares will be sold through the efforts of the Company's officers and directors. The offering price is $0.01 per share. The offering period will begin on the date this registration statement is declared effective by the Securities and Exchange Commission and continue, unless earlier terminated due to it being fully subscribed, until 5:00 P.M. Local Time, on xxxx, 2013. There is no minimum number of shares to be sold under this offering. The public offering price for the common stock is to be $0.01 per share. The Company's common stock is quoted on the OTCQB by the OTC Markets Group under the symbol "INVA". On Nov. 6, 2012, the last reported sale price for the Company's common stock was $0.01 per share. The Company is conducting this offering as a "self-underwriting" through its officers and directors, and therefore, the Company will pay no underwriting fees or commissions. A copy of the latest amendment is available for free at: http://is.gd/ldD3Kh About Inova Technology Based in Las Vegas, Nevada, Inova Technology, Inc. (OTC BB: INVA) -- http://www.inovatechnology.com/-- through its subsidiaries, intprovides information technology (IT) consulting services in the United States. It also manufactures radio frequency identification (RFID) equipment; and provides computer network solutions. The company was formerly known as Edgetech Services Inc. and changed its name to Inova Technology, Inc., in 2007. The Company reported a net loss of $1.24 million for the year ended April 30, 2012, compared with a net loss of $3.35 million during the prior year. The Company's balance sheet at Oct. 31, 2012, showed $7.46 million in total assets, $18.58 million in total liabilities and a $11.11 million total stockholders' deficit. MaloneBailey, LLP, in Houston, Texas, issued a "going concern" qualification on the consolidated financial statements for the year ended April 30, 2012. The independent auditors noted that Inova incurred losses from operations for the years ended April 30, 2012, and 2011 and has a working capital deficit as of April 30, 2012, which raise substantial doubt about Inova's ability to continue as a going concern. JAYHAWK ENERGY: Incurs $663,200 Net Loss in Fiscal 2012 ------------------------------------------------------- JayHawk Energy, Inc., filed on Jan. 9, 2013, its annual report on Form 10-K for the year ended Sept. 30, 2012. DeCoria, Maichel and Teague, P.S., in Spokane, Washington, expressed substantial doubt about JayHawk Energy's ability to continue as a going concern, noting that the Company has incurred substantial losses, has negative working capital and has an accumulated deficit. The Company reported a net loss of $4.3 million on $663,229 of total revenue in fiscal 2012 as compared to a net loss of $4.3 million on $363,122 of total revenue in fiscal 2011. The Company's balance sheet at Sept. 30, 2012, showed $1.2 million in total assets, $2.8 million in total liabilities, and a stockholders' deficit of $1.6 million. A copy of the Form 10-K is available at http://is.gd/F9rYRi Coeur d'Alene, Idaho-based JayHawk Energy, Inc., is an early stage oil and gas company. The Company's immediate business plan is to focus its efforts on further developing the as yet undeveloped acreage in Southeast Kansas and to expand its oil production on its Crosby (f/k/a Candak), North Dakota properties. JUDO ASSOCIATES: Empty Lot on Canal Returns to Bankruptcy --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports the tenant of undeveloped property at 335-341 Canal Street in Manhattan is back in bankruptcy after the prior Chapter 11 reorganization was dismissed in April. According to the report, a parking lot currently occupies the otherwise empty lot. The prior bankruptcy, begun in June 2009, ended when the bankrupt tenant revised the ground lease from the owner of the property. Israel Discount Bank of New York is the secured lender owed $8.2 million. The bankrupt company contends the ground lease is worth $18 million. If the lease were terminated, the bankrupt tenant says IDB would be a wholly unsecured creditor. Judo Associates LLC filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 13-10071) in Manhattan on Jan. 9, 2013. Salvatore LaMonica, Esq., at Lamonica Herbst & Maniscalco, in Wantagh, New York, serves as counsel. The Debtor estimated at least $1 million in assets and liabilities. K-V PHARMACEUTICAL: Files Chapter 11 Plan ----------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports K-V Pharmaceutical Co. filed a Chapter 11 reorganization plan where first-lien lenders will receive 82% of the stock along with a $50 million second-lien term loan. A group of the lenders making a $85 million loan to finance the plan will receive 15% of the new stock. The report notes that the percentage recovery for the creditors is left blank in the draft disclosure materials filed along with the plan. The plan is supported by holders of 78% of the $225 million in senior secured notes, according to the disclosure statement. According to the report, holders of $200 million in convertible notes are to have 3% of the new stock along with the ability to purchase more stock in a $20 million rights offering at a price related to full payment of the senior notes. General unsecured creditors are being offered $1 million cash to divide among themselves. Senior and subordinated bonds have soared in price since October. The first-lien notes last traded on Jan. 7 for 91 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The secured notes are up 138% since Oct. 9. 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. The Plan provides that in full satisfaction, settlement, release LARSON LAND: Creditor Objects to Ch. 7 Conversion Absent Payment ---------------------------------------------------------------- Creditor Owyhee Irrigation District, the holder of a lien claim of $18,5967 in real property owned by the Debtor, objects to Chapter 11 trustee John L. Davidson's motion to convert the bankruptcy case of Larson Land Company to one under Chapter 7, unless and until Trustee pays the balance owed to it, or provides suitable assurance that the buyer of the property will pay the obligation to it. Ontario Assets was the successful bidder at the auction by way of a credit bid in the amount of $35 million for substantially all of the Debtor's assets, including the real property in Malheur County upon which the lien of the Creditor attached. PNC Equipment Finance, Inc., People's Capital & Leasing Corp., Wells Fargo Equipment Finance, Inc.m and Zions First National Bank also participated as bidders at the auction and were the successful bidders, by way of credit bids, for specific assets of the Debtor securing their claims. In its conversion motion, the Trustee related that substantially all of the Debtor's former assets are no longer property of the estate. The Trustee, through counsel, said that the Debtor no longer has a viable business to be reorganized. "While a plan of liquidation of the estate's remaining assets could be confirmed, the cost of that process outweighs the likely benefits in this case. The estate's remaining assets can be administered just as efficiently and effectively by a Chapter 7 Trustee as they could be administered by the Trustee or by some form of liquidating agent under a liquidation plan." About Larson Land Ontario, Oregon-based Larson Land Company LLC, fka Select Onion Co. LLC -- http://www.selectonion.com/-- a privately held agribusiness company that grows, stores, processes and ships bagged onions, fresh processed onions, whole peel onions, IQF onions, and delicious raw breaded hand packed onion rings, filed a Chapter 11 petition (Bankr. D. Idaho Case No. 12-00820) in Boise, Idaho, on April 12, 2012, estimating assets of up to $100 million and debts of up to $500 million. Other than some dry land wheat, as of the Petition Date there were no crops growing on the Debtor's farm land. The Debtor also ceased processing operations following the Petition ate. Brent T. Robinson, Esq., at Robinson, Anthon & Tribe, serves as the Debtor's counsel. Judge Terry L. Myers, at the behest of the U.S. Trustee, ordered the appointment of a Chapter 11 trustee to replace management of the Debtor. Hawley Troxell Ennis & Hawley, LLP and Ball Janik LLP represent John L. Davidson, the Chapter 11 trustee for the Debtor. Robert D. Miller, Jr., U.S. Trustee for Region 18, appointed five unsecured creditors to serve on the Official Committee of Unsecured Creditors. LEAR CORP: Moody's Affirms 'Ba2' CFR; Rates $500MM Notes 'Ba2' -------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to Lear Corporation's proposed $500 million senior unsecured note offering. In a related action Moody's affirmed Lear's Corporate Family Rating and Probability of Default Rating at Ba2 and affirmed the rating on Lear's existing senior unsecured notes at Ba2. The rating outlook is stable. The Speculative Grade Liquidity Rating was raised to SGL-1 from SGL-2. Lear recently announced its intention to offer $500 million of senior unsecured bonds. The net proceeds from the offering are expected to be used, together with other sources of liquidity, for general corporate purposes, including, without limitation, the redemption of $70 million of the company's existing senior unsecured notes during 2013, investments in additional component capabilities and emerging markets and share repurchases under the company's upsized common stock share repurchase program. Rating assigned: Ba2 (LGD4 60%) to the new $500 million of senior unsecured notes due 2023 Rating raised: Speculative Grade Liquidity Rating, to SGL-1 from SGL-2 Ratings affirmed: Ba2, Corporate Family Rating; Ba2-PD, Probability of Default Rating; Ba2 (LGD4 60%), Senior unsecured notes due 2018; Ba2 (LGD4 60%);Senior unsecured notes due 2020; (P)Ba2, Senior unsecured shelf Ratings Rationale The affirmation of Lear's Ba2 Corporate Family Rating (CFR) reflects the company's relatively strong pro forma credit metrics following the proposed offering, with pro forma Debt/EBITDA estimated at 2.1x (inclusive of Moody's standard adjustments) for the LTM period ending September 29, 2012 and modest profit margins. The ratings also reflect the risks around the company's ability to maintain a prudent financial profile over the intermediate-term. Following the proposed bond offering, Lear's cash balances ($1.27 billion as of September 29, 2012) will be bolstered by the net proceeds from the $500 million note offering. These funds are expected to be available, along with free cash flow generation, and availability under a proposed $1 billion revolving credit facility to fund the company's announced $1.5 billion share repurchase program (of which there is $1 billion of availability remaining), a potential optional call under the existing senior unsecured notes in 2013, and other general corporate purposes. A portion of the Lear's liquidity is likely to support acquisition growth similar to the Guilford Mills transaction executed in 2012. The company has indicated that it would be comfortable retaining liquidity (inclusive of cash balances and undrawn revolver availability) of about $1.0 billion. Lear's LTM EBIT margin, at 4.8% for the LTM period ending September 29, 2012 (inclusive of Moody's standard adjustments), lags other similarly rated companies. As a result of the cyclical nature of the automotive industry and exposure to commodity prices, higher ratings require stronger margins that provide greater cushion to withstand a downturn. The SGL-1 Speculative Grade Liquidity Rating indicates the expectation of a very good liquidity profile over the next twelve months supported by cash balances, free cash flow generation, and availability under the proposed revolving credit facility. As of September 29, 2012, Lear maintained approximately $1.27 billion of cash and cash equivalents. The proceeds from the proposed $500 million note offering will bolster this amount. Through 2012, Lear's geographic diversity and platform mix has helped to mitigate weakening demand in the company's European markets. This competitive advantage is expected to continue to support positive free cash flow generation over the near-term. While the company's recently announced an upsized share repurchase program to $1.5 billion from $700 million (of which there is $1 billion of availability remaining), Moody's expects the plan to be executed on a measured pace consistent with historical trends. Liquidity is also supported by a revolving credit facility which is in the process of being increased to $1 billion from $500 million, maturing in 2018. The revolving credit facility was unfunded as of September 29, 2012. Financial covenants under the revolving credit facility include a debt leverage test and an interest coverage test both of which are expected to have ample headroom over the next twelve months. The stable rating outlook continues to reflects Moody's view that Lear will maintain a business position and financial profile that is consistent with its rating, which is among the strongest for automotive parts suppliers globally. The outlook incorporates the potential for acquisitions or increasing shareholder friendly actions which may diminish certain of the company's credit metrics. Future events that have the potential to drive Lear's outlook or rating higher include: increasing EBIT margins to the high single digits while sustaining Debt/EBITDA under 2.0x and EBIT/Interest coverage, inclusive of restructuring charges, over 4.5x. A higher rating or outlook could also be supported by prudent financial policies which include executing organic and acquisitive growth initiatives and shareholder returns programs while sustaining the above rating trigger thresholds. Given the strong current financial profile and expectation of continued growth in global automotive sales, a downward movement in the rating is not expected in the near term. Downward risk could occur if more aggressive acquisitions or shareholder return initiatives are transacted than has been indicated by the company, which Moody's considers to be an unlikely scenario. Lear's outlook or rating could be lowered if EBIT/Interest falls below 3.0x, or Debt/EBITDA increases to over 3.0x. The principal methodology used in this rating was the Global Automotive Supplier Industry published in January 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Lear Corporation, headquartered in Southfield, MI, is one of the world's leading suppliers of automotive seating and electrical power management systems. The company had net sales of $14.4 billion for the LTM period ending September 29, 2012. LEAR CORP: S&P Hikes CCR to 'BB+'; Rates $500MM Unsec. Notes 'BB' ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it raised the corporate credit rating on Southfield, Mich.-based Lear Corp. to 'BB+' from 'BB'. The outlook is stable. "At the same time, we assigned a 'BBB' rating and '1' recovery rating to the senior secured revolving credit facility, indicating our expectation of very high (90% to 100%) recovery for debtholders in the event of a payment default. In addition, we assigned a 'BB' issue-level and '5' recovery rating to the company's $500 million senior unsecured notes maturing in 2023, indicating our expectation of a modest (10% to 30%) recovery for debtholders in the event of a payment default. The issue-level rating remains 'BB' on the company's 7.875% senior unsecured debt maturing in 2018 and the 8.125% million senior unsecured debt maturing in 2020, but we are revising the recovery ratings to '5' from '3'. We revised the recovery rating lower to reflect the increase in secured debt potential under the revolver," S&P said. "The ratings on Southfield, Mich.-based automotive systems supplier Lear Corp. reflect Standard & Poor's opinion of the company's "intermediate" financial risk profile and "weak" business risk profile, which are unchanged," said Standard & Poor's credit analyst Lawrence Orlowski. Amid weakening demand in Europe in 2012, margins have been fairly steady. "Moreover, we expect the company to generate a solid level of free operating cash in 2012 and 2013. We assume Lear's 2013 global sales will be at least $14.7 billion. We also expect light-vehicle production to increase about 3% year over year in North America and to fall about 4% year over year in Western Europe. For the current rating, we assume the company's debt to EBITDA will remain less than 2x and that free cash flow will be more than $250 million in 2013. We adjust reported debt to add the present value of operating leases and underfunded postretirement benefit obligations," S&P added. S&P considers Lear's business risk profile weak largely because of volatile auto production, high fixed costs, fierce competition, and pricing pressures that constrain margins. Furthermore, Lear has significant customer concentration--38% of 2011 sales were to General Motors Co. (GM; BB+/Stable/--) and Ford Motor Co. (BB+/Positive/--). Moreover, S&P believes Lear still has significant exposure to pickup trucks and SUVs in North America, for which demand could fall if the price of gas again rises significantly and eventually nears $5 per gallon. The company competes in the highly competitive and cyclical global auto supplier market and has single-digit EBITDA margins. Its solid financial credit measures continue to improve because of an ongoing increase in light-vehicle demand in North America and strong growth in emerging markets. "We believe the company's profitability and cash flow are sustainable, even if sales weaken, because of cost reductions and a low debt burden, even with the issuance of $500 million senior unsecured debt. We expect the industry to remain volatile, and this volatility, along with unpredictable raw material costs, can cause large swings in cash generation and use. Still, we assume Lear will retain a substantial portion of its large cash balances over time and that debt will remain at about the current level," S&P noted. The Tier 1 auto supplier is made up of two divisions: seating systems, which designs and manufactures complete seats and components for the passenger-car and light-truck markets, and electrical power management systems, which designs and manufactures wire harnesses, terminals and connectors, junction boxes, body control electronics, wireless products, and premium audio systems. Seating has lower margins than electronics. In the seating systems division, Lear's revenue from GM represents a concentration risk, in S&P's view. S&P expects Lear to remain the No. 2 player in the global seating systems market. Business in China is expanding, and Lear's consolidated sales backlog for 2013 through 2015 currently totals $1.8 billion. "The company has benefited, in our view, from years of various restructuring actions, such as transferring manufacturing capacity to lower-cost regions, reducing manufacturing capacity, and eliminating administrative overhead. The company has pursued what it calls a low-cost-country strategy designed to increase its global manufacturing and engineering competitiveness. The company has expanded vertical integration in Mexico, Eastern Europe, Africa, and Asia. It has also increased low-cost engineering capabilities in China, India, and the Philippines. These actions have helped its electrical power management systems division support global platforms and increase scale, bolstering profitability. We assume the company will generate substantial positive free operating cash flow (FOCF) at about $275 million in 2012 and at least approximately that amount in 2013," S&P noted. The outlook is stable. S&P assumes that Lear will generate at least $250 million in annual free cash flow in 2013, maintaining a ratio of free operating cash flow to debt of more than 10%. In addition, S&P assumes adjusted debt to EBITDA will remain less than 2x, and cash balances will remain substantial. This implies gross margins above 7% and flat to positive sales growth. S&P could lower the rating if the company increased its leverage substantially or used cash to fund a large acquisition or pay a special dividend. S&P could also lower the rating if global vehicle demand declines again, the company uses cash, or leverage exceeds 2x on a sustained basis, which S&P estimates could occur if 2013 revenue declined versus 2012 levels and gross margins fell below 6%. "To raise the rating to investment grade, we would need to be convinced that the company's business model would be comfortably resilient in the face of industry downturns over the long term as well as improving profitability. This means that we would need to reassess the business risk profile to at least "fair." We would expect adjusted EBITDA margins in both its seating and electrical power management businesses to expand toward the double-digits on a sustained basis. The current financial profile (if sustained) is already consistent with a higher rating, as we consider it "intermediate," S&P said. LEHMAN BROTHERS: Traxis Tests Rigidity of Plan ---------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports a little-noticed provision in the Lehman Brothers Holdings Inc. bankruptcy reorganization plan is being challenged by funds managed by Traxis Partners LP. The outcome will decide whether creditors with valid claims lose out entirely if they don't cash checks within 90 days. The report recounts that after confirming the Chapter 11 plan, Lehman made a first distribution to creditors in March. Lehman sent Traxis checks totaling about $176,000. They were neither cashed nor returned to Lehman as undeliverable. Following a request by Traxis, Lehman refused to reissue the checks. Lehman pointed to a provision in the confirmed plan saying in substance that checks not cashed within 90 days are forfeited. The money represented by uncashed checks will be included in future distributions to all creditors. According to the report, U.S. Bankruptcy Judge James M. Peck will confront the issue at a Jan. 16 hearing. He will decide whether the plan must be strictly enforced or whether several theories advanced by Traxis give him the right to allow payment on valid claims where checks weren't cashed on time. Traxis, the report discloses, says in court papers that it moved to Connecticut from Manhattan after filing the claims, and Lehman sent the checks to Traxis's old address. Traxis said it gave forwarding instructions to the U.S. Postal Service and never received the original checks. The report adds that Lehman is giving Judge Peck a thorny issue to decide under English law regarding the U.K. affiliate's former office at Canary Wharf in London. The landlord is claiming $780 million in damages for the Lehman parent's guarantee of a 30-year lease. Lehman says the landlord released the U.K. affiliate from liability on the lease in exchange for a payment of 1.5 million pounds ($2.42 million). Lehman wants Peck to rule under English law that releasing the affiliate from liability on the lease automatically released the parent on its guarantee. The landlord argues that Lehman gave an indemnity, not a guarantee, making English law on guarantees inapplicable. 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) LEHMAN BROTHERS: Delays March Payouts Amid Archstone Sale --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports reorganized Lehman Brothers Holdings Inc. intends on delaying a March 30 distribution by 30 days to ensure that creditors receive the more than $2.5 billion from completing the sale of apartment owner Archstone Inc., Lehman's single-largest asset. According to the report, the Archstone sale is scheduled for completion in March, perhaps affording insufficient time to work out details to include the funds in the March 30 distribution, Lehman said in papers filed this week with the bankruptcy court in Manhattan. Lehman, the report relates, is also asking for flexibility in the timing of distributions to be made each year on Sept. 30 and March 30 under the confirmed reorganization plan. If the bankruptcy court approves at a Jan. 30 hearing, the distributions could be within five days of the assigned dates. According to the report, Lehman also wants the judge to rule that claim transfers must be reported no less than 40 days before a distribution date for the buyer of a claim to receive the payment. Currently, the deadline to report claim trades is 30 days before a distribution. Lehman's papers are asking the judge to rule that all sales of property are exempt from taxes under Section 1146(a) of the Bankruptcy Code. The provision states, generally speaking, that sales "under" a confirmed plan aren't subject to real estate transfer taxes, stamp taxes and the like. The report recounts that bankruptcy courts previously were liberal in interpreting the section and held that property sales before confirmation were exempt from tax. Appellate courts tightened the rule and prohibited granting tax exemption for sales before confirmation. Now, Lehman is asking for a ruling that sales after confirmation aren't subject to tax, even though the company is no longer in bankruptcy. Taxing authorities may object at the Jan. 30 hearing. 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) LIFECARE HOLDINGS: Hirings of Advisors Approved ----------------------------------------------- BankruptcyData reported that the U.S. Bankruptcy Court approved LifeCare Holdings' motions to retain Huron Management Services as interim chief financial officer and certain additional personnel and to designate Stuart Walker as chief financial officer; Young Conaway Stargatt & Taylor as conflicts counsel, KPMG as auditor, tax compliance and tax consultant; Kurtzman Carson Consultants to provide administrative services; Rothschild as financial advisor and investment banker and Skadden, Arps, Slate, Meagher & Flom as bankruptcy counsel. About LifeCare Holdings Based in Plano, Texas, LifeCare Holdings, Inc. -- http://www.lifecare-hospitals.com/-- currently operates 27 long term acute care hospitals located in ten states. Long-term acute care hospitals specialize in the treatment of medically complex patients who typically require extended hospitalization. LifeCare Holdings Inc. filed for bankruptcy protection (Bankr. D. Del. Case No. 12-13319) in Wilmington on Dec. 11, 2012, citing debt and losses from Hurricane Katrina and saying it plans to sell the company, according to a Bloomberg report. The Company reported a net loss of $34.83 million in 2011, compared with net income of $2.63 million on $358.25 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $422.15 million in total assets, $575.87 million in total liabilities and $153.72 million total stockholders' deficit. LODGENET INTERACTIVE: PAR Investment Sells Remaining Shares ----------------------------------------------------------- PAR Investment Partners disclosed in a regulatory filing with the U.S. Securities and Exchange Commission that it disposed of its remaining 2,248,677 common shares of LodgeNet Interactive Corporation and therefore it no longer beneficially owns any Shares. PAR Investment previously reported beneficial ownership of 8.4% equity stake as of Jan. 2, 2013. On Dec. 30, 2012, the Company entered into an Investment Agreement with Colony Capital, LLC, and its affiliate, Col-L Acquisition, LLC, and certain other investors, including PAR Investment Partners, pursuant to which Colony and those other investors will invest an aggregate of $60 million of new capital in the Company, with an option to invest up to an additional $30 million, to support a proposed recapitalization of the Company. Pursuant to the terms of the Investment Agreement, PAR Investment Partners agreed, subject to the terms and conditions set forth in the Investment Agreement, to invest an amount equal to one-third of the New Capital. The closing of the transactions contemplated by the Investment Agreement is subject to various closing conditions, including, among others, bankruptcy court confirmation of a pre-packaged plan or reorganization contemplated by the Investment Agreement, the Company's satisfaction of a minimum liquidity test, execution of a new satellite agreement with DirecTV LLC, the negotiation and execution of a new credit facility pursuant to the terms of an agreed upon term sheet and in form and substance satisfactory to Colony, obtaining a new revolving credit facility, and other typical closing conditions. A copy of the filing is available at http://is.gd/0LFM0k About LodgeNet Sioux Falls, South Dakota-based LodgeNet Interactive Corporation (Nasdaq: LNET) -- http://www.lodgenet.com/-- provides interactive media and connectivity services to hospitality and healthcare businesses and the consumers they serve. Recently named by Advertising Age as one of the Leading 100 US Media Companies, LodgeNet Interactive serves roughly 1.5 million hotel rooms worldwide in addition to healthcare facilities throughout the United States. The Company's services include: Interactive Television, Broadband and Advertising Media Solutions along with nationwide technical and professional support services. LodgeNet Interactive owns and operates businesses under the industry leading brands: LodgeNet, The Hotel Networks and LodgeNet Healthcare. The Company reported a net loss of $631,000 in 2011, a net loss of $11.68 million in 2010, and a net loss of $10.15 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $291.74 million in total assets, $448.72 million in total liabilities and a $156.98 million total stockholders' deficiency. * * * As reported by the TCR on Jan. 10, 2013, 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 Dec. 31, 2012. In the Jan. 8, 2013, edition of the TCR, Standard & Poor's Ratings Services said that it lowered its corporate credit rating on Sioux Falls, S.D.-based LodgeNet Interactive Corp. to 'D' from 'CC'. The downgrade follows the company's failure to make its Dec. 31, 2012, scheduled cash interest payments on its revolving credit and term loan and Dec. 31, 2012, term loan amortization payment. LODGENET INTERACTIVE: Mittleman Brothers No Longer Owns Shares -------------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Mittleman Brothers, LLC, and its affiliates disclosed that, as of Jan. 4, 2013, they do not beneficially own any shares of common stock of LodgeNet Interactive Corporation. Mittlement previously reported beneficial ownership of 1,585,498 common shares or a 6.3% equity stake as of April 27, 2012. A copy of the amended filing is available at http://is.gd/EBOANA About LodgeNet Sioux Falls, South Dakota-based LodgeNet Interactive Corporation (Nasdaq: LNET) -- http://www.lodgenet.com/-- provides interactive media and connectivity services to hospitality and healthcare businesses and the consumers they serve. Recently named by Advertising Age as one of the Leading 100 US Media Companies, LodgeNet Interactive serves roughly 1.5 million hotel rooms worldwide in addition to healthcare facilities throughout the United States. The Company's services include: Interactive Television, Broadband and Advertising Media Solutions along with nationwide technical and professional support services. LodgeNet Interactive owns and operates businesses under the industry leading brands: LodgeNet, The Hotel Networks and LodgeNet Healthcare. The Company reported a net loss of $631,000 in 2011, a net loss of $11.68 million in 2010, and a net loss of $10.15 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $291.74 million in total assets, $448.72 million in total liabilities and a $156.98 million total stockholders' deficiency. * * * As reported by the TCR on Jan. 10, 2013, 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 Dec. 31, 2012. In the Jan. 8, 2013, edition of the TCR, Standard & Poor's Ratings Services said that it lowered its corporate credit rating on Sioux Falls, S.D.-based LodgeNet Interactive Corp. to 'D' from 'CC'. The downgrade follows the company's failure to make its Dec. 31, 2012, scheduled cash interest payments on its revolving credit and term loan and Dec. 31, 2012, term loan amortization payment. MARIANA PORTS AUTHORITY: Fitch Keeps 'BB-' Rating on $31.6MM Bonds ------------------------------------------------------------------ Fitch Ratings affirms the 'BB-' rating on approximately $31.6 million of outstanding Commonwealth Ports Authority, Commonwealth of the Northern Mariana Islands, senior series 1998A & 2005A seaport revenue bonds. The Rating Outlook is Stable. KEY RATING DRIVERS: -- Concentrated But Vital Cargo Base: The seaports remain essential for the import of goods to an island economy; however, there is potential for stagnant operational trends due to CNMI's exposure to macroeconomic factors and its elevated dependence on a limited tourist base. Volume stability is expected given that food and fuel related cargos account for approximately 73% of import dependent revenue tonnage. -- Limited Pricing Power: CNMI's narrow economy and the overall recession limit management's economic flexibility to raise rates on seaport system tenants and users. Following the last increase in 2009, the authority's focus has instead been on effective containment of operating expenses. -- Conservative Capital Structure: The authority maintains 100% fixed-rate, fully amortizing debt. -- Moderate Leverage And Strong Liquidity: CPA currently maintains favorable leverage and liquidity metrics offset by modest coverage ratios. Leverage of 3.8 times (x) net debt-to- cash flow available for debt service (CFADS) and balance sheet cash and reserves available for operating expenses equating to nearly 2,000 days cash on hand (DCOH) provides the CPA with some degree of flexibility to meet financial commitments in weak performing periods. Further, coverage levels appear to have stabilized in the 1.3x - 1.4x range with estimated fiscal 2012 coverage of 1.32x. -- Modest Capital Plan: The authority's capital improvement plan is manageable in scope and is predominantly grant funded. The remaining dollars are expected to come from internally generated funds with no future debt issuances currently anticipated. What Could Trigger A Rating Action: -- Continued changes in the underlying service area economy and the seaport's ability to maintain base cargo levels at or near current levels; -- Depressed debt service coverage levels resulting from declining operating revenues despite growth in revenue tonnage; -- A shift in the seaport's short-term liquidity and financial flexibility resulting from changes in operating expense management or pricing power. Security: The seaport bonds are secured solely by gross seaport revenues and certain accounts established pursuant to the bond indenture. Credit Update: CNMI's limited economy is subject to macroeconomic factors and a diminished tourist base. Its ports' revenue tonnage is now nearly 100% from imports and concentrated in two main commodities (fuel and food), following the loss of the garment industry. Collectively, fuel and food represent over 70% of all revenue tonnage, potentially indicating that a shift in the operational profile may be nearing completion and demonstrating the essentiality of the ports to the island's survival. As a result of improved tourism, fiscal 2012 revenue tonnage grew 8.1% to 409,317 metric tons, erasing the 1.4% decrease experienced in fiscal 2011 and continuing upon the 5.1% growth experienced in 2010. Tonnage increases are the result of inbound cargo growth, with exports continuing to spiral downward and only accounting for 3.5% of total revenue tonnage. Fitch believes that the seaports may be at or near a new baseline cargo level that is tied more closely to the economic activity of CNMI. Declines in operating revenues despite the volume growth, as occurred in fiscal 2012, would be a potential credit concern if such trends continue. Fiscal 2012 unaudited operating revenues were down 4.5% as a result of lower seaport fees and concession based receipts. Operating expenses rose 3.1% due to increased maintenance costs. Together, this resulted in estimated 2012 debt service of 1.32x which was in line with the CPA's budgeted coverage of 1.31x. While coverage is down slightly from 1.41x a year ago, debt service coverage has been largely stable in the 1.3x - 1.4x range since fiscal 2009. In past years, management has been reluctant to raise rates, which led to rate covenant violations in 2007 and 2008. Following that period, actions on rates appear to have reversed the coverage deficit when combined with the austerity measures on the expense side. Fitch notes, however, that should coverage levels continue to decline as a result of diminished operating revenues, especially in times when volume levels are stable or improving, negative rating action could be warranted. Following fiscal 2012, Fitch believes that cash flows should continue to be sufficient to cover debt service through its five- year forecast period and takes comfort in the CPA's strong liquidity and fixed-rate, flat debt service profile. CPA maintains fund balances of over $13 million related to the bond indenture and has increased DCOH (including reserves available for operating expenses) to 1,960 days over the past four years. This liquidity provides some degree of financial flexibility and translates to a moderate net debt-to-CFADS of 3.8x. Further, management does not anticipate any future debt issuances at this time. The authority's capital improvement plan is modest and primarily grant funded with a 25% match required from the CPA. Current grants include a $950,000 grant from the Department of Homeland Security to improve security at the ports and another from CNMI/DOI for repair work. The CPA, however, is having trouble securing all of the funding needed for its desired improvements given the weakened economy and reduction in available governmental funds. Fitch intends to monitor the situation to ensure any necessary maintenance and/or projects are not being deferred. MARIANA PORTS AUTHORITY: Fitch Affirms 'B-' Rating on $14MM Bonds ----------------------------------------------------------------- Fitch Ratings affirms the 'B-' the rating on approximately $14 million of outstanding Commonwealth Ports Authority (CPA), Commonwealth of the Northern Mariana Islands (CNMI), senior series 1998A airport revenue bonds. The Rating Outlook is revised to Positive from Stable. The Positive Outlook reflects improved financial flexibility resulting from increased airport utilization as well as growth in pledged revenues and balance sheet liquidity. Further, management's prudent expense management has contributed to rising debt service coverage levels and CPA's ability to stockpile surplus cash. To the extent the positive trends in CPA's operating and financial performance continue, a higher rating may be warranted. Key Rating Drivers: -- Highly Volatile Enplanement Base: The airport system is an essential enterprise, serving as the gateway to and within the Mariana Islands. The enplanement base of 575,000 passengers is relatively small taking into account the overall population base and the island's more limited, weaker economy. Traffic performance is potentially vulnerable to underlying economic stresses given the significant component of traffic tied to the tourism industry. Revenue Risk-Resilience: Weaker. -- Limited Cost Recovery: Rate setting practices with airlines are not clearly established and have been observed to be more reactive, based on financial pressures, than proactive. In Fitch's view, the airport retains limited pricing power which restrains financial flexibility and has pressured liquidity in previous years. Recent approval by the Federal Aviation Administration (FAA) to allow the airport to utilize 100% of passenger facility charge (PFC) collections for debt service provides enhanced cushion to manage revenue levels to support financial obligations while keeping airline costs stable. Revenue Risk-Price: Weaker. -- Conservative Capital Structure: The authority maintains 100% fixed-rate, fully amortizing debt. Annual debt service payments are essentially level and final maturity on the bonds is in 2028. Debt Structure: Stronger. -- Improving yet Volatile Financial Metrics: CPA generated a robust coverage ratio of 3.4 times (x) (2.4x without 100% PFCs as gross revenues) for fiscal 2012 (unaudited figures). Still, coverage levels have greatly fluctuated over time and failed to meet the financial rate covenant test (1.25x) as recent as fiscal 2008. Partially mitigating this volatility is the very low leverage of 0.5x net debt-to-cash flow available for debt service (CFADS), supported in part by treating all PFCs collected as pledged revenues and improving balance sheet liquidity. Days Cash on Hand (DCOH) has grown significantly over the past three years to 284 days in fiscal 2012. Debt Service and Counterparty Risk: Mid-range. -- Moderate Capital Plan: The authority's capital improvement plan is modest at $44 million through fiscal 2015 and predominantly funded through FAA grants with no future anticipated debt issuances. To the extent that a significant portion of PFC revenue is needed for debt service, it could hamper the airport's ability to provide required matching funds and thus limit grant receipts. Infrastructure Development: Mid-range. What Could Trigger An Upgrade: -- Continued improvements in the underlying service area economy and the airports' ability to maintain or grow its current traffic base; -- Sustained favorable trends in balance sheet liquidity and strong financial ratios over the next one to two years would strengthen CPA's credit quality. -- Material declines in enplanement volume or in coverage, resulting from increased operating expenses and/or the CPA Board's failure to sufficiently apply the full collection of PFCs as gross revenues, could pressure the current rating. Security: The series 1998A bonds are secured by a pledge of gross airport revenues generated by the operations of the airport, including Passenger Facility Charges eligible for payment of debt service. Fitch notes that CPA Board Resolution No. 2011-01 now designates all PFC Revenues as gross airport revenues. Credit Update: The CPA airports are heavily reliant on tourism and leisure travelers, creating an elevated degree of vulnerability to economic recessions both within its narrow local market as well as to the larger, neighboring Asian markets. Enplanements tend to show elevated fluctuations over time. Most recently, enplanements had rebounded strongly by growing nearly 26% in fiscal 2012. This growth more than erased the 5% loss experienced in fiscal 2011, which was impacted by the confluence of natural and nuclear disasters in the region, offset by the improving tourism industry as well as additional service by carriers. Collectively, Delta Airlines and Asiana Airlines maintain their dominance with a combined market share of approximately 60% of total traffic. Overall, service remains essential to this island economy and management indicated that multiple airlines are looking to begin or increase service levels. The airports operate under a residual agreement with its carriers. However, the CPA has shown a history of reluctance to consistently pass through the full cost requirements given the fragile economy and nature of the airline industry, negatively impacting financial flexibility and resulting in past covenant violations. Management's actions in fiscal 2009 to increase airline rates have resulted in improved net revenues with coverage increasing well above the 1.25x requirement. Unaudited fiscal 2012 coverage is expected to be close to 3.35x following 1.95x coverage in the prior year, based on pledged revenues inclusive of all PFC collections. Providing somewhat of a consistent revenue stream to help service debt, non-airline revenues have been relatively stable over time and management continues to try to expand those sources. Leases just went up and a new Aircraft Rescue and Fire Fighting (ARFF) training facility to be constructed should further help financial flexibility. Additionally, management continues to closely scrutinize all expenses and should experience future savings on pension liabilities from the switch to social security. Cost per enplanement (CPE) is estimated at around $13.41 for fiscal 2012 and is expected to remain in that range barring any wide swings in enplanements or changes to airline rates. This is a notable reduction from the $15-$16 range that had been the new baseline CPE since the airline rates went up in fiscal 2009. CPA's overall leverage is relatively high given the operational profile of the airports; however its net debt-to-CFADS is very low at 0.5x taking into account its growing liquidity (284 days cash on hand), reserves, and ability to use all of its PFCs as cash flow. As a result of the airport's improved operations, conservative capital structure, and flat debt service profile, Fitch projects coverage to remain at or above covenant through a five-year forecast period, even when only the eligible portion of PFCs for debt service are applied. CPA's capital improvement plan through 2015 is modest at $44 million and 95% of the funding comes from FAA grants. The largest project is a $17 million Regional ARFF Training Facility that should be a revenue-generating project for the airports. Other projects include: rehabilitating the 30 year old runway, installation of new generators for the terminals, Tower and Airport Fire Station, and various renovations to the international and commuter terminal. These are in addition to several future anticipated projects. Management indicated that no future debt issuances are currently planned. MEDICAL INTERNATIONAL: Provides Status Report to Investors ---------------------------------------------------------- Medical International Technology, Inc., sent a status report regarding the current and future state of the Company to investors. According to MIT, the Company is focused on consolidating and seeking new distributors worldwide for the Company's existing products, to increase its sales and improve its cash flow. The Company said it has worked diligently with its US Agent for the finalization of the FDA 510K Certification documentations for its Med-Jet devices. During the last fiscal year the Company has been planning and being advised by its Advisory committee that includes Mr. George Hendy (Business & Law Advisor), Dr. Francis Bellido (Business & Scientific Advisor) and Mr. Sarkis Tossounian, (Business & Financial Advisor), the Company improved many aspects including marketing, operation, finance, and streamlined product introductions and regulatory certification process. A copy of this report is available for free at: http://is.gd/RqmP3n About Medical International Montreal, Canada-based Medical International Technology, Inc., specializes in production, marketing and the sale of needle-free jet injector products designed for humans and animals, for single and mass injections. The Company reported a net loss of US$109,993 on US$996,434 of revenues in fiscal 2012, compared with a net loss of US$643,439 on US$437,378 of revenues in fiscal 2011. The Company's balance sheet at Sept. 30, 2012, showed US$1.1 million in total assets, US$1.8 million in total liabilities, and a stockholders' deficit of US$684,564. Ps Stephenson & Co., P.C., in Wharton, Texas, expressed substantial doubt about Medical International's ability to continue as a going concern following the financial results for the fiscal year ended Sept. 30, 2012. The independent auditors noted that the Company has suffered recurring losses from operations and has a working capital deficiency. METRO FUEL: Asks to Maintain Exclusive Chapter 11 Control --------------------------------------------------------- Stephanie Gleason at Dow Jones' DBR Small Cap reports that Brooklyn, N.Y.-based fuel company Metro Fuel Oil Corp. is seeking to maintain exclusive control over its Chapter 11 case for three more months after delaying its sale process into 2013. About Metro Fuel Metro Fuel Oil Corp., is a family-owned energy company, founded in 1942, that supplies and delivers bioheat, biodiesel, heating oil, central air conditioning units, ultra low sulfur diesel fuel, natural gas and gasoline throughout the New York City metropolitan area and Long Island. Owned by the Pullo family, Metro has 55 delivery trucks and a 10 million-gallon fuel terminal in Brooklyn. Financial problems resulted in part from cost overruns in building an almost-complete biodiesel plant with capacity of producing 110 million gallons a year. Based in Brooklyn, New York, Metro Fuel Oil Corp., fka Newtown Realty Associates, Inc., and several of its affiliates filed for Chapter 11 bankruptcy protection (Bankr. E.D.N.Y. Lead Case No. 12-46913). Judge Elizabeth S. Stong presides over the case. Nicole Greenblatt, Esq., at Kirkland & Ellis LLP, represents the Debtor. The Debtor selected Epiq Bankruptcy Solutions LLC as notice and claims agent. The petition showed assets of $65.1 million and debt totaling $79.3 million. Liabilities include $58.8 million in secured debt, with $48.3 million owing to banks and $10.5 million on secured industrial development bonds. The U.S. Trustee for Region 2 appointed seven members to the Official Committee of Unsecured Creditors. MF GLOBAL: Customers Again Denied Ability to Investigate -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports MF Global Inc. customers failed once again to win authority from the bankruptcy court to investigate Jon S. Corzine and other former officers and directors of the liquidating commodity broker. The report recounts that in February, U.S. Bankruptcy Judge Martin Glenn denied a request by a customer group to conduct its own investigation under Rule 2004 of the Federal Rules of Bankruptcy Procedure, an adjunct of bankruptcy law allowing a so-called fishing expedition to lay the basis for a lawsuit. At the time, Glenn said that an independent investigation would interfere with pending investigations by the two MF Global trustees and by regulators. The customers filed another set of papers in November, this time saying the two MF Global trustees had issued reports and the U.S. Congress failed to take action even while citing the broker's mismanagement. According to the report, Judge Glenn didn't change his mind. In a four-page opinion, he said that the customer group "is not a party in interest" and thus lacks the right to participate in the Chapter 11 case. Even if the group had so-called standing, conducting an investigation would further the customers' "own interests, not those of the estate." Judge Glenn also refused to allow an investigation because consolidated class-action suits are pending in federal district court in New York. The group's attempt to investigate through the bankruptcy court was a "poorly disguised" effort to evade the discovery schedule worked out in district court, Glenn said. James Giddens, trustee for the MF Global brokerage, worked out an arrangement where he is allowing class-action plaintiffs to bring lawsuits against former officers, directors and others. Judge Glenn approved the arrangement in October because all recoveries in the suit will be turned over to Mr. Giddens for distribution to creditors. Judge Glenn said that the claims customers might bring are already subsumed in the class-action suits on behalf of all customers. 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. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy cases of MF Global Holdings Ltd. and its affiliates. The Chapter 11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. An Official Committee of Unsecured Creditors has been appointed in the case. The Committee has retained Capstone Advisory Group LLC as financial advisor. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. MF GLOBAL: Customers Must Give Releases Before Payouts ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a district judge in Manhattan ruled that customers of MF Global Inc. are properly required to give releases and indemnifications to the trustee before receiving distributions on their claims. According to the report, the bankruptcy court approved procedures for distributions to customers similar to those in other brokerage liquidations under the Securities Investor Protection Act. A customer named Jill Zunshine appealed, asking a federal district judge to knock out two aspects of an agreement she's required to sign before receiving distributions on her claim. Ms. Zunshine argued there was no reason for her to give trustee James Giddens a release which simply articulates the longstanding rule that a plaintiff isn't entitled to recover more than once for the same injury. The customer also objected to giving the trustee an indemnification if she were to receive a distribution improperly. The report relates that U.S. District Judge Alison J. Nathan wrote a nine-page opinion on Jan. 11 in which she said "the fact that the release provision is consistent with the law is not a reason to strike it." Judge Nathan concluded that Mr. Giddens wouldn't breach a fiduciary duty to customers by requiring an indemnification. The appeal is Zunshine v. Giddens (In re MF Global Holdings Ltd.), 12-4139, U.S. District Court, Southern District of New York (Manhattan). 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. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy cases of MF Global Holdings Ltd. and its affiliates. The Chapter 11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. An Official Committee of Unsecured Creditors has been appointed in the case. The Committee has retained Capstone Advisory Group LLC as financial advisor. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. MF GLOBAL: European Customers Seeing 60% Recovery ------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports the settlement last month between the U.S. trustee for the MF Global Inc. brokerage and the liquidating U.K. affiliate means that customers of the English company stand to see a 60% recovery. Unsecured creditors of the U.K. affiliate are looking at a 20% dividend. According to the report, the picture is more optimistic for customers of the U.S. broker, where traders on domestic and foreign exchanges both may be destined for full payment. 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. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy cases of MF Global Holdings Ltd. and its affiliates. The Chapter 11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. An Official Committee of Unsecured Creditors has been appointed in the case. The Committee has retained Capstone Advisory Group LLC as financial advisor. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. MPG OFFICE: Peter Johnston Resigns as EVP, Leasing -------------------------------------------------- MPG Office Trust, Inc., and MPG Office, L.P., entered into a separation agreement with Peter K. Johnston, its Senior Vice President, Leasing. Under the terms of this agreement, Mr. Johnston resigned as an employee and officer of the Company effective Jan. 11, 2013. Subject to his execution and non-revocation of a general release of claims, Mr. Johnston will be paid a lump-sum cash payment of $550,000 and will be paid certain contingent leasing commissions in the event that certain leases specified in the agreement are fully executed on or prior to May 31, 2013. About MPG Office Trust MPG Office Trust, Inc., fka Maguire Properties Inc. -- http://www.mpgoffice.com/-- is the largest owner and operator of Class A office properties in the Los Angeles central business district and is primarily focused on owning and operating high- quality office properties in the Southern California market. MPG Office Trust is a full-service real estate company with substantial in-house expertise and resources in property management, marketing, leasing, acquisitions, development and financing. The Company has been focused on reducing debt, eliminating repayment and debt service guarantees, extending debt maturities and disposing of properties with negative cash flow. The first phase of the Company's restructuring efforts is substantially complete and resulted in the resolution of 18 assets, relieving the Company of approximately $2.0 billion of debt obligations and potential guaranties of approximately $150 million. The Company reported net income of $98.22 million in 2011, compared with a net loss of $197.93 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $1.86 billion in total assets, $2.59 billion in total liabilities, and a $729.16 million total deficit. NEW ENGLAND COMPOUNDING: May Have Chapter 11 Trustee Appointed -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports New England Compounding Pharmacy Inc. will be taken over by an independent trustee if the U.S. Trustee prevails on papers filed in U.S. Bankruptcy Court in Boston. The report relates that according to papers filed by the Justice Department's bankruptcy watchdog, the company is a defendant in 130 lawsuits and has been accused of causing 39 deaths from a fungal meningitis outbreak caused by contaminated injectable medication. Based in Framingham, Massachusetts, the company said upon filing for bankruptcy protection that there would be a chief restructuring officer given "plenary and exclusive authority" over personal injury claims and conduct of the bankruptcy case. The U.S. Trustee contends that a so-called CRO isn't enough because existing management retains the right to terminate the CRO. According to the report, the U.S. Trustee also sees a conflict of interest. He says that a CRO must meet the disinterestedness test. By having direct decision-making authority, the CRO won't be disinterested and can't be approved with the court's blessing. About New England Compounding New England Compounding Pharmacy Inc., filed a Chapter 11 petition (Bankr. D. Mass. Case No. 12-19882) in Boston on Dec. 21, 2012. Daniel C. Cohn, Esq., at Murtha Cullina LLP, serves as counsel. Verdolino & Lowey, P.C. is the financial advisor. The Debtor estimated assets and liabilities of at least $1 million. The Debtor owns and operates the New England Compounding Center is located in Framingham, Mass. The company said at the outset of bankruptcy that it would work with creditors and insurance companies to structure a Chapter 11 plan dealing with personal injury claims. The outbreak linked to the pharmacy has killed 39 people and sickened 656 in 19 states, though no illnesses have been reported in Massachusetts. In October, the company recalled all its products, not just those associated with the meningitis outbreak. NNN CYPRESSWOOD: 341(a) Meeting Slated for Feb. 12 -------------------------------------------------- There's a meeting of creditors in the Chapter 11 case of NNN Cypresswood Drive 25, LLC, on Feb. 12, 2013, at 1:30 p.m. The meeting will be held at 219 South Dearborn, Office of the U.S. Trustee, 8th Floor, Room 802, Chicago, Illinois. According to the notice of the 341 meeting, the last day to object to dischargeability is April 15, 2013. The meeting, which is required under Section 341(a) of the Bankruptcy Code, offers creditors a one-time opportunity to examine a bankrupt company's representative under oath about its financial affairs and operations that would be of interest to the general body of creditors. The Debtor meanwhile has been ordered by the bankruptcy judge to submit a Chapter 11 plan and disclosure statement by April 30, 2013. A status hearing will be held on May 9, 2013, at 10:30 a.m. NNN Cypresswood Drive 25, LLC, filed a bare-bones Chapter 11 petition (Bankr. N.D. Ill. Case No. 12-50952) on Dec. 31, 2012, in Chicago. The Debtor, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), has principal assets located at 9720 & 9730 Cypresswood Drive, in Houston, Texas. The Debtor valued its assets and liabilities at less than $50 million. NORTEL NETWORKS: Creditors Make Another Stab at Settlement ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that although Nortel Networks Inc. collected almost $9 billion from the sale of assets, the money is tied up and can't be distributed to creditors for lack of agreement on how to split up proceeds among creditors of the U.S., U.K and Canadian companies. The contending parties are gathering this week in Toronto for another round of mediation aimed at achieving settlement. 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. NORTEL NETWORKS: Litigation Pits Bondholders Against Retirees ------------------------------------------------------------- Nortel Networks was once the largest telecommunication equipment company in North America, but since it filed for bankruptcy in 2009 it has earned a new label: one of the world's most complicated legal proceedings, Tom Hals of Reuters reported. According to the report, bondholders, suppliers, governments and former employees from around the globe hold $20 billion in claims based on different insolvency laws and are competing for Nortel's last remaining asset -- $9 billion in cash. The report related that Ontario Chief Justice Warren Winkler, who has spent the past few months analyzing proposals, begins a week of talks in a Toronto hotel intended to find common ground. Justice Winkler has called the case "one of the most complex transnational legal proceedings in history," Reuters noted. Failure of the mediation would mean years of litigation, with the possibility that parallel legal fights in different countries could reach inconsistent outcomes, according to Justice Winkler, who was appointed to mediate by the U.S. and Canadian courts. John Penn, Esq. -- john.penn@haynesboone.com -- a bankruptcy attorney who is not involved in the case, told Reuters that the mediation is comparable to a football playoff between the New England Patriots, the Hamilton (Ontario) Tiger-Cats, Manchester United and Australia's Sydney Swans. "Each calls it 'football' but they all do something that's quite different," Mr. Penn, of Haynes and Boone, in Fort Worth, Texas, said. "Before you get to the actual games, there will have to be a lot of negotiation and agreement." Reuters related that the complex disputes stem from Nortel's former might as a global telecom empire with a web of intercompany finances and a workforce that once stood at 93,000. Reuters also reported that, separately, an Ontario judge is set to rule in the fraud trial of three former Nortel executives. Former Chief Executive Frank Dunn, former Chief Financial Officer Douglas Beatty and former Controller Michael Gollogly were accused of misrepresenting the company's financial results between 2000 and 2004. Reuters pointed out that hedge funds, which include Centerbridge Partners and George Soros' Quantum Partners and which hold $4 billion in bonds issued by Nortel, can block any U.S. bankruptcy plan that would determine how to distribute cash allocated to Nortel's U.S. estate. Reuters also pointed out that Nortel retirees and former employees in Canada are also taking aim at the $1 billion of accrued interest on the bonds. The bondholders and the retirees are battling as to who is entitled to the accrued interest on the bonds. 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. NORTEL NETWORKS: Former Executives Acquitted in Fraud Case ---------------------------------------------------------- Ben Dummett at Daily Bankruptcy Review reports that a Canadian judge acquitted three former Nortel Networks Corp. executives of fraud charges, bringing to an end one of the final legal chapters in one of Canada's biggest corporate collapses. 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. NUSTAR LOGISTICS: Fitch Rates New Junior Subordinated Notes 'B+' ---------------------------------------------------------------- Fitch Ratings assigns a 'B+' rating to NuStar Logistics, L.P.'s proposed issuance of junior subordinated notes due 2043. The new notes are to be guaranteed by NuStar Energy L.P. and NuStar Pipe Line Operating Partnership, L.P. Proceeds are to be used for general partnership purposes which include the reduction of revolver borrowings which may be reborrowed to fund assets to be acquired. The notes are subordinated to the company's senior unsecured debt. Both Logistics and NPOP are the operating limited partnerships of NuStar, which is a publicly traded master limited partnership. Fitch has also affirmed the ratings of Logistics and NPOP. Fitch rates Logistics and NPOP as follows: Logistics -- Long-term Issuer Default Rating (IDR) affirmed at 'BB'; -- Senior unsecured debt affirmed at 'BB'; -- Junior subordinated notes assigned 'B+'. NPOP -- IDR affirmed at 'BB'; -- Senior unsecured debt affirmed at 'BB'. Approximately $1.6 billion of existing senior unsecured debt at the combined partnerships is affected by today's rating actions (excluding the new junior subordinated notes). The Outlooks for Logistics and NPOP are Stable. The junior subordinated notes are assigned 50% equity credit under Fitch's hybrid criteria. The notching of the junior subordinated notes reflects Fitch's criteria which typically notches such hybrid securities two notches down from the IDR. Fitch Ratings downgraded the IDR of Logistics and NPOP in November 2012 which reflected the company's acquisition of assets from TexStar Midstream Services LP. The affirmed 'BB' rating reflects expectations for leverage to increase as a result of the company's acquisition of Eagle Ford assets for approximately $425 million in total. In December 2012, NuStar closed on the acquisition of crude oil assets for approximately $325 million. By the end of 1Q13, it expects to close on the acquisition of NGL assets for approximately $100 million. Additional investments in the assets are expected to be in the range of $400 to $500 million over the next 18-24 months. The company plans to fund the acquisition with revolver borrowings and with the issuance of junior subordinated notes. Key Rating Drivers Ratings concerns center on the company's relatively low liquidity and high leverage metrics; the execution risks associated with the acquisition of TexStar assets; and the significant increase in capex in 2013. Given NuStar's substantial investment in the acquisitions, and the need for the company to make additional investments in its latest acquisition to realize its full earnings potential, Fitch also believes there is increased risk that EBITDA growth may not meet expectations. Factors which support the rating are NuStar's strong base of primarily fee-based and regulated pipeline, terminalling and storage assets and its shrinking footprint in the higher volatility asphalt refining segment. These assets accounted for 80% of segment EBITDA in 2011 and could increase to 90-95% by the end of 2013. The company sold 50% of its asphalt operations in 3Q12 and closed on the sale of its San Antonio refinery in January 2013. Other factors include expectations for significant growth in EBITDA in 2013 for the storage and transportation segments, and sizeable and geographically diverse assets. Liquidity As of Sept. 30, 2012 NuStar had $107 million of cash on the balance sheet. In addition, it had $1.1 billion of availability on its $1.5 billion revolver. However, liquidity is restricted by a leverage covenant and Fitch estimates availability to draw on the revolver was approximately $300 million. The company's $1.5 billion revolving credit facility expires in 2017. In December 2013, the 21 million UK 6.65% term loan is due. In 2013, $230 million of notes are due in March and $250 million are due in June. NuStar received approximately $115 million for the San Antonio refinery (including $15 million for inventories) in January 2013. By the end of 1Q'13, it expects to close on the $100 million of TexStar NGL assets. Leverage Leverage as defined by the bank agreement is to be no greater than 5.0x for covenant compliance. However, if NuStar makes acquisitions which exceed $50 million, the bank defined leverage ratio increases to 5.5x from 5.0x for two consecutive quarters. Furthermore, the May 2012 bank agreement will exclude junior subordinated debt from the definition of debt for the leverage calculation if two of the three rating agencies assign the notes 50% equity credit. The junior subordinated notes meet Fitch's criteria for 50% equity credit. NuStar has stated that leverage at the end of 3Q'12 was 4.3x as defined by the bank agreement and the maximum leverage allowed was 5.0x. Due to the acquisition of TexStar assets, the maximum leverage for 4Q'12, 1Q'13, and 2Q'13 will be 5.5x. Fitch believes liquidity may be tightened in 3Q'13 due to the maximum leverage ratio reverting to 5.0x. With 50% equity credit assigned to the planned issuance of junior subordinated notes, Fitch still expects leverage (debt adjusted for cash held in escrow for the future funding of construction and 50% equity credit for the junior subordinated notes to adjusted EBITDA) to be in the range of 4.8 - 5.0x by the end of 2013. Capital Expenditures Capital expenditures have been increasing. In 2011, capex was $336 million. NuStar has stated that in 2012, strategic capex is projected to be around $400 million and reliability capex is to be $45 million to $50 million. With the pending acquisition of the TexStar assets and plans to invest significantly in the assets, Fitch expects capital expenditures to increase again in 2013. Logistics and NPOP are wholly owned subsidiaries of NuStar. NuStar guarantees the debt of Logistics and NPOP, and the debt instruments for the two operating partnerships have cross defaults and cross guarantees which closely link the ratings. What Could Trigger A Rating Action Positive: Future developments that may, individually or collectively, lead to positive rating action include: -- Significant leverage reduction. Should leverage fall below 4.5x on a sustained period of time, Fitch may take positive rating action. Negative: Future developments that may, individually or collectively, lead to a negative rating action include: -- Reduced liquidity; -- Further deterioration of EBITDA; -- Inability to meet growth expectations associated with the pending acquisition given the substantial investment; -- Significant increases in capital spending beyond Fitch's expectations or further acquisition activity which have negative consequences for the credit profile; -- Increased adjusted leverage beyond 5.5x for a sustained period of time. NUSTAR LOGISTICS: Moody's Assigns 'Ba2' Subordinated Debt Rating ---------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to NuStar Logistics, L.P.'s fixed/floating rate subordinated notes. NuStar Logistics is the main operating subsidiary and financing entity for NuStar Energy L.P, a Public Master Limited Partnership. NuStar and another wholly-owned subsidiary, NuStar Pipeline Operating Partnership L.P., will unconditionally guarantee the notes in accordance with their subordination provisions. NuStar will use the note proceeds for general corporate purposes, including permanent financing of the acquisition of various crude and liquids pipelines, storage and fractionation assets from TexStar Midstream Services LP, at an expected total cost of approximately $425 million. NuStar's existing ratings assignments are: -- NuStar Logistics L.P. Corporate Family Rating of Ba1 and Probability of Default Rating of Ba1-PD -- NuStar Logistics L.P. and NuStar Pipeline Operating Partnership L.P. senior notes rating of Ba1 (LGD 4, 51%) -- Speculative Grade Liquidity Rating of SGL-3 Ratings Rationale The Ba2 (LGD6, 93%) subordinated note rating is based on NuStar Logistics's Ba1 Corporate Family Rating, which reflects the MLP's consolidated credit quality. The Ba2 rating incorporates the overall probability of default of NuStar Logistics, to which Moody's assigns a Probability of Default (PDR) rating of Ba1/PD. The Ba2 notes rating is one notch lower than the CFR, reflecting their subordination to NuStar's other debt. NuStar's various bonds and revolving credit facility all rank senior unsecured and pari passu based on cross guarantees. Moody's has assigned Basket B treatment to the subordinated notes, or 25% "equity credit," to reflect provisions that provide some equity cushion to senior creditors in the event of bankruptcy. The provisions include the options to defer interest on the notes and a distribution stopper that prevents the MLP from paying third- party distributions during periods of interest deferral. NuStar Logistics's Ba1 CFR with a stable outlook is based on a consolidated analysis of NuStar Energy. NuStar exhibits high financial leverage and will be making substantial debt-financed capital investments to build cash flow and stronger returns from more stable fee-based transportation and storage operations. Despite its elevated leverage and the execution risk on its growth projects, NuStar's Ba1 rating is supported by the breadth of its midstream transportation, storage and terminal assets and a view that its re-positioning strategy will have a positive impact in the medium-term on capital returns, EBITDA and financial leverage. The company's ratings could be downgraded if consolidated Debt/EBITDA remains elevated at 5.5x or higher and distribution coverage stays under 1x over the next few years, which would likely indicate continued high spending, project delays, underperforming assets, or even more aggressive growth spending. Over the next two years Moody's will watch NuStar's progress in delivering on its growth projects, stronger capital returns, and expected increases in cash flow and EBITDA. Prospects for adjusted Debt/EBITDA approaching 4x on a sustainable basis and more robust distribution coverage above 1.1x could lead to an upgrade. The principal methodology used in rating NuStar Logistics was the Global Midstream Energy Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. NUSTAR LOGISTICS: S&P Rates New Subordinated Notes Due 2043 'B+' ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' issue rating to U.S. midstream energy partnership NuStar Logistics L.P.'s proposed subordinated unsecured notes offering due 2043. NuStar Logistics, an operating subsidiary of NuStar Energy L.P. (BB+/Stable/--), intends to use the net proceeds for general partnership purposes, which may include repayment of amounts outstanding under its revolving credit facility, or to pay for a portion of the recent TexStar acquisition. NuStar Energy L.P. and NuStar Pipeline Operating Partnership L.P. will fully and unconditionally guarantee the notes. As of Sept. 30, 2012, San Antonio-based NuStar had $2.04 billion in balance-sheet debt. Standard & Poor's ratings on NuStar reflect its "satisfactory" business risk profile and "aggressive" financial risk profile, under S&P's criteria. The rating outlook on NuStar Energy L.P. is stable and reflects S&P's view that the partnership will have debt to EBITDA in the mid-5x area in 2013 and have adequate liquidity to fund its growth initiatives during the next 12 to 18 months. "We could lower the rating if NuStar exhibits a more aggressive financial strategy in managing its businesses, such that there is a renewed focus on segments with a higher degree of business risk and more volatile cash flows. Lower ratings could also occur if NuStar cannot reduce leverage to less than 5x and distribution coverage becomes increasingly pressured. A higher rating, currently not under consideration, is possible over time if we see management embrace more conservative financial policies and demonstrate that it can consistently maintain leverage in the low- 4x area and distribution coverage of more than 1x," said Standard & Poor's credit analyst Michael Grande. OCALA FUNDING: Recovers $9 Million From Sovereign in Lawsuit ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports Ocala Funding LLC, a subsidiary of previously bankrupt Taylor Bean & Whitaker Mortgage Corp., made a $9 million payday at the expense of Sovereign Bank NA. The bank, on the other hand, could claim partial victory from escaping $22.5 million in potential liability. The report recounts that as explained in Ocala's lawsuit begun in October, Taylor Bean owed Sovereign the $22.5 million. With the debt coming due, Taylor Bean called on Ocala for payment. In the lawsuit filed in U.S. Bankruptcy Court in Jacksonville, Florida, where Ocala filed for Chapter 11 protection, the company alleged that the payment was a fraudulent transfer because it wasn't liable on the debt. According to the report, Sovereign agreed to settle by paying $9 million. The settlement comes to bankruptcy court for approval on Feb. 8. Before the Chapter 11 filing in July, holders of almost all of Ocala's $1.5 billion in secured and $800 million in unsecured claims signed an agreement to support a reorganization plan dividing up proceeds of lawsuits. Ocala said in October that it was close to filing a Chapter 11 plan where creditors' recoveries will flow from "complex causes of action against large financial institutions and/or government sponsored entities." Ocala said it intended to sue the Federal Home Loan Mortgage Corp. to recover $805 million from alleged fraudulent transfers. 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. OCALA SHOPPES: Hiring Jennis & Bowen as Counsel ----------------------------------------------- Shopping center owner The Ocala Shoppes LLC filed an application to employ the law firm of Jennis & Bowen, P.L., as counsel. The firm's David Jennis and Chad Bowen would assume primary responsibility as lead bankruptcy counsel. A third member of the firm, Suzy Tate, will also assist in providing legal services to the Debtor, as appropriate. J&B's current hourly rates range from $100 to $150 for paralegals and $200 to $425 for attorneys. J&B says it's a disinterested party and does not hold or represent any interest adverse to the estate. Aside from the application, the Debtor on the Petition Date filed a motion to prohibit utilities from discontinuing service. About The Ocala Shoppes The Ocala Shoppes LLC, owner and operator of the Market Street at Heath Brook shopping center on Southwest College Road in Ocala, Florida, filed a Chapter 11 petition (Bankr. M.D. Fla. Case No. 13-00125) on Jan. 7 in Tampa. The open-air shopping center has 560,000 square feet of retail space and 70,000 square feet of offices. Tenants are Dillard's Inc., Dick's Sporting Goods Inc., and Barnes & Noble Inc. Ocala is about 100 miles (160 kilometers) north northeast of Tampa. Secured lender Bank of America NA obtained an order from state court in August directing tenants to send rent checks to the bank. In its petition, the Debtor estimated assets and debts of $50 million to $100 million. David S. Jennis, Esq., and Suzy Tate, Esq., at Jennis & Bowen, P.L., serve as counsel. Judge Michael G. Williamson presides over the case. ODYSSEY DIVERSIFIED: Court Confirms Odyssey VI, VII and IX's Plans ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Florida has confirmed the Chapter 11 Plans of Reorganization filed by: (i) Odyssey Diversified VI, LLC, (ii) Odyssey Diversified VII, LLC, and (iii) Odyssey Diversified IX, LLC. The three Plans have similar groupings of Claims. In Odyssey VI, Odyssey VII and Odyssey IX's respective ballot summaries, Classes 2 (Claims of Noteholders), 4 (Claims of Related Parties) and 6 (Existing Indemnity Claims of the Investor Note Trustee) all voted to accept the Plan. There were no votes cast with respect to Class 3 (Unsecured Claims). Classes 1 (Priority Claims) and 5 (Equity Interests), being Unimpaired, were deemed to have accepted the Plan and were not entitled to Vote. The Effective Dates of the Plans all occurred on Jan. 3, 2013. Odyssey Diversified VI's Plan Under Odyssey Diversified VI's Plan, Allowed Claims of Noteholders in Class 2 will receive annual payments, if available, from a fund, the source of which will be: (1) Causes of Action Recoveries, if any, (2) the excess cash flow, if any, of business operations of the Debtor Owned Entities. Such payments, if available, will be made annually until the earlier of: (a) the disposal of all Debtor Owned Entities or (b) the fifth anniversary of the Effective Date. In addition, the Noteholders will receive excess proceeds from the sales of the Debtor Owned Entities occurring prior to the Maturity Date, after payment of underlying debt service, taxes, closing costs, and amounts owed under the Maxwell Line of Credit. On or before the date that is 60 days after the Effective Date, there will be a distribution of $500,000 to the Noteholders from the Guarantor of Odyssey VI to be made partially from existing funds, with the balance of the $500,000 payment to be funded from an advance to the Guarantor of Odyssey VI by Maxwell or his affiliate (the "M Advance"). Upon the sale of the property owned by the Guarantor of Odyssey VI, the net proceeds from such sale, less the M Advance, which will be repaid from the net proceeds, will be paid to the Noteholders on or before the first day of the month that is 30 months after the Effective Date. Unsecured creditors in Class 3 will not receive any distributions under the Plan unless and until there is adjudicated in such Holder's favor a Final Order awarding an Allowed Claim against the Debtor, in which case the Holder of such Claim will receive its pro rata share of any distributions that are being paid to the Noteholders in Class 2, with the exception of any payment to be under under the Guaranty of Odyssey VI. Equity Interests in Class 5 will not be affected by the Plan and Members will retain their Equity Interests. No distributions will be made under the Plan on account of the Equity Interests. Odyssey Diversified VII's Plan Under Odyssey Diversified VII's Plan, Allowed Claims of Noteholders in Class 2 will receive annual payments, if available, from a fund, the source of which will be: (1) Causes of Action Recoveries, if any, (2) the excess cash flow, if any, of business operations of the Debtor Owned Entities. Such payments, if available, will be made annually until the earlier of: (a) the disposal of all Debtor Owned Entities or (b) the fifth anniversary of the Effective Date. In addition, the Noteholders will receive excess proceeds from the sales of the Debtor Owned Entities occurring prior to the Maturity Date, after payment of underlying debt service, taxes, closing costs, and amounts owed under the Maxwell Line of Credit. On or before the date that is 60 days after the Effective Date, conditioned upon the approval of the release and exculpation provisions in the Plan and the dismissal with prejudice of the Howard Action, the Indenture Trustee will release its lien and distribute to the Noteholders the amount of $6,285,000, less reasonable fees and costs, which represents all monies currently held by the Indenture Trustee as security for his indemnification rights under the Indenture Agreement. The remaining amount of $2.3 million owed by the Guarantor pursuant to the Guaranty of Odyssey VII will be paid to the Noteholders on or before the date that is sixty days after the Effective Date. Unsecured creditors in Class 3 will not receive any distributions under the Plan unless and until there is adjudicated in such Holder's favor a Final Order awarding an Allowed Claim against the Debtor, in which case the Holder of such Claim will receive its pro rata share of any distributions that are being paid to the Noteholders in Class 2, with the exception of any payment to be under under the Guaranty of Odyssey VII. Equity Interests in Class 5 will not be affected by the Plan and Members will retain their Equity Interests. No distributions will be made under the Plan on account of the Equity Interests. Odyssey Diversified IX's Plan Under Odyssey Diversified IX's Plan, Allowed Claims of Noteholders in Class 2 will receive annual payments, if available, from a fund, the source of which will be: (1) Causes of Action Recoveries, if any, (2) the excess cash flow, if any, of business operations of the Debtor Owned Entities. Such payments, if available, will be made annually until the earlier of: (a) the disposal of all Debtor Owned Entities or (b) the fifth anniversary of the Effective Date. In addition, the Noteholders will receive excess proceeds from the sales of the Debtor Owned Entities occurring prior to the Maturity Date, after payment of underlying debt service, taxes, closing costs, and amounts owed under the Maxwell Line of Credit. On or before the date that is 60 days after the Effective Date, there will be a distribution to the Noteholders of the remaining amounts due under the Guaranty of Odyssey IX in the amount of $1,445,000, which are the net proceeds from the remaining property of the Guarantor of Odyssey IX or its equivalent. Unsecured creditors in Class 3 will not receive any distributions under the Plan unless and until there is adjudicated in such Holder's favor a Final Order awarding an Allowed Claim against the Debtor, in which case the Holder of such Claim will receive its pro rata share of any distributions that are being paid to the Noteholders in Class 2, with the exception of any payment to be under under the Guaranty of Odyssey IX. Equity Interests in Class 5 will not be affected by the Plan and Members will retain their Equity Interests. No distributions will be made under the Plan on account of the Equity Interests. About Odyssey Diversified Odyssey Diversified VI, LLC, Odyssey Diversified VII, LLC, and Odyssey Diversified IX, LLC, sought Chapter 11 protection (Bankr. M.D. Fla. Case Nos. 12-12323 to 12-12325) on Aug. 10, 2012, in Tampa, Florida. Edward J. Peterson. Esq., at Tampa, Florida, serves as counsel to the Debtors. William Maloney of Bill Maloney Consulting serves as chief restructuring officer for the Debtors. The Debtors are three of nine parent companies in the "Odyssey" family that began doing business in 2004. Seven of these parent entities, including the Debtors, invested in commercial real property, ultimately owning and operating a total of sixty-two commercial projects. Odyssey VI, formed in 2007, currently owns an indirect interest in four (4) projects encumbered by Project specific first mortgage loans from lenders in the aggregate amount of approximately $25.2 million. Odyssey VII, formed in 2007, currently owns an indirect interest in two (2) projects encumbered by Project specific first mortgage loans from lenders in the aggregate amount of approximately $9.4 million. Odyssey IX, formed in 2008, currently owns an indirect interest in four (4) projects encumbered by Project specific first mortgage loans from lenders in the aggregate amount of approximately $17.8 million. OMEGA NAVIGATION: Insider Settlement Killed by Judge ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports U.S. Bankruptcy Judge Karen Brown in Houston approved a settlement between ship owner Omega Navigation Enterprises Inc. and its senior secured lenders. At the Jan. 9 hearing, she refused to approve a settlement with Omega's owner, George Kassiotis, according to Al Yudes, an attorney from Watson Farley & Williams in New York representing junior secured lenders. The report notes that had Judge Brown approved both settlements, Omega's assets would have been disposed of without even the filing of a disclosure statement, the junior lenders said in a court filing. The approved settlement gives secured lenders ownership of Omega's eight vessels in return for a release of claims, Mr. Yudes said in a telephone interview with Bloomberg. The lenders will pay most professional expenses and provide $500,000 for distribution to unsecured creditors. The lenders waive claims, so they won't take back any of the money they pay. The judge, the report relates, refused to approve a separate settlement with Kassiotis under which he would waive his claims against Omega in return for ownership of two non-bankrupt Omega subsidiaries. The junior secured lenders opposed giving subsidiaries over to Omega's owner without a full valuation and trial to determine if he would have given sufficient value in return. About Omega Navigation Athens, Greece-based Omega Navigation Enterprises Inc. and affiliates, owner and operator of tankers carrying refined petroleum products, filed for Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 11-35926) on July 8, 2011, in Houston, Texas in the United States. Omega is an international provider of marine transportation services focusing on seaborne transportation of refined petroleum products. The Debtors disclosed assets of US$527.6 million and debt totaling US$359.5 million. Together, the Debtors wholly own a fleet of eight high-specification product tankers, with each vessel owned by a separate debtor entity. HSH Nordbank AG, as the senior lenders' agent, has first liens on vessels to secure a US$242.7 million loan. The lenders include Bank of Scotland and Dresdner Bank AG. The ships are encumbered with US$36.2 million in second mortgages with NIBC Bank NV as agent. Before bankruptcy, Omega sued the senior bank lenders in Greece contending they violated an agreement to grant a three year extension on a loan that otherwise matured in April 2011. An affiliate of Omega that manages the vessels didn't file, nor did affiliates with partial ownership interests in other vessels. Judge Karen K. Brown presides over the case. Bracewell & Giuliani LLP serves as counsel to the Debtors. Jefferies & Company, Inc., is the financial advisor and investment banker. The Official Committee of Unsecured Creditors has tapped Winston & Strawn as local counsel; Jager Smith as lead counsel; and First International as financial advisor. OMEGA NAVIGATION: Looks to Sell Assets After Judge Halts Deal ------------------------------------------------------------- Jess Davis of BankruptcyLaw360 reported that after a Texas bankruptcy judge refused Monday to approve Greek oil shipper Omega Navigation Enterprises Inc.'s proposed settlement with senior lenders and insiders, Omega sought permission to sell off three investments companies and their subsidiaries. U.S. Bankruptcy Judge Karen K. Brown wouldn't sign off on a proposed settlement that would have given Omega's current CEO and largest shareholder George Kassiotis equity in the companies after two junior secured creditors, NIBC Bank NV and BTMU Capital Corp., objected to the deal, the report said. About Omega Navigation Athens, Greece-based Omega Navigation Enterprises Inc. and affiliates, owner and operator of tankers carrying refined petroleum products, filed for Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 11-35926) on July 8, 2011, in Houston, Texas in the United States. Omega is an international provider of marine transportation services focusing on seaborne transportation of refined petroleum products. The Debtors disclosed assets of US$527.6 million and debt totaling US$359.5 million. Together, the Debtors wholly own a fleet of eight high-specification product tankers, with each vessel owned by a separate debtor entity. HSH Nordbank AG, as the senior lenders' agent, has first liens on vessels to secure a US$242.7 million loan. The lenders include Bank of Scotland and Dresdner Bank AG. The ships are encumbered with US$36.2 million in second mortgages with NIBC Bank NV as agent. Before bankruptcy, Omega sued the senior bank lenders in Greece contending they violated an agreement to grant a three year extension on a loan that otherwise matured in April 2011. An affiliate of Omega that manages the vessels didn't file, nor did affiliates with partial ownership interests in other vessels. Judge Karen K. Brown presides over the case. Bracewell & Giuliani LLP serves as counsel to the Debtors. Jefferies & Company, Inc., is the financial advisor and investment banker. The Official Committee of Unsecured Creditors has tapped Winston & Strawn as local counsel; Jager Smith as lead counsel; and First International as financial advisor. OPEN SOLUTIONS: S&P Withdraws 'CCC+' Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services withdrew the 'CCC+' corporate credit rating on Glastonbury, Conn.-based Open Solutions Inc. following its acquisition by Fiserv (BBB-/Stable /--), which has assumed the company's existing debt. S&P is also withdrawing the 'B-' issue-level rating on the company's senior secured debt as well as the '2' recovery rating on this debt, reflecting its repayment by Fiserv. At the same time S&P raised the issue-level rating on the company's subordinated notes to 'BB+' from 'CCC-' reflecting their assumption by Fiserv. The '6 'recovery rating is withdrawn. The rating will be withdrawn in 30 days following its repayment. "The rating action reflects the announcement by Fiserv that it has acquired Open Solutions for $1.02 billion which includes assuming and repaying its $960 million of debt," said Standard & Poor's credit analyst Jacob Schlanger. The outstanding bank debt will be paid off immediately while the rated subordinated debt will be paid off in 30 days following the expiration of the required call period. Open Solutions has a targeted industry focus with strong competitors (including Fiserv), very high leverage, and weak liquidity somewhat offset by a contractually recurring revenue base and high switching costs. The prior rating was indicative of the ongoing uncertainty surrounding the company's ability to repay or refinance its upcoming maturing debt, which this transaction has addressed. OVERSEAS SHIPHOLDING: Becomes Maritime Law Test Case ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports the Chapter 11 reorganization of Overseas Shipholding Group Inc. will afford U.S. Bankruptcy Judge Peter J. Walsh an opportunity to decide a question at the intersection of maritime and bankruptcy law. OSG is one of the world's largest publicly owned transporters of crude oil and petroleum products. As part of the Chapter 11 restructuring begun in November in Delaware, the company is terminating charter agreements for several vessels. According to the report, the process, known as rejection, amounts to a court-authorized breach of the charter agreements. When a charter agreement ends, there will be fuel bunker, provisions, and stores on board which OSG purchased. The charter agreements require the owners to reimburse OSG for the value of those items. The owners contend they have the right to retain the fuel and other property while offsetting the value against the unsecured claims OSG will owe from termination of the charters. Judge Walsh previously said he would allow ending the charters while saving the offset dispute for later decision. About Overseas Shipholding Overseas Shipholding Group, Inc., headquartered in New York, is one of the largest publicly traded tanker companies in the world, engaged primarily in the ocean transportation of crude oil and petroleum products. OSG owns or operates 111 vessels that transport oil and petroleum products throughout the world. Overseas Shipholding Group and 180 affiliates filed voluntary Chapter 11 petitions (Bankr. D. Del. Lead Case No. 12-20000) on Nov. 14, 2012. Bankruptcy Judge Peter J. Walsh oversees the case. Greylock Partners LLC Chief Executive John Ray serves as chief reorganization officer. Cleary Gottlieb Steen & Hamilton LLP serves as OSG's Chapter 11 counsel, while Chilmark Partners LLC serves as financial adviser. Kurtzman Carson Consultants LLC will provide certain administrative services. The Debtors disclosed $4.15 billion in assets and $2.67 billion in liabilities as of June 30, 2012. Liabilities include $1.49 billion on an unsecured credit agreement with DNB Bank ASA as agent. In addition to the secured Chinese loan, there is $518 million in unsecured notes and debentures plus $267 million on ship mortgages taken down to finance nine vessels. The Export-Import Bank of China, owed $312 million used for the construction of five tankers, is represented by Louis R. Strubeck, Jr., Esq., and Kristian W. Gluck, Esq., at Fulbright & Jaworski LLP in Dallas; David L. Barrack, Esq., and Beret Flom, Esq., at Fulbright & Jaworski in New York; and John Knight, Esq., and Christopher Samis, Esq., at Richards Layton & Finger PA. Chilmark Partners, LLC serves as financial and restructuring advisor. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed a five-member official committee of unsecured creditors in the case of Overseas Shipholding Group Inc. PATRIOT COAL: Hearing on Retiree Committee Adjourned to Feb. 26 --------------------------------------------------------------- The hearing to consider Harold Racer's Motion to Appoint Official Retiree Committee is adjourned and continued to Feb. 26, 2013, at 10:00 a.m. Objections or responses by the Debtors or any other party to the motion or any related motion by the Debtors must be filed with the Bankruptcy Court no later than Feb. 5, 2013. Any response by Harold Racer or any other party to an objection or to any related motion filed by the Debtors must be filed with the Bankruptcy Court no later than Feb. 15, 2013. Any reply by the Debtors or any other party to a response by Harold Racer or any other party must be filed with the Bankruptcy Court no later than Feb. 22, 2013. In his motion, Harold Racer, on behalf of himself and others similarly situated Non-Union Retirees of Patriot Coal Corporation and its affiliated Debtors, asked the Bankruptcy Court to authorize and instruct the U.S. Trustee for the Eastern District of Missouri to appoint any Official Non-Union Retiree Committee. According to Mr. Racer, without previously notifying the Court, on Dec. 17, 2012, Debtors sent a mass mailing (upon information and belief) to all non-union retirees informing them that Debtors would be seeking to unilaterally terminate all retiree benefits. According to papers filed with the Court, now that the Debtors have publicly announced their intent to terminate retiree benefits, a Retiree Committee must be formed as required by Section 1114 of the Bankruptcy Code without delay. Section 1114 requires a Debtor to continue to pay "retiree benefits" under certain circumstances after a bankruptcy filing. About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The U.S. Trustee appointed a seven-member creditors committee. Kramer Levin Naftalis & Frankel LLP serves as its counsel. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as its information agent. On Nov. 27, 2012, the New York bankruptcy judge moved Patriot's bankruptcy case to St. Louis. The order formally sending the reorganization to Missouri was signed December 19 by the bankruptcy judge. PATRIOT PLACE: Court Nixes Rival Exit Plans, Sale to El Paso ------------------------------------------------------------ The U.S. Bankruptcy Court in El Paso, Texas, denied confirmation of the Chapter 11 plan put forward by Patriot Place, Ltd., the bankrupt owner of the Hawkins Plaza Shopping Center, and the competing plan filed by its bankrupt tenant, Three Legged Monkey, L.P. Patriot Place's Plan calls for the sale of the shopping center to the City of El Paso as part of a settlement. Three Legged Monkey operates a sports bar and restaurant at Hawkins Plaza; it risks losing its business if the sale pushes through. "These controversies present the latest episode of an ongoing public saga that found its way to this Court, when the Chapter 11 bankruptcy filing of one debtor (Patriot Place) spawned yet another Chapter 11 bankruptcy filing by a different debtor (Three Legged Monkey)," said Bankruptcy Judge H. Christopher Mott in his ruling on Friday. "This latest episode became a battle between one debtor (Patriot Place, the owner and landlord of Hawkins Plaza) that wants to sell its business at Hawkins Plaza to the City of El Paso to settle its ground lease dispute with the City -- and the other debtor (Three Legged Monkey, a rather notorious tenant at Hawkins Plaza) that is fighting the proposed sale to the City so that it can save its business at Hawkins Plaza. Many interesting factual and legal issues are presented in this very unusual and highly contentious battle between two separate debtors, with the City waiting in the wings," "Will this be the final episode of the saga? Regrettably, no," Judge Mott said. Patriot Place Ltd. filed for Chapter 11 (Bankr. W.D. Tex. Case Nos. 11-31024) on May 30, 2011, listing under $10 million in both assets and debts. Carlos A. Miranda, III, & Associates, P.C., serves as the Debtor's counsel. A list of the Company's 17 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/txwb11-31024.pdf The petition was signed by David Brandt, trustee of Hawkins Plaza Trust, general partner. In July 2011, Patriot Place sought to assume a 1996 Commercial Ground Lease with the El Paso International Airport/City of El Paso, as lessor, as well as 15 unexpired leases with current tenants, including the 2005 shopping center lease with Three Legged Monkey. The City objected to the Motions to Assume, arguing that the Ground Lease could not be assumed and should be terminated, primarily based on the activities of Three-Legged Monkey. City Bank supported Patriot Place's bid to assume the Ground Lease. After mediation before retired Bankruptcy Judge Frank R. Monroe over a period of several months, Patriot Place and the City reached a settlement agreement dated May 23, 2012, which was subject to Court approval through a Plan of Reorganization to be filed by Patriot Place. The Settlement Agreement provided, in part, for the termination of the shopping center lease between Patriot Place and Three Legged Monkey, and the sale of Hawkins Plaza by Patriot Place to the City. Three Legged Monkey filed for Chapter 11 (Bankr. W.D. Tex. Case No. 12-31019) on June 2, 2012. At the behest of Patriot Place, the Bankruptcy Court in August 2012 lifted the automatic stay in Three Legged Monkey's case so that Patriot Place could proceed with seeking confirmation of its Plan. The latest version of Patriot Place's Plan was filed Sept. 20, 2012. Three Legged Monkey proposed a competing Plan for Patriot Place on Aug. 15, 2012. On Sept. 21, the Court approved the Third Amended Disclosure Statement explaining Patriot Place's Plan and the Second Amended Disclosure Statement explaining the competing Second Amended Plan. The Court set the confirmation hearing on Nov. 15. Limited objections to confirmation of Patriot Place's Third Amended Plan were filed by the City of El Paso Tax Assessor and the U.S. Trustee, which were later withdrawn. Significant objections to confirmation of the Third Amended Plan were filed by Three Legged Monkey and Monaco Entertainment Group. Thereafter, Patriot Place filed Preconfirmation Modifications to the Third Amended Plan. A limited objection to confirmation of Three Legged Monkey's competing Second Amended Plan was filed by the U.S. Trustee, which was later withdrawn based on an amendment by Three Legged Monkey. Significant objections to confirmation of Three Legged Monkey's Competing Second Amended Plan were filed by Patriot Place, City Bank, the City, and Monaco Entertainment. Patriot Place on Nov. 5, 2012, filed a Motion For Determination of Value of Leasehold Interest of Three Legged Monkey at Hawkins Plaza Shopping Center. Three Legged Monkey objected. Three Legged Monkey on Nov. 7 filed an Expedited Motion To Designate the Classes of 1(A) and 3 As Being Unimpaired and Strike the Ballots of Such Classes As Not Being Accepted, Solicited or Procured in Good Faith. Three Legged Monkey sought to strike the ballots of City Bank and other tenants which voted in favor of Patriot Place's Plan. Patriot Place on Nov. 13 filed a Request to Strike Ballots of Three Legged Monkey, which voted against Patriot Place's Plan. Meanwhile, in its own case, Three Legged Monkey filed a motion to assume the lease with Patriot Place, which objected due to alleged defaults. On Friday, Judge Mott granted Three Legged Monkey's request to assume the lease. The judge denied, as moot, the Motion to Value Leasehold Interest; Three Legged Monkey's Motion to Strike Ballots; and Patriot Place's Request to Strike Ballots. "So now at the end of this particular battle, and after literally hundreds of thousands of dollars in litigation expense, hundreds of hours spent by the parties and this Court, and a plethora of documents, exhibits, and pleadings -- little has been accomplished. 3LM is still in business (at least for a while) at Hawkins Plaza, PPL is still stuck in the middle of what (in essence) is a dispute between the City and 3LM that threatens Hawkins Plaza, and all parties have incurred significant professional fees. This must change in the future, or one or both of these Chapter 11 debtors will end up losing the war," according to Judge Mott. "It is possible that further battles in this war can be avoided. Perhaps the proposed sale of Hawkins Plaza to the City can be resurrected by negotiation to obtain 3LM's consent to the Hawkins Plaza sale (Sec. 363(f)(2)) and providing 3LM with sufficient time and funds to relocate. Or, perhaps 3LM can stay in business at Hawkins Plaza by the parties jointly negotiating more restrictive terms in the Shopping Center Lease and the Ground Lease. Or, perhaps these will continue to be litigating Chapter 11 cases, with new battles immediately on the horizon over whether the Ground Lease with the City can be assumed by PPL and whether 3LM is capable of proposing and obtaining approval of a plan of reorganization in its own bankruptcy case. In any event, it is not the Court's job to negotiate settlements between the parties; instead the Court's job is to rule on controversies and approve settlements that comply with the Bankruptcy Code," Judge Mott added. The Court will set a status conference in each of the bankruptcy cases. A copy of the Court's Jan. 11, 2013 Consolidated Opinion is available at http://is.gd/Nj29eWfrom Leagle.com. PEER REVIEW: Engages Drake Klein as New Accountant -------------------------------------------------- Peer Review Mediation and Arbitration, Inc., engaged Drake, Klein, Messineo, CPAs PA, of Clearwater, Florida, as its new registered independent public accountant. The Company's previously registered independent public accountant, Peter Messineo, CPA, of Palm Harbor Florida declined to stand for re-election, as PM has merged his firm into the registered firm of Drake and Klein CPAs PA. Peter Messineo's report on the financial statements for the years ended Dec. 31, 2011, contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to audit scope or accounting, except that the report contained an explanatory paragraph stating that there was substantial doubt about the Company's ability to continue as a going concern. The Company's Board of Directors participated in and approved the decision to change independent accountants. Through the period covered by the financial audit for the years ended Dec. 31, 2011, and including its review of financial statements of the quarterly periods through Sept. 30, 2012, there have been no disagreements with Peter Messineo on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Peter Messineo would have caused them to make reference thereto in their report on the financial statements. Through the interim period Jan. 9, 2013, there have been no disagreements with Peter Messineo on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Peter Messineo would have caused them to make reference thereto in their report on the financial statements. During the year ended Dec. 31, 2011, and 2010 and prior to Jan. 9, 2013, the Company did not consult with DKM. About Peer Review Deerfield Beach, Fla.-based Peer Review Mediation and Arbitration, Inc., was incorporated in the State of Florida on April 16, 2001. The Company provides peer review services and expertise to law firms, medical practitioners, insurance companies, hospitals and other organizations in regard to personal injury, professional liability and quality review. The Company's balance sheet at Sept. 30, 2012, showed $1.8 million in total assets, $5.9 million in total liabilities, and a stockholders' deficit of $4.1 million. As reported in the TCR on Aug. 6, 2012, Peter Messineo, CPA, in Palm Harbor, Fla., expressed substantial doubt about Peer Review's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. Mr. Messineo noted that the Company has recurring losses from operations, a working capital deficit, negative cash flows from operations and a stockholders' deficit. PENSON WORLDWIDE: Starts Rejecting Contracts as Part of Wind-Down ----------------------------------------------------------------- Penson Worldwide Inc. and its affiliates sought bankruptcy protection Friday and immediately filed two omnibus motions to reject executory contracts. The Debtors say they are currently in the process of winding down their business operations and liquidating their remaining assets. As a part of this process, the Debtors have reviewed and analyzed their contractual obligations and identified those executory contracts and unexpired leases that no longer serve any business purpose and are burdensome to the estates. A list of the contracts subject to the first rejection motion is available at: http://bankrupt.com/misc/PW_RejectedContracts_1.pdf A list of the contracts subject to the second rejection motion is available at: http://bankrupt.com/misc/PW_RejectedContracts_1.pdf Aside from the rejection motions, the Debtors filed on the first day of the case requests to hire a claims and noticing agent, continue using their cash management system, prohibit utilities from discontinuing service, and pay prepetition wages and benefits of employees. The Debtors said that payments of prepetition wages will be subject to the limitation under Section 507(a)(4) of the Bankruptcy Code on payments to individual employee on account of prepetition wages of $11,725. As to severance, the Debtors will only make severance payments to non-insider employees. "There is a real, immediate risk that if the Debtors are not authorized to continue to honor their prepetition employee obligations in the ordinary course, the employees would no longer support and maintain the wind-down process, thereby endangering the prospects of a successful chapter 11 process and plan confirmation," says Bryce B. Engel, president and COO of the Debtors. About Penson Worldwide Plano, Texas-based Penson Worldwide Inc. and its affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No. 13-10061) on Jan. 11, 2013. Founded in 1995, Penson Worldwide is provider of a range of critical securities and futures processing infrastructure products and services to the global financial services industry. The company?s products and services include securities and futures clearing and execution, financing and cash management technology and other related offerings, and it provides tools and services to support trading in multiple markets, asset classes and currencies. Penson was one of the top two clearing brokers overall in the United States. Its foreign-based subsidiaries were some of the largest independent clearing brokers in Canada and Australia and the second largest independent clearing broker in the United Kingdom as of Dec. 31, 2010. In 2012, the company sold its futures division to Knight Capital Group Inc. and its broker-deal subsidiary to Apex Clearing Corp. But the company was unable to successfully streamline is business after the asset sales. Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Young, Conaway, Stargatt & Taylor serve as counsel to the Debtors. Kurtzman Carson Consultants LLC is the claims and notice agent. The company estimated $100 million to $500 million in assets and liabilities in its Chapter 11 petition. The last publicly filed financial statements as of June 30 showed assets of $1.17 billion and liabilities totaling $1.227 billion. PENSON WORLDWIDE: Proposes KCC as Claims and Notice Agent --------------------------------------------------------- Penson Worldwide Inc. and its affiliates are seeking an order appointing Kurtzman Carson Consultants LLC as the claims and noticing agent in order to assume full responsibility for the distribution of notices and the maintenance, processing and docketing of proofs of claim filed in their Chapter 11 cases. Although the Debtors have not yet filed their schedules of assets and liabilities, they anticipate that there will be hundreds of entities to be noticed at some point in the Chapter 11 cases. In view of the number of anticipated claimants and the complexity of the businesses, the Debtors submit that the appointment of a claims and noticing agent is both necessary and in the best interests of the Debtors' estates and their creditors. On account of its consulting services, KCC personnel will charge based on a 25% discounted rate: Position 25% Discounted Rate -------- ------------------- Clerical $30 to $45 Project Specialist $60 to $105 Technology/Programming Consultant $75 to $150 Consultant $94 to $150 Senior Consultant $169 to $206 Senior Managing Consultant $221 Weekend, holidays and overtime Waived Travel expenses and working meals Waived For its noticing services, KKC will charge $50 per 1,000 e-mails, and $0.10 per page for electronic noticing. For its claims administration services, KCC will charge $0.10 per creditor per month but is waiving the fee for its public website hosting services. About Penson Worldwide Plano, Texas-based Penson Worldwide Inc. and its affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No. 13-10061) on Jan. 11, 2013. Founded in 1995, Penson Worldwide is provider of a range of critical securities and futures processing infrastructure products and services to the global financial services industry. The company?s products and services include securities and futures clearing and execution, financing and cash management technology and other related offerings, and it provides tools and services to support trading in multiple markets, asset classes and currencies. Penson was one of the top two clearing brokers overall in the United States. Its foreign-based subsidiaries were some of the largest independent clearing brokers in Canada and Australia and the second largest independent clearing broker in the United Kingdom as of Dec. 31, 2010. In 2012, the company sold its futures division to Knight Capital Group Inc. and its broker-deal subsidiary to Apex Clearing Corp. But the company was unable to successfully streamline is business after the asset sales. Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Young, Conaway, Stargatt & Taylor serve as counsel to the Debtors. The company estimated $100 million to $500 million in assets and liabilities in its Chapter 11 petition. The last publicly filed financial statements as of June 30 showed assets of $1.17 billion and liabilities totaling $1.227 billion. PENSON WORLDWIDE: S&P Lowers Issuer Credit Rating to 'D' -------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its issuer credit rating on Penson Worldwide Inc. to 'D' from 'CC'. S&P also lowered its rating on Penson's $200 million senior secured second-lien notes to 'D' from 'CC'. "The downgrade follows Penson's voluntary Chapter 11 bankruptcy filing in the U.S. on Jan. 11," said Standard & Poor's credit analyst Robert Hoban. "We believe Penson filed for bankruptcy because its weak operating cash flow constrained its debt service and financial capacity." Over the past year, management attempted to restructure its debt and operations, including the sale or transfer of most of its operating businesses. In May 2012, Penson transferred the operations, clearing contracts, and most of the net assets of its main business, U.S. securities clearing, to Apex Clearing in exchange for a 94% ownership stake in Apex's holding company. PENSON WORLDWIDE: Case Summary & 30 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Penson Worldwide Inc. 800 Klein Road Plano, TX 75074 Bankruptcy Case No.: 13-10061 Chapter 11 Petition Date: January 11, 2013 Court: U.S. Bankruptcy Court District of Delaware Judge: Hon. Peter J. Walsh Debtor's Counsel: Paul, Weiss, Rifkind, Wharton & Garrison LLP Debtor's Co-Counsel: Kenneth J. Enos, Esq. Pauline K. Morgan, Esq. YOUNG, CONAWAY, STARGATT & TAYLOR Rodney Square 1000 North King Street Wilmington, DE 19801 Tel: 302-571-6600 Debtor's Claims Agent: Kurtzman Carson Consultants LLC Estimated Assets: $100,000,001 to $500,000,000 Estimated Liabilities: $100,000,001 to $500,000,000 Affiliates that simultaneously sought Chapter 11 protection: Debtor Case No. ------ -------- SAI Holdings, Inc. 13-10062 Penson Financial Services, Inc. 13-10063 Penson Financial Futures, Inc. 13-10064 Penson Holdings, Inc. 13-10065 Penson Execution Services, Inc. 13-10067 Nexa Technologies, Inc. 13-10068 Penson Futures 13-10069 GHP1 Inc. 13-10070 GHP2 LLC 13-10071 The petitions were signed by Bryce B. Engel, the president and chief operating officer. Consolidated List of Debtors' 30 Largest Unsecured Creditors: Entity Nature of Claim Amount of Claim ------ --------------- --------------- Second Lien Noteholders 12.50% Sr 2nd $215,972,222 Committee Lien Secured c/o Fried Frank Harris Notes due 2017 Shriver & Jacobson LLP Gary Kaplan, Esq. One New York Plaza New York, NY 10004 Tel: 212-859-8000 Fax: 212-859-4000 Convertible Noteholders 8.00% Sr. $62,866,667 Committee Convertible c/o Sidley Austin LLP Notes due 2014 Bojan Guzina, Esq. One South Dearborn Chicago, IL 60603 Tel: 312-853-7323 Fax: 312-853-7036 Sungard Financial Systems LLC Contract $6,393,854 601 Walnut Street, Suite 1010 Philadelphia, PA 19106 Tel: 215-627-3800 Fax: 215-627-7009 Microsoft Licensing, GP Contract $730,943 6100 Neil Road, Ste 100 Reno, NV 89511 Tel: 775-823-5600 Fax: 775-823-7287 ComGraphics Inc. Contract $349,104 329 W. 18th St., 10th Fl Chicago, IL 60616 Tel: 315-226-0900 Fax: 312-226-9411 Berkeley First City LP Contract $326,154 c/o Lincoln Property Company 1700 Pacific Ave., Ste 2300 Dallas, TX 75201 Tel: 214-740-5019 Fax: 214-855-3725 NYSE ARCA LLC Services $243,916 Vernado Office Management LLC Contract $157,270 NASDAQ Stock Market LLC Services $148,086 Drinker Biddle & Reath, LLP Services $127,790 CSG Systems Inc. Contract $89,556 Sungard Securities Finance LLC Contract $86,248 Equinix Inc. Contract $81,382 Standard & Poors Financial Contract $77,405 Services LLC Headstrong Inc. Services $62,808 Iron Mountain Trade $58,845 HOVServices Services $52,023 Merrill Lynch, Pierce, Fenner Services $51,526 & Smith Inc. ITG Inc. Services $45,148 PDQ ATS Inc. Services $43,544 IDG Services Inc. Services $43,362 NW Tech Network Security Contract $42,250 The Irvine Company Office Prop Contract $42,136 Global Crossing Services $40,813 FlexTrade LLC Services $40,736 Morgan Stanley Services $37,982 Experis Finance US LLC Services $36,825 State of Delaware Tax $36,540 Division of Corporations RR Donnelley Contract $33,579 Citigroup Global Markets Inc. Services $32,561 PEREGRINE FINANCIAL: Regulator Turns to Execs for Fraud Fixes ------------------------------------------------------------- Jacob Bunge and Ianthe Jeanne Dugan of The Wall Street Journal reported on Jan. 11 that a key financial regulator has interviewed the executive team that ran Peregrine Financial Group Inc. in an effort to improve its oversight of the industry, which was heavily criticized in the wake of the broker's collapse last July. Investigators working on behalf of the National Futures Association talked with most of Peregrine's senior ranks -- including jailed founder and Chief Executive Russell Wasendorf Sr. -- over the past month, according to people involved in the process. Regulators seeking input from the failed firm's management is "a highly unusual move, but it's a great lessons-learned tool," Ken Springer, president of Corporate Resolutions Inc. and a former white-collar crime investigator for the Federal Bureau of Investigation, told WSJ. The Chicago-based NFA drew scrutiny from investors and policy makers after the revelations of fraud at Peregrine. Directors of the industry-funded agency, which federal futures market regulators depend upon for day-to-day policing of brokers, last summer ordered an external review of its practices while putting on hold potential management changes and bonus payments to top officials, WSJ related. A special committee of the NFA's board hired California-based Berkeley Research Group to conduct the analysis, which officials at the association said will likely be presented to directors later this month. In addition to Mr. Wasendorf Sr., who spoke with investigators at the Cedar Rapids Correctional Center in Iowa, Berkeley Research Group officials in December met with his son, Russell Wasendorf Jr., Peregrine's former president and chief operating officer, WSJ said, citing people with direct knowledge of the matter. Investigators also interviewed Brenda Cuypers, Peregrine's former chief financial officer, General Counsel Rebecca Wing, and Susan O'Meara, who had been the firm's chief compliance officer, these people said. According to WSJ, questions for the former Peregrine executives centered on how the NFA can make its audits more comprehensive and finding broader ways to better supervise brokers that deal in futures and currencies, according to people involved in the discussions. Investigators also sought further details of Mr. Wasendorf Sr.'s scheme and Peregrine's own operations, the people said, the report added. It wasn't clear how the former Peregrine executives responded. WSJ related that Mr. Wasendorf Sr. aired his own critique of regulators' audit practices in a confession letter he penned ahead of his attempted suicide July 9. "It was relatively simple to deceive the Regulators during their Annual Audits since their Audit Modules guided them to find a number, tick a box, tie out totals, etc.," Mr. Wasendorf Sr. wrote in the letter, which was recovered by law enforcement officials. "They had no way to detect a counterfeit bank statement." Mr. Wasendorf's crimes dealt another blow to the already-bruised reputation of the U.S. futures industry, after the late-2011 implosion of a larger player, MF Global Holdings Ltd., left an estimated $1.6 billion worth of investors' money unaccounted for, according to trustees. The thoroughness of the NFA's auditing drew fire from some customers of Peregrine as details of Mr. Wasendorf's scheme emerged last summer, including an instance when his fraud nearly came to light during a 2011 NFA audit, WSJ said. An NFA campaign last year to shift futures brokerages toward an automated system for confirming bank balances helped unveil Mr. Wasendorf Sr.'s scheme, WSJ noted. The agency took further steps in the months following Peregrine's collapse to improve monitoring of investor funds and boost the expertise of its examiners, and last month began monitoring futures account balances on a daily basis with some banks. "We expect the Berkeley review will include recommendations for strengthening NFA's regulation of the industry, and we look forward to reviewing them," a spokesman for the NFA in a statement told WSJ. "If some of the recommendations in the review come from 'unique'. . . or non-traditional sources, we look forward to reviewing them as well." About Peregrine Financial Peregrine Financial Group Inc. filed to liquidate under Chapter 7 of the U.S. Bankruptcy Code (Bankr. N.D. Ill. Case No. 12-27488) on July 10, 2012, disclosing between $500 million and $1 billion of assets, and between $100 million and $500 million of liabilities. Earlier that day, at the behest of the U.S. Commodity Futures Trading Commission, a U.S. district judge appointed a receiver and froze the firm's assets. The firm put itself into bankruptcy liquidation in Chicago later the same day. The CFTC had sued Peregrine, saying that more than $200 million of supposedly segregated customer funds had been "misappropriated." The CFTC case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-5383, U.S. District Court, Northern District of Illinois (Chicago). Peregrine's CEO Russell R. Wasendorf Sr. unsuccessfully attempted suicide outside a firm office in Cedar Falls, Iowa, on July 9. The bankruptcy petition was signed in his place by Russell R. Wasendorf Jr., the firm's chief operating officer. The resolution stated that Wasendorf Jr. was given a power of attorney on July 3 to exercise if Wasendorf Sr. became incapacitated. Peregrine Financial is the regulated unit of the brokerage PFGBest. PETRON ENERGY II: Amends Q1 2012 to Respond to Comments of SEC -------------------------------------------------------------- Petron Energy II, Inc., filed on Jan. 7, 2013, Amendment No. 3 on Form 10-Q/A to its quarterly report on Form 10-Q for the quarterly period ended March 31, 2012, to respond to certain comments received from the Staff of the Securities and Exchange Commission. For convenience and ease of reference, the Company is filing this Form 10-Q/A in its entirety with all applicable changes. The Company reported a net loss of $6.6 million on $90,634 of total revenue in the first quarter of 2012, compared with a net loss of $479,671 on $43,009 of total revenue for the same period in 2011. In the first quarter of 2012, the Company recorded an impairment charge of $5,903,000 on its investment in the wells purchased from ONE Energy Capital Corp. The Company's balance sheet at March 31, 2012, showed $2.5 million in total assets, $6.8 million in total liabilities, and a stockholders' deficit of $4.3 million. Going Concern Uncertainty According to the Form 10-Q filing, the Company has incurred a net loss of $6,552,438 for the quarter ended March 31, 2012, and at March 31, 2012, had an accumulated deficit of $18,047,598. "While the Company has recognized revenues from operations, the revenues generated are not sufficient to sustain operations. The Company does not have sufficient funds to acquire new business assets or maintain its existing operations at this time. Management's plan is to raise equity and/or debt financing as required but there is no certainty that such financing will be available or that it will be available at acceptable terms. The outcome of these matters cannot be predicted at this time." A copy of the Form 10-Q/A for the first quarter ended March 31, 2012, is available at http://is.gd/70qhgZ The Company also filed Amendment No. 2 on Form 10-Q/A for the second quarter ended June 30, 2012, and Amendment No. 1 on Form 10-Q/A for the third quarter ended June 30, 2012. Both these amendments were made to respond to certain comments received from the Staff of the Securities and Exchange Commission. A copy of the Form 10-Q/A for the second quarter ended June 30, 2012, is available at http://is.gd/RNpFNK A copy of the Form 10-Q/A for the third quarter ended Sept. 30, 2012, is available at http://is.gd/zkCPWZ Petron Energy II, Inc., based in Dallas, is engaged primarily in the acquisition, development, production, exploration for and the sale of oil, gas and gas liquids in the United States. As of Dec. 31, 2011, the Company is operating in the states of Texas and Oklahoma. In addition, the Company operates two gas gathering systems located in Tulsa, Wagoner, Rogers and Mayes counties of Oklahoma. The pipeline consists of approximately 132 miles of steel and poly pipe, a gas processing plant and other ancillary equipment. The Company sells its oil and gas products primarily to a domestic pipeline and to another oil company. PHI GROUP: Sets Aside 5.6 Million Common Shares for Dividend ------------------------------------------------------------ PHI Group, Inc., reserved 5,673,327 shares of the Company's $0.001 par value common stock for the declared special dividend to the Company's shareholders of record as of June 30, 2012. These shares will be distributed to the eligible shareholders without a restrictive legend upon full and effective registration of the dividend distribution with the Securities and Exchange Commission. On Nov. 30, 2012, three creditors and one former employee of the Company converted a total of $220,079 into 81,737 shares of the Company's $0.001 par value common stock at the conversion price of $2.69 per share. On Jan. 10, 2013, the Company issued 3,288,443 shares of its $0.001 par value restricted common stock at the price of $1.5965 per share to the majority shareholder of PT Tambang Sekarsa Adadaya, an Indonesian company, towards the total agreed price for the Company's purchase of 70% of equity interest in TSA. These issuances brought the total number of fully diluted issued and outstanding shares of the Company's common stock as of Jan. 10, 2013, to 10,934,616. About PHI Group Huntington Beach, Calif.-based PHI Group, Inc., through its wholly owned and majority-owned subsidiaries, is engaged in a number of business activities, the scope of which includes consulting and merger and acquisition advisory services, real estate and hospitality development, mining, natural resources, energy, and investing in special situations. The Company invests in various business opportunities within its chosen scope of business, provides financial consultancy and M&A advisory services to U.S. and foreign companies, and acquires selective target companies under special situations to create additional long-term value for its shareholders. In its auditors' report accompanying the consolidated financial statements for the fiscal year ended June 30, 2011, Dave Banerjee CPA, in Woodland Hills, Calif., expressed substantial doubt about PHI Group's ability to continue as a going concern. The independent auditors noted that the Company has accumulated deficit of $28,177,788 and net loss amounting $1,178,297 for the year ended June 30, 2011. The Company reported a net loss of $1.2 million for the fiscal year ended June 30, 2011, compared with a net loss of $3.6 million for the fiscal year ended June 30, 2010. The Company's balance sheet at Dec. 31, 2011, showed $2.46 million in total assets, $10.11 million in total liabilities, all current, and a $7.65 million total stockholders' deficit. PINNACLE AIRLINES: Pilots Ratify Restructuring Agreement -------------------------------------------------------- The pilots of Pinnacle Airlines, represented by the Air Line Pilots Association, Int'l (ALPA), on Jan. 15 ratified a bankruptcy restructuring contract that was tentatively agreed to in December. With more than 86 percent of eligible pilots casting ballots, 85 percent of Pinnacle pilots voted in favor of the agreement. "The pilots were given a stark choice between holding on to our current contract and seeing Pinnacle wound down or accepting drastic cuts to our pay and work rules in order to save the airline and the jobs of employees in all areas of Pinnacle's operations," said Capt. Tom Wychor, chairman of the Pinnacle arm of ALPA. "I am proud of our pilots for making this difficult decision to preserve the company and to move forward as a group. Now we must work to protect our investment by continuing to provide our passengers with safe, reliable, and professional service." The new seven-year agreement includes, among other cuts, a 9 percent reduction in pay for all pilots plus longevity caps to all pay scales which will further cut the pay of more than half of Pinnacle's pilots by as much as another 16 percent. In addition to almost 25 percent pay cuts, the deal also increases health-care costs for all pilots while reducing pilot retirement benefits by more than 50 percent for Pinnacle's most senior pilots. In recognition of the magnitude of the pilots' concessions, the contract also includes a bridge agreement that provides a one-time longevity transition payment and guaranteed hiring for many Pinnacle pilots at Delta Air Lines. Pinnacle Airlines flies exclusively as a Delta Connection carrier and Delta will likely own Pinnacle as a result of having provided the financing that allowed Pinnacle to reorganize. "Management failures are responsible for Pinnacle's current financial crisis," Capt. Wychor added, "but only this sacrifice by the pilots could preserve a future for the airline and its employees. In that future, we will seek out new employment opportunities for our pilots who no longer see a viable career path at Pinnacle while we protect and shore up the restructured contract for those who remain." The pilot-ratified contract will now be submitted to the Bankruptcy Court for the Southern District of New York for final approval. Founded in 1931, ALPA is the world's largest pilot union, representing nearly 51,000 pilots at 35 airlines in the United States and Canada, including the 2,400 pilots at Pinnacle. 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. PINNACLE AIRLINES: Hearing on ALPA Tentative Deal Scheduled Today ----------------------------------------------------------------- Pinnacle Airlines Corp.'s wholly owned subsidiary, Pinnacle Airlines, Inc., on Jan. 15 disclosed that its pilots group, represented by the Air Line Pilots Association, International (ALPA), ratified the tentative agreement reached with ALPA in December. The changes in the ratified agreement, which covers pilot pay, retirement, work rules and benefits, will become effective when concessions are implemented for the airline's other labor groups and non-union employees. "Through the constructive efforts of Pinnacle and ALPA, we were able to achieve our goal of reaching a consensual agreement with our pilots. We have now reached agreements with all of our unions following the previously announced agreements with the Association of Flight Attendants and the Transport Workers Union. This is a significant milestone in our restructuring and represents substantial progress that we expect will allow us to successfully emerge from bankruptcy," said John Spanjers, president and CEO of Pinnacle Airlines Corp. A hearing is scheduled on Jan. 16 for the Bankruptcy Court to consider approval of the tentative agreement with ALPA and the other agreements that Pinnacle expects to facilitate its emergence from bankruptcy. 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. PINNACLE AIRLINES: Gets 90 More Days to File Chapter 11 Plan ------------------------------------------------------------ Maria Chutchian of BankruptcyLaw360 reported that a New York bankruptcy judge on Monday gave Pinnacle Airlines Corp. an extra 90 days to file a Chapter 11 reorganization plan following "intense" negotiations with a pilot union and a fast-approaching Jan. 25 deadline to finalize deals with pilots and creditors. U.S. Bankruptcy Judge Robert E. Gerber approved the Memphis, Tenn.-based regional carrier's request, which drew no objections, the report said. The airline's exclusivity period to file its proposed plan now expires April 25, and competing plans won't be accepted before June 25, the report added. 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. PRESTIGE BRANDS: Moody's Affirms 'B1' CFR; Outlook Stable --------------------------------------------------------- Moody's Investors Service affirmed the B1 Corporate Family rating and B1-PD Probability of Default rating of Prestige Brands Inc. and revised its outlook to stable from negative. The stable outlook reflects the company's improved credit metrics as it has reduced leverage and improved organic revenue growth and profit margins. "Prestige's profitability is expected to continue to improve modestly and will more than offset incremental investment in product promotion and advertising," said Moody's Vice President Nancy Meadows. The following ratings were affirmed: - Corporate Family Rating of B1 - Probability of Default Rating of B1-PD - $660 million senior secured term loan due 2019, to Ba3 (LGD 3, 38%) from Ba3 (LGD 3, 39%) - $250 million senior secured notes due 2018, to Ba3 (LGD 3, 38%) from Ba3 (LGD 3, 39%) - $250 million senior unsecured notes due 2020 to B3 (LGD 6, 90%) from B3 (LGD 6, 91%) - Speculative Grade Liquidity Rating of SGL-2 The outlook is stable. Ratings Rationale Prestige's B1 Corporate Family Rating reflects the company's relatively high leverage (pro forma debt-to-EBITDA of approximately 5 times) especially given its participation in highly competitive segments in near-pharmacy like categories, primarily competing with companies that have significantly more resources and financial flexibility. Prestige's small overall scale and sizable OTC business, while attractive in terms of profitability and growth potential, makes it relatively more exposed to product recalls and possible legal liability than its more broadly diversified consumer products peers.The company's substantially smaller household segment remains mature and is constrained by the competitive marketplace and its declining organic growth. In addition, the company's financial policies are likely to remain aggressive as it continues to supplement its growth through leveraged acquisitions. The B1 rating also reflects Prestige's diverse and balanced portfolio of leading niche brands; high margins; good cash flow; a flexible, outsourced business model; and low-capital spending requirements. The stable outlook reflects Prestige's strengthening profit margins and cash flow and improved organic growth rates in both its legacy brands as well as those it recently acquired. Prestige's ratings could be downgraded if the company's financial performance deteriorates as result of unexpected weakness in the company's existing product portfolio and/or management significantly deviates from its current disciplined financial policies. Additionally, debt-to-EBITDA sustained above 5.0 times or EBIT-to-interest below 2.0 times could result in a downgrade. For an upgrade, Prestige's scale would need to significantly improve beyond its current level and be sustained by a strong organic growth rate. Financial metrics would need to be maintained for an extended period of time such that debt-to-EBITDA was sustained below 4.0 times and EBIT-to-interest was sustained above 2.5 times. Prestige Brands, Inc., headquartered in Tarrytown, New York, is a leading marketer of a broad portfolio of branded over-the counter ("OTC") healthcare and household cleaning products. Key brands include Beano, Compound W, Chloraseptic, Clear Eyes, Luden's, Dramamine, BC, and Goody's. Revenues for the twelve months ending September 30, 2012 were approximately $624 million. The principal methodology used in this rating was the Global Packaged Goods published in December 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. PRIME HEALTHCARE: Moody's Affirms 'B2' CFR; Rates Revolver 'Ba3' ---------------------------------------------------------------- Moody's Investors Service assigned a Ba3 (LGD 3, 32%) rating to Prime Healthcare Services, Inc.'s $175 million senior secured revolving credit facility expiring 2016. Moody's also affirmed Prime's B2 Corporate Family Rating and B2-PD Probability of Default Rating. The rating outlook is stable. Following is a summary of Moody's rating actions. Ratings assigned: Senior secured revolving credit facility expiring 2016, Ba3 (LGD 3, 32%) Ratings affirmed: Corporate Family Rating, B2 Probability of Default Rating, B2-PD Ratings withdrawn: Senior secured term loan A due 2014, B1 (LGD 3, 41%) Senior secured term loan B due 2015, B1 (LGD 3, 41%) Ratings Rationale Prime's B2 Corporate Family Rating reflects the risks associated with the concentration of operations in Southern California and the company's reliance on a few facilities for a considerable portion of revenue and EBITDA. Additionally, the company currently generates the majority of its revenue from government programs, including Medi-Cal, the Medicaid program for the state of California. Furthermore, while Moody's acknowledges the company's track record of significantly improving acquired facilities, both in terms of top line and margin performance, the rating also reflects the risks associated with acquiring and integrating financially distressed operations. Finally, the rating reflects Moody's expectation that the company will continue to aggressively pursue growth through acquisitions that may be debt financed and involve the entrance into markets in which the company does not have a presence. However, the company has relatively moderate financial leverage and strong interest expense coverage. Moody's expects to continue to see credit metrics that are strong for the rating category given the inherent risks associated with a rapid growth strategy through the acquisition of troubled operations. Therefore, Moody's does not believe an upgrade of the rating is likely in the near term. However, if the company is able to increase its scale and reduce concentration through diversification of revenue and profitability sources, geographic presence and payor mix, while maintaining a conservative financial profile, Moody's could upgrade the rating. If the company experiences a significant deterioration of credit metrics, through a negative development in the California market, a large debt financed acquisition or ongoing litigation and investigations, Moody's would downgrade the rating. For example, if state budget issues force a significant negative change in Medi-Cal reimbursement or if the payor mix deteriorates significantly such that Moody's expects the change to jeopardize cash flow, interest coverage, or future growth prospects, the ratings could be downgraded. Moody's could also downgrade the ratings if the turn-around of the operations of future acquisition targets is not successful or integration problems arise that negatively impact the operations of the consolidated company. Finally, Moody's could also downgrade the rating if the company undertook a significant shareholder distribution. The principal methodology used in this rating was the Global Healthcare Service Providers Industry Methodology published in December 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Prime Healthcare Services, Inc. is an owner and operator of acute care hospitals. The company currently operates 17 hospitals. Prime has 11 hospitals in California, three in Texas, two in Pennsylvania, and one in Nevada. The company recognized approximately $1.5 billion in revenue for the twelve months ended September 30, 2012 before considering the provision for doubtful accounts. QUIGLEY CO: Supreme Court Asks Govt.'s Opinion on Pfizer Appeal --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Supreme Court is asking for the government's opinion on whether Pfizer Inc. should be allowed a final appeal from an unfavorable ruling in April by the U.S. Court of Appeals in Manhattan. Pfizer is the parent of non-operating Quigley Company Inc., which is waiting to learn whether the bankruptcy court will approve the reorganization plan ending its eight-year- old bankruptcy dealing with asbestos claims. The report recounts that the appeals court, upholding the district court, ruled that Pfizer wasn't entitled to complete protection from asbestos claims under the umbrella of Quigley's Chapter 11 case. The lower courts ruled there was a narrow category of state-law claims for which the Quigley bankruptcy can't protect parent Pfizer. Quigley filed its sixth-amended plan in late June, modified after the April opinion from the appeals court. In the latest iteration of the plan, Pfizer increased its contribution to creditors' recoveries. According to the report, on Jan. 14 the Supreme Court "invited" the U.S. Solicitor General to "file a brief in this case expressing the views of the U.S." The Solicitor General could urge the Supreme Court to allow a further appeal or not. The Solicitor General is an arm of the Attorney General that handles the federal government's involvements in matters before the Supreme Court. Pfizer, the report relates, filed papers in September with the Supreme Court, asking the court to allow an appeal. The request by the Supreme Court was made following a conference the justices held Jan. 11 on the question of whether to allow an appeal. In bankruptcy court, Quigley creditors concluded voting on the plan at the end of November. The bankruptcy judge will conduct a status conference on Jan. 17, with a confirmation hearing for approval of the plan to occur sometime later. The plan will shed asbestos liability for both Quigley and Pfizer. In addition to increasing its cash contribution, Pfizer is waiving a $95 million secured claim, a $19 million claim for financing the Chapter 11 case, and a $33 million unsecured claim. Mr. Rochelle notes that Quigley suffered several defeats during the Chapter 11 case. The bankruptcy judge ruled that a prior reorganization plan was filed in bad faith and not feasible. Quigley had filed a new plan to cure the defects. The plan was pending when a district judge ruled against Pfizer in May 2011. The district court ruling was upheld in the appeals court. The Pfizer appeal in the Supreme Court is Pfizer Inc. v. Law Offices of Peter G. Angelos, 12-300, U.S. Supreme Court (Washington). The appeal in the circuit court was Quigley Co. Inc. v. Law Offices of Peter G. Angelos (In re Quigley Co. Inc.), 11-2635, 2nd U.S. Circuit Court of Appeals (Manhattan). The appeal in district court was In re Quigley Co. Inc., 10-01573, U.S. District Court, Southern District of New York (Manhattan). About Quigley Co. Quigley Co. was acquired by Pfizer in 1968 and sold small amounts of products containing asbestos until the early 1970s. In September 2004, Pfizer and Quigley took steps that were intended to resolve all pending and future claims against the Company and Quigley in which the claimants allege personal injury from exposure to Quigley products containing asbestos, silica or mixed dust. Quigley filed for bankruptcy in 2004 and has a Chapter 11 plan and a settlement with Chrysler. Quigley filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 04-15739) on Sept. 3, 2004, to implement a proposed global resolution of all pending and future asbestos- related personal injury liabilities. Lawrence V. Gelber, Esq., and Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represent the Debtor in its restructuring efforts. Elihu Inselbuch Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it disclosed $155,187,000 in total assets and $141,933,000 in total debts. In April 2011, the bankruptcy judge approved a plan-support agreement with Pfizer and an ad hoc committee representing 30,000 asbestos claimants. A May 20, 2011 opinion by District Judge Richard Holwell concluded that Pfizer was directly liable for some asbestos claims arising from products sold by its now non-operating subsidiary Quigley. REGAL ENTERTAINMENT: Fitch Assigns 'B-' Rating to Sr. Unsec. Notes ------------------------------------------------------------------ Fitch Ratings has assigned a 'B-'/'RR6' rating to Regal Entertainment Group's proposed senior unsecured note offering. The notes will rank pari pasu with Regal's existing 9.125% senior unsecured notes due 2018 ($525 million outstanding). Proceeds will be used for general corporate purposes, including acquisitions. The notes will be issued under a new indenture and covenants will be similar to the 9.125% senior unsecured note indenture. Covenants include limitation on consolidated debt (net interest coverage greater than 2x incurrence test), limitation on restricted payments (a basket that increases based on, among other factors, the excess of EBITDA over 1.7x interest expense) and limitation on liens (standard carve-outs exist in addition to an incurrence test of 2.75x net senior secured leverage). In addition, the indenture includes a change of control provision that is triggered if any person (except for the Anschutz Company and any of its affiliates) becomes the beneficial owner of 50% or more of the voting stock of Regal. Other change of control triggers include a majority change in the Board of Directors, the liquidation or dissolution of Regal, and/or if all or substantially all of Regal's and its subsidiaries' assets are sold. There are cross payment default/cross acceleration provisions (among Regal and Regal Cinemas) in regard to debt in excess of $25 million. The proposed note offering will increase Regal's leverage, however, Regal has the financial flexibility to absorb the incremental leverage and maintain current ratings. As of Sept. 30, 2012, pro forma for the proposed offering and the recent acquisition of Great Escape theater circuit, Regal had approximately $2.25 billion in debt, with lease-adjusted gross leverage at 5x and unadjusted gross leverage at 4.4x. As of Sept. 30, 2012, liquidity was made up of $251 million in cash ($495 million adjusting for the proceeds of the new notes) and $82 million in credit facility availability (reduced by $3 million in letters of credit), under the company's $85 million revolving credit facility due May 2015. Fitch calculates September 2012 last 12 month FCF (after dividends) of $90 million. Fitch expects cash deployment to be dedicated to acquisitions and return of capital to shareholders. RECOVERY Regal's Recovery Ratings reflect Fitch's expectation that the enterprise value of the company and, hence, recovery rates for its creditors, will be maximized in a restructuring scenario (as a going concern) rather than a liquidation. Fitch estimates a distressed enterprise valuation of $1.7 billion, using a 5x multiple and including an estimate for Regal's 20% stake in National CineMedia, LLC of approximately $190 million. Based on this enterprise valuation, which is before any administrative claims, overall recovery relative to total current debt outstanding is approximately 71%. The 'RR1' Recovery Rating for the company's credit facilities reflects Fitch's belief that 91% - 100% expected recovery is reasonable. While Fitch does not assign Recovery Ratings for the company's operating lease obligations, it is assumed the company rejects only 30% of its remaining operating lease commitments due to their significance to the operations in a going-concern scenario and is liable for 15% of those rejected values (at a net present value). The 'RR2' assigned to Regal Cinema's senior unsecured notes reflect an expectation of 71% - 90% recovery. The 'RR6' assigned to Regal's senior unsecured notes reflects the structural subordination of the notes and Fitch's expectation for nominal recovery. Key Rating Drivers -- Fitch believes movie exhibition will continue to be a key promotion window for the movie studios biggest/most profitable releases. -- Long-term, Fitch continues to expect that the movie exhibitor industry will be challenged in growing attendance and any potential attendance declines will offset some of the growth in average ticket prices. -- The ratings also incorporate the intermediate/long-term risks associated with increased competition from at-home entertainment media, limited control over revenue trends, the pressure on film distribution windows, increasing indirect competition from other distribution channels (such as DVD, VOD, and the Internet), and high operating leverage (which could make theater operators FCF negative during periods of reduced attendance). In addition, RGC and its peers rely on the quality, quantity, and timing of movie product, all factors out of management's control. What Could Trigger A Rating Action -- Fitch anticipates that Regal, and other movie exhibitors, will continue to consolidate. While not anticipated, a material debt-funded acquisition or return of capital to shareholders that would raise the unadjusted gross leverage beyond 4.5x could have a negative impact on the rating. In addition, meaningful, sustained declines in attendance and/or per-guest concession spending, which drove leverage beyond 4.5x, may pressure the rating as well. -- Fitch heavily weighs the prospective challenges facing Regal and its industry peers in arriving at the long-term credit ratings. Significant improvements in the operating environment (sustainable increases in attendance) and sustained deleveraging could have a positive effect on the rating, though Fitch views this as unlikely. Fitch currently rates Regal and Regal Cinemas Corporation as follows: Regal -- Issuer Default Rating (IDR) 'B+'; -- Senior unsecured notes 'B-'/'RR6'. Regal Cinemas Corporation -- IDR 'B+'; -- Senior secured credit facility 'BB+/RR1'; -- Senior unsecured notes 'BB/RR2'. The Rating Outlook is Stable. REGAL ENTERTAINMENT: Moody's Affirms 'B1' CFR; Rates Bonds 'B3' --------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to the proposed senior unsecured notes of Regal Entertainment Group (Regal) and affirmed its B1 corporate family rating. The company expects to use proceeds to fund acquisitions or to repay debt, which could include a tender for Regal's 9.125% senior unsecured bonds due August 2018 and the 8.625% senior unsecured bonds due 2019 of its operating subsidiary Regal Cinema Corporation. Absent acquisitions, Moody's expects a slight increase (less than $50 million) in gross debt pro forma for the transactions given the necessary premium to execute the tenders, but no meaningful change in leverage. If Regal uses the proceeds to fund acquisitions, leverage could increase modestly on a pro forma basis, but given the probable multiples paid, acquisitions are unlikely to materially weaken credit metrics. Moody's estimates leverage of about 5.6 times debt-to-EBITDA for the trailing twelve months ended September 30, although leverage would be about one-quarter turn lower with the benefit of a strong fourth quarter and pro forma for the acquisition of theaters in December. Moody's also affirmed Regal's SGL-1 speculative grade liquidity rating and continues to consider its short term liquidity "very good," even though the $91 million acquisition and approximately $155 million special dividend in December consumed a substantial portion of the cash balance. Moody's estimates balance sheet cash at around $100 million as of year end 2012. This balance sheet cash, along with the undrawn $85 million revolver and the saleable stake in National CineMedia, Inc. supports the liquidity profile. A summary of the action follows. Regal Entertainment Group Senior unsecured bonds, Assigned B3, LGD5, 89% Corporate Family Rating, Affirmed B1 Probability of Default Rating, Affirmed B1-PD Speculative Grade Liquidity Rating, Affirmed SGL-1 9 1/8% Sr Unsec Notes due 2018, Affirmed B3, LGD adjusted to LGD5, 89% from LGD6, 91% Outlook, Stable Regal Cinemas Corporation Senior Secured Credit Facility, Affirmed Ba2, LGD2, 21% 8 5/8% Sr Unsec due 2019, Affirmed B2, LGD adjusted to LGD4, 64%, from LGD4, 68% Outlook, Stable Ratings Rationale Moody's expects Regal's leverage to remain in the mid 5 times debt-to-EBITDA range given weak industry growth trends and management's propensity to allocate excess cash to shareholders rather than debt reduction. This weak credit profile drives the B1 CFR. The high leverage also poses challenge for operating in an inherently volatile industry reliant on movie studios for product to drive the attendance that leads to cash flow from admissions and concessions, although good short term liquidity enables the company to better manage the attendance related volatility. Scale and geographic diversification also support the rating. Moody's considers theatrical exhibition a mature industry with low-to- negative growth potential, high fixed costs and increasing competition from alternative media, and anticipates attendance growth will continue to lag behind population growth over the long term, with year to year volatility driven by the popularity of the films. However, the industry remains viable and stable throughout economic cycles. The stable outlook incorporates expectations for modestly positive free cash flow, leverage in the mid 5 times debt-to-EBITDA range, and maintenance of good liquidity. Upward ratings momentum is highly unlikely given the aggressive fiscal policy, the weak credit metrics, and expectations for continued poor industry growth trends. However, Moody's could consider a positive ratings action with evidence of commitment to improving the credit profile such that Moody's anticipates leverage sustained below 5 times debt-to-EBITDA and free cash to debt in excess of 5%. Sustained negative free cash flow or leverage above 5.75 times debt-to-EBITDA, whether due to worsening fundamentals, debt funded acquisitions, or shareholder returns could pressure the rating downward. Deterioration of the liquidity profile could also have negative ratings implications. Regal Entertainment Group, the parent of Regal Cinemas Corporation, operates approximately 6,900 screens in 550 theatres in 38 states and the District of Columbia (pro forma for the acquisition of theaters from Great Escape in December), primarily in mid-sized metropolitan markets and suburban growth areas of larger metropolitan markets throughout the U.S. The company maintains its headquarters in Knoxville, Tennessee, and its revenue for the twelve months ended September was approximately $2.7 billion. Regal'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 Regal's core industry and believes Regal'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. REGAL ENTERTAINMENT: S&P Affirms 'B+' CCR, Stable Outlook --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Knoxville, Tenn.-based Regal Entertainment Group. The outlook is stable. At the same time, S&P assigned the company's proposed $250 million senior notes due 2025 our issue-level rating of 'B-' (two notches lower than the 'B+' corporate credit rating on the company). S&P also assigned this debt a recovery rating of '6', indicating its expectation for negligible (0% to 10%) recovery for noteholders in the event of payment default. The company plans to use proceeds for general corporate purposes, acquisitions, and/or debt repayment. In addition, S&P affirmed all other ratings on the company. Standard & Poor's analyzes Regal Entertainment Group and subsidiary Regal Cinemas Corp. on a consolidated basis. "Standard & Poor's Ratings Services' rating on Regal Entertainment Group reflect the company's "aggressive" financial risk profile (based on our criteria), characterized by high leverage amid volatile revenue, EBITDA, and discretionary cash flow," said Standard & Poor's credit analyst Jeanne Shoesmith. S&P expects increasing dividends, higher capital spending, and volatile box office trends to keep leverage elevated, at around 6x over the intermediate term. Revenue and EBITDA depend heavily on the performance of the unpredictable U.S. box office. Regal has a "fair" business risk profile, because of its participation in the mature, highly competitive U.S. movie exhibition industry, exposure to the fluctuating popularity of Hollywood films, and the risk of increased competition from the proliferation of entertainment alternatives. S&P's assessment of management & governance score is "fair." Despite one entity owning a controlling share of the company's voting stock, S&P is not aware of any material deficiencies in the company's internal controls or risk management. Regal is the largest motion picture exhibitor in the U.S., based on the number of screens. It has a modern theater circuit relative to other major theater chains, increasing its appeal to consumers, and its operations are geographically diversified in the U.S., helping insulate against adverse local or regional conditions. Regal's aggressive cost management and cost advantages related to its large size are the main reasons its profit margin compares well with those of most of its rivals. Its margin increased to 19% for the 12 months ended Sept. 27, 2012, from 18% one year ago because of the strong box-office performance in the first quarter of 2012. However, high fixed costs and substantial variable costs, together with the risks cited above, underpin the fair business profile. Like other exhibitors, Regal is exposed to the risk of increased competition from the proliferation of online entertainment alternatives such as iTunes and Netflix, and higher-quality home viewing. S&P believes that studios' release of films to premium video-on-demand platforms within the traditional theatrical release window and films becoming available for digital purchase ahead of their DVD availability could hurt Regal's longer-term performance. RESIDENTIAL CAPITAL: Ally Seeks to Enjoin Landon Suit ----------------------------------------------------- Ally Financial Inc. and Ally Bank ask the Bankruptcy Court to enforce the automatic stay by (a) enjoining the plaintiffs in the putative class action entitled Landon Rothstein, et al. v. GMAC Mortgage, LLC, et al., No. 1:12-cv-03412-AJN (S.D.N.Y.) and their attorneys from pursuing the claims they assert in the Class Action against Ally and (b) declaring the assertion of those claims in the Class Action void ab initio. The Amended Complaint asserts claims for violation of the Rackeeter Influenced and Corrupt Organizations Act, violation of the Real Estate Settlement Procedures Act, breach of contract, breach of the implied covenant of good faith and fair dealing, restitution/unjust enrichment/disgorgement and breach of fiduciary duty/misappropriation, purportedly on behalf of a nationwide putative class consisting of residential mortgage borrowers who have been charged with "lender-placed" insurance in connection with loans serviced by GMAC Mortgage, based on allegations that GMACM received kickbacks from Balboa Insurance Company and Meritplan Insurance Company in the form of phony commissions and free "insurance tracking services" that had the effect of artificially inflating premiums charged to borrowers on mortgages serviced by GMACM for LPI. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, tells the Court that, unable to allege that AFI or Ally Bank had a direct role in the alleged wrongful conduct, the Amended Complaint instead alleges -- in conclusory fashion -- that they are vicariously responsible for the conduct of GMACM. The Plaintiffs, he argues, baldly assert that GMACM was the "alter ego" of AFI and acted as "agent" of Ally Bank in servicing loans allegedly owned by Ally Bank and/or certain other unspecified lenders. The Plaintiffs' attempt to pierce the corporate veil alleges only generalized injury to the Debtors' estates, and not any particularized injury to the Plaintiffs or the purported class, Mr. Schrock further argues. Those claims therefore are solely property of the Debtors, and the Debtors alone have exclusive standing to prosecute those claims, with the automatic stay prohibiting the Plaintiffs from prosecuting them, he asserts. Mr. Schrock relates that Ally has been discussing the Motion and the issues raised in the Motion with the Debtors' counsel, who is still in the process of reviewing the matter, and has informed the Official Unsecured Creditors' Committee of the Motion. He adds that Ally will continue to discuss these issues with the Debtors and the Committee. 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: JPM Drops Opposition to Stay Relief Protocol ----------------------------------------------------------------- JPMorgan Chase, N.A., withdrew its objection to Residential Capital's motion seeking approval of procedures proposed by which the automatic stay may be modified for third parties to foreclosure on real properties. As a result of the withdrawal of JPMorgan's objection, the Court granted the Debtors' motion with respect to JPMorgan. To the extent that JPMorgan seeks to continue or commence a senior line foreclosure action with respect to any property, JPMorgan will serve a letter requesting relief from the automatic stay to the Debtors, their counsel, the U.S. Trustee, and counsel for the Official Committee of Unsecured Creditors. The Notice Parties will have 20 days to seek evaluate the request or seek additional information. The letter is a mandatory prerequisite to the filing of a motion for relief. 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's Pachulski Application Amended -------------------------------------------------------------- The Official Committee of Unsecured Creditors filed an amended application asking permission from the Court to retain Pachulski Stang Ziehl & Jones LLP, as its co-counsel nunc pro tunc to September 19, 2012. As co-counsel, PSZJ is expected to (a) perform services on bankruptcy-related matters which involve negotiations, contested hearings, adversary proceedings, or other matters in which the Committee is prosecuting a position that Kramer Levin Naftalis & Frankel LLP determines may cause an actual or potential conflict of interest; and (b) represent the Committee on matters that can be efficiently handled by the PSZJ as determined by Kramer Levin in consultation with the Committee, including investigation concerning the Debtors' financial condition, the prosecution of any claims filed against the Debtors, and review and analysis of certain aspects of the contemplated sale of the Debtors' mortgage origination and servicing platform and portfolio of non- conforming held-for-sale loans and certain other securities/mortgage assets. The Court authorized the Committee to retain Pachulski Stang pursuant to the amended application. 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: U.S. Trustee Objects to Proposed Bonus Plan ---------------------------------------------------------------- Tracy Hope Davis, the U.S. Trustee for Region 2, is trying to stop Residential Capital LLC from paying out more than $33 million in normal annual bonuses to more than 75% of its employees. The Justice Department's bankruptcy monitor says while ResCap is presenting the bonuses as an "ordinary course" transaction, the company still needs to disclose enough information to adhere to the bonus requirements set out by the Bankruptcy Code, according to the report. Residential Capital is seeking to under its annual incentive plan to pay bonuses to about 3,000 out of 3,926 employees. The U.S. Trustee points out that ResCap has not provided information and reasons why it has met the strict requirements of Section 530 of the Bankruptcy Code, which governs bonus and incentive plan payments to employees. The U.S. Trustee complained that with respect to the 185 Key Employee Incentive Plan/Key Employee Retention Plan Participants, the proposed AIP payments to the KEIP Participants are retentive and therefore barred by Section 503(c)(1). Even if the AIP payments to the KEIP Participants were determined to be incentive- based, both the KEIP Participants and the KERP Participants would have to satisfy Section 503(c)(3) and justify the AIP payments, which, at a minimum, would require the Debtors to establish that the previously approved KEIP and KERP awards did not contemplate the entirety of the compensation to be paid to the KEIP/KERP Participants, the U.S. Trustee further argued. 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: To Enter Into Compensation Agreements with 2 Sr. Staff ---------------------------------------------------------------- WP Steel Venture LLC, et al., ask the U.S. Bankruptcy Court for the District of Delaware for authorization to enter into compensation agreements with senior employees Richard Caruso and Jeff Gennuso. These two individuals ceased to earn incentive pay under the Management Plan on Dec. 31, 2012. The Debtors tell the Court though they have sold their major facilities, work remains to be done to ensure the highest recoveries possible for all creditors, and that the two Senior Employees are critical to these efforts. According to papers filed with the Court, pursuant to the compensation agreements, the Senior Employees will continue to work for the Debtors on a purely incentive basis, with no salary or additional benefits. Promptly following the end of each calendar month (commencing with January 2013), each of the Senior Employees will be entitled to receive a lump sum cash payment. Together, the Senior Employees' Payments will be equal to the sum of: i. 1.25% of the net cash proceeds received by any of the Debtors from any Asset Disposition that is subsequently indefeasibly paid by any of the Debtors to Cerberus Business Finance, LLC, as agent for the Junior Lenders, or The Renco Group, Inc., during the immediately preceding month, which amount will be funded from the cash collateral of the Junior Lenders and Renco; and ii. 0.7% of the net cash proceeds received by any of the Debtors from any Asset Disposition that is subsequently indefeasibly paid by any of the Debtors to any of their respective Creditors (in their capacity as unsecured creditors) on account of such Creditors' prepetition claims during the immediately preceding month, which amount shall be funded from the net cash proceeds of the Asset Disposition giving rise to such payment. The amounts the Senior Employees would earn under the compensation agreements represent all of the compensation that the Senior Employees will be eligible to receive for their services from the Debtors from and after Jan. 1, 2013, and is in lieu of any compensation, benefit plans, bonus, or other incentive payments under any applicable employment agreement, or prior policies or arrangements of the Debtors that may have existed prior to Jan. 1, 2013. The Senior Employees entry into the compensation agreements, however, will not impact such employees' entitlements under the MIP. A complete text of the motion which includes a summary of the principal terms of the compensation agreements is available for free at http://bankrupt.com/misc/rgsteel.doc2001.pdf 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: Can Apply PJMS Cash to Sparrows' Obligations ------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved the stipulation by and among Debtor RG Steel Sparrows Point, LLC, PJM Interconnection LLC and PJM Settlement, Inc., pertaining to the application of cash collateral held by PJM Settlement, Inc. Subject to and upon the occurrence of the Cash Collateral Application: (a) Claim No. 1909, filed by PJMS, is deemed reduced by $1,222,091.06; and (b) Claim No. 1916, filed by PJMS, is disallowed and expunged from the claims register. Pursuant to the PJM Agreements, PJMS holds cash collateral in the amount of $3,885,684.03 to secure RG Steel's payment obligations under the PHM Agreements. RG Sparrows' outstanding prepetition obligations to PJMS under the Agreements total $1,222,091.06 as of the date of the Stipulation. Pursuant to the Court's order, on the Effective Date of the Stipulation, the PJM Parties will be authorized to apply the cash collateral to the RG Sparrows' obligations to PJMS under the the PJM Agreements. No later than 2 business days after the Effective Date, the PJM Parties will return the cash collateral in the amount of $2,463,592.97 to RG Sparrows. The PJM Parties will retain cash collateral in the amount of $200,000 as security for any remaining obligations of RG Sparrows to the PJM Parties. A copy of the Stipulation is available at: http://bankrupt.com/misc/rgsteel.doc2010.pdf 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: Time to Remove Actions Extended Until April 26 -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware further extended WP Steel Venture LLC, and its affiliated Debtors' time for removal of prepetition nonbankruptcy actions until the later of: (a) April 26, 2013; and (b) 30 days after entry of an order terminating the stay with respect to the particular prepetition nonbankruptcy action sought to be removed. 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. RYLAND GROUP: JPMorgan Chase Lowers Equity Stake to Less Than 1% ---------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, JPMorgan Chase & Co. disclosed that, as of Dec. 31, 2012, it beneficially owns 370,820 shares of common stock of The Ryland Group, Inc., representing 0.8% of the shares outstanding. JPMorgan Chase previously reported beneficial ownership of 2,265,005 common shares or a 5% equity stake as of Dec. 30, 2011. A copy of the amended filing is available at: http://is.gd/hb8r42 About Ryland Group Headquartered in Calabasas, California, The Ryland Group, Inc. (NYSE: RYL) -- http://www.ryland.com/-- is one of the nation's largest homebuilders and a leading mortgage-finance company. Since its founding in 1967, Ryland has built more than 285,000 homes and financed more than 240,000 mortgages. The Company currently operates in 15 states and 19 homebuilding divisions across the country and is listed on the New York Stock Exchange under the symbol "RYL." The Company reported a net loss of $50.75 million in 2011, a net loss of $85.14 million in 2010, and a net loss of $162.47 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $1.95 billion in total assets, $1.45 billion in total liabilities and $497.36 million in total equity. * * * Ryland Group carries 'B1' corporate family and probability of default ratings, with stable outlook, from Moody's. It has 'BB-' issuer credit ratings, with stable outlook, from Standard & Poor's. RYLAND GROUP: BlackRock Hikes Equity Stake to 11.4% --------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, BlackRock, Inc., disclosed that, as of Dec. 31, 2012, it beneficially owns 5,140,445 shares of Common Stock of Ryland Group Inc. representing 11.39% of the shares outstanding. BlackRock previously reported beneficial ownership of 4,549,176 common shares or a 10.24% equity stake as of April 30, 2012. A copy of the amended filing is available at: http://is.gd/v1Iqd7 About Ryland Group Headquartered in Calabasas, California, The Ryland Group, Inc. (NYSE: RYL) -- http://www.ryland.com/-- is one of the nation's largest homebuilders and a leading mortgage-finance company. Since its founding in 1967, Ryland has built more than 285,000 homes and financed more than 240,000 mortgages. The Company currently operates in 15 states and 19 homebuilding divisions across the country and is listed on the New York Stock Exchange under the symbol "RYL." The Company reported a net loss of $50.75 million in 2011, a net loss of $85.14 million in 2010, and a net loss of $162.47 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $1.95 billion in total assets, $1.45 billion in total liabilities and $497.36 million in total equity. * * * Ryland Group carries 'B1' corporate family and probability of default ratings, with stable outlook, from Moody's. It has 'BB-' issuer credit ratings, with stable outlook, from Standard & Poor's. SMART ONLINE: Sells Additional $375,000 Convertible Note -------------------------------------------------------- Smart Online, Inc., sold an additional convertible secured subordinated note due Nov. 14, 2016, in the principal amount of $375,000 to a current noteholder. The Company is obligated to pay interest on the New Note at an annualized rate of 8% payable in quarterly installments commencing April 7, 2013. The Company is not permitted to prepay the New Note without approval of the holders of at least a majority of the aggregate principal amount of the Notes then outstanding. The Company plans to use the proceeds to meet ongoing working capital and capital spending requirements. The sale of the New Note was made pursuant to an exemption from registration in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended. At a meeting held on Dec. 12, 2012, the Company's Board of Directors appointed Mr. Amir Elbaz, an existing member of the Board of Directors, to the Chairman of the Board of Directors, effective as of Dec. 12, 2012. About Smart Online Durham, North Carolina-based Smart Online, Inc., develops and markets a full range of mobile application software products and services that are delivered via a SaaS/PaaS model. The Company also provides website and mobile consulting services to not-for- profit organizations and businesses. The Company's balance sheet at Sept. 30, 2012, showed $1.9 million in total assets, $27.8 million in total liabilities, and a stockholders' deficit of $25.9 million. Cherry, Bekaert & Holland, L.L.P., in Raleigh, North Carolina, expressed substantial doubt about Smart Online's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31 2011. The independent auditors noted that the Company has suffered recurring losses from operations and has a working capital deficiency as of Dec. 31, 2011. SNO MOUNTAIN: Ski Resort Planning for Feb. 28 Auction ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports the Sno Mountain ski resort and water park in Scranton, Pennsylvania, will go up for auction on Feb. 28 if the U.S. Bankruptcy Court in Philadelphia approves sale procedures at a Jan. 23 hearing. The resort's trustee wants bids due initially by Feb. 25 with a hearing on March 6 to approve sale. The report notes that there is no buyer as yet under contract. The secured lender DFM Realty Inc., owed $8.6 million, purchased the mortgage debt and presumably will buy the project using secured debt if there isn't an acceptable third-party offer. About Sno Mountain Various parties -- predominated by various limited partners of Sno Mountan LP, including Richard Ford, Charles Hertzog, Edward Reitmeyer, who are each guarantors of certain obligations owing by Sno Mountain -- filed an involuntary Chapter 11 petition against Sno Mountain (Bankr. E.D. Pa. Case No. 12-19726) On Oct. 15, 2012. The other petitioning parties include Wynnewood Capital Partners, L.L.C., t/a WCP Snow Mountain Partners, L.P., and Kathleen Hertzog. The Alleged Debtor is the owner and operator of a popular ski mountain resort and water park known as "Sno Mountain," located at 1000 Montage Mountain Road in Scranton, Pennsylvania. The Debtor's bankruptcy case is a "single asset real estate" case within the meaning of 11 U.S.C. Sec. 101(51)(B). Judge Jean K. FitzSimon oversees the case. Brian Joseph Smith, Esq., at Brian J. Smith & Associates PC, represents the petitioning creditors. Gary Seitz has been appointed as trustee overseeing the bankruptcy of the Sno Mountain recreation complex. The Chapter 11 trustee arranged $500,000 in financing sufficient to continue operations only through March. STANFORD INT'L: SEC Continues Fighting for Customers ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Securities and Exchange Commission hasn't given up on trying to force the Securities Investor Protection Corp. to pay claims of investors defrauded in the R. Allen Stanford Ponzi scheme. According to the report, the SEC filed a 58-page brief on Jan. 11 in the U.S. Court of Appeals in Washington arguing that a federal district judge was wrong in July when he ruled that Stanford investors aren't entitled to payments from the SIPC fund. The report recounts that the SEC sued in December 2011, contending that the district court should force SIPC into taking over the liquidation of Stanford's brokerage firm, Stanford Group Co. Had the SEC won, SIPC would have been required to cover customers' claims up to $500,000 each. U.S. District Judge Robert L. Wilkins ruled against the SEC last year, in effect telling investors in the $7 billion fraud they must be content with being paid from whatever recoveries are realized in a receivership pending in a federal court in Texas. The report adds that in the brief filed last week in the appeals court, the SEC argues that SIPC is espousing too narrow an interpretation of who is a "customer." SIPC takes the position that investors were customers of an offshore Stanford bank, not customers of the Stanford brokerage. Only brokerage customers are covered by the SIPC fund, SIPC contends. The SEC argues on appeal that the distinction between the Stanford broker and the bank should be disregarded because the companies "operated as a single fraudulent enterprise that ignored corporate boundaries." The appeal is Securities and Exchange Commission v. Securities Investor Protection Corp., 12-5286, U.S. Court of Appeals for the District of Columbia Circuit (Washington). The case in district court was Securities and Exchange Commission v. Securities Investor Protection Corp., 11-mc-00678, U.S. District Court, District of Columbia (Washington). About Stanford International Bank Domiciled in Antigua, Stanford International Bank Limited -- http://www.stanfordinternationalbank.com/-- is a member of Stanford Private Wealth Management, a global financial services network with US$51 billion in deposits and assets under management or advisement. Stanford Private Wealth Management serves more than 70,000 clients in 140 countries. On Feb. 16, 2009, the United States District Court for the Northern District of Texas, Dallas Division, signed an order appointing Ralph Janvey as receiver for all the assets and records of Stanford International Bank, Ltd., Stanford Group Company, Stanford Capital Management, LLC, Robert Allen Stanford, James M. Davis and Laura Pendergest-Holt and of all entities they own or control. The February 16 order, as amended March 12, 2009, directs the Receiver to, among other things, take control and possession of and to operate the Receivership Estate, and to perform all acts necessary to conserve, hold, manage and preserve the value of the Receivership Estate. STEINWAY MUSICAL: S&P Raises CCR to 'B+'; Outlook Stable -------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Waltham, Mass.-based Steinway Musical Instruments Inc. to 'B+' from 'B'. The outlook is stable. At the same time, S&P raised the issue-level rating on the 7% senior unsecured notes due 2014 to 'BB-' from 'B+'. The recovery rating on this debt is '2', indicating S&P's expectation for substantial (70% to 90%) recovery in the event of a payment default. "The upgrade of reflects Steinway's decision to end its strategic evaluation process without selling any (or all) of the company," said Standard & Poor's credit analyst Stephanie Harter. In addition, S&P believes credit metrics have improved following a substantial debt prepayment in 2011. The ratio of adjusted debt to EBITDA improved to 3.3x as of June 30, 2011, following about $80 million of debt prepayment, and has since improved to 2.9x as of the 12 months ended Sept. 30, 2012. Despite these improved metrics, the potential sale of the company or its Band division and our uncertainty regarding financial policy, management, and direction of the company, had been a constraint on the rating. The ratings on Steinway reflect the company's "significant" financial risk profile and "vulnerable" business risk profile. Steinway's financial risk profile reflects the company's significant reduction in debt, as mentioned above. The company's ratio of adjusted funds from operations (FFO) to total debt remained near 20% for the 12 months ended Sept. 30, 2012, the same as the prior year. Both these ratios are near S&P's "significant" indicative ratios of leverage of 3x-4x and FFO to total debt of 20%-30%. "Key credit factors in our assessment of Steinway's business risk profile include its narrow business focus in a highly fragmented and competitive market, the discretionary nature of its products, its vulnerability to economic cycles, and weak governance. We also considered the benefits of Steinway's good market positions, its well-recognized brand names, and the geographic diversity of its sales," S&P said. S&P's rating outlook on Steinway is stable. S&P expects the company's sales to modestly grow from increased sales in emerging markets, which should result in improved credit metrics, including debt to EBITDA near 2.5x and funds from operations to total debt of over 25% by fiscal year-end 2013. STEREOTAXIS INC: Regains Compliance with NASDAQ MVPHS Requirement ----------------------------------------------------------------- Stereotaxis, Inc., received notification from the NASDAQ Stock Market that the Company had regained compliance with the minimum market value of publicly held shares requirement of $15,000,000 for a minimum of 10 consecutive business days as set forth in NASDAQ Listing Rule 5450(b)(3)(C). Previously, on June 25, 2012, the Company received a written deficiency notice from NASDAQ advising the Company that it did not maintain a minimum MVPHS of $15,000,000 for the 30 consecutive business days prior to the date of the letter. Since the Company has regained compliance with the Rule, NASDAQ advised that it considers this matter to be closed. About Stereotaxis Based in St. Louis, Mo., Stereotaxis, Inc., designs, manufactures and markets the Epoch Solution, which is an advanced remote robotic navigation system for use in a hospital's interventional surgical suite, or "interventional lab", that the Company believes revolutionizes the treatment of arrhythmias and coronary artery disease by enabling enhanced safety, efficiency and efficacy for catheter-based, or interventional, procedures. For the year ended Dec. 31, 2011, Ernst & Young LLP, in St. Louis, Missouri, expressed substantial doubt about Stereotaxis' ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring operating losses and has a working capital deficiency. The Company reported a net loss of $32.0 million for 2011, compared with a net loss of $19.9 million for 2010. The Company's balance sheet at Sept. 30, 2012, showed $35.17 million in total assets, $50.42 million in total liabilities and a $15.25 million total stockholders' deficit. STEREOTAXIS INC: Sophrosyne Capital Discloses 5.1% Equity Stake --------------------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, Sophrosyne Capital, LLC, disclosed that, as of Jan. 11, 2013, it beneficially owns 401,047 shares of common stock of Stereotaxis, Inc., representing 5.10% of the shares outstanding. A copy of the filing is available at: http://is.gd/avl5kJ About Stereotaxis Based in St. Louis, Mo., Stereotaxis, Inc., designs, manufactures and markets the Epoch Solution, which is an advanced remote robotic navigation system for use in a hospital's interventional surgical suite, or "interventional lab", that the Company believes revolutionizes the treatment of arrhythmias and coronary artery disease by enabling enhanced safety, efficiency and efficacy for catheter-based, or interventional, procedures. For the year ended Dec. 31, 2011, Ernst & Young LLP, in St. Louis, Missouri, expressed substantial doubt about Stereotaxis' ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring operating losses and has a working capital deficiency. The Company reported a net loss of $32.0 million for 2011, compared with a net loss of $19.9 million for 2010. The Company's balance sheet at Sept. 30, 2012, showed $35.17 million in total assets, $50.42 million in total liabilities and a $15.25 million total stockholders' deficit. SUPERVALU INC: S&P Puts 'B' Corp. Credit Rating on CreditWatch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on SUPERVALU Inc., including the 'B' corporate credit rating, on CreditWatch with positive implications following the announcement that SUPERVALU has reached a definitive agreement to sell 877 stores under five banners (its Albertson's, Acme, Jewel-Osco, Shaw's, and Star Market stores) to AB Acquisition. AB Acquisition will acquire the stock of New Albertson's Inc. (NAI), a wholly owned subsidiary of SUPERVALU, for $100 million in cash and absorb about $3.2 billion of NAI debt in a transaction valued at $3.3 billion. Concurrently, an entity owned by a Cerburus-led investor consortium will conduct a tender offer for up to 30% of SUPERVALU's shares at a price of $4.00 per share. "The CreditWatch listing reflects our opinion that the sale transaction, if completed as proposed, will result in a modest decline in debt leverage for SUPERVALU, with total debt to EBITDA possibly below 5.0x on a pro forma basis from our expectations of 5.3x in fiscal 2013," said Standard & Poor's credit analyst Ana Lai. The transaction will not only lessen SUPERVALU's balance sheet debt, but also could substantially lower its operating lease commitments and multiemployer plan liabilities. Following the sale of its retail assets, SUPERVALU will generate about half of its revenue from its food wholesaling operations and the remainder from Save-A Lot and a number of regional grocery banners: Cub, Farm Fresh, Shoppers, Shop n' Save, and Hornbacher's. Although SUPERVALU is selling a large portion of its struggling retail assets, the remaining retail assets still face significant competitive pressure. However, S&P believes the food wholesale business is relatively more stable and SUPERVALU maintains a strong position as the second-largest food wholesaler in the U.S. after C&S Wholesale. S&P also believes that SUPERVALU could achieve a slight improvement in profitability given that it is divesting part of its underperforming retail operations and that the repositioned company will be less capital intensive going forward. In connection with the asset sale transaction, SUPERVALU has negotiated a new and fully underwritten $900 million asset based revolving credit facility and a $1.5 billion secured term loan. Standard Poor's uses CreditWatch when it believes that the likelihood of a rating action within the next 90 days is substantial and there is at least a one-in-two likelihood of a rating change. S&P aims to resolve the CreditWatch in the near term based on a review of SUPERVALU's business and financial risk profiles following the sale of the retail assets and the pro-forma capital structure following the asset sale transaction. TALON THERAPEUTICS: Issues 60,000 Pref. Shares to Warburg, et al ---------------------------------------------------------------- Talon Therapeutics, Inc., issued and sold an aggregate of 60,000 shares of its Series A-3 Convertible Preferred Stock at a price per share of $100, for aggregate proceeds of $6,000,000. The transaction was pursuant to an investment agreement the Company entered into on Jan. 9, 2012, with with Warburg Pincus Private Equity X, L.P., and Warburg Pincus X Partners, L.P., and Deerfield Private Design Fund, L.P., Deerfield Private Design International, L.P., Deerfield Special Situations Fund, L.P., and Deerfield Special Situations Fund International Limited, which Investment Agreement was amended on July 3, 2012. The offer and sale of those shares constituted a private placement under Section 4(2) of the Securities Act of 1933, as amended, in accordance with Regulation D promulgated thereunder. No general solicitation was involved in connection with the offer and sale of those shares, and each of the Purchasers has represented to the Company that it is an "accredited investor." Following the issuance and sale of the 60,000 shares, the Purchasers have the right under the Investment Agreement, but not the obligation, to purchase up to 420,000 additional shares of Series A-3 Preferred, at a price per share of $100, at any time on or before Aug. 9, 2013, the first anniversary of the Company's receipt of marketing approval from the U.S. Food and Drug Administration for its Marqibo product candidate. About Talon Therapeutics Formerly known as Hana Biosciences, Inc., Talon Therapeutics Inc. (TLON.OB.) -- http://www.talontx.com/-- is a biopharmaceutical company dedicated to developing and commercializing new, differentiated cancer therapies designed to improve and enable current standards of care. The company's lead product candidate, Marqibo, potentially treats acute lymphoblastic leukemia and lymphomas. The Company has additional pipeline opportunities some of which, like Marqibo, improve delivery and enhance the therapeutic benefits of well characterized, proven chemotherapies and enable high potency dosing without increased toxicity. Effective Dec. 1, 2010, Hana Biosciences changed its name to Talon Therapeutics. The name change was effected by merging Talon Therapeutics, a wholly owned subsidiary of the Company, with and into the Company, with the Company as the surviving corporation in the merger. The Company's balance sheet at Sept. 30, 2012, showed $6.61 million in total assets, $57.93 million in total liabilities, $44.94 million in redeemable convertible preferred stock, and a $96.25 million total stockholders' deficit. The Company reported a net loss of $18.82 million for the year ended Dec. 31, 2011, compared with a net loss of $25.98 million during the prior year. BDO USA, LLP, in San Jose, California, issued a "going concern" qualification on the financial statements for the year ended Dec. 31, 2011, citing recurring losses from operations and net capital deficiency that raise substantial doubt about the Company's ability to continue as a going concern. TC GLOBAL: Starbucks Protests Losing Auction Bid ------------------------------------------------ Katy Stech of The Wall Street Journal reported that losers at the bankruptcy auction for the Tully's coffee shops are asking the court to reject the winning $9.1 million bid from actor Patrick Dempsey, arguing that the "Grey's Anatomy" star whom Hollywood calls "McDreamy" unfairly charmed auctioneers to win the 47- location chain without putting in the highest bid. After losing the 13-hour auction last week Starbucks Corp. and another group were left waving their $10.5 million combined offer in frustration, WSJ noted. Starbucks and others are now pushing Judge Karen Overstreet of the U.S. Bankruptcy Court in Seattle to reject Mr. Dempsey's lower bid at a Friday afternoon hearing, the same report said. The Denver private equity firm that put in the very first bid of $4.3 million accused Mr. Dempsey's company of creating a spectacle that "may have impeded financing for qualified bidders and creates the appearance that its bid was favored," WSJ said, citing papers filed in court. According to WSJ, Mr. Dempsey's bid was supported by Tully's Chief Executive Scott Pearson who said in court papers that the offer would keep the chain intact, saving its 480 jobs, and allow customers to continue to use their $5.4 million worth of unspent gift cards. Mr. Pearson added in the court papers that an underplayed key reason that Mr. Dempsey's bid won, was that Tully's coffee supplier Green Mountain Coffee Roasters is trying to protect its sales pipeline. As Tully's exclusive roaster, Green Mountain has the power to cause a fuss that would delay the sale, which its executives promised to do if Starbucks won the right to buy some stores, Mr. Pearson said in court papers, WSJ related. But with Green Mountain's blessing, a winning bidder could purchase the company by the end of the month. Starbucks, according to WSJ, planned to wipe the Tully's name off of its 13 locations and add to growing roster of 700 Starbucks that are located throughout Washington state. The converted stores would not sell Green Mountain-brewed coffee, WSJ said. About TC Global Headquartered in Seattle, Washington, TC Global, Inc., dba Tully's Coffee -- http://www.tullyscoffeeshops.com/-- is a specialty coffee retailer and wholesaler. Through company owned, licensed and franchised specialty retail stores in Washington, Oregon, California, Arizona, Idaho, Montana, Colorado, Wyoming and Utah, throughout Asia with Tully's Coffee International, and with its global alliance partner Tully's Coffee Japan, Tully's premium coffees are available at 545 branded retail locations globally. TC Global Inc. filed a Chapter 11 petition (Bankr. W.D. Wash. Case No. 12-20253-KAO) on Oct. 10, 2012. The Debtor is represented by attorneys at Bush Strout & Kornfeld LLP, in Seattle. The Debtor disclosed assets of $4.9 million and debt totaling $3.7 million, including $2.6 million in unsecured claims. The Seattle-based chain has 57 company-owned stores and 12 franchised. There are another 71 franchises in grocery stores, schools and airports. Tully's will close nine stores following bankruptcy. Bloomberg report discloses that Tully's sold the wholesale and distribution business in 2009, generating $40 million that allowed a $5.9 million distribution to shareholders. TELETOUCH COMMUNICATIONS: To Settle $1.9MM Texas Tax Liability -------------------------------------------------------------- Teletouch Communications, Inc.'s wholly-owned subsidiary, Progressive Concepts, Inc., entered into a Settlement Agreement with the State of Texas tax authorities to resolve the previously disclosed matter relating to the Company's sales and use tax liability. Under the terms of the Settlement Agreement, the Company agreed to settle the $1,911,895 tax liability, which includes penalties and interest assessed through Jan. 3, 2013, of $502,007, by making a series of payments to the State totaling $1,413,888. Under the terms of the Settlement Agreement, the Company is obligated to make the following payments: $625,000 down payment due and payable on or before Jan. 5, 2013, plus 35 monthly payments of $22,000 and the last payment of $18,888. Since the completion of the tax audit, the Company has voluntarily paid $150,000 to the State against this tax liability and as part of the settlement, the State has agreed to apply these payments against the required down payment. On Jan. 10, 2013, the Company entered into a formal payment agreement with the State and paid the $475,000 remaining due on the down payment. In the event the Company fails to make any of the foregoing payments, the full balance of the tax liability owed, together with applicable penalties and interest, will become due and payable in full. About Teletouch Teletouch Communications, Inc., offers a comprehensive suite of wireless telecommunications solutions, including cellular, two-way radio, GPS-telemetry and wireless messaging. Teletouch is an authorized provider of AT&T (NYSE: T) products and services (voice, data and entertainment) to consumers, businesses and government agencies, as well as an operator of its own two-way radio network in Texas. Recently, Teletouch entered into national agency and distribution agreements with Sprint (NYSE: S) and Clearwire (NASDAQ: CLWR), providers of advanced 4G cellular network services. Teletouch operates a chain of 26 retail and agent stores under the "Teletouch" and "Hawk Electronics" brands, in conjunction with its direct sales force, customer care (call) centers and various retail eCommerce Web sites including: http://www.hawkelectronics.com/and http://www.hawkexpress.com/ Through its wholly-owned subsidiary, Progressive Concepts, Inc., Teletouch operates a national distribution business, PCI Wholesale, primarily serving large cellular carrier agents and rural carriers, as well as auto dealers and smaller consumer electronics retailers, with product sales and support available through http://www.pciwholesale.com/and http://www.pcidropship.com/among other B2B oriented Web sites. The Company's balance sheet at Aug. 31, 2012, showed $11.88 million in total assets, $18.21 million in total liabilities and a $6.33 million total shareholders' deficit. BDO USA, LLP, in Houston, Texas, issued a "going concern" qualification on the consolidated financial statement for the year ended May 31, 2012. The independent auditors noted that the Company has increasing working capital deficits, significant current debt service obligations, a net capital deficiency along with current and predicted net operating losses and negative cash flows which raise substantial doubt about its ability to continue as a going concern. TERCON INVESTMENTS: Canadian Receiver Files Ch. 15 in Alaska ------------------------------------------------------------ The receiver of Kamloops, British Columbia-based Tercon Investments Ltd. filed a Chapter 15 petition recognition of a foreign main proceeding for Tercon on Jan. 11, 2013 (Bankr. D. Alaska Case No. 13-00015) in Anchorage. The receiver, as foreign representative, is represented in the Chapter 15 case by Cabot C. Christianson, Esq., at Christianson & Spraker, in Anchorage, Alaska. On Dec. 14, 2012, FTI Consulting Canada Inc. was appointed as receiver pursuant to an Order of the Supreme Court of British Columbia of all the assets, undertakings and properties of Tercon Investments and its subsidiaries. The receivership was sought by Dumas Holdings Inc. The receiver can be reached at: Nigel D. Meakin FTI CONSULTING CANADA INC. Phone: 416-649-8048 Tel: 1-855-649-8048 Fax: 416-649-8101 E-mail: tercon@fticonsulting.com TERCON INVESTMENTS: Chapter 15 Case Summary ------------------------------------------- Chapter 15 Debtor: Tercon Investments Ltd. 2079 Falcon Road Kamloops, BC V2C4J2 Canada Foreign Representative: Nigel D. Meakin Receiver FTI Consulting Canada, Inc. Bankruptcy Case No.: 13-00015 Chapter 15 Petition Date: January 11, 2013 Court: U.S. Bankruptcy Court District of Alaska (Anchorage) Judge: Hon. Herbert A. Ross Debtor's Counsel: Cabot C. Christianson, Esq. CHRISTIANSON & SPRAKER 911 W 8th Ave., Suite #201 Anchorage, AK 99501 Tel: (907) 258-6016 Fax: (907) 258-2026 E-mail: cabot@cclawyers.net Estimated Assets: $10,000,001 to $50,000,000 Estimated Liabilities: $10,000,001 to $50,000,000 Affiliates also subject to simultaneously filed Chapter 15 petitions: Debtor Case No. ------ -------- Tercon Investments Ltd. 13-00015 Tercon A.C. Ltd. 13-00016 Tercon Equipment Ltd. 13-00017 Tercon Construction Ltd. 13-00018 Tercon Mining Ltd. 13-00019 Tercon Enterprises Ltd. 13-00020 Tercon MRC Ltd. 13-00021 FNP Ventures Inc. 13-00022 Tercon Mining PV Ltd. 13-00023 Tercon Equipment Alaska Partnership 13-00024 Tercon Alaska Ltd. 13-00025 TERRESTAR CORP: Gets Approval to Incur $16.5 Million DIP Financing ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York authorized the February Debtors -- TerreStar Corporation; and TerreStar Holdings Inc. -- to: a) obtain up to $16,500,000 in aggregate principal amount of postpetition financing and loans thereunder pursuant to an agreement among the February Debtors, the guarantor, Solus Alternative Asset Management LP, Highland Capital Management, LP, West Face Long Term Opportunities Global Master L.P., OZ Management, LP, and their respective affiliates and approved funds, and NexBank, SSB as administrative agent and collateral agent; and b) use cash collateral; c) grant adequate protection to the bridge loan lenders with respect to the bridge loan collateral. The Debtors would use the fund to (i) pay fees and expenses associated with the DIP Financing; (ii) to make one or more intercompany loans to certain co-Debtors, TerreStar Global Ltd. and TerreStar 1.4 Holdings LLC in an aggregate amount not to exceed $60,000 or, with the consent of the requisite lenders, a greater amount; (iii) in accordance with the budget, provide for the February Debtors' ongoing working capital requirements; (iv) in accordance with the proposed settlement, make a cash payment to Elektrobit, Inc. in the amount of $13,500,000 within two business days after the later of (x) entry of the order and (y) entry of an order approving the 9019 Motion; and (v) make payments and settlements of prepetition claims, subject to the reasonable consent of the requisite lenders. The February Debtors admit, stipulate, acknowledge and agree that: 1. Prior to the commencement of the TSC Cases, the lenders (the bridge loan lenders) under that certain Term Loan Credit Agreement, dated as of Nov. 19, 2010, made loans, made advances and provided other financial accommodations to the February Debtors. 2. As of the February Petition Date, the aggregate principal amount of all loans to TSC and TS Holdings under and in connection with the bridge loan documents was not less than $4,308,262, plus interest accrued and accruing thereon, together with all costs, fees, expenses. 3. The February Debtors are unable to obtain adequate unsecured credit allowable under Section 503(b)(1) of the Bankruptcy Code as an administrative expense. As adequate protection from any diminution in value of the lenders' collateral, the DIP Agent is granted security interests and liens, superpriority administrative expense claim status, subject to the carve out on certain expenses. According to the Debtors, the bridge loan lenders and the holders of prior liens are adequately protected as the value of the February Debtors' assets greatly exceeds the amount of secured debt encumbering the assets. About TerreStar Corp. TerreStar Corporation and TerreStar Holdings, Inc., filed voluntary Chapter 11 petitions with the U.S. Bankruptcy Court for the Southern District of New York on Feb. 16, 2011. TSC's Chapter 11 filing joins the bankruptcy proceedings of TerreStar Networks Inc. and 12 other affiliates, which filed on Oct. 19, 2010. The October Chapter 11 cases are procedurally consolidated under TSN's Case No. 10-15446 under Judge Sean H. Lane. TSC is the parent company of each of the October Debtors. TSC has four wholly owned direct subsidiaries: TerreStar Holdings, Inc., TerreStar New York Inc., Motient Holdings Inc., and MVH Holdings Inc. TSC's case is jointly administered with the cases of seven of the October Debtors under the caption In re TerreStar Corporation, et al., Case No. 11-10612 (SHL). The seven Debtor entities who sought joint administration with TSC are TerreStar New York Inc., Motient Communications Inc., Motient Holdings Inc., Motient License Inc., Motient Services Inc., Motient Ventures Holdings Inc., and MVH Holdings Inc. TSC is a Delaware corporation whose main asset is the equity in non-Debtor TerreStar 1.4 Holdings LLC, which has the right to use a "1.4 GHz terrestrial spectrum" pursuant to 64 licenses issued by the Federal Communication Commission. TSC also has an indirect 89.3% ownership interest in TerreStar Network, Inc., which operates a separate and distinct mobile communications business. TerreStar Holdings is a Delaware corporation that directly holds 100% of the interests in 1.4 Holdings LLC. TerreStar Networks -- TSN -- the principal operating entity of TSC, developed an innovative wireless communications system to provide mobile coverage throughout the United States and Canada using satellite-terrestrial smartphones. The system, however, required an enormous amount of capital expenditures and initially produced very little in the way of revenue. TSN's available cash and borrowing capacity were insufficient to cover its funding; thus, forcing TSN to seek bankruptcy protection in October 2010. TSC estimated assets and debts of $100 million to $500 million in its Chapter 11 petition. Ira S. Dizengoff, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, in New York, serves as counsel for the TSC and TSN Debtors. Garden City Group is the claims and notice agent. Blackstone Advisory Partners LP is the financial advisor. The Garden City Group, Inc., is the claims and noticing agent in the Chapter 11 cases. Otterbourg Steindler Houston & Rosen P.C. is the counsel to the Official Committee of Unsecured Creditors formed in TSN's Chapter 11 cases. FTI Consulting, Inc., is the Committee's financial advisor. TerreStar Networks sold its business to Dish Network Corp. for $1.38 billion. It canceled a June 2011 auction because there were no competing bids submitted by the deadline. TerreStar Networks previously filed a reorganization plan that called for secured noteholders to swap more than $850 million in debt for nearly all the equity in reorganized TerreStar. Junior creditors, however, would see little recovery under that plan while existing equity holders would be wiped out. TerreStar Networks scrapped that plan in 2011 in favor of the auction. In November 2011, TerreStar Networks filed a liquidating Chapter 11 plan after striking a settlement with creditors. The creditors' committee initiated lawsuits in July to enhance the recovery by unsecured creditors. Judge Lane approved on Feb. 14, 2012, TerreStar Networks Inc.'s Chapter 11 plan to divvy up the proceeds from the sale to Dish Network. TEXAS RANGERS: Ex-Owner, JPMorgan Call Truce in Creditor Dispute ---------------------------------------------------------------- Jess Davis of BankruptcyLaw360 reported that following a settlement agreement, a Texas federal judge on Friday agreed to dismiss JPMorgan Chase Bank NA's claims that the ex-owner of the formerly bankrupt Texas Rangers tried to dodge a $35.4 million debt to the bank through fraudulent transfers within his company. U.S. District Judge John McBryde dismissed the claims following a joint request from the bank and Tom Hicks, who last week settled two other suits over business dealings with the Rangers and U.K. soccer team Liverpool FC, the report said. About Texas Rangers Texas Rangers Baseball Partners owned and operated the Texas Rangers Major League Baseball Club, a professional baseball club in the Dallas/Fort Worth Metroplex. TRBP is a Texas general partnership, in which subsidiaries of HSG Sports Group LLC own a 100% stake. Controlled by Thomas O. Hicks, HSG also indirectly wholly-owns Dallas Stars, L.P., which owns and operates the Dallas Stars National Hockey League franchise. The Texas Rangers have had five owners since the club moved to Arlington in 1972. Mr. Hicks became the fifth owner in the history of the Texas Rangers on June 16, 1998. Texas Rangers Baseball Partners filed a Chapter 11 petition (Bankr. N.D. Tex. Case No. 10-43400) on May 24, 2010. The partnership filed simultaneously with the bankruptcy petition a Chapter 11 plan that contemplated the sale of the club to an entity formed by a group that includes the President of the Texas Rangers, Nolan Ryan, and Chuck Greenberg, a sports lawyer and minor league club owner. In its petition, Texas Rangers Baseball Partners said it had both assets and debt of less than $500 million. Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, served as bankruptcy counsel to the Debtor. Forshey & Prostok LLP acted as conflicts counsel. Parella Weinberg Partners LP served as financial advisor. Major League Baseball was represented by Sandy Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka PC. Lenders to the Texas Rangers sought to force the baseball team's equity owners -- Rangers Equity Holdings, L.P. and Rangers Equity Holdings GP, LLC -- into bankruptcy court protection (Bankr. N.D. Tex. Case No. 10-43624 and 10-43625). The lenders, a group that includes investment funds Monarch Alternative Capital and Kingsland Capital Management, filed an involuntary bankruptcy petition on May 28, 2010 against the two companies. The two companies were not included in the May 24 Chapter 11 filing of TRBP. U.S. Bankruptcy Judge Stacey G. C. Jernigan on Aug. 5, 2010 confirmed the Debtor's fourth amended version of the Prepackaged Plan of Reorganization. The judge's confirmation order cleared the way for a group of Hall of Fame pitcher Nolan Ryan, and Pittsburgh sports attorney and minor-league team owner Charles Greenberg to purchase the Texas Rangers. The Ryan group paid $385 million in cash and assumed $208 million in liabilities. The Ryan group outbid Dallas Mavericks owner Mark Cuban at an auction. TEXAS RANGERS: Ex-Owner, JPMorgan Call Truce in Creditor Dispute ---------------------------------------------------------------- Jess Davis of BankruptcyLaw360 reported that following a settlement agreement, a Texas federal judge on Friday agreed to dismiss JPMorgan Chase Bank NA's claims that the ex-owner of the formerly bankrupt Texas Rangers tried to dodge a $35.4 million debt to the bank through fraudulent transfers within his company. U.S. District Judge John McBryde dismissed the claims following a joint request from the bank and Tom Hicks, who last week settled two other suits over business dealings with the Rangers and U.K. soccer team Liverpool FC, the report said. About Texas Rangers Texas Rangers Baseball Partners owned and operated the Texas Rangers Major League Baseball Club, a professional baseball club in the Dallas/Fort Worth Metroplex. TRBP is a Texas general partnership, in which subsidiaries of HSG Sports Group LLC own a 100% stake. Controlled by Thomas O. Hicks, HSG also indirectly wholly-owns Dallas Stars, L.P., which owns and operates the Dallas Stars National Hockey League franchise. The Texas Rangers have had five owners since the club moved to Arlington in 1972. Mr. Hicks became the fifth owner in the history of the Texas Rangers on June 16, 1998. Texas Rangers Baseball Partners filed a Chapter 11 petition (Bankr. N.D. Tex. Case No. 10-43400) on May 24, 2010. The partnership filed simultaneously with the bankruptcy petition a Chapter 11 plan that contemplated the sale of the club to an entity formed by a group that includes the President of the Texas Rangers, Nolan Ryan, and Chuck Greenberg, a sports lawyer and minor league club owner. In its petition, Texas Rangers Baseball Partners said it had both assets and debt of less than $500 million. Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, served as bankruptcy counsel to the Debtor. Forshey & Prostok LLP acted as conflicts counsel. Parella Weinberg Partners LP served as financial advisor. Major League Baseball was represented by Sandy Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka PC. Lenders to the Texas Rangers sought to force the baseball team's equity owners -- Rangers Equity Holdings, L.P. and Rangers Equity Holdings GP, LLC -- into bankruptcy court protection (Bankr. N.D. Tex. Case No. 10-43624 and 10-43625). The lenders, a group that includes investment funds Monarch Alternative Capital and Kingsland Capital Management, filed an involuntary bankruptcy petition on May 28, 2010 against the two companies. The two companies were not included in the May 24 Chapter 11 filing of TRBP. U.S. Bankruptcy Judge Stacey G. C. Jernigan on Aug. 5, 2010 confirmed the Debtor's fourth amended version of the Prepackaged Plan of Reorganization. The judge's confirmation order cleared the way for a group of Hall of Fame pitcher Nolan Ryan, and Pittsburgh sports attorney and minor-league team owner Charles Greenberg to purchase the Texas Rangers. The Ryan group paid $385 million in cash and assumed $208 million in liabilities. The Ryan group outbid Dallas Mavericks owner Mark Cuban at an auction. THREE LEGGED MONKEY: Exit Plan for Landlord Denied -------------------------------------------------- The U.S. Bankruptcy Court in El Paso, Texas, denied confirmation of the Chapter 11 plan put forward by Patriot Place, Ltd., the bankrupt owner of the Hawkins Plaza Shopping Center, and the competing plan filed by its bankrupt tenant, Three Legged Monkey, L.P. Patriot Place's Plan calls for the sale of the shopping center to the City of El Paso as part of a settlement. Three Legged Monkey operates a sports bar and restaurant at Hawkins Plaza; it risks losing its business if the sale pushes through. "These controversies present the latest episode of an ongoing public saga that found its way to this Court, when the Chapter 11 bankruptcy filing of one debtor (Patriot Place) spawned yet another Chapter 11 bankruptcy filing by a different debtor (Three Legged Monkey)," said Bankruptcy Judge H. Christopher Mott in his ruling on Friday. "This latest episode became a battle between one debtor (Patriot Place, the owner and landlord of Hawkins Plaza) that wants to sell its business at Hawkins Plaza to the City of El Paso to settle its ground lease dispute with the City -- and the other debtor (Three Legged Monkey, a rather notorious tenant at Hawkins Plaza) that is fighting the proposed sale to the City so that it can save its business at Hawkins Plaza. Many interesting factual and legal issues are presented in this very unusual and highly contentious battle between two separate debtors, with the City waiting in the wings," "Will this be the final episode of the saga? Regrettably, no," Judge Mott said. Patriot Place Ltd. filed for Chapter 11 (Bankr. W.D. Tex. Case Nos. 11-31024) on May 30, 2011, listing under $10 million in both assets and debts. Carlos A. Miranda, III, & Associates, P.C., serves as the Debtor's counsel. A list of the Company's 17 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/txwb11-31024.pdf The petition was signed by David Brandt, trustee of Hawkins Plaza Trust, general partner. In July 2011, Patriot Place sought to assume a 1996 Commercial Ground Lease with the El Paso International Airport/City of El Paso, as lessor, as well as 15 unexpired leases with current tenants, including the 2005 shopping center lease with Three Legged Monkey. The City objected to the Motions to Assume, arguing that the Ground Lease could not be assumed and should be terminated, primarily based on the activities of Three-Legged Monkey. City Bank supported Patriot Place's bid to assume the Ground Lease. After mediation before retired Bankruptcy Judge Frank R. Monroe over a period of several months, Patriot Place and the City reached a settlement agreement dated May 23, 2012, which was subject to Court approval through a Plan of Reorganization to be filed by Patriot Place. The Settlement Agreement provided, in part, for the termination of the shopping center lease between Patriot Place and Three Legged Monkey, and the sale of Hawkins Plaza by Patriot Place to the City. Three Legged Monkey filed for Chapter 11 (Bankr. W.D. Tex. Case No. 12-31019) on June 2, 2012. At the behest of Patriot Place, the Bankruptcy Court in August 2012 lifted the automatic stay in Three Legged Monkey's case so that Patriot Place could proceed with seeking confirmation of its Plan. The latest version of Patriot Place's Plan was filed Sept. 20, 2012. Three Legged Monkey proposed a competing Plan for Patriot Place on Aug. 15, 2012. On Sept. 21, the Court approved the Third Amended Disclosure Statement explaining Patriot Place's Plan and the Second Amended Disclosure Statement explaining the competing Second Amended Plan. The Court set the confirmation hearing on Nov. 15. Limited objections to confirmation of Patriot Place's Third Amended Plan were filed by the City of El Paso Tax Assessor and the U.S. Trustee, which were later withdrawn. Significant objections to confirmation of the Third Amended Plan were filed by Three Legged Monkey and Monaco Entertainment Group. Thereafter, Patriot Place filed Preconfirmation Modifications to the Third Amended Plan. A limited objection to confirmation of Three Legged Monkey's competing Second Amended Plan was filed by the U.S. Trustee, which was later withdrawn based on an amendment by Three Legged Monkey. Significant objections to confirmation of Three Legged Monkey's Competing Second Amended Plan were filed by Patriot Place, City Bank, the City, and Monaco Entertainment. Patriot Place on Nov. 5, 2012, filed a Motion For Determination of Value of Leasehold Interest of Three Legged Monkey at Hawkins Plaza Shopping Center. Three Legged Monkey objected. Three Legged Monkey on Nov. 7 filed an Expedited Motion To Designate the Classes of 1(A) and 3 As Being Unimpaired and Strike the Ballots of Such Classes As Not Being Accepted, Solicited or Procured in Good Faith. Three Legged Monkey sought to strike the ballots of City Bank and other tenants which voted in favor of Patriot Place's Plan. Patriot Place on Nov. 13 filed a Request to Strike Ballots of Three Legged Monkey, which voted against Patriot Place's Plan. Meanwhile, in its own case, Three Legged Monkey filed a motion to assume the lease with Patriot Place, which objected due to alleged defaults. On Friday, Judge Mott granted Three Legged Monkey's request to assume the lease. The judge denied, as moot, the Motion to Value Leasehold Interest; Three Legged Monkey's Motion to Strike Ballots; and Patriot Place's Request to Strike Ballots. "So now at the end of this particular battle, and after literally hundreds of thousands of dollars in litigation expense, hundreds of hours spent by the parties and this Court, and a plethora of documents, exhibits, and pleadings -- little has been accomplished. 3LM is still in business (at least for a while) at Hawkins Plaza, PPL is still stuck in the middle of what (in essence) is a dispute between the City and 3LM that threatens Hawkins Plaza, and all parties have incurred significant professional fees. This must change in the future, or one or both of these Chapter 11 debtors will end up losing the war," according to Judge Mott. "It is possible that further battles in this war can be avoided. Perhaps the proposed sale of Hawkins Plaza to the City can be resurrected by negotiation to obtain 3LM's consent to the Hawkins Plaza sale (Sec. 363(f)(2)) and providing 3LM with sufficient time and funds to relocate. Or, perhaps 3LM can stay in business at Hawkins Plaza by the parties jointly negotiating more restrictive terms in the Shopping Center Lease and the Ground Lease. Or, perhaps these will continue to be litigating Chapter 11 cases, with new battles immediately on the horizon over whether the Ground Lease with the City can be assumed by PPL and whether 3LM is capable of proposing and obtaining approval of a plan of reorganization in its own bankruptcy case. In any event, it is not the Court's job to negotiate settlements between the parties; instead the Court's job is to rule on controversies and approve settlements that comply with the Bankruptcy Code," Judge Mott added. The Court will set a status conference in each of the bankruptcy cases. A copy of the Court's Jan. 11, 2013 Consolidated Opinion is available at http://is.gd/Nj29eWfrom Leagle.com. THQ INC: Common Stock Delisted from NASDAQ ------------------------------------------ NASDAQ Stock Market LLC filed a Form 25-NSE with the U.S. Securities and Exchange Commission regarding the removal from listing or registration of THQ Inc.'s common stock on NASDAQ. THQ 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 Court approved Clearlake Capital Group, L.P.'s bid for the entire company as the opening bid for an orderly auction process. The Court also approved procedures that allow other interested parties to bid for individual assets or for the entire company, but bids for individual assets will only be considered superior to an aggregate bid for the entire company if the value generated by separate sales were to exceed the price offered by an individual bidder for the entire company. 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. January 23, and the closing will occur January 24. The Court also approved an amended financing agreement that will support THQ's operations during this period. "Today's ruling provides a clear path. We will now know definitively by Jan. 23rd where we stand," confirmed Brian Farrell, Chairman and CEO of THQ. "We appreciate the support of our employees, partners, and suppliers now more than ever." THQ is being advised by Centerview Partners LLC and FTI Consulting as its financial advisors and Gibson, Dunn & Crutcher LLP as legal counsel. 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. UNITED AMERICAN: "Put Exercise Period" to End on March 30 --------------------------------------------------------- United American Healthcare Corporation entered into a Fourth Amendment to Voting and Standstill Agreement with St. George Investments, LLC, an Illinois limited liability company, and The Dove Foundation, an Illinois trust. The Fourth Amendment further amends the Voting and Standstill Agreement dated March 19, 2010, between the Company and St. George, which was previously amended by (i) the Amendment to Voting and Standstill Agreement dated June 7, 2010, (ii) the Agreement to Join the Voting and Standstill Agreement by Dove dated June 7, 2010, (iii) the Acknowledgment and Waiver of Certain Provisions of the Voting and Standstill Agreement dated June 18, 2010, (iv) the Second Amendment to Voting and Standstill Agreement dated Nov. 3, 2011, and (v) the Third Amendment to Voting and Standstill Agreement dated May 15, 2012. In connection with the Fourth Amendment, St. George and Dove have agreed to forbear on exercising their rights to cause the Company to purchase their respective shares of the Company's common stock, and the Company has agreed to postpone the "Put Commencement Date" (as defined in the Voting and Standstill Agreement) until Oct. 1, 2013. As a result, the "Put Exercise Period" will end on March 30, 2014. A copy of the Fourth Amendment is available at: http://is.gd/TNu9Mu About United American Chicago-based United American Healthcare, through its wholly owned subsidiary Pulse Systems, LLC, provides contract manufacturing services to the medical device industry, with a focus on precision laser-cutting capabilities and the processing of thin-wall tubular metal components, sub-assemblies and implants, primarily in the cardiovascular market. The Company's balance sheet at Sept. 30, 2012, showed $15.5 million in total assets, $12.9 million in total liabilities, and stockholders' equity of $2.6 million. As reported in the TCR on Oct. 18, 2012, Bravos & Associates, CPA's, in Bloomingdale, Illinois, expressed substantial doubt about United American's ability to continue as a going concern. The independent auditors noted that the Company incurred a net loss from continuing operations of $1.9 million during the year ended June 30, 2012, and, as of that date, had a working capital deficiency of $10.2 million. VANDERRA RESOURCES: OK'd to Implement Key Employee Incentive Plan ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas authorized Vanderra Resources, LLC, to implement a key employee incentive plan. The Debtor, in its motion, stated that a critical aspect of its orderly wind down includes the selling of its rolling stock and other property and the collection of its accounts receivable. As of Nov. 7, 2012, the Debtor's gross trade accounts receivable aggregated $9,175,101. Of that amount, $5,881,840 is over 120 days. The key employees are integral to the efficient and expeditious wind down of the Debtor's affairs, well as the maximization of funds available for distribution to creditors. They perform, or will perform over the next three to four months, critical functions necessary to the administration of the Estate including, among other things: -- selling the Debtor's remaining rolling stock and other property; -- collecting A/R; -- analyzing proofs of claim filed against the Debtor and supporting any objections to same; -- identifying and developing potential claims and causes of action against third parties; -- preparing monthly operating reports; and -- assisting the Debtor's attorneys in responding to documents and information requests by the Committee, PlainsCapital Bank and other parties-in-interest. The KEIP will create an incentive pool from the A/R collections from Nov. 12, 2012, through Feb. 28, 2013, which will be divided among the key employees, based on the following benchmarks: A/R Col. AR Col. Incentive Incentive Cum. Cum. Lower Rate Upper Rate Rate Amount Incentive Incentive Amount Rate -------- ---------- ------- ------- -------- -------- $0 $1,500,000 0% $0 $0 0% $1,500,001 $2,000,000 1.00% $5,000 $5,000 0.25% $2,000,001 $2,500,000 1.25% $6,250 $11,250 0.45% $2,500,001 $3,000,000 1.50% $7,500 $18,750 0.62% $3,000,001 $3,500,000 1.75% $8,750 $27,500 0.79% $3,500,001 $4,000,000 2.00% $10,000 $37,500 0.94% $4,000,001 $4,500,000 2.25% $11,250 $48,750 1.08% $4,500,001 $5,000,000 2.50% $12,500 $61,250 1.22% $5,000,001 $5,500,000 2.50% $12,500 $73,750 1.34% $5,500,001 $6,000,000 2.50% $12,500 $86,250 1.44% $6,000,001 $6,500,000 2.50% $12,500 $98,750 1.52% $6,500,001 $7,000,000 2.50% $12,500 $111,250 1.59% $7,000,001 $7,500,000 2.50% $12,500 $123,750 1.65% $7,500,001 $8,000,000 2.50% $12,500 $136,250 1.70% The payments to the key employees based on A/R collections will be paid weekly, commencing the week of Nov. 19, 2012. The A/R incentive pool will be divided among the key employees as follows: 35% to Mr. Lassiter; 35% to Mr. Morgan and 30% to Ms. Belmont. With respect to the two remaining officers, Mr. Lassiter and Mr. Morgan, the KEIP increases their monthly compensation for a guaranteed set period of time. Beginning Dec. 1, 2012, and continue through the end of March 2013, Mr. Lassiter's monthly compensation will increase from $14,583 to $18,541. Beginning Dec. 1, 2012, and continuing through the end of Feb. 2013, Mr. Morgan's monthly compensation will increase from $10,833 to $13,750. The aggregate additional cost of this portion of the KEIP is $24,583. The Court also ordered that: -- the incentive compensation to the key employees, which is based on A/R collections commencing on Nov. 12, 2012, and ending on Feb. 28, 2013, will be paid on the earlier of (i) the date the Bankruptcy Case is converted to a case under Chapter 7 of the Bankruptcy Code; (ii) March 1, 2013; or (iii) the Effective Date of a liquidating plan; and -- the incentive compensation will only be paid to the key employees identified in the motion and who are employed by the Debtor on the applicable trigger date. Objections of Parties-in-Interest Various objections were filed to the incentive plan. PlainsCapital Bank said that its does not object to the structure of the incentive plan. Since Ritchie Brothers is liquidating substantially all of the Debtor's personal property, the only major remaining asset in the Debtor's estate is the A/R which is over $9 million. However, PCB objects to the timing of the payment of the "A/R incentive pool" to the key employees as this does not incentivize the key employees to maximize the collection of the A/R throughout the period of their employment. Instead, the key employees must be paid at the end of March 2013. The U.S. Trustee for Region 6 objected to the portion of the incentive plan that proposes to give monthly raises to Joseph Lassiter and Mike Morgan, who are insiders, for remaining with the company rather than establishing performance benchmarks. About Vanderra Resources Vanderra Resources LLC is an innovator and leader in the oil-field services industry, providing one stop solutions for the setup of drilling sites, including the construction of well site locations and roads, compressor pads, pipelines, and frac ponds. Vanderra Resources filed a Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-45137) in Fort Worth, Texas, on Sept. 9, 2012. The Debtor filed for bankruptcy to address its legacy debt issues, to finalize its restructuring into a smaller, more profitable company, and to preserve and enhance its going concern value for the benefit of its vendors, customers, creditors, employees, and all stakeholders. The Debtor disclosed $26,319,392 in assets and $24,066,684 in liabilities as of the Chapter 11 filing. Bankruptcy Judge D. Michael Lynn oversees the Debtor's case. Kevin M. Lippman, Esq., and Davor Rukavina, Esq., at Munsch Hardt Kopf & Harr, P.C., serve as the Debtor's counsel. The petition was signed by George Langis, president and chief operating officer. Meredyth A. Kippes, U.S. Trustee for Region 6, appointed five persons to serve in the Official Committee of Unsecured Creditors. The Committee is represented by Hunton & Williams LLP as counsel. VERTIS HOLDINGS: Wins Injunction Against Jay Schiller ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Vertis Inc. won an injunction against an individual named Jay Schiller barring him from contacting customers and alleging they were overcharged for printing more newspaper inserts than needed. The bankrupt Baltimore-based advertising and marketing services provider said Mr. Schiller's activities threaten to upset the $258.5 million court-approved sale of the business to Quad/Graphics Inc. Mr. Schiller claimed he did "absolutely" nothing wrong while saying that "Vertis is not doing a good job in managing preprint quantities." According to the report, Vertis said in papers filed Jan. 7 in bankruptcy court that Mr. Schiller was engaging in "blackmail and extortion" by threatening to contact customers "unless the debtors agree to pay him a significant sum of money." Later on Jan. 7, U.S. Bankruptcy Judge Christopher Sontchi in Delaware gave Vertis a temporary injunction barring Mr. Schiller from "contacting the debtor's customers or anyone else for the purpose of disclosing to them information concerning the debtors." In a phone interview, Mr. Schiller said he didn't know he had been sued and was unaware of the injunction. The report notes that the nature of Mr. Schiller's activities from Vertis's perspective is unclear because crucial allegations in court papers were filed under seal. In an interview with Bloomberg News, Mr. Schiller denied contacting Vertis's customers. He said he helps advertisers recover overcharges when more inserts are printed than required given a newspaper's circulation. Mr. Schiller said customers might have claims against Vertis for printing too many inserts because "they didn't manage the outgoing quantities correctly." Mr. Schiller said in the interview that Vertis wasn't disputing the amounts, they "just don't want anyone to find out." He claimed that a Vertis lawyer named Christopher Updike said he shouldn't contact customers until after the sale to Quad/Graphics is completed. "Schiller's statements are without merit," Shannon Pritchett, a Vertis spokeswoman, said in an e-mailed statement. The lawsuit is Vertis Holdings Inc. v. Schiller (In re Vertis Holdings Inc.), 13-50003, U.S. Bankruptcy Court, District of Delaware (Wilmington). About Vertis Vertis Holdings Inc. -- http://www.thefuturevertis.com/-- provides advertising services in a variety of print media, including newspaper inserts such as magazines and supplements. Vertis and its affiliates (Bankr. D. Del. Lead Case No. 12-12821), returned to Chapter 11 bankruptcy on Oct. 10, 2012, this time to sell the business to Quad/Graphics, Inc., for $258.5 million, subject to higher and better offers in an auction. As of Aug. 31, 2012, the Debtors' unaudited consolidated financial statements reflected assets of approximately $837.8 million and liabilities of approximately $814.0 million. Bankruptcy Judge Christopher Sontchi presides over the 2012 case. Vertis is advised by Perella Weinberg Partners, Alvarez & Marsal, and Cadwalader, Wickersham & Taft LLP. Quad/Graphics is advised by Blackstone Advisory Partners, Arnold & Porter LLP and Foley & Lardner LLP, special counsel for antitrust advice. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Quad/Graphics is a global provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts/circulars, direct mail, books, directories, and commercial and specialty products, including in-store signage. Headquartered in Sussex, Wis. (just west of Milwaukee), the Company has approximately 22,000 full-time equivalent employees working from more than 50 print-production facilities as well as other support locations throughout North America, Latin America and Europe. Vertis first filed for bankruptcy (Bankr. D. Del. Case No. 08-11460) on July 15, 2008, to complete a merger with American Color Graphics. ACG also commenced separate bankruptcy proceedings. In August 2008, Vertis emerged from bankruptcy, completing the merger. Vertis against filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 10-16170) on Nov. 17, 2010. The Debtor estimated its assets and debts of more than $1 billion. Affiliates also filed separate Chapter 11 petitions -- American Color Graphics, Inc. (Bankr. S.D.N.Y. Case No. 10-16169), Vertis Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10-16170), Vertis, Inc. (Bankr. S.D.N.Y. Case No. 10-16171), ACG Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10-16172), Webcraft, LLC (Bankr. S.D.N.Y. Case No. 10-16173), and Webcraft Chemicals, LLC (Bankr. S.D.N.Y. Case No. 10-16174). The bankruptcy court approved the prepackaged Chapter 11 plan on Dec. 16, 2010, and Vertis consummated the plan on Dec. 21. The plan reduced Vertis' debt by more than $700 million or 60%. GE Capital Corporation, which serves as DIP Agent and Prepetition Agent, is represented in the 2012 case by lawyers at Winston & Strawn LLP. Morgan Stanely Senior Funding Inc., the agent under the prepetition term loan, and as term loan collateral agent, is represented by lawyers at White & Case LLP, and Milbank Tweed Hadley & McCloy LLP. VIGGLE INC: Sillerman Line of Credit Hiked to $20 Million --------------------------------------------------------- Viggle Inc.'s Board of Directors approved an increase in the line of credit with Sillerman Investment Company LLC, an affiliate of Robert F.X. Sillerman, the Executive Chairman and Chief Executive Officer of the Company, from $15,000,000 to $20,000,000. As previously disclosed, Sillerman agreed to advance up to $10,000,000 to the Company, as evidenced by a line of credit grid promissory note, dated as of June 29, 2012, that was executed and delivered by the Company in favor of the Lender on July 6, 2012. On Oct. 31, 2012, the Company's Board of Directors approved an increase in the line of credit from $10,000,000 to $12,000,000 and a further advance of $2,000,000 was made on Oct. 31, 2012. On Dec. 3, 2012, the Company's Board of Directors approved an increase in the line of credit from $12,000,000 to $12,500,000 and entered into an Amended and Restated Line of Credit Promissory Note for $12,000,000 but otherwise on the same terms and conditions as the Grid Note. A further advance of $500,000 was made by the Lender. On Dec. 12, 2012, the Company's Board of Directors approved an increase in the line of credit from $12,500,000 to $15,000,000 and entered into an Amended and Restated Line of Credit Promissory Note for $15,000,000 but otherwise on the same terms and conditions as the Grid Note. A further advance of $2,500,000 was made by the Lender. The Company entered into an Amended and Restated Line of Credit Promissory Note for $20,000,000 but otherwise on the same terms and conditions as the Grid Note. A further advance of $1,000,000 had been made by the Lender. The Company is using the proceeds to fund working capital requirements and for general corporate purposes. Because Mr. Sillerman is a director, executive officer and greater than 10% stockholder of the Company, the Company's independent directors approved the transaction. About Viggle New York City-based Viggle Inc. is a loyalty marketing company. The Company has developed a loyalty program for television that gives people real rewards for checking into the television shows they are watching on most mobile operating system. Viggle users can redeem their points in the app's rewards catalog for items such as movie tickets, music, or gift cards. The Company's balance sheet at Sept. 30, 2012, showed $17.3 million in total assets, $22.2 million in total liabilities, and a stockholders' deficit of $4.9 million. As reported in the TCR on Oct. 22, 2012, BDO USA, LLP, in New York City, expressed substantial doubt about Viggle's ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations and at June 30, 2012, has deficiencies in working capital and equity. WAVE SYSTEMS: Has Until July 8 to Comply with Nasdaq Requirement ---------------------------------------------------------------- Wave Systems Corp. received notification from the Listing Qualifications Department of The Nasdaq Stock Market granting an additional 180-day period, or until July 8, 2013, to regain compliance with Nasdaq's minimum $1.00 bid price per share requirement. Under Nasdaq listing rules, the Company was granted this extension because it met the continued listing requirement for market value of publicly held shares and all other applicable Nasdaq listing requirements, except the bid price requirement, and the Company provided written notice to Nasdaq of its intention to cure the bid price deficiency during the second compliance period by effecting a reverse stock split, if necessary. The Company will regain compliance with the minimum bid price requirement if at any time prior to July 8, 2013, the bid price for the Company's common stock closes at $1.00 per share or above for a minimum of 10 consecutive business days. About Wave Systems Lee, Massachusetts-based Wave Systems Corp. (NASDAQ: WAVX) -- http://www.wave.com/-- develops, produces and markets products for hardware-based digital security, including security applications and services that are complementary to and work with the specifications of the Trusted Computing Group, an industry standards organization comprised of computer and device manufacturers, software vendors and other computing products manufacturers. The Company reported a net loss of $10.79 million in 2011, a net loss of $4.12 million in 2010, and a net loss of $3.34 million in 2009. Wave Systems' balance sheet at Sept. 30, 2012, showed $23.72 million in total assets, $17.99 million in total liabilities and $5.73 million in total stockholders' equity. WESTMORELAND COAL: Amends Bylaws to Update with Developments ------------------------------------------------------------ The Board of Directors of Westmoreland Coal Company amended and restated the Company's bylaws. The Amended Bylaws became effective immediately upon adoption. The Amended Bylaws were adopted to keep the Company's bylaws current with developments in General Corporation Law in the State of Delaware. Among other changes, the amendments: * Granted the Board the discretion to postpone, reschedule or cancel any previously scheduled annual or special meeting of stockholders, and hold virtual meetings of stockholders; * Updated the advance notice bylaws provisions regarding the information that must be submitted to the Company with respect to a stockholder proposal or nomination, and other requirements of the stockholder. The amendments set forth procedure, consistent with amendments to the DGCL, for creating and providing the list of stockholders in advance of a stockholders' meeting, including electronically for remote meetings; * Modified several provisions (including Sections 2.2, 2.11, and 3.2) to implement a majority vote standard for the election of directors. However, if the number of nominees for election to the Board exceeds the number of directors to be elected, the directors will instead be elected by the vote of a plurality of the votes cast. The amendments provided that, in order for an incumbent director to become a nominee for election, the director must submit an irrevocable resignation contingent upon the director failing to receive a majority of the votes cast in an election that is not a Contested Election and acceptance of that resignation by the Board. The amendments also set forth the procedure for the Board to consider and act upon such a resignation; and * Eliminated the Company's obligation to indemnify and advance expenses to supervisors and managers, although the Company is still permitted to do so. A copy of the Amended and Restated Bylaws is available at: http://is.gd/ZFr5SS About Westmoreland Coal Colorado Springs, Colo.-based Westmoreland Coal Company (NYSE AMEX: WLB) -- http://www.westmoreland.com/-- is the oldest independent coal company in the United States. The Company's coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. The Company reported a net loss of $36.87 million in 2011, a net loss of $3.17 million in 2010, and a net loss of $29.16 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $971.15 million in total assets, $1.22 billion in total liabilities and a $252.74 million total deficit. * * * As reported by the TCR on Nov. 6, 2012, Standard & Poor's Ratings Services raised its corporate credit rating on Englewood, Co.-based Westmoreland Coal Co. (WLB). to 'B-' from 'CCC+'. "The upgrade reflects our view that WLB is less vulnerable to default after successfully negotiating less restrictive covenant requirements for an unrated $110 million term loan due 2018," said credit analyst Gayle Bowerman. "Our assessment of WLB's business risk profile as 'vulnerable' and financial risk profile as 'highly leveraged' are unchanged. We also revised our liquidity score to 'adequate' based on the covenant relief and additional liquidity provided under the company's new $20 million asset-based loan (ABL) facility from 'less than adequate'." WILCOX EMBARCADERO: Has Access to WF Cash Collateral Until Jan. 31 ------------------------------------------------------------------ The Hon. Roger L. Efremsky of the U.S. Bankruptcy Court for the Northern District of California extended, in an interim order, Wilcox Embarcadero Associates, LLC's access to cash collateral which secured creditor Wells Fargo Bank, N.A., asserts an interest. Pursuant to a stipulation, among other things: -- Wells Fargo consents to the Debtor's use of cash collateral provided that Wells Fargo is granted adequate protection; -- the Debtor's right to use cash collateral will terminate on the earlier of (i) Jan. 31, 2013, (ii) or an event of default under the stipulation, (iii) or the date the stipulation ceases to be in full force and effect for any reason; and -- the Debtor will continue to make payments on the note in the sum of $33,454 per month on the first day of each month until there is a final order on use of cash collateral, a Plan of Reorganization or another agreement between the parties. On March 22, 2004, the Debtor executed a Fixed Rate Note and Deed of Trust payable to Wells predecessor, Greater Bay Bank, N.A., in the amount of $6,900,000 secured by the Debtors sole real property asset located at 1001 22nd Ave., Oakland, California. The Note was due and payable on March 22, 2011. The Wells Fargo Deed of Trust contains an Assignment of Rents. Wells Fargo holds a First Deed of Trust issued to its predecessor, Greater Bay Bank, N.A. There is a junior Deed of Trust in favor of Owens Mortgage Investment Fund. The current principal balance due on the Wells Note is $5,813,733; the current balance due on the Owens Note is $3,297,570. About Wilcox Embarcadero Wilcox Embarcadero Associates, LLC, filed a Chapter 11 petition in Oakland (Bankr. N.D. Calif. Case No. 12-40758) on Jan. 26, 2012. Wilcox operates a commercial building, leasing warehouse, wholesale, retail and office space. Wilcox operates in the Bay Area and has been in business for 10 years. The Debtor says it is a single asset real estate case. Steele, George, Schofield & Ramos LLP represents the Debtor in its restructuring efforts. In its schedules, The Debtor disclosed $10.2 million in assets and under $8.6 million in liabilities. The Debtor's property secures an $8.55 million debt to Wells Fargo and Owens Mortgage Investment Fund, LP. The Debtor said it incurred financial difficulty when its primary lender, the holder of the First Deed of Trust, refused to extend, modify or refinance the loan. The Debtor is in negotiations with a new lender to take out the lender, but needs more time to accomplish this task. ZACHRY HOLDINGS: Moody's Gives 'B1' CFR; Rates $250MM Notes 'B2' ---------------------------------------------------------------- Moody's Investors Service assigned a B1 corporate family rating and a B1-PD probability of default rating to Zachry Holdings, Inc. In addition, Moody's assigned a B2 rating to the company's proposed $250 million senior unsecured notes due 2020. The rating outlook is stable. The proceeds from the proposed note offering will be used to retire the company's existing $250 million term loan. The company also plans to upsize the borrowing limit on its credit facility to $350 million from $275 million upon completion of the note offering. The following ratings were assigned in this rating action: Corporate Family Rating B1; Probability of Default Rating B1-PD; $250 million of senior unsecured notes B2 (LGD5, 79%); This is a newly initiated rating and is Moody's first press release on this issuer. Ratings Rationale The B1 corporate family rating reflects Zachry's small size, low margins and lack of geographic and end-market diversification versus other rated engineering and construction companies. The company is primarily focused on the cyclical domestic energy industry and has little exposure to other end-markets and geographic regions. Zachry's ratings are supported by the company's relatively conservative financial policies and reasonable credit metrics. Zachry's pro forma liquidity profile also supports the ratings since the company is expected to have a sizeable cash balance and no near-term debt maturities. They anticipate no borrowings and approximately $150 million of financial and performance letters of credit outstanding on the new $350 million credit facility after the note offering is complete. Moody's expects Zachry's to produce revenue of approximately $2.3 billion and EBITDA of approximately $145 million over the next 12 months including Moody's standard adjustment for operating leases. This should result in a leverage ratio of approximately 2.7x and an interest coverage ratio (EBITA/Interest Expense) of approximately 3.7x including Moody's adjustments. The stable outlook presumes the company's operating results will remain relatively stable or gradually improve over the next 12 to 18 months and result in improved credit metrics. It also assumes the company will carefully balance its leverage with its growth strategy. The ratings could experience upward pressure if the company successfully integrates the acquisition of JV Industrial Companies and continues to grow its EBITA resulting in improved credit metrics. This would include generating EBITA of at least $125 million and increasing cash & marketable securities to more than 40% of the company's outstanding debt. Moody's views high cash balances to be prudent in the engineering & construction sector due to the risks associated with completing complex and technical projects under fixed price lump sum contracts. Negative rating pressure could develop if deteriorating operating results, debt financed acquisitions or shareholder dividends result in funds from operations (CF from operations before working capital changes) declining below 20% of outstanding debt or cash & marketable securities declining to less than 40% of outstanding debt. A significant reduction in borrowing availability or liquidity could also result in a downgrade. The principal methodology used in rating Zachry was the Global Construction Industry Methodology published in November 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 San Antonio, Texas, Zachry Holdings is a domestically focused provider of engineering, procurement, construction, turnaround and maintenance services. The company is predominantly focused on the domestic downstream energy and power industries with exposure to fossil fuels and renewable energy. The company's EPC business provides engineering, procurement and construction services to the fossil power and renewable energy industries on both a cost reimbursable and lump sum basis. The Turnarounds and Maintenance business performs maintenance, overhaul and repair services for the refinery, chemical and petrochemical sectors. The company generated approximately $2.2 billion in pro forma revenue for the trailing 12-month period ended September 30, 2012. * Fitch Says Deal Ends Uncertainty for US Residential Servicers --------------------------------------------------------------- Fitch Ratings believes the settlement between regulators and 10 residential loan servicing companies is positive for those companies as it is an end to the foreclosure review proceedings and will allow for a refocus on the services they provide. The Office of the Comptroller of the Currency (OCC) and the U.S. Federal Reserve Board announced the agreement on Jan. 7, 2013. It includes the payment of $8.5 billion, either as cash payments or assistance to help borrowers, and effectively ends the case-by- case independent foreclosure reviews mandated by the enforcement actions issued in April 2011. Fitch says: "In our view, the end to the extended, and recently controversial, independent review process will allow these servicers to refocus on completing other initiatives required by the various regulators, as well as to reassign internal staff that have been involved with the lengthy review process. In addition, the agreements makes the final compensation structure clear and eliminates further cost for the independent reviews that will allow the servicers to better establish their future cost to service and potentially allow funds to be released for improvements in the quality of their services. The additional scrutiny, mandated changes, and costs have caused many institutions to re-examine strategies and question their commitments to the market. Three of the 10 servicers under this agreement are no longer active in the U.S. residential servicer market. Many have actively pursued a strategy to offload non- agency and, in some cases, higher risk agency portfolios to concentrate on new, low-risk products. "Fitch further believes that the industry as a whole has addressed foreclosure documentation and process changes that resulted from regulation and policy changes. However, we see a backlog of foreclosures remaining to be processed. "The servicers included in this agreement who are also Fitch-rated servicers include: Bank of America, Citibank, JPMorgan Chase, PNC, and Wells Fargo." * First American Ducks Duty to Indemnify Lender in $100M Deal Row ----------------------------------------------------------------- Gavin Broady of BankruptcyLaw360 reported that a Wisconsin federal judge on Friday determined First American Title Insurance Co. does not have a duty to indemnify a lender in a dispute over a bankrupt developer's failed $100 million real estate project, but said the insurer still breached its defense duty. U.S. District Judge William M. Conley, revisiting a pair of November 2011 rulings in light of new facts and the determinations of a Missouri bankruptcy court, based his ruling on an exclusion in a First American insurance policy issued to BB Syndication Services Inc., the report said. * Setting Aside Abandonment Is Governed by Rule 60(b) ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that according to a Jan. 8 decision by U.S. District Judge Michael A. Shipp in Trenton, New Jersey, closing a Chapter 7 case doesn't amount to an irrevocable abandonment of a lawsuit. The report recounts a woman was given a discharge in Chapter 7 and her case was closed. One year later, the trustee reopened the case and proceeded to settle with the former husband on a claim for personal injury inflicted on the wife during marriage. The husband was to pay $15,000. The ex-wife contended that closing the case was an irrevocable abandonment of the lawsuit claim under Section 544(c) of the Bankruptcy Code. The bankruptcy judge agreed and refused to approve the settlement. The former husband appealed. The report relates that Judge Shipp said there was no guidance from the U.S. Court of Appeals in Philadelphia about the consequences of closing a case. He said the Courts of Appeal for the Sixth and Tenth Circuits have ruled that setting aside an automatic abandonment should be governed by Rule 60(b) of the Federal Rules of Civil Procedure. Judge Shipp remanded the case, telling the bankruptcy judge to analyze whether abandonment should be set aside under Rule 60(b). The case is Frost v. Reilly (In re Reilly), 12-3171, U.S. District Court, District of New Jersey (Trenton). * Dorsey Adds Five Lawyers to West Coast Bankruptcy Practice ------------------------------------------------------------ International law firm Dorsey & Whitney LLP on Jan. 15 disclosed that five attorneys have joined its Palo Alto office from the well-known bankruptcy law firm, Murray & Murray. John Murray, Stephen O'Neill, Robert Franklin, Craig Prim and Thomas Hwang will anchor Dorsey's West Coast Bankruptcy and Restructuring practice. The attorneys bring more than 35 years of specialized expertise in business reorganization, insolvency and bankruptcy law. The group represents financially distressed companies in the restructuring of their financial affairs in formal Chapter 11 bankruptcy proceedings, assignments for the benefit of creditors and out-of- court workouts. The group also maintains a creditor practice representing creditors' committees, secured creditors, investors and other creditor clients in bankruptcy and commercial law matters. The attorneys also represent parties interested in mergers with, and acquisitions of, financially distressed entities, and the purchase of assets from such entities. Prior to joining Dorsey, Murray, O'Neill, Franklin, Prim and Hwang practiced at Murray & Murray, a Cupertino-based law firm specializing in business reorganization, insolvency and bankruptcy law. The firm, which was founded in 1975, is among the most prominent and distinguished bankruptcy practices in Northern California. "We are delighted to have this preeminent group of bankruptcy and restructuring lawyers join us in our Palo Alto office," said Craig Ritchey, Office Head of Dorsey's Palo Alto office. "They are extremely accomplished and well respected in this community, and together with our existing bankruptcy and restructuring lawyers throughout the firm will give us tremendous capabilities." "We are very excited about the move," said John Murray. "The broader platform offered by Dorsey & Whitney will allow us to expand our practice to a national level and capitalize on east coast opportunities, especially in Delaware and New York." About Dorsey & Whitney LLP Clients have relied on Dorsey since 1912 as a valued business partner. With 19 locations in the United States, Canada, Europe and the Asia-Pacific region, Dorsey provides an integrated, proactive approach to its clients' legal and business needs. Dorsey represents a number of the world's most successful companies from a wide range of industries, including leaders in the healthcare and life sciences, financial services, technology, retail, agribusiness and energy sectors, as well as major non- profit and government entities. * Lowenstein Sandler Elects Seven New Partners ---------------------------------------------- Lowenstein Sandler LLP has elected seven new partners, effective January 1, 2013. The new partners represent the robust growth of many of the firm's practices, including Bankruptcy, Capital Markets Litigation, Employment, IP, Real Estate, Specialty Finance and Tech. "Lowenstein Sandler lawyers are characterized by their passion for helping clients achieve their legal and business objectives," said Gary M. Wingens, Lowenstein Sandler Chairman and Managing Partner. "So it is a genuine pleasure to recognize as new partners the colleagues who best exemplify this drive. The successes they have helped us achieve are the result of their dedication to their clients, entrepreneurial zeal and creative thinking. We are excited to have these talented attorneys take on new roles, and we look forward to their future contributions to our clients and the firm." The following attorneys have been elected to the partnership: -- David Banker, a member of the Bankruptcy, Financial Reorganization & Creditors' Rights Group -- Vanessa A. Ignacio, Chair of the Trademark Prosecution & Enforcement practice and a member of the Tech Group -- Amiad Kushner, a member of the Capital Markets Litigation practice -- Matthew Savare, a member of the Tech Group and Intellectual Property and Media & Entertainment practices -- David Tlusty, a member of the Real Estate practice -- Traci Tomaselli, a member of the Corporate Department and Specialty Finance and M&A practices -- Amy Komoroski Wiwi, a member of the Employment practice About Lowenstein Sandler LLP Lowenstein Sandler LLP -- http://www.lowenstein.com-- is a provider of transactional, litigation, and bankruptcy and creditors' rights legal services to many of the country's top companies and funds. The firm has close to 300 lawyers in its New York, New Jersey and California offices. * Law360 Names Morrison Foerster Bankr. Practice Group of the Year ------------------------------------------------------------------ Dietrich Knauth of BankruptcyLaw360 reported that Morrison Foerster LLP garnered impressive results for creditors and debtors in 2012, representing Residential Capital LLC during one of the largest restructurings on record and supporting MF Global Inc.'s trustee in collecting billions in assets for creditors, earning it a place among Law360's Bankruptcy Practice Groups of the Year. ResCap filed for bankruptcy protection in May 2012 with $15.7 billion in assets, $15.3 billion in debt and a plan to sell most of its assets to a Fortress Investment Group LLC unit, according to the report. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Jan. 24-25, 2013 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Four Seasons Hotel Denver, Denver, Colo. Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 7-9, 2013 AMERICAN BANKRUPTCY INSTITUTE Caribbean Involvency Symposium Eden Roc Renaissance, Miami Beach, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 17-19, 2013 AMERICAN BANKRUPTCY INSTITUTE Advanced Consumer Bankruptcy Practice Institute Charles Evans Whittaker Courthouse, Kansas City, Mo. Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 20-22, 2013 AMERICAN BANKRUPTCY INSTITUTE VALCON Four Seasons Las Vegas, Las Vegas, Nev. Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 10-12, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Chicago, Chicago, Ill. Contact: http://www.turnaround.org/ Apr. 18-21, 2013 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ June 13-16, 2013 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Mich. Contact: 1-703-739-0800; http://www.abiworld.org/ July 11-13, 2013 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Hyatt Regency Newport, Newport, R.I. Contact: 1-703-739-0800; http://www.abiworld.org/ July 18-21, 2013 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Amelia Island, Amelia Island, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 8-10, 2013 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hotel Hershey, Hershey, Pa. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 22-24, 2013 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nev. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 3-5, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Wardman Park, Washington, D.C. Contact: http://www.turnaround.org/ Nov. 1, 2013 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Atlanta Marriott Marquis, Atlanta, Ga. Contact: 1-703-739-0800; http://www.abiworld.org/ Nov. 25, 2013 BEARD GROUP, INC. 20th Annual Distressed Investing Conference The Helmsley Park Lane Hotel, New York, N.Y. Contact: 240-629-3300 or http://bankrupt.com/ Dec. 5-7, 2013 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Terranea Resort, Rancho Palos Verdes, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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 ***