/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/130118.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, January 18, 2013, Vol. 17, No. 17 Headlines ACTIVECARE INC: Incurs $12.4 Million Net Loss in Fiscal 2012 AIDA'S PARADISE: Bank Fails to Dismiss Equitable Subordination Bid AMERICAN AIRLINES: Unveils Brand New Paint Job AMERICAN AIRLINES: Pilots See $522M Silver Lining in US Air Merger AMERICAN AIRLINES: AMR, USAir Pilot Unions OK Deal Ahead of Merger AMERICAN AIRLINES: Passenger Service Agents Reject CWA Union AMERICAN INT'L GROUP: Seeks Approval to File More Bank Suits AMF BOWLING: Files Schedules of Assets and Liabilities AMPAL-AMERICAN: Creditors Committee Files Own Plan AUTO CARE: Unsecureds to Be Paid in Full Under Plan AUTO CARE: Bank of Marin Responds to Motion for Ch.7 Conversion BEALL CORP: Wabash Non-Compete Agreements Threaten Sale BERNARD L. MADOFF: Removing Suit Has Little Significance BLOCKBUSTER INC: Dish May Shutter UK Unit After No Buyer Found BOOMERANG SYSTEMS: Incurs $17.4 Million Net Loss in 2012 BROCADE COMMUNICATIONS: Moody's Rates $300MM Unsecured Notes 'B1' BROCADE COMMUNICATIONS: S&P Assigns 'BB+' Rating to $300MM Notes CANYONS AT DEBUQUE: Wins Extension of Right to Use Cash Collateral CANYONS AT DEBUQUE: First-Citizens Objects to Disclosure Statement CAREY LIMOUSINE: Drivers Want to Steer It Through Bankruptcy CARY CREEK: Intends to Keep Affiliate AAC as Property Manager CARY CREEK: Proposes $300,000 DIP Financing From AAC CELOTEX CORP: NJ High Court Tackles Post-Ch. 11 Coverage Row CHEROKEE SIMEON: Facing Challenge on Bid to Use Cash Collateral CLINICA REAL: Dr. Stone's Plan Exclusivity Extended to June 23 CLINICA REAL: State Farm Balks at Exclusivity Until Nov. 1 COMPUTER GRAPHICS: Clement C. W. Chan Raises Going Concern Doubt CRYSTAL COVE: Manager Replacement No Impact on Fitch Ratings DDR CORP: Closes Refinancing of Revolving Credit Facilities DIAL GLOBAL: Suspending Filing of Reports with SEC DRAGON SYSTEMS: Deliberations on Case vs. Goldman This Week DYNASIL CORP: Had $4MM Loss in 2012, Warns of Possible Bankruptcy EASTMAN KODAK: Bankruptcy Costs Nearing $125 Million EASTMAN KODAK: Pushes Court to Ax Kyocera Infringement Claims EGPI FIRECREEK: Director Quits; Co-Treasurer Passes Away EINSTEIN NOAH: S&P Raises Corporate Credit Rating to 'B+' ELCOM HOTEL: Works Out Deal with Unit Owners ENERGYSOLUTIONS INC: Rejects Equity Election Option Suggestion FAIRFAX FIN'L: Moody's Assigns '(P)Ba2' Seniority Shelf Ratings FLAGSHIP FRANCHISES: Patient Care Ombudsman Not Needed FREESEAS INC: Supreme Court OKs Settlement with Hanover FREESEAS INC: Hanover Holdings Discloses 8.4% Equity Stake GENCORP INC: Moody's Confirms 'B1' CFR; Rates $460MM Notes 'Ba3' GENWORTH FINANCIAL: Moody's Downgrades IFS Rating to 'Ba2' GEOKINETICS HOLDINGS: Moody's Cuts PDR to 'D-PD' on Ch. 11 Filing GHC NY: Chapter 11 Case Dismissed Due to "Bad Faith" Filing GIBRALTAR INDUSTRIES: Moody's Affirms 'B1' CFR; Rates Notes 'B2' GIBRALTAR INDUSTRIES: S&P Affirms 'BB-' Corporate Credit Rating GREYSTONE LOGISTICS: Delays Form 10-Q for Nov. 30 Quarter HAMPTON CAPITAL: Final DIP Financing Hearing on Feb. 14 HAWKER BEECHCRAFT: Lines Up $600M for Bankruptcy-Exit Financing HEALOGICS INC: S&P Affirms 'B' CCR; Outlook Stable HICKOK INCORPORATED: Incurs $784,000 Net Loss in Fiscal 2012 HORSHAM 410: Chapter 11 Case Dismissed After Failing to File Docs IMH FINANCIAL: Amends Bylaws to Protect NOL Carryforwards INTERFAITH MEDICAL: Committee Hiring A&B as Bankruptcy Counsel JAS & ASSOCIATES: Plan Outline Fails to Pass Muster LAGUNA BRISAS: Wins Right to Use Cash Collateral Through Feb. 28 LAKERIDGE CENTER: Second Amended Reorganization Plan Confirmed LAUSELL INC: Can Access Bank's Cash Collateral Until March 31 LCI HOLDING: Can Employ Young Conaway as Conflicts Counsel LCI HOLDING: Has Until Feb. 9 to File Schedules and Statements MEADE INSTRUMENTS: Incurs $1.3MM Net Loss in Fiscal 2013 3rd Qtr. MEDIANNUAIRE HOLDING: 90% of Lenders Back Restructuring Proposal METRO FUEL: Kirkland & Ellis Approved as Lead Bankruptcy Counsel METRO FUEL: Taps AP Services as Crisis Managers and Provide CRO METRO FUEL: Hires Carl Marks as Financial Advisor MF GLOBAL: Stipulation on Securities Class Litigation Docketed MIRAMAR REAL ESTATE: Confirms Plan, Transfers Assets to Putman MOBIVITY HOLDINGS: Robert Prag Discloses 8.4% Equity Stake MOMENTIVE SPECIALTY: Obtains Amendments to Credit Facilities MOMENTIVE SPECIALTY: Moody's Affirms 'B3' CFR; Outlook Stable MOMENTIVE SPECIALTY: S&P Affirms B- CCR & Sr. Secured Debt Rating MONEY TREE: Payout Plan Targets Company Executives MONITOR COMPANY: Wants to Use $6.7-Mil. for Transition MONITOR COMPANY: Michael Ash Joins Creditors Committee MONITOR COMPANY: Can Employ McGladrey LLP as Tax Advisor MONITOR COMPANY: Committee Retains MFC as Financial Advisors MORGANS HOTEL: JPMorgan Hikes Equity Stake to 9.3% MSR RESORT: Gets OK to Obtain Additional $7-Mil. in Loans NATIONAL RETAIL: Fitch Ups $288MM Preferred Stock Rating from BB+ NATURAL PORK: Conway MacKenzie OK'd to Market Operating Assets NATURAL PORK: Court OKs Appointment of Chapter 11 Trustee NEXT 1 INTERACTIVE: Delays Form 10-Q for Nov. 30 Quarter NEOGENIX ONCOLOGY: Has Until Jan. 22 to Propose Chapter 11 Plan NET TALK.COM: Obtains Add'l $400,000 from 1080 NW 163rd Drive NORTEL NETWORKS: Former Executives Acquitted in Fraud Case NPS PHARMACEUTICALS: Amends Third Quarter Form 10-Q OCALA FUNDING: Has Until March 7 to Propose Chapter 11 Plan OCWEN FINANCIAL: Moody's Affirms 'B1' CFR; Outlook Stable OLYMPIC HOLDINGS: Plan Offers Payment to Unsecureds in 2 Years ONE SILVER: Case Summary & 20 Largest Unsecured Creditors OPEN SOLUTIONS: Moody's Reviews 'Caa2' CFR for Possible Upgrade OVERSEAS SHIPHOLDING: Wants to Obtain $10-Mil. DIP Loan From OIN OVERSEAS SHIPHOLDING: CEXIM Borrowers to Obtain $15-Mil. DIP Loan OVERSEAS SHIPHOLDING: Wants Actions vs. Execs Halted During Ch. 11 PELICAN COVE: Case Summary & 11 Largest Unsecured Creditors PENNFIELD CORP: Creditors Balk at Cargill's Bid to Buy Mills PENSON WORLDWIDE: Wins OK for KCC as Claims and Notice Agent PENSON WORLDWIDE: Files Chapter 11 Liquidation Plan PHIL'S CAKE: Cash Collateral Hearing Continued to Jan. 24 PHIL'S CAKE: Okayed to Transfer Tampa Property to FDIC PHOENIX COS: S&P Affirms 'B-' Longterm Counterparty Credit Rating PICCADILLY RESTAURANTS: Wants 90-Day Extension in Exclusivity PINNACLE AIRLINES: Plan Next After Delta Deal Wins Court Okay PIPKIN'S MOTORS: Case Summary & 10 Largest Unsecured Creditors PMI GROUP: Jan. 23 Hearing on Sixth Exclusivity Extension RADIOSHACK CORP: Dissolves Target Mobile Partnership with Target RADIOSHACK CORP: Ended Target Deal No Impact on Moody's 'B3' CFR REAL ESTATE ASSOCIATES: Eric Mathis Quits as CFO RED MOUNTAIN: Incurs $3.2-Mil. Net Loss in Fiscal 2013 2nd Quarter RESIDENTIAL CAPITAL: Examiner Has Wolf as Conflicts Counsel RESIDENTIAL CAPITAL: CHFA Wants to Recover Servicing Portfolio RESIDENTIAL CAPITAL: MassMutual Seeks Limited Discovery REVEL AC: S&P Lowers Rating on First-Lien Term Loan to 'CC' RG STEEL: Sues to Wind Up Coke Fuel Joint Venture RITZ CAMERA: Heads to Ch. 7 After Failing to Sell Assets RITZ CAMERA: Converting to Chapter 7 to Continue Lawsuits RTW PROPERTIES: Selling Tank Farm to Pay Arvest Bank's Claim S&W AIRCRAFT: Case Summary & 13 Largest Unsecured Creditors SANUWAVE HEALTH: David Nemelka Lowers Equity Stake to 19.9% SATCON TECHNOLOGY: Fraser Milner Approved as Canadian Counsel SATCON TECHNOLOGY: Greenberg Traurig OK'd as Bankruptcy Counsel SATCON TECHNOLOGY: OK'd to Pay $6.4MM Critical Vendors Claims SECUREALERT INC: Incurs $19.9 Million Net Loss in Fiscal 2012 SEARS HOLDINGS: Edward Lampert Buys 332,048 Add'l Common Shares SHERIDAN GROUP: Has Access to $10MM BOA Facility After Oct. 15 SOUTHERN MONTANA: Valuation Consultant Now Known as Harper Hofer SUGARLEAF TIMBER: Andrew Brumby Appointed as Mediator SUNY DOWNSTATE MEDICAL: Facing Liquidity Crunch SYNTAX-BRILLIAN: Del. Court Won't Reinstate Suit Against Bank TELETOUCH COMMUNICATIONS: Delays Form 10-Q for Nov. 30 Quarter TESORO CORP: Moody's Assigns 'Ba1' Rating to $500-Mil. Term Loan TESORO CORP: S&P Assigns 'BB+' Corporate Credit Rating THQ INC: Gibson, Young Conaway Hiring Approvals Sought TPC GROUP: $100MM Add-On Notes No Impact on Moody's 'B2' CFR TPC GROUP: S&P Keeps 'B' Rating over New $100MM Add-On Notes TRIBUNE COMPANY: Elects Bruce Karsh as Board Chairman TRIBUNE CO: To Drop Clawback Lawsuits Against Many Top Executives TWG CAPITAL: Wins Extension to File Creditor-Payment Plan UNIFRAX I: Moody's Affirms B2 CFR; Rates Sr. Unsec. Notes Caa1 UNIFRAX HOLDING: S&P Affirms 'B' Corporate Credit Rating UNIVERSITY GENERAL: To Present at Equity Conference on Jan. 22 URANIUM ONE: S&P Revises Outlook to Developing; Affirms 'BB-' CCR UTSTARCOM HOLDINGS: Himanshu Shah Hikes Equity Stake to 17.7% VERTICAL COMPUTER: Secures $1.7 Million Loan from Lakeshore VERTIS HOLDINGS: Quad/Graphics Completes Acquisition of Assets VERTIS HOLDINGS: Cousins Chipman Is Committee's Del. Counsel VERTIS HOLDINGS: Perella Weinberg Is Financial Advisor VERTIS HOLDINGS: Richards Layton Is Debtors' Co-Counsel VIGGLE INC: Terminates Merger Agreement with GetGlue WEST PENN ALLEGHENY: Pursues Out-of-Court Restructuring WESTERN POZZOLAN: Trustee Taps Kim Firm as General Purpose Counsel WESTSIDE MEDICAL: Court Confirms Liquidating Plan WILLIAMS MANAGEMENT: Case Summary & 14 Largest Unsecured Creditors YMCA RIVERSIDE: Shutters Doors; To Liquidate in Chapter 7 ZUERCHER TRUST: Files Schedules of Assets and Liabilities ZUERCHER TRUST: List of 20 Largest Unsecured Creditors * Two Circuits Retain Absolute Priority Rule for Individuals * Foreclosure Activity Increased in 25 States in 2012 * National Credit Default Rates Up in Fourth Quarter 2012 * Fitch Says No Economic Boost to Come from Global Corporate Capex * Moody's Says 2013 Outlook for US Higher Education Sector Neg. * Bank of America Takes a Mortgage Mulligan * Morgan Stanley to Defer Bonuses to Top Bankers, Traders * FASB Calls for More Disclosure on Repurchase Deals * House Approves Sandy Aid Package * Gonzalez Saggio Adds Three Attorneys in Atlanta Office * Law360 Names Weil Gotshal Bankruptcy Group of the Year * Wiley Rein Picks Bankruptcy Vet from Dickstein Shapiro * BOOK REVIEW: Corporate Venturing -- Creating New Businesses ********* ACTIVECARE INC: Incurs $12.4 Million Net Loss in Fiscal 2012 ------------------------------------------------------------ ActiveCare, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $12.36 million on $1.52 million of total revenues for the year ended Sept. 30, 2012, compared with a net loss of $7.89 million on $771,391 of total revenues during the prior year. ActiveCare's balance sheet at Sept. 30, 2012, showed $5.87 million in total assets, $13.59 million in total liabilities, and a $7.71 million total stockholders' deficit. Hansen, Barnett & Maxwell, P.C., in Salt Lake City, Utah, issued a "going concern" qualification on the consolidated financial statements for the year ended Sept. 30, 2012, citing recurring operating losses and an accumulated deficit which 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/bkSCnv On Nov. 16, 2012, pursuant to the LOI dated Sept. 14, 2012, ActiveCare entered into an Asset Purchase Agreement finalizing the terms of its purchase of substantially all of the net assets of Green Wire, LLC, and its related entities, Rapid Medical Response, LLC, Orbit Medical Response, LLC, and Green Wire Outsourcing, Inc. The Company filed a Current Report on Form 8-K on Nov. 19, 2012, to report the purchase. The Company amends the Form 8-K to furnish the financial statements of the acquired entities and pro forma financial information related to the transaction. A copy of the financial statements is available at: http://is.gd/yYiqHq About ActiveCare South West Valley City, Utah-based ActiveCare, Inc., is organized into three business segments based primarily on the nature of the Company's products. The Stains and Reagents segment is engaged in the business of manufacturing and marketing medical diagnostic stains, solutions and related equipment to hospitals and medical testing labs. The CareServices segment is engaged in the business of developing, distributing and marketing mobile health monitoring and concierge services to distributors and customers. The Chronic Illness Monitoring segment is primarily engaged in the monitoring of diabetic patients on a real time basis. The Company's business plan is to develop and market products for monitoring the health of and providing assistance to mobile and homebound seniors and the chronically ill, including those who may require a personal assistant to check on them during the day to ensure their safety and well being. AIDA'S PARADISE: Bank Fails to Dismiss Equitable Subordination Bid ------------------------------------------------------------------ Bankruptcy Judge Karen S. Jennemann denied the request of lender TD Bank to strike or dismiss a request by Aida's Paradise LLC to equitably subordinate the bank's unsecured claim. Aida's Paradise is a multi-member, Florida Limited Liability Company that owns valuable real property located on International Drive in Orlando's tourist corridor. Until recently, the Debtor leased a large portion of its holdings to a restaurant operated as the Salt Island Chophouse and Fish Market. Salt Island once contributed roughly 70% of the Debtor's rental revenue. The Debtor commenced an adversary complaint against TD Bank and has sought to equitably subordinate the Bank's unsecured deficiency claim, arguing TD Bank unjustifiably thwarted the Debtor's attempt to evict Salt Island and improperly refused to allow the Debtor to timely release the restaurant space. TD Bank argues it was merely acting as a prudent lender pursuing collection of its sizeable claim and has filed a motion to strike or dismiss the Debtor's motion attempting to equitably subordinate its claim. The Debtor's principals allegedly took out a $5,000,000 loan in 2003 from Colonial Bank, predecessor in interest to TD Bank, to purchase property on I-Drive. As security for the loan, the Debtor and its principals executed a mortgage and security agreement encumbering the real property, an assignment of leases, rents, and contract rights, and an unconditional guaranty in favor of Colonial Bank. TD Bank acquired the note and other loan documents in October 2006, at which time the Debtor executed and delivered a renewed promissory note for $9 million secured by an updated mortgage encumbering the real property. Salt Island began leasing space for its sizeable, up-scale restaurant from the Debtor in 2004. Salt Island renewed the lease for a further five-year term in 2009. The Debtor subordinated its leasehold interest in the Salt Island lease to TD Bank's first mortgage. In February 2009, the Debtor apparently fell behind on its loan payment to TD Bank, but allegedly quickly cured the monetary default in March. Arguing the cure was incomplete, TD Bank revoked its assignment of rents and directed all tenants, including Salt Island, to begin paying rent to TD Bank directly. TD Bank refused to allow the Debtor to directly collect the rents until the Debtor executed a forbearance agreement, which included additional warranties and representations and payment of TD Bank's legal fees. The Debtor argues its real problems with TD Bank started when TD Bank refused to sign the forbearance agreement. To add to the Debtor's financial problems, beginning in April 2009, Salt Island started making only partial rent payments directly to TD Bank, which forced the Debtor to pay additional funds of its own to meet its monthly loan obligations. From July 2009 to July 2010, the Debtor allegedly tried repeatedly to evict Salt Island but, because of TD Bank's continual acceptance of partial rent payments, the Debtor claims it was unable to complete the eviction process. TD Bank next offered to allow the Debtor to resume the direct collection of rent from Salt Island if the Debtor first would escrow $1.2 million. The Debtor again refused, stating no provision in any loan document authorized TD Bank to demand such an escrow. On July 21, 2010, TD Bank initiated foreclosure proceedings against the Debtor in Orange County, Florida. By that time, the Debtor had entered into discussions with a new potential tenant -- Rothman's Orlando, LLC, a New York City steakhouse looking to enter the Orlando market. While the foreclosure was pending, the Debtor entered into a 15-year lease agreement with Rothman's for the Salt Island restaurant space, contingent upon TD Bank executing a non-disturbance agreement agreeing not to evict Rothman's upon a foreclosure of the Debtor's interest in the Property. TD Bank allegedly declined to sign the non-disturbance agreement, instead adding Rothman's as a defendant to its foreclosure complaint. The Debtor answered the foreclosure complaint with affirmative defenses of (1) estoppel; (2) unclean hands; (3) setoff; (4) failure to mitigate; and (5) impossibility of performance because TD Bank had prevented the Debtor from evicting Salt Island. On July 29, 2010, after 15 months of making only partial rent payments and failing to secure a new tenant, Salt Island closed its doors and ceased operations. On Aug. 12, 2010, the Debtor regained possession of the former Salt Island space to find the property "significantly damaged" and "in overall poor repair." The Debtor claims Salt Island tore the furniture, fixtures, and equipment from the restaurant space after TD Bank sent a letter requesting their removal. The Debtor filed four counterclaims against TD Bank in the state court foreclosure action alleging TD Bank: (1) interfered with contractual relations; (2) interfered with an advantageous business relationship; (3) breached the implied covenant of good faith and fair dealing; and (4) breached its fiduciary duty as a lender. The parties filed cross motions for summary judgment, but, before the state court ruled on any of the issues, the Debtor filed for Chapter 11 bankruptcy protection. The Debtor's Schedule D lists a secured debt owed to TD Bank in the amount of $9 million. Both parties agree the real property securing the debt is worth vastly less than $9 million and that TD Bank has a very large unsecured, deficiency claim. In its bankruptcy case, the Debtor filed a motion to equitably subordinate TD Bank's unsecured claim under Bankruptcy Code Sec. 501(c), arguing the bank unduly dominated and controlled the Debtor's business decisions by constructively preventing the Debtor from evicting Salt Island, by unreasonably collecting partial rent, by requiring an unjusitified $1.2 million escrow, by unreasonably rejecting a proposed replacement tenant for the restaurant, and by instructing Salt Island to remove FF&E which caused significant damage to the restaurant. These claims are nearly identical to the Debtor's causes of action before the state court, now removed to the Bankruptcy Court. The Court consolidated the adversary proceeding with the Debtor's motion to equitably subordinate in the main case because the issues giving rise to the two matters involve the same facts and circumstances. Both address Salt Island's failure to pay rent and the events leading up to Salt Island's ultimate eviction. In denying the Bank's request, Judge Jennemann said the aggregate degree of TD Bank's control over the Debtor in declining to execute a non-disturbance agreement with a viable new tenant, in requiring additional warranties, representations, and a substantial escrow of $1.2 million, and in continuing to redirect rents and forestall Salt Island's eviction, is a question of fact not appropriate for resolution at the motion to dismiss stage. At a minimum, the Debtor's allegations provide sufficient information to suggest TD Bank may have become a fiduciary, and the Debtor has stated a plausible claim for relief. A copy of the Court's Jan. 14, 2013 Memorandum Opinion is available at http://is.gd/9vmOGFfrom Leagle.com. About Aida's Paradise Based in Maitland, Florida, Aida's Paradise LLC owns roughly three acres of developed real property on International Drive in Orlando, Florida. It leases various parcels of the I-Drive Property to three tenants: Volcano Island Mini Golf, Dunkin Donuts (aka Jennifer's Donuts), and CBS Outdoor (which operates an electronic billboard on site). Aida's Paradise filed for Chapter 11 bankruptcy (Bankr. M.D. Fla. Case No. 12-00189) on Jan. 6, 2012. Chief Karen S. Jennemann presides over the case. R. Scott Shuker, Esq., at Latham Shuker Eden & Beaudine LLP, serves as the Debtor's counsel. Terry J. Soifer and Consulting CFO, Inc., serves as its financial advisor. The petition was signed by Dr. Adil R. Elias, manager. In its schedules, the Debtor disclosed $15.0 million in total assets and $9.32 million in total liabilities. The Debtor has filed a plan that allows the holder of a class of secured claim, TD Bank, to retain its lien on the I-Drive Properties, and its allowed secured claim to be paid back over time. The class of allowed general unsecured claims will be paid a pro rata portion of the so-called "cash flow note." The class of interests will retain their interest in the Debtor in exchange for "new value" and, as such, are unimpaired. AMERICAN AIRLINES: Unveils Brand New Paint Job ---------------------------------------------- Susan Carey, writing for The Wall Street Journal, reports that American Airlines parent AMR Corp. unveiled a new brand and paint job on Thursday, a sign that the company is preparing to soar again after nearly completing its bankruptcy-court reorganization. The report says Tom Horton, AMR's chief executive officer, said in an interview that the new look has been in the works for two years, since around the time the company placed a massive order for 550 new planes. Because the new aircraft are made partly of lightweight composite materials that need to be painted, he said, "we knew we had to cross the paint bridge" and give up American's 45-year-old polished aluminum look. AMR and its creditors currently are weighing whether to merge with US Airways Group Inc. as a way for American to emerge from bankruptcy protection later this year, or whether to step out as an independent company. In a statement Thursday, US Airways said it applauded American on its new brand elements and livery, the report says. 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: Pilots See $522M Silver Lining in US Air Merger ------------------------------------------------------------------ Maria Chutchian of BankruptcyLaw360 reported that labor Labor contracts for American Airlines Inc. pilots could be increased by $522 million over six years if the airline consummates a potential merger with U.S. Airways Group Inc. that could be AA's ticket out of bankruptcy, the airlines' pilot unions said Tuesday. The Allied Pilots Association, which represents the AA pilots, and US Airline Pilots Association, released a joint statement outlining a memorandum of understanding recently approved by both groups' leadership, the report said. The joint statement reads: "Fellow pilots, The Allied Pilots Association (APA) and US Airline Pilots Association (USAPA) share the goal of achieving the best possible contract for our memberships, and the increasing possibility of an American Airlines-US Airways merger has brought us together to work for that common cause. While this is the first joint communication you are receiving, your respective negotiating committees have been working well together since shortly after the announcement of the possible merger last April. Additionally, APA and USAPA have enjoyed a good working relationship for years though our mutual involvement with the Coalition of Airline Pilots Associations (CAPA), advancing common interests that affect our profession. One of the results of these cooperative efforts has been the memorandum of understanding (MOU) that was approved by the APA Board of Directors on Dec. 29, 2012 and approved on Jan. 4, 2013 by the USAPA Board of Pilot Representatives for a membership vote. This MOU was the product of extensive discussions during the last month with our unions and representatives from US Airways, American Airlines and the AMR Unsecured Creditors' Committee. Due to restrictions imposed by a confidentiality agreement, we have been unable to share any details of this MOU with you until now. In addition to this joint update, you will be receiving information today from your respective negotiating committees outlining what the MOU means to you. If the merger is eventually approved, this MOU along with the APA-American Airlines 2012 Collective Bargaining Agreement will serve as the foundation for the joint collective bargaining agreement (JCBA) for the combined pilot force. Your negotiating committees will continue working together as we develop this contract, jointly pursuing the best possible outcome for our memberships and striving to expeditiously join other pilot groups that are already enjoying substantially improved contracts. We recognize the prospect for substantial improvements this potential merger holds for both pilot groups. We will continue our partnership in this effort and will update you as conditions warrant. Should this merger take place, we are looking forward to utilizing the best assets from both unions to work toward a JCBA that we can all be proud of?a JCBA that propels the ?New American Airlines' to the top of the industry." Keith Wilson Gary Hummel President, APA President, USAPA American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: AMR, USAir Pilot Unions OK Deal Ahead of Merger ------------------------------------------------------------------ Pilots for American Airlines Inc. and US Airways Group Inc. have agreed to a memorandum of understanding addressing working conditions related to a potential merger, according to a January 16 report by Tulsa World. The MOU provides both companies the means to evaluate the impact of pilot labor costs as well as operational and union seniority integration issues in a merger. The document also establishes wages and working conditions agreed to by American Airlines and the Allied Pilots Association in the latter's 2012 labor agreement as the baseline contract for all pilots if the two carriers should merge, according to the report. Bruce Hicks, American Airlines spokesman, said the MOU is based on the airline's labor agreement ratified by the APA union and signed by the parties last month. "The MOU was negotiated to give the parties greater clarity on both the costs and the pilot integration processes associated with a potential merger, as American reviews its strategic alternatives," Tulsa World quoted Mr. Hicks as saying. "It defines the terms and conditions of employment for American and US Airways pilots in the event of a merger and the process to reach a joint collective bargaining agreement," Mr. Hicks said. Maria Chutchian of BankruptcyLaw360 reported that labor contracts for American Airlines pilots could be increased by $522 million over six years if the airline consummates a potential merger with US Airways. The MOU document was negotiated over the past month by the APA union and US Airways' US Airlines Pilots Association, representatives of senior management of the companies and the committee representing unsecured creditors. The unions released a joint statement outlining the memorandum of understanding. The joint statement reads: "Fellow pilots, The Allied Pilots Association (APA) and US Airline Pilots Association (USAPA) share the goal of achieving the best possible contract for our memberships, and the increasing possibility of an American Airlines-US Airways merger has brought us together to work for that common cause. While this is the first joint communication you are receiving, your respective negotiating committees have been working well together since shortly after the announcement of the possible merger last April. Additionally, APA and USAPA have enjoyed a good working relationship for years though our mutual involvement with the Coalition of Airline Pilots Associations (CAPA), advancing common interests that affect our profession. One of the results of these cooperative efforts has been the memorandum of understanding (MOU) that was approved by the APA Board of Directors on Dec. 29, 2012 and approved on Jan. 4, 2013 by the USAPA Board of Pilot Representatives for a membership vote. This MOU was the product of extensive discussions during the last month with our unions and representatives from US Airways, American Airlines and the AMR Unsecured Creditors' Committee. Due to restrictions imposed by a confidentiality agreement, we have been unable to share any details of this MOU with you until now. In addition to this joint update, you will be receiving information today from your respective negotiating committees outlining what the MOU means to you. If the merger is eventually approved, this MOU along with the APA-American Airlines 2012 Collective Bargaining Agreement will serve as the foundation for the joint collective bargaining agreement (JCBA) for the combined pilot force. Your negotiating committees will continue working together as we develop this contract, jointly pursuing the best possible outcome for our memberships and striving to expeditiously join other pilot groups that are already enjoying substantially improved contracts. We recognize the prospect for substantial improvements this potential merger holds for both pilot groups. We will continue our partnership in this effort and will update you as conditions warrant. Should this merger take place, we are looking forward to utilizing the best assets from both unions to work toward a JCBA that we can all be proud of -- a JCBA that propels the 'New American Airlines' to the top of the industry." 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: Passenger Service Agents Reject CWA Union ------------------------------------------------------------ American Airlines Inc.'s passenger service agents voted for no union after an election that concluded on Tuesday, according to a January 15 report by Reuters. Of the 5,954 workers who cast a vote, 3,052 voted against unionizing while 2,891 voted in favor of the Communications Workers of America. There were 7,792 people eligible to vote, Reuters reported, citing data from the National Mediation Board, which conducted the election from December 4, 2012 to January 15, 2013. The worker group, which includes airport agents and reservations representatives, is the only group at American Airlines not unionized. In a January 15 statement, the CWA union said it will keep working to give agents a voice. "Agents at American Airlines will continue to stand strong and work for a voice at their airline and CWA will be with them," the union said. CWA also said a merger would give American Airlines agents another chance at representation since their counterparts at US Airways Group Inc. are represented by a union. The result of the election means American Airlines will have one fewer union to deal with as it completes Chapter 11 restructuring either independently or through a merger with US Airways, Bloomberg News reported. American Airlines disagreed with the CWA union over the amount of support it needed among workers to hold a representation vote. In December 2011, the union petitioned the mediation board to hold an election after collecting signatures of support from at least 35% of those eligible to vote, which is the minimum required by the agency. In February 2012, Congress raised the threshold to 50%. When the mediation board said the vote could proceed under the previous standard, American Airlines appealed to a federal district court which agreed to block balloting, Bloomberg News reported. The CWA union won an appeal before the 5th U.S. Circuit Court of Appeals and the airline filed papers with the Supreme Court on November 21, 2012, asking that the election be delayed until the case could be heard. Justice Antonin Scalia denied the stay on November 27, 2012, according to the report. American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN INT'L GROUP: Seeks Approval to File More Bank Suits ------------------------------------------------------------ Mary Williams Walsh, writing for The New York Times, reported that American International Group wants to be able to sue other banks, aside from Bank of America, that sold it mortgage-backed securities that plunged in value during the financial crisis. AIG has not said which banks, but possibilities include Deutsche Bank, Goldman Sachs and JPMorgan Chase, the report said. The report noted that since the summer of 2011, AIG has been battling Bank of America over claims that the bank packaged and sold it defective mortgages that dealt A.I.G. billions of dollars in losses. But to sue, A.I.G. first must win a court fight with an entity controlled by the Federal Reserve Bank of New York, which the insurer says is blocking its efforts to pursue the banks that caused it financial harm, the report said. The dispute illustrates the web of financial instruments that A.I.G. and the federal government became tangled in as the insurer nearly collapsed in 2008 and required a vast taxpayer bailout, the NY Times report pointed out. It also shows the complexity of apportioning blame, five years after the financial crisis, and making wrongdoers pay for their share of the harm. According to a lawsuit filed Friday, A.I.G. is seeking a declaration from a New York state judge that it has the right to pursue "billions of dollars of fraud and other tort claims that exist against numerous financial institutions," even though Fed officials have said A.I.G. gave up that right, the report cited. "If I were the general counsel of A.I.G., I would seek this kind of declaratory judgment," Henry T. C. Hu, a former regulator who is now a professor at the University of Texas School of Law, told the NY Times. "I don't know whether I'd win, but it's certainly worth trying." The NY Times report said that much of A.I.G.'s rescue was needed because it didn't have money in 2008 to cover guarantees that it sold banks in case the complex securities in their portfolios defaulted. But the latest dispute centers on a less familiar part of the bailout -- the part in which reserves were removed from A.I.G.'s life insurance units and replaced with what turned out to be troubled mortgage securities. The securitized housing loans lost value so fast when the bubble burst that some of A.I.G.'s life insurers risked being shut down by state insurance regulators. The Fed stepped in instead, and A.I.G.'s current lawsuit centers on the relationship that formed between the insurer and its rescuer as a result. The Fed paid about $44 billion to extricate A.I.G.'s life insurance units from soured trades, and set up a special entity, Maiden Lane II, to buy the plunging mortgage securities for $20.8 billion. Those securities had an original face value of $39.3 billion. Maiden Lane II is the sole defendant in A.I.G.'s lawsuit, according to the report. The complaint says that at the moment Maiden Lane II bought the securities, it locked the insurance units into an $18 billion loss -- the difference between the securities' face value and their price in late 2008, arguably the bottom of the market. A.I.G. attributes a large chunk of its losses to the mortgage securities that it bought from Bank of America. It sued the bank for $10 billion in August 2011. But one of Bank of America's defenses is that A.I.G. lacks standing, having given its litigation rights to Maiden Lane II, the report noted. Last month, for instance, two senior Fed officials submitted declarations saying they believed that as part of the sale of assets to Maiden Lane II, A.I.G. had agreed not to go after any of the banks. That prompted A.I.G. to file its suit, arguing that when it sold the tainted assets to Maiden Lane II, it did yield some litigation rights, but not the ones giving it the right to bring fraud complaints against the banks that put the securities together. A.I.G. said those banks had misled its life insurance and money management businesses regarding the quality of the securities, and "obtained artificially high credit ratings" so the securities would pass the life insurers' investment rules. A.I.G.'s lawsuit is separate from one that until late last week it considered joining, which argued that the New York Fed acted unconstitutionally during the bailout, harming the insurer's shareholders. That lawsuit was filed in 2011 by Maurice R. Greenberg, a former chief executive of A.I.G. and a major shareholder. Mr. Greenberg had hoped the company would join the lawsuit, but the possibility that A.I.G. would sue its rescuer drew sharp criticism and A.I.G.'s board decided against it. The new suit isn't seeking financial compensation from the Fed. About AIG American International Group, Inc. -- http://www.aig.com/-- is an international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services around the world. AIG common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. At the height of the 2008 financial crisis, AIG experienced a liquidity crunch when its credit ratings were downgraded below "AA" levels by Standard & Poor's, Moody's Investors Service and Fitch Ratings. AIG almost collapsed under the weight of bad bets it made insuring mortgage-backed securities. The Company, however, was bailed out by the Federal Reserve, but even after an initial infusion of $85 billion, losses continued to grow. The later rescue packages brought the total to $182 billion, making it the biggest federal bailout in U.S. history. AIG sold off a number of its businesses and other assets to pay down loans received from the U.S. government. AMF BOWLING: Files Schedules of Assets and Liabilities ------------------------------------------------------ AMF Bowling Worldwide, Inc., filed its schedules of assets and liabilities with the U.S. Bankruptcy Court for the Eastern District of Virginia, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ------------ A. Real Property $508,115 B. Personal Property $29,585,582 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $316,854,533 E. Creditors Holding Unsecured Priority Claims $1,800 F. Creditors Holding Unsecured Non-priority $8,610,156 Claims ----------- ------------ TOTAL $30,093,697 $325,466,489 A copy of the schedules is available at: http://bankrupt.com/misc/amf.doc322.pdf 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. AMPAL-AMERICAN: Creditors Committee Files Own Plan -------------------------------------------------- BankruptcyData reported that Ampal-American Israel's official committee of unsecured creditors filed with the U.S. Bankruptcy Court an Amended Plan of Reorganization and related Disclosure Statement. According to the Disclosure Statement, "The Plan is a reorganizing plan for the Debtor. Pursuant to the Plan, distributions to holders of Allowed General Unsecured Claims against the Debtor's Estate in satisfaction of each such holder's Claim will be the Pro Rata share (after payment in Cash out of funds held in the Series B Deposit Account and the Series C Deposit Account) of either (i) 100% of the Preferred Stock of the Reorganized Debtor or (ii) the Cash Payment if the Equity Buyout Option is exercised pursuant to Section 4.7 of the Plan. The funds held in the Series B Deposit Account and the Series C Deposit Account, respectively, shall be distributed Pro Rata to the holders of the Series B and Series C Debentures, respectively. The Plan does not provide for any distribution to Intercompany Claims, however, the Reorganized Debtor will have the right to adjust, reinstate, cancel, extinguish, or pay such claims. Holders of Equity Interests will retain their shares of Class A Stock, now in the Reorganized Debtor; moreover, such holders will have the right to exercise the Equity Buyout Option by making a cash investment in the Debtor in the amount equal to seventy-five (75%) of the sum of (i) the Net Allowed General Unsecured Claims Amount and (ii) the total amount of all scheduled and filed Claims against the Debtor that have not been Allowed (excluding Claims that have been disallowed by a Final Order), in which case the holders of General Unsecured Claims, instead of receiving Preferred Stock, will instead receive their Pro Rata share of the Cash Payment," the report said. About Ampal-American Ampal-American Israel Corporation -- http://www.ampal.com/-- acquired interests primarily in businesses located in Israel or that are Israel-related. Ampal-American filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-13689) on Aug. 29, 2012, to restructure the Company's Series A, Series B and Series C debentures. Bankruptcy Judge Stuart M. Bernstein presides over the case. Ampal-American sought bankruptcy protection in the U.S. because bankruptcy laws in Israel would lead to the Company's liquidation. Michelle McMahon, Esq., at Bryan Cave LLP, serves as the Debtor's counsel. Houlihan Lokey serves as investment banker. The petition was signed by Irit Eluz, chief financial officer, senior vice president. The Company scheduled $290,664,095 in total assets and $349,413,858 in total liabilities. A three-member official committee of unsecured creditors is represented by Brown Rudnick as counsel. The Committee has proposed a Chapter 11 Plan for the Debtor pursuant to a settlement with the Debtor. AUTO CARE: Unsecureds to Be Paid in Full Under Plan --------------------------------------------------- Auto Care Mall of Fremont, Inc., filed a plan of reorganization and disclosure statement in support of the plan dated Dec. 12, 2012. The Plan provides for the payment over time of the Debtor's debt for real estate taxes, first and second mortgages arrearages to Bank of Marin and for reinstatement of the subject loans. The Debtor proposes to eliminate the encumbrance of Bank of America by mutual agreement or successful completion of an adversary proceeding filed to determine status of the Bank of America deed of trust. All general unsecured claims totaling $7,410 will be paid in full with interest at the rate of 3% per annum within 60 days of the Effective Date. In addition, security interest holders will retain their equity interests in the Debtor. Equity holders and principal owner of the Debtor, Dan Duc, is in the process of setting the $6,000 claim of BofA as to junior trust deed, Dan Duc personally and Flipper Marine. Additionally, Mr. Duc is going to lenders, friends and relatives and will raise the funds necessary to pay, back taxes and reinstate first and second loans with Bank of Marin. A full-text copy of the disclosure statement is available for free at http://bankrupt.com/misc/AUTO_CARE_ds.pdf About Auto Care Mall of Fremont Auto Care Mall of Fremont, Inc., in San Jose, California, filed for Chapter 11 bankruptcy (Bankr. N.D. Calif. Case No. 12-56050) on Aug. 15, 2012. The only shareholders of the Debtor are Dan Duc (50%) and his wife (50%). Judge Stephen L. Johnson presides over the case. The Law Office of Patrick Calhoun, Esq., serves as the Debtor's counsel. The petition was signed by Gina Baumbach, vice president. On May 18, 2012, at the behest of the secured lender, Bank of Marin, the Alameda County Superior Court of the State of California appointed Susan L. Uecker as receiver to the Debtor's real property commonly known as 40851-40967 Albrae Street, in Fremont, California. The Superior Court appointed the receiver to address the Debtor's mismanagement and misappropriation of the bank's cash collateral. The property is improved with four single story warehouse buildings totaling 38,226 square feet and is occupied exclusively with auto service related businesses. The property consists of 15 units, three of which are currently vacant. The property generates monthly rents totaling roughly $34,492 in addition to common area maintenance charges totaling $8,235. According to Bank of Marin, the Debtor owes the bank roughly $6.5 million under two prepetition promissory notes. The Debtor's Schedule D identifies a judgment lien against the property held by Bank of America to secure a $6 million claim scheduled by the Debtor as a non-contingent, liquidated, and undisputed held by Bank of America. The Debtor's Schedules D identifies non- contingent, liquidated and undisputed claims totaling $11.105 million that encumber the property, which the Debtor values at $7.4 million. The Debtor disclosed $13,400,000 in assets and $11,119,045 in liabilities as of the Chapter 11 filing. AUTO CARE: Bank of Marin Responds to Motion for Ch.7 Conversion --------------------------------------------------------------- Secured creditor Bank of Marin has submitted a response to the motion by U.S. Trustee to convert the Chapter 11 case of Auto Care Mall of Fremont, Inc., to a case under Chapter 7. According to the bank, the U.S. Trustee may well be correct that conversion to Chapter 7 is appropriate so that a Chapter 7 trustee may evaluate and pursue claims against shareholders of the Debtor based on loans and preferential transfers made to the shareholders prior to the bankruptcy filing. However, the bank argues, the U.S. Trustee's action does not involve property that is subject to Bank of Marin's Stay Relief Motion. Because of that fact, and because section 362(d)(3) mandates termination of the automatic stay in this single asset real estate case due to the Debtor's failure to file a plan of reorganization before November 13, 2012, that has a reasonable possibility of being confirmed, that should not delay or otherwise affect the Court's granting of Bank of Marin's Stay Relief Motion, the bank says. As reported by the Troubled Company Reporter on Jan. 8, 2013, August B. Landis, Acting United States Trustee for Region 17, asked the Bankruptcy Court to convert the Debtor's Chapter 11 case to under one under Chapter 7 of the Bankruptcy Code. The U.S. Trustee said the Debtor has no incentive to pursue collection of significant loans and preferential transfers to the shareholders of the Debtor, and an unbiased and independent Chapter 7 trustee would be in a much better position to evaluate and pursue such transfers. The U.S. Trustee further said in the filing, "In addition, the commercial real property owned by the Debtor is in receivership, and the lender has sought relief from stay in order to foreclose. Finally, the Debtor has failed to file any monthly operating reports in the case -- the Court, the creditors and the UST have no idea what is happening in the case." About Auto Care Mall of Fremont Auto Care Mall of Fremont, Inc., in San Jose, California, filed for Chapter 11 bankruptcy (Bankr. N.D. Calif. Case No. 12-56050) on Aug. 15, 2012. The only shareholders of the Debtor are Dan Duc (50%) and his wife (50%). Judge Stephen L. Johnson presides over the case. The Law Office of Patrick Calhoun, Esq., serves as the Debtor's counsel. The petition was signed by Gina Baumbach, vice president. On May 18, 2012, at the behest of the secured lender, Bank of Marin, the Alameda County Superior Court of the State of California appointed Susan L. Uecker as receiver to the Debtor's real property commonly known as 40851-40967 Albrae Street, in Fremont, California. The Superior Court appointed the receiver to address the Debtor's mismanagement and misappropriation of the bank's cash collateral. The property is improved with four single story warehouse buildings totaling 38,226 square feet and is occupied exclusively with auto service related businesses. The property consists of 15 units, three of which are currently vacant. The property generates monthly rents totaling roughly $34,492 in addition to common area maintenance charges totaling $8,235. According to Bank of Marin, the Debtor owes the bank roughly $6.5 million under two prepetition promissory notes. The Debtor's Schedule D identifies a judgment lien against the property held by Bank of America to secure a $6 million claim scheduled by the Debtor as a non-contingent, liquidated, and undisputed held by Bank of America. The Debtor's Schedules D identifies non- contingent, liquidated and undisputed claims totaling $11.105 million that encumber the property, which the Debtor values at $7.4 million. The Debtor disclosed $13,400,000 in assets and $11,119,045 in liabilities as of the Chapter 11 filing. BEALL CORP: Wabash Non-Compete Agreements Threaten Sale ------------------------------------------------------- Stephanie Gleason at Dow Jones' DBR Small Cap reports that semi- trailer manufacturer Wabash National Corp. was the successful bidder during a Chapter 11 auction for three parcels of Beall Corp.'s assets with a $21.35 million bid, but Beall principals' refusal to sign non-compete agreements could threaten the deal. About Beall Corp. Portland, Oregon-based Beall Corporation, a manufacturer of lightweight, efficient, and durable tanker trucks, trailers and related products, filed a Chapter 11 bankruptcy petition (Bankr. D. Ore. Case No. 12-37291) on Sept. 24, 2012, estimating at least $10 million in assets and liabilities. Founded in 1905, Beall has four factories and nine sale branches across the U.S. The Debtor has 285 employees, with an average weekly payroll of $300,000. Judge Elizabeth L. Perris presides over the case. The Debtor has tapped Tonkon Torp LLP as counsel. The Debtor disclosed $14,015,232 in assets and $28,791,683 in liabilities as of the Chapter 11 filing. Robert D. Miller Jr., the U.S. Trustee for Region 18, appointed six members to the official committee of unsecured creditors. Ball Janik LLP represents the Committee. BERNARD L. MADOFF: Removing Suit Has Little Significance -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. District Judge Jed Rakoff won't be granting any tardy requests to take lawsuits away from the bankruptcy judge involving Bernard L. Madoff Investment Securities LLC. Judge Rakoff's ruling on Jan. 15 may nonetheless have little practical significance. The report recounts that Madoff trustee Irving Picard sued a customer named Betty Klein in 2010. In March 2012, the bankruptcy judge decreed that any attempt at removing lawsuits to district court must be initiated by April 2, 2012. Ms. Klein says her lawyer never received notification about the deadline and filed papers in July asking Judge Rakoff to remove the lawsuit from bankruptcy court. Mr. Picard produced an affidavit showing that notice of the deadline was sent to Klein's lawyer as the lawyer requested. Judge Rakoff said in his four-page opinion that merely denying receipt isn't enough to counter the presumption that notice of the deadline was properly given. He therefore refused to take the suit away from the bankruptcy judge. Mr. Rochelle notes that refusing to even consider removing the suit makes little practical difference. Early this month Judge Rakoff wrote an opinion where he concluded that the bankruptcy court doesn't have constitutional power to make final judgments in lawsuits against customers asserting fraudulent transfer claims. He sent all the cases back to the bankruptcy judge with instructions to make recommended rulings. In substance, Judge Rakoff ruled this month on the very issues that Ms. Klein wanted the judge to consider. The Klein opinion was part of Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 12-mc-00115, U.S. District Court, Southern District of New York (Manhattan). About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.) The SIPA Trustee has said that as of March 31, 2012, through prepetition litigation and other settlements, he has successfully recovered, or reached agreements to recover, more than $9 billion -- over 50% of the principal lost in the Ponzi scheme by those who filed claims -- for the benefit of all customers of BLMIS. The liquidation has so far has cost the Securities Investor Protection Corp. $1.3 billion, including $791 million to pay a portion of customers' claims. Mr. Picard has so far made only one distribution in October of $325 million for 1,232 customer accounts. Uncertainty created by various appeals has limited Mr. Picard's ability to distribute recovered funds. BLOCKBUSTER INC: Dish May Shutter UK Unit After No Buyer Found -------------------------------------------------------------- Jessica Hodgson at Daily Bankruptcy Review reports that the U.K. arm of DVD rental company Blockbuster called in administrators to sell or wind down the company after U.S. parent Dish Network Corp. failed to find a buyer. The move marks the third failure of a high-profile British retailer this year and underscores the bleak conditions in the U.K. retail sector as well as the shift away from high street DVD rentals as consumers increasingly opt to download movies over the Internet or use post-based rental services, according to the report. About Blockbuster Inc. Blockbuster Inc., the movie rental chain with a library of more than 125,000 titles, along with 12 U.S. affiliates, initiated Chapter 11 bankruptcy proceedings with a pre-arranged reorganization plan in Manhattan (Bankr. S.D.N.Y. Case No. 10-14997) on Sept. 23, 2010. It disclosed assets of $1 billion and debts of $1.4 billion at the time of the filing. Martin A. Sosland, Esq., and Stephen Karotkin, Esq., at Weil, Gotshal & Manges, serve as counsel to the U.S. Debtors. Rothschild Inc. is the financial advisor. Alvarez & Marsal is the restructuring advisor with A&M managing director Jeffery J. Stegenga as chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. The Official Committee of Unsecured Creditors retained Cooley LLP as its counsel. In April 2011, Blockbuster conducted a bankruptcy court-sanctioned auction for all the assets. Dish Network Corp. won with an offer having a gross value of $320 million. BOOMERANG SYSTEMS: Incurs $17.4 Million Net Loss in 2012 -------------------------------------------------------- Boomerang Systems, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $17.42 million on $1.14 million of total revenues for the year ended Sept. 30, 2012, compared with a net loss of $19.10 million on $1.59 million of total revenues during the prior year. Boomerang Systems' balance sheet at Sept. 30, 2012, showed $6.03 million in total assets, $21.28 million in total liabilities and a $15.25 million total stockholders' deficit. Bankruptcy Warning "Our operations may not generate sufficient cash to enable us to service our debt. If we were to fail to make any required payment under the notes and agreements governing our indebtedness or fail to comply with the covenants contained in the notes and agreements, we would be in default. Our debt holders would have the ability to require that we immediately pay all outstanding indebtedness. If the debt holders were to require immediate payment, we might not have sufficient assets to satisfy our obligations under the notes or our other indebtedness. In such event, we could be forced to seek protection under bankruptcy laws, which could have a material adverse effect on our existing contracts and our ability to procure new contracts as well as our ability to recruit and/or retain employees. Accordingly, a default could have a significant adverse effect on the market value and marketability of our common stock," the Company said in the filing. A copy of the Form 10-K is available for free at: http://is.gd/ZiUaKI About Boomerang Systems Headquartered in Morristown, New Jersey, Boomerang Systems, Inc. (Pink Sheets: BMER) through its wholly owned subsidiary, Boomerang Utah, is engaged in the design, development, and marketing of automated racking and retrieval systems for automobile parking and automated racking and retrieval of containerized self-storage units. BROCADE COMMUNICATIONS: Moody's Rates $300MM Unsecured Notes 'B1' ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Brocade Communications Systems, Inc.'s proposed $300 million senior unsecured notes and revised the rating on Brocade's existing senior secured debt to Ba1 from Ba2. It is expected that the new notes will be used to partially refinance the company's secured debt. The corporate family rating remains Ba3 and the ratings outlook remains positive. The debt instrument ratings were assigned using Moody's Loss Given Default Methodology. The upward revision in the secured debt rating to Ba1 reflects the expected repayment of the secured notes due 2018 and increase in junior debt. The unsecured rating reflects its junior-most position in the capital structure. The ratings on the secured notes due 2018 will be withdrawn upon repayment. Ratings Rationale Revenue, EBITDA and free cash flow grew in the fourth quarter and fiscal year ended October 27, 2012 driven by continued strength in the company's storage area networking (SAN) business. Moody's expects the SAN business will remain strong in 2013 though some challenges will continue for the Ethernet business. The rating outlook remains positive reflecting Moody's view that given the business outlook and company's strong balance sheet, ratings could be upgraded in the near term particularly if the newly appointed CEO maintains Brocade's strategic direction and conservative financial policies. On January 14, 2013, Brocade announced the appointment of networking industry veteran, Lloyd Carney to replace long term CEO Michael Klayko who announced his retirement last July. Upgrades: Issuer: Brocade Communications Systems, Inc. Senior Secured Bank Credit Facility Oct 7, 2013, Upgraded to Ba1 from Ba2 Senior Secured Bank Credit Facility Oct 7, 2013, Upgraded to LGD2, 25 % from LGD3, 41 % Senior Secured Regular Bond/Debenture Jan 15, 2020, Upgraded to Ba1 from Ba2 Senior Secured Regular Bond/Debenture Jan 15, 2020, Upgraded to LGD2, 25 % from LGD3, 41 % Assignments: Issuer: Brocade Communications Systems, Inc. Senior Unsecured Regular Bond/Debenture, Assigned B1 Senior Unsecured Regular Bond/Debenture, Assigned LGD5, 78 % The principal methodology used in rating Brocade was the Global Communications Equipment Industry Methodology published in June 2008. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Brocade Communications Systems, Inc. is a leading producer of storage area network ("SAN") equipment and a niche provider of data network equipment. Brocade, with revenues of $2.2 billion for the twelve months ended October 2012, is headquartered in San Jose, CA. BROCADE COMMUNICATIONS: S&P Assigns 'BB+' Rating to $300MM Notes ---------------------------------------------------------------- Standard & Poor's Rating Services assigned its 'BB+' issue level rating and '3' recovery rating to Brocade Communications Systems Inc.'s new $300 million senior unsecured notes. The '3' recovery rating indicates our expectations for meaningful (50% to 70%) recovery of principle in the event of payment default. S&P also affirmed its existing ratings on the company: the 'BB+' corporate credit rating and the 'BBB' issue-level rating on the company's $300 million senior secured notes due 2020. The '1' recovery rating on the senior secured notes remains unchanged and indicates expectations for very high (90% to 100%) recovery of principle in the event of payment default. The ratings on San Jose, Calif.-based Brocade Communications Systems Inc. reflect Standard & Poor's expectation that the company will maintain its "intermediate" financial risk profile, as evidenced by a credit profile S&P considers conservative and consistent cash flow generation. S&P views Brocade's business risk profile as "fair," reflecting its strong presence in the mature core storage area network (SAN) segment and a small market share in the much larger and highly competitive Ethernet switching segment. "Brocade continues to deliver mixed results, with consistent growth in the SAN segment offset by uneven performance in the Ethernet switching segment," said Standard & Poor's credit analyst Andrew Chang. "Despite macroeconomic headwinds and competitive industry dynamics, we expect Brocade to drive low single-digit revenue growth overall in fiscal 2013 as SAN growth remains stable and the Ethernet switching segment resumes growth via new product rollouts," added Mr. Chang. Brocade benefits from the underlying trend toward network convergence as the proliferation of video, wireless products, and IT infrastructure virtualization lead to increasing demand for networking products. CANYONS AT DEBUQUE: Wins Extension of Right to Use Cash Collateral ------------------------------------------------------------------ U.S. Bankruptcy Judge Elizabeth E. Brown has approved a stipulation for extension of the use of cash collateral between Bluestone Ridge Ranch East, LLC, and Canyons at Debeque Ranch, LLC, and First Citizens Bank and Trust. The Debtors and First Citizens previously entered into a Stipulation for Authorization of Debtors' Use of Cash Collateral which provided for the Debtors' use of cash collateral through October 31, 2012. The parties agree to extend the term of the Stipulation from October 31, 2012 through January 31, 2013, pursuant to a Budget. The stipulation provides that the Debtors may provide a revised Budget for the extended time period to First Citizens, subject to First Citizens' approval, and the Budget approval and use of cash collateral will be governed by the same terms. About Canyons @ DeBeque Ranch Canyons @ DeBeque Ranch, LLC, filed a Chapter 11 petition (Bankr. D. Colo. Case No. 12-24993) in Denver on July 18, 2012. Affiliate Bluestone Ridge Ranch East, LLC, aka Bluestone Ridge Ranch PUD, based in Butte, Montana, filed a separate Chapter 11 petition (Bankr. D. Colo. Case No. 12-24994) on the same day. Judge Elizabeth E. Brown oversees the case. The Debtor is represented by Jeffrey S. Brinen, Esq., at Kutner Miller Brinen, P.C., serves as counsel to the Debtor. Canyons @ DeBuque disclosed $12,115,374 in assets and $7,182,814 in liabilities as of the Chapter 11 filing. CANYONS AT DEBUQUE: First-Citizens Objects to Disclosure Statement ------------------------------------------------------------------ First-Citizens Bank & Trust Company, as Receiver for United Western Bank, objects to the adequacy of the Disclosure Statement explaining the Plan of Reorganization by Canyons @ DeBeque Ranch, LLC. Douglas W. Brown, Esq., at Brown, Berardini & Dunning, P.C., representing the Bank, tells the Court that the Debtors do not disclose their tax basis in any of the real properties which would be essential in determining available net proceeds in the event of a sale of the real properties. The Disclosure Statement also does not address the potential for any deficiency claims on the Canyons Obligations and Bluestone Obligations. First-Citizens' secured position may become under- secured during the proposed Plan if the Debtors cannot sell or refinance the real properties securing same. In addition, there is no provision in the Plan for a reevaluation of the Plan in the event that the values of the properties decline during the 4 year plan. Mr. Brown contends that the Disclosure Statement must disclose that the Ranches of the West, Inc., is an insider of the Debtors and include an analysis of why the Debtors have not pursued an avoidance or subordination of Ranches' claims in the best interests of the Estates and all creditors. In addition, the Disclosure Statement does not sufficiently address why it is paying 3.75% on the secured claims, specifically it does not explain how such interest rate was arrived at. The Disclosure Statement also fails to disclose how the Debtors can make monthly payments derived from Other Proceeds when such Other Proceeds appears to be based in part on annual payments to be received from anticipated leases that have not yet been entered into. Mr. Brown notes that the Disclosure Statement is lacking in its explanation of how the Debtors will generate crop and pasture revenues of approximately $200,000 in the first year. The Debtors have failed to explain in detail who they are talking to concerning leasing of the improved grounds, which leases will generate such revenues, nor do they have sufficient information to explain why their crop production will increase 10% in the second and third years of the Plan, simply stating that increased carrying capacities will generate same. When these Debtors do not have any history of these levels of crop production, this is simply insufficient disclosure. There also needs to be disclosure on how Debtor's prior removal of the top soil on the Properties will affect future crop production. The liquidation analysis is not sufficient and fails to give a creditor a clear understanding of whether there is available equity for all creditors in the event of liquidation. Simply stating that the estates have a liquidation value of 75% of the Debtors' market values is not sufficient disclosure. Mr. Brown points out that the Disclosure Statement is not clear as to what personal assets the Debtors hold or intend to retain. The latest Monthly Operating Report for Bluestone reflects that the Debtor currently carries $500,000.00 worth of vehicle insurance, yet it doesn't appear that Bluestone holds any of such type of asset. The Bank is represented by: Douglas W. Brown, Esq. BROWN, BERARDINI & DUNNING, P.C. 2000 S. Colorado Blvd. Tower Two, Suite 700 Denver, CO 80222 Tel: (303) 329-3363 Email: dbrown@bbdfirm.com As a result and in addition to the objections filed by parties-in- interest, Judge Elizabeth E. Brown has filed a notice directing the Debtor to correct discrepancies in the Disclosure Statement. About Canyons @ DeBeque Ranch Canyons @ DeBeque Ranch, LLC, filed a Chapter 11 petition (Bankr. D. Colo. Case No. 12-24993) in Denver on July 18, 2012. Affiliate Bluestone Ridge Ranch East, LLC, aka Bluestone Ridge Ranch PUD, based in Butte, Montana, filed a separate Chapter 11 petition (Bankr. D. Colo. Case No. 12-24994) on the same day. Judge Elizabeth E. Brown oversees the case. The Debtor is represented by Jeffrey S. Brinen, Esq., at Kutner Miller Brinen, P.C., serves as counsel to the Debtor. Canyons @ DeBuque disclosed $12,115,374 in assets and $7,182,814 in liabilities as of the Chapter 11 filing. CAREY LIMOUSINE: Drivers Want to Steer It Through Bankruptcy ------------------------------------------------------------ Katy Stech at Dow Jones' DBR Small Cap reports that drivers for Carey Limousine L.A. Inc. who won a multimillion-dollar judgment against the company said they have a better way to get the company out of bankruptcy: Sue parent company Carey International Inc. About Carey Limousine Carey Limousine L.A., Inc., a subsidiary of Carey International, is one of the largest chauffeured transportation services companies in Southern California. Carey Limousine filed a Chapter 11 petition (Bankr. D. Del. Case No. 12-12664) on Sept. 25, 2012. The Debtor operates from a centralized location with convenient proximity to Los Angeles International Airport, Beverly Hills, Downtown Los Angeles, and other centers of business and tourism in Southern California. The Debtor has 17 employees and utilized 30 independent owner-operators. Seventeen farm-out companies, providing chauffeurs, fulfill overflow customer requests. The Debtor estimated just under $500,000 in assets and at least $100 million in liabilities. The Debtor said it owes $146.6 million in term loans provided by lenders led by Highland Financial Corp., as arranger and NexBank, SSB, as administrative agent. The Debtor has tapped Young, Conaway, Stargatt & Taylor, as counsel; Willkie Farr & Gallagher LLP, as bankruptcy co-counsel; and Kurtzman Carson Consultants LLC as the claims and notice agent. CARY CREEK: Intends to Keep Affiliate AAC as Property Manager ------------------------------------------------------------- Cary Creek Limited Partnership filed with the Bankruptcy Court a motion to continue the employment of American Asset Corporation as property manager for the Debtor. Prior to the Petition Date, AAC, formerly known as AAC Real Estate Services, Inc., a North Carolina corporation, was the property manager for the Debtor's property in North Carolina. AAC, an affiliate of the Debtor by way of common ownership, employs individuals who oversee and handle the day-to-day management and development of the Property pursuant to a Development, Construction Management and Marketing Agreement dated June 8, 2004 between the Debtor and AAC. AAC also is the property manager for other companies affiliated with the Debtor. AAC would continue to receive after the Petition Date certain fees for its services, including an infrastructure fee and building fee, and reimbursement for out-of-pocket expenses paid on behalf of the Debtor. The Debtor says that the fees are reasonable as compared to industry standards for similar properties in Wake County. The Property Management Agreement also contains provisions for (i) leasing commissions, (ii) sales commissions, and (iii) purchase commissions. The Debtor says no services will be provided that would require payment of commissions, no commissions will be paid to AAC unless otherwise approved by the Court after notice and hearing. In its capacity as property manager for the Debtor, AAC is not a "professional person" within the meaning of section 327(a) of the Bankruptcy Code, and thus, Court approval is not required for the continued employment of AAC in such capacity. In addition, the Debtor and AAC have common officers; namely, Terry Bradshaw and Paul Herndon. Thus, the principals of the Debtor are, in effect, providing the property management services through AAC, an affiliated entity. About Cary Creek Cary Creek Limited Partnership sought Chapter 11 protection (Bankr. E.D.N.C. Case No. 13-00041) on Jan. 3, 2013. Cary Creek is the owner of 1,009 acres of land located adjacent to the west boundary of NC Highway 55 immediately sought of its interchange with NC-540/I-540, in Cary, Wake County, North Carolina. The property is managed by American Asset Corporation. The primary secured creditor is Bank of America, N.A. BofA has a first mortgage lien on the Debtor's property. Cary Creek is seeking joint administration of its Chapter 11 case with the consolidated Chapter 11 cases of Brier Creek Corporate Center Associates Limited Partnership, et al., which sought bankruptcy protection on March 9, 2012 (Bankr. E.D.N.C. Lead Case No. 12-01855). Brier Creek, et al., own real property located in Wake County, North Carolina and Mecklenburg County, North Carolina. Cary Creek and the Brier Creek Debtors are parties to litigation pending in the Bankruptcy Court against BofA, Adv. Proc. No. 12-00121. The BofA litigation was instituted on Oct. 13, 2011, in Mecklenburg County Superior Court, and was removed and subsequently transferred to the Bankruptcy Court after the Brier Creek Debtors filed for Chapter 11 bankruptcy protection in March 2012. Cary Creek is related to the Brier Creek Debtors through common ownership, common property management, and common secured and unsecured creditors. CARY CREEK: Proposes $300,000 DIP Financing From AAC ---------------------------------------------------- Cary Creek Limited Partnership has no income or cash reserves from which to pay the costs or expenditures likely to arise during the Chapter 11 case. Accordingly, the Debtor seeks approval from the Bankruptcy Court to obtain postpetition financing to timely pay the on-going costs of operating, preserving, and protect the business and property of the estate, and preserve the going-concern value of the Property for the benefit of creditors and the estate. The Debtor seeks to obtain post-petition financing from AAC Retail Property Development and Acquisition Fund, LLC. The postpetition financing would be a credit facility in an amount not to exceed $300,000 upon these terms: a. The outstanding principal balance would bear interest at 4% per annum, and all principal and accrued interest would be due and payable in full upon the earliest of (a) June 30, 2013, (b) the date on which payment of the Obligations is accelerated by the Lender as provided in the Financing Agreement, and (c) the date of closing of a sale of all or substantially all of the assets of any Debtor. b. The financing would be used to fund the Debtor's operating expenses, costs of administration, capital expenditures, and other expenses. c. The outstanding indebtedness would be secured, pursuant to 11 U.S.C. Sec. 364(c), by (i) a first lien on property of the estate that is not otherwise subject to a lien and (ii) a junior lien on property of the estate that is subject to a lien, excluding only bankruptcy causes of action or the proceeds thereof. d. Any deficiency would be treated as a super-priority administrative expense pursuant to Sec. 364(c), subject and subordinate to the payment of (a) the fees specified in 28 U.S.C. Sec. 1930, and (b) a carve-out in an amount not to exceed $100,000 ($75,000 for the Debtor's professionals and $25,000 for the professionals for any official committee) for the payment of allowed but unpaid fees of such professionals approved by the Court pursuant to Sections 327 or 328 of the Bankruptcy Code. About Cary Creek Cary Creek Limited Partnership sought Chapter 11 protection (Bankr. E.D.N.C. Case No. 13-00041) on Jan. 3, 2013. Cary Creek is the owner of 1009 acres of land located adjacent to the west boundary of NC Highway 55 immediately sought of its interchange with NC-540/I-540, in Cary, Wake County, North Carolina. The property is managed by American Asset Corporation. The primary secured creditor is Bank of America, N.A. BofA has a first mortgage lien on the Debtor's property. Cary Creek is seeking joint administration of its Chapter 11 case with the consolidated Chapter 11 cases of Brier Creek Corporate Center Associates Limited Partnership, et al., which sought bankruptcy protection on March 9, 2012 (Bankr. E.D.N.C. Lead Case No. 12-01855). Brier Creek, et al., own real property located in Wake County, North Carolina and Mecklenburg County, North Carolina. Cary Creek and the Brier Creek Debtors are parties to litigation pending in the Bankruptcy Court against BofA, Adv. Proc. No. 12-00121. The BofA litigation was instituted on Oct. 13, 2011, in Mecklenburg County Superior Court, and was removed and subsequently transferred to the Bankruptcy Court after the Brier Creek Debtors filed for Chapter 11 bankruptcy protection in March 2012. Cary Creek is related to the Brier Creek Debtors through common ownership, common property management, and common secured and unsecured creditors. CELOTEX CORP: NJ High Court Tackles Post-Ch. 11 Coverage Row ------------------------------------------------------------ Martin Bricketto of BankruptcyLaw360 reported that a bankruptcy decision that notice failings prevented Celotex Corp. from securing excess insurance coverage for asbestos-related claims at the time shouldn't bar a company trust from now obtaining coverage for more recent claims, an attorney for the trust told the New Jersey Supreme Court on Tuesday. Representing the Celotex Asbestos Settlement Trust, James R. Matthews of Keating Muething & Klekamp PLLC asked the court to preserve a 2011 Appellate Division ruling that the Florida bankruptcy court decisions and subsequent rulings upholding it did not address future claims, the report said. About Celotex Corp. The Celotex Corporation manufactured, marketed, and distributed building products. Carey Canada Inc. mined asbestos until it ceased operations in 1986. Celotex and Carey Canada sought chapter 11 protection (Bankr. M.D. Fla. Case No. 90-10016) on Oct. 12, 1990. At the time of the filing, Celotex and Carey Canada had been named as defendants in thousands of lawsuits filed by Asbestos Personal Injury Claimants, and in hundreds of lawsuits filed by Asbestos Property Damage Claimants. On Dec. 6, 1996, the Bankruptcy Court entered an Order Confirming the Modified Joint Plan of Reorganization for Celotex and Carey Canada. A principal feature of the confirmed Plan was the creation of the Asbestos Settlement Trust under 11 U.S.C. Sec. 524(g) "to address, liquidate, resolve, and disallow or allow and pay Asbestos Claims, which will operate in accordance with the Asbestos Claims Resolution Procedures." CHEROKEE SIMEON: Facing Challenge on Bid to Use Cash Collateral --------------------------------------------------------------- Cherokee Simeon Venture, I, LLC, asks the Bankruptcy Court for authority to use cash collateral of EFG-Campus Bay LLC. The Debtor requests the use of roughly $10,100 per month. In connection with the Debtor's termination of the services of a rent receiver that previously oversaw the Debtor's real property, the Debtor seeks to use funds in its bank account for the limited purposes of paying a security company to protect its real property; certain miscellaneous expenses to preserve the property; and the Debtor's accountant, CIS, for tax return preparation services and other limited accounting services. In addition, to the extent necessary and appropriate, the Debtor seeks the use of cash collateral for purposes of paying any bankruptcy fees. Without immediate access to the cash in the Account, the Debtor said it will be unable to preserve the Property's value or its Chapter 11 case. The Debtor also seeks permission to use cash collateral for miscellaneous charges such as refuse disposal ($199.78 per month), landscape maintenance ($65.92 per month), fire alarm monitoring services ($713.04) and utility services such as electric and water. Additionally, the Debtor may need cash for payment of quarterly United States Trustee fees. However, the funds in the Debtor's Account may constitute part of the Lender's collateral, and therefore, may not be used in support of the Chapter 11 case, absent compliance with section 363(c)(2) of the Bankruptcy Code. To provide the Lender with adequate protection, the Debtor will grant the Lender a valid and perfected replacement security interest and lien in all of the Pre-Petition Collateral, to the extent of any diminution of the value of the Lender's Pre-Petition Collateral. To the extent the adequate protection is ultimately determined to be insufficient, the Lender could receive a superpriority administrative claim in the amount of its valid and perfected claim to be determined. EFG-Campus Bay Objects Sandra G.M. Selzer, Esq., at Greenberg Traurig LLP, tells the Court that the Cash Collateral Motion should be considered in light of EFG-Campus Bay LLC's pending motion to dismiss this Chapter 11 case or have it transferred to the U.S. Bankruptcy Court for the Northern District of California. Only if the Court determines to retain the case should it act on this motion at all. Ms. Selzer contends that the motion should be denied. While the motion makes perfunctory recitals about adequate protection, replacement liens and the like, the Cash Collateral Motion is entirely disconnected from the facts of this case. It makes no showing of a need for usage of EFG's cash collateral, nor does it show that adequate protection can or would be provided to EFG. EFG's position cannot be adequately protected against diminution that will be caused by the Debtor's proposed actions and instead, the effect of granting this motion will be to authorize the expenditure of EFG's collateral (money) for the benefit of the Debtor -- and Zeneca, Inc. -- with essentially no chance of recoupment, much less benefit, to EFG or its other collateral. Even giving the Debtor the benefit of the doubt concerning the referenced expenditures, Ms. Selzer contends that they would, at best, cover a small part of the carrying costs of the subject real property. For example, over $100,000 of property taxes are coming due (penalties and interest accrue after December 10, 2012) and the Debtor neither mentions them, nor makes provision for them. Nor does the Debtor address fire prevention (for which it has received notices of violation within the last year), preserving the casualty insurance on the property, or a number of other key things that would be necessary to avoid waste or destruction of the Debtor's only tangible asset -- and EFG's central collateral -- during the pendency of the case. Ms. Selzer concludes that the relief requested would proverbially "throw good money after bad", which it appears the Debtor and Zeneca are too willing to do with EFG's money. The Lender's counsel may be reached at: Sandra G.M. Selzer, Esq. GREENBERG TRAURIG LLP The Nemours Building 1007 North Orange Street, Suite 1200 Wilmington, DE 19801 Tel: (302) 661-7000 Fax: (302) 661-7360 Email: selzers@gtlaw.com Cherokee Simeon Venture, I, LLC, is an AstraZeneca Plc affiliate that owns a contaminated former acid-factory site in Richmond, California. Cherokee Simeon sought Chapter 11 protection (Bankr. D. Del. Case No. 12-12913) on Oct. 23, 2012. Cherokee Simeon disclosed $33,600,000 in assets and $17,954,851 in debts in its schedules. Rafael Xavier Zahralddin-Aravena, Esq., at Elliott Greenleaf represents the Debtor. CLINICA REAL: Dr. Stone's Plan Exclusivity Extended to June 23 -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona extended Keith Michael Keith Stone's exclusive period to file a plan from Dec. 21, 2012, to June 21, 2013. In the motion, Dr. Stone said that the source of income for the Debtor is his chiropractic and pain management practice, Clinical Real, LLC, and that the primary reason for his filing of the Chapter 11 petition was a lawsuit filed by State Farm in which both Debtor and his practice were named defendants, alleging fraudulent practices and a pattern of racketeering activity. According to Dr. Stone, it is unlikely that State Farm's claims against the Debtor and the Debtor's claims against State Farm will be adjudicated before the expiration of the exclusive period. About Clinica Real Clinica Real, LLC, dba Clinica Real Rehabilitation & Chiropractic, filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 12-20451) in Phoenix, Arizona, on Sept. 13, 2012. Clinica Real, doing business as Clinica Real Rehabilitation & Chiropractic, disclosed $10.5 million in assets and $29.8 million in liabilities. The Debtor has no real property. Its largest asset is an unliquidated claim against State Farm Mutual Automobile Insurance Co. and State Farm Fire & Casualty Co., which the Debtor valued at $9.75 million. Most of the claims against the Debtor are unsecured. State Farm has an unsecured claim of $29 million, which the Debtor says is disputed. Judge Sarah Sharer Curley presides over the case. Mark J. Giunta, Esq., serves as the Debtor's counsel. The petition was signed by Keith M. Stone, member. Keith Michael Stone filed a separate Chapter 11 petition (Bankr. D. Ariz. Case No. 12-20452) on Sept. 13, 2012. Mr. Stone is represented by Cindy L. Greene, Esq., at Carmichael & Powell, P.C., in Phoenix, Arizona. The cases are jointly administered under Case No. 12-20451. CLINICA REAL: State Farm Balks at Exclusivity Until Nov. 1 ----------------------------------------------------------- Clinica Real, LLC, asks the U.S. Bankruptcy Court for the District of Arizona to extend its exclusive period to file a plan from Jan. 13, 2013, until Nov. 1, 2013. The Debtor related that the extension will give it approximately 2 weeks to propose a Plan or Reorganization after the conclusion of the state court trial prior to the expiration of the exclusivity. According to papers filed with the Court, the primary factor leading to the filing of the Debtor's Chapter 11 petition was a lawsuit filed by State Farm Mutual Automobile Insurance Company and State Farm Fire & Casualty Co. in which both the Debtor and its principal, Keith M. Stone, were named defendants, alleging fraudulent business practices and a pattern of racketeering activity. The Debtor disputes these claims. State Farm filed a motion to dismiss or in the alternative abstain, or relief from the automatic stay which the Bankruptcy Court denied in part and granted in part. According to the Debtor, the Bankruptcy Court denied the dismissal of the case and abstention. The Bankruptcy Court, however, granted relief from the automatic stay to allow the State Farm Litigation to continue in State Court commencing on or about Sept. 4, 2013. The Debtor stated, "It is anticipated that the trial will slightly exceed thirty days. Resolution of the State Farm Litigation is the biggest obstacle to confirming any proposed Plan of Reorganization and it is unlikely that the State Farm's claims against the Debtor and the Debtor's claims against State Farm will be adjudicated before the expiration of the standard exclusivity period." State Farm objects to the length of the extension requested by Clinica Real, pointing out it is far longer than Dr. Michael Stone's exclusivity period. According to State Farm, these intertwined Debtors and likely joint proponents of any proposed plan of reorganization in the jointly administered cases should have the same expiration date for exclusivity. Creating different exclusivity periods in the cases introduces unnecessary Complication, says State Farm. State Farm does not oppose the extension of the exclusivity period to June 21, 2013, the same date as Dr. Stone's exclusivity expires, but opposes the requested extension to Nov. 1, 2013. A hearing on the extension is scheduled Feb. 5, 2013, at 10:00 a.m. About Clinica Real Clinica Real, LLC, dba Clinica Real Rehabilitation & Chiropractic, filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 12-20451) in Phoenix, Arizona, on Sept. 13, 2012. Clinica Real, doing business as Clinica Real Rehabilitation & Chiropractic, disclosed $10.5 million in assets and $29.8 million in liabilities. The Debtor has no real property. Its largest asset is an unliquidated claim against State Farm Mutual Automobile Insurance Co. and State Farm Fire & Casualty Co., which the Debtor valued at $9.75 million. Most of the claims against the Debtor are unsecured. State Farm has an unsecured claim of $29 million, which the Debtor says is disputed. Judge Sarah Sharer Curley presides over the case. Mark J. Giunta, Esq., serves as the Debtor's counsel. The petition was signed by Keith M. Stone, member. Keith Michael Stone filed a separate Chapter 11 petition (Bankr. D. Ariz. Case No. 12-20452) on Sept. 13, 2012. Mr. Stone is represented by Cindy L. Greene, Esq., at Carmichael & Powell, P.C., in Phoenix, Arizona. The cases are jointly administered under Case No. 12-20451. COMPUTER GRAPHICS: Clement C. W. Chan Raises Going Concern Doubt ---------------------------------------------------------------- Computer Graphics International Inc. filed on Jan. 14, 2013, its annual report on Form 10-K for the fiscal year ended Sept. 30, 2012. Clement C. W. Chan & Co., in Wanchai, Hong Kong, expressed substantial doubt about Computer Graphics' ability to continue as a going concern. The independent auditors noted that the Company incurred a net loss of $1,136,813 for the year ended Sept. 30, 2012. and has accumulated losses of $841,688 at Sept. 30, 2012. The Company reported a net loss of $1.1 million on $5.8 million of sales in fiscal 2012, compared with net income of $2.8 million on $10.1 million of sales in fiscal 2011. The Company attributed the decrease in sales to the overall market decline in the current Chinese real estate industry. The Company's balance sheet at Sept. 30, 2012, showed $2.0 million in total assets, $1.3 million in total liabilities, and stockholders' equity of $700.8 million. A copy of the Form 10-K is available at http://is.gd/R5TP9v Shenzhen, China-based Computer Graphics International, Inc., is a 3D digital visual service provider founded in 2006. The Company specializes in providing one-stop-shop service and systems based on 3D image technology to domestic governments, real estate developers, game developers, the automotive industry and other commercial customers. The Company operates through its wholly- owned subsidiaries Shenzhen Digital Image Technologies Co., Limited and Guangzhou Digital Image Technologies Co., Ltd. CRYSTAL COVE: Manager Replacement No Impact on Fitch Ratings ------------------------------------------------------------ The proposed manager replacement for Crystal Cove CDO, Ltd. is unlikely to impact the transaction's outstanding ratings, according to Fitch Ratings. Fitch has been notified of a proposed amendment and restatement to the Crystal Cove Collateral Management Agreement (CMA) in which the CDO asset management responsibilities for the transaction would be assumed by Vertical Capital, LLC (Vertical Capital), successor collateral manager to Pacific Investment Management Company LLC. The most senior class in the transaction is currently rated 'Csf', indicating that default appears inevitable for the notes. In addition, Crystal Cove is no longer in its reinvestment period and all overcollateralization tests have been failing. Given the above, the manager's capabilities are no longer a rating factor for this transaction. Accordingly, Fitch has not evaluated the replacement manager and does not expect the amendment and restatement of the CMA and the appointment of Vertical Capital as collateral manager thereunder to result in the withdrawal, reduction or other adverse action with respect to the current rating of the notes. Fitch is not a party to the transaction and therefore does not provide consent or approval, as that remains the sole preserve of the transaction parties. Fitch expects to be notified by the trustee when or if the proposed transfer of asset management responsibilities is completed. DDR CORP: Closes Refinancing of Revolving Credit Facilities ----------------------------------------------------------- DDR Corp. on Jan. 17 disclosed that it has closed the refinancing of its two senior unsecured revolving credit facilities scheduled to mature in February 2016 and its senior secured term loan scheduled to mature in September 2014. The new $750 million unsecured revolving credit facility, arranged by J.P. Morgan Securities LLC and Wells Fargo Securities, LLC, has an initial maturity of April 2017, a borrower option to extend an additional year, and contains an accordion feature that provides for $1.25 billion of potential total capacity. DDR also refinanced its $65 million unsecured revolving credit facility, provided solely by PNC Bank, National Association, to match the terms of the $750 million unsecured revolving credit facility. Pricing on both refinanced revolving credit facilities was reduced and is currently set at LIBOR plus 140 bp, a decrease of 25 bp from the previous rate, and is determined based upon DDR's credit ratings from Moody's and S&P. Further, the annual facility fee for both revolving credit facilities has been reduced from 35 bp to 30 bp. Simultaneously with refinancing its unsecured revolving credit facilities, DDR refinanced its $400 million senior secured term loan scheduled to mature in September 2014. The new secured term loan, arranged by KeyBanc Capital Markets and RBC Capital Markets, has an initial maturity of April 2017 with a borrower option to extend an additional year. Pricing on the new secured term loan is currently set at LIBOR plus 155 bp, a decrease of 15 bp from the previous rate, and is determined based upon DDR's credit ratings from Moody's and S&P. During the fourth quarter of 2012, the secured term loan was reduced to $400 million from $500 million, using proceeds from DDR's re-opening of its 2022 Senior Unsecured Notes. David J. Oakes, DDR's president and chief financial officer, commented, "These refinancings are consistent with our stated objectives to extend duration and lower our cost of capital as we continue to reduce our corporate risk profile." About DDR DDR (NYSE: DDR) -- http://www.ddr.com--is an owner and manager of 459 value-oriented shopping centers representing 116 million square feet in 39 states, Puerto Rico and Brazil. The company's assets are concentrated in high barrier-to-entry markets with stable populations and high growth potential and its portfolio is actively managed to create long-term shareholder value. DDR is a self-administered and self-managed REIT operating as a fully integrated real estate company. * * * As reported by the Troubled Company Reporter on November 21, 2012, Fitch Ratings revised the Rating Outlook on DDR Corp. (NYSE: DDR) to Positive from Stable. In addition, Fitch affirmed the following credit ratings of DDR: -- Issuer Default Rating (IDR) at 'BB+'; -- Senior unsecured revolving credit facilities at 'BB+'; -- Senior unsecured term loans at 'BB+'; -- Senior unsecured notes at 'BB+'; -- Senior unsecured convertible notes at 'BB+'; -- Preferred stock at 'BB-'. DIAL GLOBAL: Suspending Filing of Reports with SEC -------------------------------------------------- Dial Global, Inc., filed a Form 15 with the U.S. Securities and Exchange Commission to voluntarily terminate the registration of its common stock and seven year common stock purchase warrants and to suspend its obligations to file periodic reports with the SEC. As of Jan. 15, 2013, there were 263 holders of the Common Stock. About Dial Global Dial Global, Inc., headquartered in New York City, is an independent, full-service network radio company that distributes, produces, or syndicates programming and services to more than 8,500 radio stations nationwide. The Company produces and distributes over 200 news, sports, music, talk and entertainment radio programs, services and digital applications, as well as audio content from live events, turn-key music formats (the 24/7 Radio Formats), prep services, jingles and imaging. In addition, the Company is the largest sales representative for independent third party providers of audio content. The Company has no operations outside the United States, but sells to customers outside of the United States. The Company's balance sheet at Sept. 30, 2012, showed $380.9 million in total assets, $385.2 million in total liabilities, $10.5 million of Series A Preferred Stock, and a stockholders' deficit of $14.8 million. "... if an event of default under the Credit Facilities occurs and results in an acceleration of the Credit Facilities, a material adverse effect on us and our results of operations would likely result or we may be forced to (1) attempt to restructure our indebtedness, (2) cease our operations or (3) seek protection under applicable state or federal laws, including but not limited to, bankruptcy laws. If one or more of foregoing events were to occur, this would raise substantial doubt about the Company's ability to continue as a going concern," the Company said in its quarterly report for the period ended Sept. 30, 2012. DRAGON SYSTEMS: Deliberations on Case vs. Goldman This Week ----------------------------------------------------------- Tim McLaughlin of Reuters reported that a federal jury in Boston could begin deliberations as early as Thursday on whether Wall Street banking giant Goldman Sachs Group Inc. was liable for the botched acquisition of speech recognition software company Dragon Systems in 2000. Dragon's founders have accused Goldman of being negligent after Belgium-based Lernout & Hauspie paid $580 million in stock for Dragon and then went bankrupt, the report related. It wasn't the job of Goldman bankers to sniff out the accounting fraud that ultimately doomed Lernout & Hauspie and made the stock received by Dragon founders Jim and Janet Baker worthless, defense attorneys have argued, Reuter said. The Bakers owned 51 percent of the company but only were able to sell a few million dollars worth of L&H stock before the company collapsed in an accounting fraud, Reuters noted. The Bakers and two other early Dragon employees are seeking several hundred million dollars in damages. According to Reuters, U.S. District Judge Patti Saris on Tuesday told jurors they could begin their deliberations as early as Thursday after hearing closing arguments and getting her instructions on the law in the case. Tuesday marked the trial's 18th day of testimony. Meanwhile, in a videotape shown to jurors, Ellen Chamberlain, who was Dragon's chief financial officer, recalled how the company was on the verge of insolvency before the deal with Lernout & Hauspie closed, the report related. Dragon was making payroll, but the company was going to have to borrow money to continue to do so, she said. Chamberlain also said Dragon had to restate its 1999 financial results after the discovery of "channel stuffing," the report added. The term refers to flooding vendors with excess products so the company can book higher revenue. Before the deal closed, Dragon executives also were concerned that they did not have Lernout & Hauspie's most recent audited financial statements, according to the report. But Dragon was told that Lernout & Hauspie had no open issues with the U.S. Securities and Exchange Commission over accounting issues. Dragon questioned L&H's spike in Asian revenue. Had there been issues, Dragon would have pushed for the deal to be restructured as a cash sale rather than an all-stock transaction, Chamberlain said, according to Reuters. The case is Baker v. Goldman Sachs & Co., 09-cv-10053, U.S. District Court. DYNASIL CORP: Had $4MM Loss in 2012, Warns of Possible Bankruptcy ----------------------------------------------------------------- Dynasil Corporation of America filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K reporting a net loss of $4.30 million on $47.88 million of net revenue for the year ended Sept. 30, 2012, compared with net income of $1.35 million on $46.95 million of net revenue during the prior fiscal year. Dynasil's balance sheet at Sept. 30, 2012, showed $37.46 million in total assets, $18.62 million in total liabilities and $18.84 million in total stockholders' equity. McGladrey LLP, in Boston, Massachusetts, issued a "going concern" qualification on the consolidated financial statements for the year ended Sept. 30, 2012, citing default with the financial covenants under the Company's outstanding loan agreements and a loss from operations which factors raise substantial doubt about the Company's ability to continue as a going concern. The Company is in default of the financial covenants under the terms of its outstanding indebtedness with Sovereign Bank, N.A., and Massachusetts Capital Resource Company for its fiscal fourth quarter ended Sept. 30, 2012. These covenants require the Company to maintain specified ratios of earnings before interest, taxes, depreciation and amortization (EBITDA) to fixed charges and to total/senior debt. A default gives the lenders the right to accelerate the maturity of the indebtedness outstanding. Furthermore, Sovereign Bank, the Company's senior lender has an option option to impose a default interest rate with respect to the senior debt outstanding, which is 5% higher than the current rate. None of the lenders has has taken any actions as of January 15. The Company had approximately $9 million of indebtedness with Sovereign Bank and $3.0 million of indebtedness with Massachusetts Capital, which is subordinated to the Sovereign Bank loan, as of as of Sept. 30, 2012. The Company said it is current with all principal and interest payments due on all its outstanding indebtedness, through January 15. "If our lenders were to accelerate our debt payments, our assets may not be sufficient to fully repay the debt and we may not be able to obtain capital from other sources at favorable terms or at all. If additional funding is required, this funding may not be available on favorable terms, if at all, or without potentially very substantial dilution to our stockholders. If we do not raise the necessary funds, we may need to curtail or cease our operations, sell certain assets and/or file for bankruptcy, which would have a material adverse effect on our financial condition and results of operations," the Company said in the regulatory filing A copy of the Form 10-K is available at http://is.gd/DWTXNW About Dynasil Watertown, Mass.-based Dynasil Corporation of America (NASDAQ: DYSL) -- http://www.dynasil.com/-- develops and manufactures detection and analysis technology, precision instruments and optical components for the homeland security, medical and industrial markets. EASTMAN KODAK: Bankruptcy Costs Nearing $125 Million ---------------------------------------------------- USA Today's Matthew Daneman, citing a Rochester (N.Y.) Democrat and Chronicle analysis, reports that more than two dozen separate law firms, accounting firms and other outfits associated with Eastman Kodak Co.'s bankruptcy have submitted billing statements totaling nearly $125 million. The report relates: -- roughly $22 million come from New York City firm Sullivan & Cromwell LLP, the primary law firm representing Kodak in the bankruptcy; -- the committees representing creditors' and retirees' interests also racked up sizable bills -- expenses that have to be borne by Kodak. That $3.2 million bill includes legal services from Arent Fox LLP and Haskell, Slaughter, Young & Rediker LLC; financial advising from Zolfo Cooper LLC and actuarial services from Segal Co.; -- the fee examiner, Luskin Stern & Eisler LLP, has submitted roughly $225,000 worth of bills in the Chapter 11; and -- accounting giant Ernst & Young has billed more than $13 million so far in the bankruptcy for financial consulting services. "That doesn't shock me," said Martha L. Salzman, assistant professor of accounting and law at the State University of New York at Buffalo, according to the report. "Bankruptcy's expensive." The report notes Enron spent more than $1 billion on attorneys, financial advisers and other professionals for its bankruptcy. Lehman Brothers Holdings Inc., which filed for bankruptcy protection in 2008, ultimately paid its attorneys and advisers in excess of $850 million. American Airlines bankruptcy has to date topped $200 million in various bills and expenses. "A modern Chapter 11 case is just hugely expensive," said Robert Rock, senior counsel with the bankruptcy practice at Albany law firm Tully Rinckey PLLC. "It goes in proportion to the size of the company and the complexity of the debt structure." Kodak has said it expects to emerge from bankruptcy in the first half of 2013. About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. The Retirees Committee has hired Haskell Slaughter Young & Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC, as Bankruptcy Consultants and Financial Advisors; and the Segal Company, as Actuarial Advisors. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. Kodak intends to reorganize by focusing on the commercial printing business. Other businesses are being sold or shut down. EASTMAN KODAK: Pushes Court to Ax Kyocera Infringement Claims ------------------------------------------------------------- Maria Chutchian of BankruptcyLaw360 reported that Eastman Kodak Co. on Tuesday urged a New York bankruptcy judge to toss most of Kyocera Corp.'s patent infringement suit over 15 camera and printer patents, saying more than a dozen of Kyocera's claims violate the automatic stay because they could have been brought before Kodak filed for bankruptcy. The iconic camera and imaging company contends the court should dismiss those 13 claims and requested that the court implement the automatic stay with respect to the remaining two patents, the report said. About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. The Retirees Committee has hired Haskell Slaughter Young & Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC, as Bankruptcy Consultants and Financial Advisors; and the Segal Company, as Actuarial Advisors. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. Kodak intends to reorganize by focusing on the commercial printing business. Other businesses are being sold or shut down. EGPI FIRECREEK: Director Quits; Co-Treasurer Passes Away -------------------------------------------------------- David H. Ray resigned from his positions as director and executive vice president, co-Treasurer, and positions as committee member of EGPI Firecreek, Inc., and its subsidiaries, effective as of Nov. 15, 2012. Mr. Ray's resignation from the Board was not due to any disagreement with the Company, but was made by Mr. Ray for personal reasons. Mrs. Melvena Alexander who has served as Co-Treasurer, Secretary and Comptroller of the Company and Subsidiaries and member of the audit committee since Feb. 10, 2007, having served as Secretary and Comptroller of EGPI and Firecreek Petroleum, Inc., since July 1, 2004, through Feb. 9, 2007, and having served in one or more capacities as Secretary and Comptroller of EGPI since May 18, 1999., has recently passed away. As a result, the Company will hold a Board of Directors meeting to formally end Mrs. Alexander's service with the Company expected to be as of Dec. 31, 2012, and further, to nominate and or formally appoint a transition member or officer for these positions. About EGPI Firecreek Scottsdale, Ariz.-based EGPI Firecreek, Inc. (OTC BB: EFIR) was formerly known as Energy Producers, Inc., an oil and gas production company focusing on the recovery and development of oil and natural gas. The Company has been focused on oil and gas activities for development of interests held that were acquired in Texas and Wyoming for the production of oil and natural gas through Dec. 2, 2008. Historically in its 2005 fiscal year, the Company initiated a program to review domestic oil and gas prospects and targets. As a result, EGPI acquired non-operating oil and gas interests in a project titled Ten Mile Draw located in Sweetwater County, Wyoming for the development and production of natural gas. In July 2007, the Company acquired and began production of oil at the 2,000 plus acre Fant Ranch Unit in Knox County, Texas. This was followed by the acquisition and commencement in March 2008 of oil and gas production at the J.B. Tubb Leasehold Estate located in the Amoco Crawar Field in Ward County, Texas. The Company reported a net loss of $4.97 million in 2011, compared with a net loss of $4.48 million in 2010. In its audit report for the 2011 results, M&K CPAS, PLLC, in Houston, Texas, noted that the Company has suffered recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. The Company's balance sheet at Sept. 30, 2012, showed $2.35 million in total assets, $6.49 million in total liabilities, all current, $1.86 million in series D preferred stock, and a $6.01 million total shareholders' deficit. EINSTEIN NOAH: S&P Raises Corporate Credit Rating to 'B+' --------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Lakewood, Co.-based Einstein Noah Restaurant Group Inc. to 'B+' from 'B'. The rating outlook is stable. "The upgrade reflects our reassessment of the company's financial risk profile as 'aggressive' because of the enhanced credit protection profile," said Standard & Poor's credit analyst Mariola Borysiak. The rating on Einstein Noah also takes into account our assessment of its business risk profile as "vulnerable". We believe that these assessments will not change over the next year. The "aggressive" financial risk profile assessment reflects Einstein's moderately improved credit metrics resulting from lower debt balances. In October 2012, Einstein planned to issue a $265 million credit facility to refinance its existing debt and pay a one-time special dividend to its shareholders. However, the proposed transaction did not close and the company instead amended its existing Dec. 20, 2010, credit agreement. The amendment increased the company's term loan to $100 million from $75 million and its revolver to $75 million from $50 million. The company used proceeds from the incremental term loan, along with about $40 million borrowings under the revolver, to pay approximately $68 million in dividends to its shareholders. Einstein's credit measures are moderately stronger following the amendment of the credit facility than initially contemplated in the October 2012 transaction. Pro forma total debt to EBITDA as of Oct. 2, 2012, is now about 3.9x compared with 5.6x. EBITDA coverage of interest improved to the mid-3x area from about 2.5x, and funds from operations (FFO) to total debt ratio is now slightly over 20% versus an initial estimate of 14%. S&P anticipates modest improvement of these measures mainly from small EBITDA gains and modest debt reduction over the next 12 months. S&P anticipates that debt leverage will improve to about 3.7x, coverage of interest will strengthen to nearly 4x, and FFO to total debt will improve to about 26% at fiscal 2013 year-end. "Our stable outlook reflects our view that Einstein's performance will benefit from favorable trends in the bakery-cafe segment of the restaurant industry, despite heightened competition. We expect the company's menu innovations coupled with cost savings initiatives to propel modest profitability gains over the next year," S&P noted. S&P could raise the rating on Einstein if S&P reassessed its business risk profile to "weak" from the current "vulnerable," while the company at least maintains its existing credit metrics. However, S&P considers an upgrade unlikely over the next 12 months, given Einstein's small position in the increasingly competitive breakfast segment of the restaurant industry, and its lack of success in increasing its lunch business. "Alternatively, we could consider a downgrade if increasing competition in the breakfast daypart hurts Einstein's sales growth and margins and results in leverage that exceeds 4.5x. This could happen if revenues remain flat in 2013 and commodity inflation hurts gross margin by about 200 basis points from the Oct. 2, 2012, level. Given the company's vulnerable business risk profile, another debt-financed dividend that results in leverage increasing over the indicated threshold could also trigger a downgrade. ELCOM HOTEL: Works Out Deal with Unit Owners -------------------------------------------- Carolina Bolado of BankruptcyLaw360 reported that the previously sparring condominium owners associations and the bankrupt operators of Miami hotel and condominium development One Bal Harbour settled on a chief restructuring officer Tuesday and set out a plan to work together during the Chapter 11 restructuring process. In a ruling from the bench, U.S. Bankruptcy Judge Robert A. Mark approved the agreement, which appoints Algon Group as chief restructuring officer for Elcom Condominium LLC and Elcom Hotel & Spa LLC, the report said. 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. ENERGYSOLUTIONS INC: Rejects Equity Election Option Suggestion -------------------------------------------------------------- EnergySolutions, Inc., through its Chairman of the Board of Directors Steven R. Rogel, sent an answer to a letter dated Jan. 9, 2013, of Gary Siegler of Indian Creek Asset Management relating to the Company's proposed merger agreement with Rockwell Holdco, Inc., and Rockwell Acquisition Corp., affiliates of Energy Capital Partners, a leading private equity firm focused on investing in North America's energy infrastructure. The Company has rejected a suggestion by Mr. Siegler that shareholders of EnergySolutions be given an election to retain equity in the company going forward post-acquisition. EnergySolutions said it is committed to complying with the terms of the Merger Agreement which contemplates an all-cash transaction. The Company, however, has forwarded the suggestion to Energy Capital for its consideration. The Company also clarifies that the management has had no discussions with Energy Capital relating to post-closing equity awards, salary, bonuses, or any other compensation, and no arrangements, understandings or agreements are in place regarding those matters. "[T]he transaction with Energy Capital Partners followed an extensive evaluation of strategic alternatives, which included contacting over twenty parties," Mr. Rogel wrote. "At the conclusion of that process, there were no actionable proposals. In addition, as has been publicly announced, EnergySolutions is currently in a "go-shop" period in which we are actively soliciting other offers to enter into a transaction." The letter is available for free at http://is.gd/ARG8Jr $4.8MM Retention Awards Okayed The Compensation Committee of the Board of Directors of EnergySolutions approved retention awards to the named executive officers: Name Amount -------------- ------------ David Lockwood $3,300,000 Greg Wood $1,200,000 John Christian $100,000 Mark Morant $100,000 Alan Parker $100,000 The retention awards were approved in connection with the Company's recently announced agreement to consummate a merger with a subsidiary of Rockwell Holdco, Inc. Subject to any required tax withholdings, the awards will be paid upon and subject to the closing of the Merger and the aforementioned officers' employment with the Company through the date of the closing of the Merger. About EnergySolutions, Inc. EnergySolutions offers customers a full range of integrated services and solutions, including nuclear operations, characterization, decommissioning, decontamination, site closure, transportation, nuclear materials management, the safe, secure disposition of nuclear waste, and research and engineering services across the fuel cycle. The Company's balance sheet at Sept. 30, 2012, showed $2.85 billion in total assets, $2.54 billion in total liabilities, and $311.77 million in total stockholders' equity. * * * As reported by the TCR on June 18, 2012, Standard & Poor's Ratings Services lowered its corporate credit rating on Salt Lake City- based EnergySolutions Inc. and its subsidiaries by two notches to 'B' from 'BB-'. "The downgrade reflects weakening credit metrics and the added uncertainty stemming from the unexpected change in management since the company's strategic and financial priorities are now less clear," said Standard & Poor's credit analyst James Siahaan. FAIRFAX FIN'L: Moody's Assigns '(P)Ba2' Seniority Shelf Ratings --------------------------------------------------------------- Moody's Investors Service has assigned Baa3 ratings to C$250 million of senior unsecured notes being issued by Fairfax Financial Holdings Limited (Fairfax; TSE: FFH) through a reopening of its October 2012 issuance. As a result of the reopening, the issue will increase in size by C$250 million to C$450 million in total. The senior notes reopening constitutes a drawdown from the company's domestic shelf registration (provisional senior unsecured debt rated (P)Baa3). Proceeds from the offering are expected to be used to re-finance near term bond maturities as well as for general corporate purposes. The rating outlook for Fairfax is stable. Ratings Rationale According to William Burn, Moody's lead analyst for Fairfax, "The incremental financial leverage associated with the offering is within the tolerance for the current rating, and proceeds will be partly used to retire maturing debt that has a higher coupon". Fairfax's Baa3 senior unsecured debt rating is based on a diversified revenue stream by product and geography, a high level of cash and marketable resources at the parent-company level, and a liquid investment portfolio. Several credit challenges remain significant to Fairfax's rating including: weak operating earnings (excluding realized gains), historical volatility of loss reserves particularly at its run-off operations, exposure to catastrophe risk, a high level of common stock investments and the basis risk associated with the current equity hedge. Key man risk and management succession is also a consideration given the instrumental role played by CEO Prem Watsa in Fairfax's strategic direction, investment philosophy and corporate culture. The debt rating also reflects the collective insurance financial strength ratings of the Fairfax group of companies and the debt outstanding at intermediate holding companies, which results in structural subordination at the ultimate holding company. This structural subordination is mitigated by both the diversification of businesses and by the commitment to maintain significant levels of cash at the parent company. The following factors could lead to an upgrade of Fairfax's ratings: 1) adjusted financial leverage consistently less than 30% and earnings coverage (excluding realized gains/losses) consistently above 4x; 2) reduction in risk at Fairfax's runoff operations; 3) aggregate combined ratios consistently less than 100%; and 4) an upgrade of the stand-alone credit profile of the company's lead operating P&C and/or reinsurance companies. Factors that could lead to a downgrade of the ratings include: 1) substantial reduction of holding company liquidity to less than $750 million (or less than 3x total fixed charges); 2) adjusted financial leverage consistently above 35% and earnings coverage (excluding realized gains/losses) consistently less than 2x; 3) significant adverse reserve development at Fairfax's run-off or ongoing operating subsidiaries (greater than 2% of net reserves); and/or a 4) downgrade of the stand-alone credit profile of the company's lead operating P&C and/or reinsurance companies. The following ratings have been assigned: Assignments: Issuer: Fairfax Financial Holdings Limited Senior Unsecured Regular Bond/Debenture Oct 14, 2022, Assigned Baa3 C$2 billion Multiple Seniority Shelf, Assigned (P)Baa3 for senior unsecured debt C$2 billion Multiple Seniority Shelf, Assigned (P)Ba1 for subordinated debt C$2 billion Multiple Seniority Shelf, Assigned (P)Ba2 for preferred shares (non-cumulative) C$2 billion Multiple Seniority Shelf, Assigned (P)Ba2 for preferred shares Fairfax is an insurance and financial services holding company that offers P&C insurance products through its reinsurance and insurance operating subsidiaries. Fairfax has four primary operating companies: Odyssey Re Holdings Corporation (A3 insurance financial strength (IFS) rating of Odyssey Reinsurance Company, positive outlook); Crum & Forster Holdings Corp (principal insurance subsidiaries Baa1 IFS rating, stable); Zenith National Insurance Corporation (A3 IFS rating of Zenith Insurance Company, stable), and Northbridge Financial Corp. (not rated). Fairfax also has a sizable runoff business including TIG Insurance Company, and UK-based RiverStone Insurance (both not rated). The company also engages in internal reinsurance activities, primarily through its CRC Insurance Limited and Wentworth subsidiaries (not rated), depending on the pricing environment. Fairfax Asia, which includes three subsidiaries (not rated), represented around 4% of net premium written and 16% of underwriting profit for the first nine months of 2012. Fairfax is headquartered in Toronto, Canada. For the first nine months of 2012, Fairfax generated total revenues of $5.3 billion and net income attributable to Fairfax of $128 million. Shareholders' equity attributable to Fairfax was $8.5 billion as of September 30, 2012. The methodologies used in this rating were Moody's Global Rating Methodology for Property and Casualty Insurers published in May 2010, and Moody's Global Rating Methodology for Reinsurers published in December 2011. FLAGSHIP FRANCHISES: Patient Care Ombudsman Not Needed ------------------------------------------------------ Bankruptcy Judge Kathleen H. Sanberg ruled that a patient care ombudsman is not necessary for the protection of the clients of Flagship Franchises of Minnesota, LLC and Flagship Franchises of Minnesota, Inc. A copy of the Court's Jan. 4, 2013 Memorandum and Opinion is available at http://is.gd/14Bs5tfrom Leagle.com. Flagship Franchises of Minnesota, LLC, operates an adult healthcare day center in Savage, Minnesota, and provides in-home adult day care services for chronically ill and vulnerable adults, including adults with Alzheimer's, Parkinson's, and brain injuries. It conducts business under the assumed name "Sarah Adult Day Services" and began operating in July 2002. Flagship Franchises of Minnesota LLC filed a Chapter 11 bankruptcy petition (Bankr.D. Minn. Case Nos. 12-36898 on Dec. 12, 2012, listing $162,229 in assets and $1,552,906 in debts. Flagship Franchises of Minnesota Inc. also sought Chapter 11 protection (Bankr. D. Minn. Case No. 12-36900), listing under $1 million in both assets and debts. Judge Kathleen H. Sanberg oversees the bankruptcy cases. Edwin H. Caldie, Esq., at Leonard, Street and Deinard, represent the Debtors. A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/mnb12-36898.pdf The petition was signed by Deborah Delaney, founder and manager. FREESEAS INC: Supreme Court OKs Settlement with Hanover ------------------------------------------------------- The Supreme Court of the State of New York, County of New York, on Jan. 14, 2013, entered an order approving, among other things, the fairness of the terms and conditions of an exchange pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended, in accordance with a stipulation of settlement between FreeSeas Inc., and Hanover Holdings I, LLC, in the matter entitled Hanover Holdings I, LLC v. FreeSeas Inc., Case No. 654474/2012. On Dec. 21, 2012, Hanover commenced the Action against the Company to recover an aggregate of $305,485 of past-due accounts payable of the Company, which Hanover had purchased from certain vendors of the Company pursuant to the terms of separate claim purchase agreements between Hanover and each of those vendors, plus fees and costs. The Assigned Accounts relate to certain maritime services provided by certain vendors of the Company and certain investor relations and financial communications services provided by a vendor of the Company. The Order provides for the full and final settlement of the Claim and the Action. The Settlement Agreement became effective and binding upon the Company and Hanover upon execution of the Order by the Court on Jan. 14, 2013. Pursuant to the terms of the Settlement Agreement approved by the Order, the Company issued and delivered to Hanover 1,375,000 shares of the Company's common stock, $0.001 par value. Giving effect to that issuance, the Settlement Shares represent approximately 8.37% of the total number of shares of Common Stock presently outstanding. The Settlement Agreement provides that the Settlement Shares will be subject to adjustment on the 36th trading day following the date on which the Settlement Shares were initially issued to reflect the intention of the parties that the total number of shares of Common Stock to be issued to Hanover pursuant to the Settlement Agreement be based upon a specified discount to the trading volume weighted average price of the Common Stock for a specified period of time subsequent to the Court's entry of the Order. A copy of the Court's Order is available for free at: http://is.gd/9IxO2P About FreeSeas Inc. Headquartered in Athens, Greece, FreeSeas Inc., formerly known as Adventure Holdings S.A., was incorporated in the Marshall Islands on April 23, 2004, for the purpose of being the ultimate holding company of ship-owning companies. The management of FreeSeas' vessels is performed by Free Bulkers S.A., a Marshall Islands company that is controlled by Ion G. Varouxakis, the Company's Chairman, President and CEO, and one of the Company's principal shareholders. The Company's fleet consists of six Handysize vessels and one Handymax vessel that carry a variety of drybulk commodities, including iron ore, grain and coal, which are referred to as "major bulks," as well as bauxite, phosphate, fertilizers, steel products, cement, sugar and rice, or "minor bulks." As of Oct. 12, 2012, the aggregate dwt of the Company's operational fleet is approximately 197,200 dwt and the average age of its fleet is 15 years. As reported in the Troubled Company Reporter on July 18, 2012, Ernst & Young (Hellas) Certified Auditors Accountants S.A., in Athens, Greece, expressed substantial doubt about FreeSeas' ability to continue as a going concern, following its audit of the Company's financial statements for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred recurring operating losses and has a working capital deficiency. "In addition, the Company has failed to meet scheduled payment obligations under its loan facilities and has not complied with certain covenants included in its loan agreements with banks." The Company's balance sheet at June 30, 2012, showed US$120.8 million in total assets, US$104.1 million in total current liabilities, and shareholders' equity of US$16.7 million. FREESEAS INC: Hanover Holdings Discloses 8.4% Equity Stake ---------------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, Hanover Holdings I, LLC, and Joshua Sason disclosed that, as of Jan. 14, 2013, they beneficially own 1,375,000 shares of common stock of FreeSeas, Inc., representing 8.37% of the shares outstanding. The 1,375,000 shares of common stock owned directly by Hanover were acquired by Hanover pursuant to an order entered by the Supreme Court of the State of New York, County of New York, approving, among other things, the fairness of the terms and conditions of an exchange pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended, in accordance with a stipulation of settlement between the Issuer and Hanover in the matter entitled Hanover Holdings I, LLC v. FreeSeas Inc., Case No. 654474/2012. Hanover commenced the Action against the Company on Dec. 21, 2012, to recover an aggregate of $305,485 of past-due accounts payable of the Company, which Hanover had purchased from certain vendors of the Company pursuant to the terms of separate claim purchase agreements between Hanover and each of such vendors, plus fees and costs. A copy of the regulatory filing is available for free at: http://is.gd/26tWgO About FreeSeas Inc. Headquartered in Athens, Greece, FreeSeas Inc., formerly known as Adventure Holdings S.A., was incorporated in the Marshall Islands on April 23, 2004, for the purpose of being the ultimate holding company of ship-owning companies. The management of FreeSeas' vessels is performed by Free Bulkers S.A., a Marshall Islands company that is controlled by Ion G. Varouxakis, the Company's Chairman, President and CEO, and one of the Company's principal shareholders. The Company's fleet consists of six Handysize vessels and one Handymax vessel that carry a variety of drybulk commodities, including iron ore, grain and coal, which are referred to as "major bulks," as well as bauxite, phosphate, fertilizers, steel products, cement, sugar and rice, or "minor bulks." As of Oct. 12, 2012, the aggregate dwt of the Company's operational fleet is approximately 197,200 dwt and the average age of its fleet is 15 years. As reported in the Troubled Company Reporter on July 18, 2012, Ernst & Young (Hellas) Certified Auditors Accountants S.A., in Athens, Greece, expressed substantial doubt about FreeSeas' ability to continue as a going concern, following its audit of the Company's financial statements for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred recurring operating losses and has a working capital deficiency. "In addition, the Company has failed to meet scheduled payment obligations under its loan facilities and has not complied with certain covenants included in its loan agreements with banks." The Company's balance sheet at June 30, 2012, showed US$120.8 million in total assets, US$104.1 million in total current liabilities, and shareholders' equity of US$16.7 million. GENCORP INC: Moody's Confirms 'B1' CFR; Rates $460MM Notes 'Ba3' ---------------------------------------------------------------- Moody's Investors Service has confirmed the B1 Corporate Family Rating of GenCorp Inc. and lowered the Speculative Grade Liquidity Rating to SGL-3 from SGL-2, concluding the review for possible downgrade that commenced July 24, 2012. Concurrently a Ba3 rating has been assigned to the planned $460 million of second lien notes due 2021, the proceeds of which will help fund the pending acquisition of Pratt & Whitney Rocketdyne, Inc. The rating outlook is stable. Ratings assigned: $460 million guaranteed second lien notes due 2021, assigned Ba3, LGD3, 38% Ratings confirmed: Corporate Family, B1 Probability of Default, B1-PD $0.2 million convertible subordinated notes due 2024, B3, to LGD6, 92% from LGD5, 87% Ratings lowered: Speculative Grade Liquidity, to SGL-3 from SGL-2 Ratings Rationale Confirmation of the B1 Corporate Family Rating heavily considers the improved scale and market position expected to come from the GenCorp/Rocketdyne combination. Good prospects exist for funding resilience on missile and propulsion technologies, despite fiscal austerity. Precision strike weapons play an integral role in the US military and an increasing number of missile development programs globally will drive ongoing investment levels. Space launch prospects are helped by the growing role of satellites in defense communications, navigation and ISR (intelligence, surveillance, reconnaissance). Heavy lift and exploration should support orders related to space vehicle launch as well. Rocketdyne's intellectual property will raise GenCorp's prominence in the missile segment, while greater scale will broaden the revenue base over which fixed costs can be spread. Better overhead cost efficiencies should facilitate future bidding prospects, a competitive imperative as federal procurement reforms advance. A good funded backlog level, not uncommon for contractors deriving orders from procurement accounts but helpful to near-term earnings visibility in a sequestration scenario, also helps the credit. Pro forma for the transaction, debt to EBITDA (as of 8/31/12) would be just above 6x, elevated for the B1 CFR, but the increase stems mainly from Moody's estimate of pension underfunding, rather than from funded debt. The acquisition itself, being valued at only 5.5x pro forma EBITDA and paid partially by cash on hand (about $75 million), does not much raise leverage. The Speculative Grade Liquidity rating has been lowered to SGL-3 from SGL-2, despite confirmation of the B1 CFR. GenCorp will likely consume cash over the ensuing 12 months due to the high level of planned capital spending. The high spending should complete Rocketdyne's operational restructuring that was needed as NASA's Space Shuttle program concluded and the company's revenues fell. The capital spending will also cover roll-out of a new enterprise reporting system at GenCorp, which should permit greater efficiencies. In Moody's view, dependence (about $15 million is expected) on the revolving credit line will likely develop over the next year, but good financial ratio covenant cushion is expected. GenCorp will not likely be required to fund its (closed) pension plan for the next year, which supports the likelihood that borrowings under the revolver will probably not rise much beyond $15 million. The rating outlook is stable. Debt to EBITDA should improve to the 5x level by 2014 when free cash flow can be put toward debt reduction and integration benefits begin taking hold. The stable outlook anticipates that GenCorp's management will focus on the considerable integration challenge ahead rather than on further acquisition spending, and that liquidity should rise, by 2014. Upward rating momentum is unlikely, but would depend on stable backlog levels (pro forma for the acquisition), expectation of debt to EBITDA sustained at 4x or less, free cash flow to debt in the high single digit percentage range and good liquidity. Downward rating pressure would mount with debt to EBITDA continued above the mid-5x level beyond the near-term integration period, backlog declines, or a prolonged period of low cash flow. GenCorp Inc., produces propulsion systems for defense and space applications and armament systems for precision tactical weapon systems. Revenues for the twelve months ended 8/30/12 were approximately $950 million. The principal methodology used in rating GenCorp 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. GENWORTH FINANCIAL: Moody's Downgrades IFS Rating to 'Ba2' ---------------------------------------------------------- Moody's Investors Service has confirmed the debt ratings of Genworth Financial, Inc. ("Genworth"; NYSE: GNW, senior debt at Baa3), with a stable outlook. The rating action follows the company's announcement of a reorganization plan designed to reduce the linkages of the holding company with Genworth's US Mortgage Insurance (MI) operating companies. At the same time, Moody's downgraded the insurance financial strength (IFS) ratings of Genworth's US MI operating companies to Ba2 from Ba1, with a negative outlook. The rating actions conclude a review for downgrade that was initiated on June 27, 2012. Moody's ratings on Genworth's US life insurance operating companies (IFS at A3 / stable), Genworth Financial Mortgage Insurance Pty Limited (Genworth Australia, IFS at A1 / on review for downgrade) and Genworth Financial Mortgage Indemnity Limited (Genworth Indemnity, IFS at A2 / on review for downgrade) are unaffected. Overview of Genworth's Reorganization Announcement Moody's said the plan outlined by Genworth consisted of the following actions: 1) A legal entity reorganization that includes the creation of a new ultimate parent entity (New Parent) to facilitate the separation of the US MI business from the holding company that has issued the senior note obligations; 2) Creation of the option, under certain conditions, to write future US MI business using a new operating company (NewCo) structure; and 3) Transfer of the ownership of the European MI operating subsidiaries to Genworth Mortgage Insurance Corporation (GMICO). According to the rating agency, the New Parent will own Genworth, the old parent, as well as the US MI subsidiaries. Genworth's outstanding senior and subordinated notes will remain obligations of the old parent. As a result of the reorganization, under which the old parent no longer owns the US MI subsidiaries, the latter are no longer among the companies covered by the indenture governing the old parent's senior notes. The reorganization, which the company expects to be completed in the second quarter of 2013, does not require shareholder or noteholder consent. North Carolina, the state regulator for GMICO, has approved the plans. The plans have also been filed with other regulators and are subject to their approval, which the company expects to be completed by the second quarter of 2013. The NewCo option, discussed in the US MI section below, gives Genworth the option to write new business out of a new operating company in the unexpected event that business at GMICO deteriorated significantly or significant additional capital is required by its counterparties, effectively walling off GMICO's existing liabilities and placing the entity into runoff. The option to create NewCo has received requisite approvals from US government sponsored enterprises (GSEs), the main regulator for MIs. If Genworth created a new US mortgage insurance company under the NewCo option, Genworth and GMICO would also have to meet certain obligations, pursuant to the approvals granted by the GSEs. Ratings Rationale Holding Company Commenting on the confirmation of the holding company ratings of Genworth, Moody's Senior Vice President Robinson said: "The plan outlined by Genworth limits the potential downside impact of the lower-rated US MI on the holding company and the rest of the operations, thereby addressing the key rating concern that drove the review for downgrade." The rating agency noted that since, under the reorganization plan, stress losses in the US MI operations should not pressure or require support from Genworth's financial resources going forward, notching for holding company debt will no longer be affected by the weaker creditworthiness of the US MI business. Genworth's Baa3 senior debt rating is now 3 notches lower than the A3 IFS ratings of the company's life insurance operating entities, the standard notching practice for insurance groups. Genworth ended the fourth quarter with approximately $1 billion of cash and highly-liquid securities at the holding company. As part of the actions outlined above, the company expects to contribute about $100 million of cash to GMICO. Moody's added that restoring dividend capacity for the life entities is important from a holding company perspective, especially as the company aims to sell off a portion of its Australian MI business. In its US life operations, statutory capital generation has been weak relative to peers, and the company has a modest amount of unassigned surplus, which limits dividend capacity to the holding company. Over the past year, the company has taken and continues to take a number of steps to increase unassigned surplus. US Mortgage Insurance (GMICO) Moody's said the downgrade of the IFS rating of Genworth Mortgage Insurance Corporation (`GMICO'- collectively consolidated US MI operating company affiliates) to Ba2 from Ba1, reflects the expected weaker implicit parental support going forward under the new holding company structure, which reduces the linkage between GMICO and Genworth. GMICO's rating had previously benefited from one notch of uplift from its stand-alone credit profile due to the implicit financial support of the holding company. In addition, under a stress scenario, Genworth could put GMICO into run-off and use the NewCo to write new business, and that would limit GMICO's future earnings from higher quality new production. Moody's believes that while the capital infusion in connection with the restructuring is expected to enhance GMICO's current capital adequacy, it is not sufficient to offset the negative credit pressure attributable to diminishing support from Genworth and the potential for GMICO being placed into run-off. The rating agency commented that GMICO's rating and negative outlook reflect the firm's modest capitalization and its reliance on regulatory forbearance to write new business. The negative outlook also incorporates continued elevated mortgage delinquencies, modest cures, and remaining uncertainty about the role of private mortgage insurers amid ongoing housing market reform, offset slightly by recent improved underwriting prospects. Rating Drivers - holding company The rating agency said the following could result in an upgrade to Genworth's ratings: 1) Upgrade of Genworth's life insurance subsidiaries; 2) Significant increase in cash flow diversity available to the holding company. Conversely, the following could place downward pressure on the company's ratings: 1) Deterioration in credit profile of the US life insurance or the international mortgage insurance operations; 2) Unassigned surplus at the US life operations is expected to be less than $100 million as of year-end 2013; 3) Financial leverage in excess of 30% and/or earnings coverage less than 2x on a sustained basis; or 4) Failure to execute the reorganization plan. Rating Drivers -- US mortgage insurance The following factors could lead to a change in rating outlook to stable from negative: 1) Ability to maintain new business flows and to return to profitability; 2) Persistent lower new delinquencies and robust cures; 3) A regulatory framework that affirms the market opportunity for private mortgage insurers. Conversely, the following factors could lead to a downgrade of GMICO: 1) Material deterioration of risk to capital and statutory loss ratio; 2) Non-renewal of GSE agreements and regulatory forbearance; 3) Genworth elects the NewCo as its main mortgage insurance writer, while placing GMICO into run-off. The following ratings were confirmed with a stable outlook: Genworth Financial, Inc. - senior unsecured debt rating at Baa3, junior subordinated debt rating at Ba1(hyb), provisional senior unsecured shelf rating at (P)Baa3, provisional subordinate shelf rating at (P)Ba1, provisional preferred shelf rating at (P)Ba2, short-term debt rating for commercial paper at P-3; Genworth Seguros de Credito a la Vivienda - insurance financial strength rating at Baa3, national scale insurance financial strength rating at Aa3.mx. The following ratings were downgraded with a negative outlook: Genworth Mortgage Insurance Corporation - insurance financial strength rating to Ba2 from Ba1; Genworth Residential Mortgage Insurance Corporation of NC - insurance financial strength rating to Ba2 from Ba1. Genworth Financial, Inc., headquartered in Richmond, Virginia, reported total assets of $114 billion and total stockholders' equity, excluding noncontrolling interests, of $16.4 billion as of September 30, 2012. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to pay punctually senior policyholder claims and obligations. The methodologies used in this rating were Moody's Global Methodology for Rating Mortgage Insurers published in December 2012 and Moody's Global Rating Methodology for Life Insurers published in May 2010. Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".mx" for Mexico. For further information on Moody's approach to national scale ratings, please refer to Moody's Rating Methodology published in October 2012 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings". GEOKINETICS HOLDINGS: Moody's Cuts PDR to 'D-PD' on Ch. 11 Filing ----------------------------------------------------------------- Moody's Investors Service downgraded the Probability of Default Rating (PDR) for Geokinetics Holdings USA, Inc. (GEOK) to D-PD from Ca-PD. The company's Corporate Family Rating (CFR) and senior secured notes rating were confirmed at Ca. The rating outlook was changed to negative from under review for downgrade. This rating action concludes the review for downgrade initiated on December 18, 2012 following GEOK's decision not to make the scheduled December 15, 2012 $14.6 million interest payment due on its 9.75% senior secured notes. The 30-day grace period to cure the technical default associated with not making its scheduled interest payment expired on January 14, 2013. Issuer: Geokinetics Holdings USA, Inc. Corporate Family Rating, Confirmed Ca Probability of Default rating, Downgraded to D-PD from Ca-PD US$300 million Senior Secured Notes, Confirmed Ca US$300 million Senior Secured Notes, Confirmed LGD4-51% Ratings Rationale This rating action is in response to the company's announcement on January 15, 2013 that it entered into a restructuring plan under Chapter 11 of Title 11 of the U.S. Bankruptcy Code for the District of Delaware. Shortly following these rating actions, Moody's will withdraw all of GEOK's ratings (refer to Moody's ratings withdrawal policy on moodys.com). The principal methodology used in rating Geokinetics Holdings was the Global Oilfield Services Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Geokinetics Holdings USA, Inc. is a wholly owned subsidiary of Geokinetics Inc., whose debt it guarantees. Geokinetics Inc. is a global provider of seismic data acquisition and processing services, and is headquartered in Houston, Texas. GHC NY: Chapter 11 Case Dismissed Due to "Bad Faith" Filing ----------------------------------------------------------- Judge Robert E. Gerber has dismissed the Chapter 11 case of GHC NY Corp., at the behest of Gerald Romanoff, sole officer and director of the company. Gerald Romanoff argues the bankruptcy petition was wholly unauthorized, and filed in bad faith -- which both bolsters "cause" for dismissal for lack of corporate authority and provides separate "cause" for dismissal. He said his son, Robert Romanoff, retained counsel to file the Petition after he suffered a string of losses in state court and six days after one judge in a foreclosure action ordered Robert to pay back rent of over $200,000 within 10 days of the order, and found that Robert's "freeloading" for seven years in a building owned by GHC was at least partly responsible for the foreclosure action against GHC's Gansevoort Property. In a classic case of forum shopping, Robert filed the Petition and removed the foreclosure action to federal court to avoid the state court ruling. Moreover, the Petition was also filed as the next battleground of his relentless, and to date, unsuccessful, war to subvert the estate plan of his mother, Sheryl Romanoff, to wrestle control of GHC away from father, Gerald, and to deny his mother certain majority ownership rights she has in GHC's parent company, New Roads. Gerald Romanoff pointed out that the Bankruptcy Court is now the fourth forum in which Robert seeks to fight with his parents over GHC after having no success in multiple state court fora. About GHC NY GHC NY Corp. in New York filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-14031) on Sept. 25, 2012. Robert R. Leinwand, Esq., at Robinson Brog Leinwand Greene Genovese & Gluck P.C. GHC NY estimated $10 million to $50 million in assets and debts. The petition was signed by Robert Romanoff, authorized signatory. The Debtor is owned by an entity named New Roads Realty Corp., which is ran by Robert Romanoff, who signed the Chapter 11 petition. The Debtor sought Chapter 11 protection after Robert Romanoff determined that the attempt of Gerald Romanoff to transfer title to the Company's most valuable asset, the real property and improvements located at 53-61 Gansevoort Street, new York, New York, for inadequate consideration, would permanently impair the Company's ability to pay its debts as they come due. The resolution authorizing the bankruptcy filing said a pending foreclosure proceeding against the Manhattan property and the real property and improvements located at 501-511 Church Avenue, Brooklyn, New York, without proper defenses thereto may cause irreparable harm to the company. GIBRALTAR INDUSTRIES: Moody's Affirms 'B1' CFR; Rates Notes 'B2' ---------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Gibraltar Industries, Inc.'s proposed $210 million senior subordinated notes due 2021. In the same rating action, the rating agency affirmed B1 corporate family rating and B1-PD probability of default rating. The rating outlook is stable. The following rating actions were taken: Proposed $210 million senior subordinated notes due 2021, assigned a B2 (LGD 5, 71%); - B1 corporate family rating affirmed; - B1-PD probability of default rating affirmed Existing $204 million of senior subordinated notes due 2015, affirmed at B2 (LGD 5, 71%), will be withdrawn at the close of its refinancing Speculative grade liquidity rating upgraded to SGL-2 from SGL-3 Ratings Rationale The proceeds from the $210 million senior subordinated notes will be designated for refinancing the company's current senior subordinated notes due 2015. Because if its retirement, the maturity of the company's bank credit facility will be extended from June 2015 to October 2016. The B1 corporate family rating reflects Gibraltar's heavy exposure to residential and non-residential construction markets, the potential for margins to remain pressured until these sectors experience a sustainable recovery, and integration risks associated with four acquisitions completed over the last 12 months. At the same time, the rating takes into consideration the company's ability to generate strong and consistent free cash flow, on-going efforts to eliminate redundancies through facility consolidations, improved profitability relative to cyclical lows, and good liquidity. Gibraltar's good liquidity profile (SGL-2) is supported by a pro forma cash balance that is sufficient given the size of the company. At September 30, 2012, the cash balance stood at $71 million and was supplemented by a sizeable $200 million asset- based revolver that was undrawn and had availability of approximately $140 million. This availability reflected the borrowing base less approximately $14 million of outstanding letter of credit commitments. Also, the company continues to generate strong positive free cash flow. The revolving credit facility has only a fixed charge coverage covenant of 1.25 to 1.00, under which there was sufficient headroom at September 30, 2012. All assets are encumbered to secure borrowings under the revolving credit facility. The ratings could be downgraded if the company fails to sustain adjusted EBITA margins above 5.0%, adjusted debt to EBITDA were to remain above 5.0x, adjusted EBITA to interest expense were to remain below 2.0x, or if housing were to again stumble and non- residential construction markets were to deteriorate further over the next 12 to 18 months. A shift in Moody's expectations about non-residential construction coupled with significant improvement in operating margins and interest coverage could result in upgrade consideration. Specifically, adjusted EBITA margins above 8%, adjusted debt to EBITDA sustained below 4.0x and adjusted EBITA to interest expense above 3.0x on a trailing 12 month basis could result in a positive rating action. The principal methodology used in rating Gibraltar Industries, Inc. was the Global Manufacturing Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Buffalo, NY, Gibraltar Industries, Inc. ("Gibraltar") is a manufacturer and distributor of products for building markets. Approximately 50% of the company's mix is derived from sales of residential building products, with the balance from non-residential building markets. Products include structural and architectural enhancements largely for homes and, to a lesser extent, for low-rise retail, other commercial and professional buildings, and a wide variety of other building structures. With the acquisition of The D.S. Brown Company in 2011, Gibraltar's broadened its non-residential product offering to include bridge and highway transportation infrastructure products. GIBRALTAR INDUSTRIES: S&P Affirms 'BB-' Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'BB-' corporate credit rating on Buffalo, N.Y.-based Gibraltar Industries Inc. The rating outlook is stable. S&P also assigned a 'BB-' issue-level rating to the company's proposed $210 million senior subordinated notes. The recovery rating on the proposed notes is '3', indicating S&P's expectation for meaningful (50% to 70%) recovery in the event of payment default under S&P's default scenario. (For the complete recovery analysis, see Standard & Poor's recovery report on Gibraltar Industries Inc., to be published shortly on RatingsDirect.) "The ratings on Gibraltar Industries reflect our view of the company's ''weak' business risk profile and 'significant' financial risk profile," said Standard & Poor's credit analyst. "Our business risk profile considers the building products manufacturer's dependence on cyclical residential, industrial, and construction end markets; high customer concentration; and exposure to volatile raw materials costs." These factors are modestly offset by the company's good position in niche markets and highly variable cost structure. The financial risk assessment incorporates our view that the company will maintain leverage below 4x and 'strong' liquidity while continuing to pursue an acquisitive growth strategy. Gibraltar Industries is a leading manufacturer, processor, and distributor of products for the building, highway, and bridge construction markets. The company's strategy is to target high market share opportunities in niche products and be the low-cost provider in these markets. "The rating outlook is stable, reflecting our belief that Gibraltar's credit measures will remain consistent with recent levels and the 'BB-' corporate credit rating, despite weak residential and nonresidential markets. We believe leverage will stay below 4x, even after giving consideration to the company's acquisition-driven growth strategy. Moreover, our outlook incorporates the company's strong liquidity position, favorable debt maturity profile, good expected cushion regarding its fixed- charge covenant, and ability to generate modest free cash flow," S&P said. "We could lower the rating if credit measures weakened from current levels such that leverage was likely to be maintained between 4x and 5x. This could occur if the recovery in residential and nonresidential end markets reverses course or if the company cannot pass through raw material costs following a decline in demand. We could downgrade Gibraltar if the company pursued a more aggressive financial policy regarding its acquisition growth strategy," S&P noted. Based on S&P's view of the company's weak business risk profile and acquisition driven growth strategy, an upgrade is viewed as unlikely in the next year. GREYSTONE LOGISTICS: Delays Form 10-Q for Nov. 30 Quarter --------------------------------------------------------- Greystone Logistics, Inc., notified the U.S. Securities and Exchange Commission regarding the delay in the filing of its quarterly report on Form 10-Q for the period ended Nov. 30, 2012. The Company's limited personnel and resources have impaired its ability to prepare and timely file its Quarterly Report. The net income for the six months and three months ended Nov. 30, 2012, is expected to be $1,103,544 and $136,777, respectively, compared to $751,141 and $368,830, respectively, for the six months and three months ended Nov. 30, 2011. The net income to common stockholders for the six months and three months ended Nov. 30, 2012, is expected to be $834,608, or $0.03 per share, and $2,603, or $0.00 per share, compared to $623,934, or $0.02 per share, and $237,248, or $0.01 per share, respectively, for the six months and three months ended Nov. 30, 2011. The increase in net income for the six months ended Nov. 30, 2012, compared to the six months ended Nov. 30, 2011, is primarily related to an increase of approximately $70,000 in operating income plus the recognition of a benefit from income taxes of $209,300 for the six months ended Nov. 30, 2012, compared to no benefit recognized in the six months ended Nov. 30, 2011. The decrease in net income for the three months ended Nov. 30, 2012, compared to the three months ended Nov. 30, 2011, results primarily from a decline in sales of approximately $1,154,000. About Greystone Logistics Tulsa, Okla.-based Greystone Logistics, Inc. (OTC BB: GLGI.OB - News) -- http://www.greystonelogistics.com/-- manufactures and sells plastic pallets through its wholly owned subsidiary, Greystone Manufacturing, LLC. Greystone sells its pallets through direct sales and a network of independent contractor distributors. Greystone also sells its pallets and pallet leasing services to certain large customers direct through its President, Senior Vice President of Sales and Marketing and other employees. Greystone reported net income of $2.49 million for the year ended May 31, 2012, compared with a net loss of $847,204 during the prior fiscal year. The Company's balance sheet at Aug. 31, 2012, showed $13.08 million in total assets, $18.65 million in total liabilities, and a $5.57 million total deficit. HAMPTON CAPITAL: Final DIP Financing Hearing on Feb. 14 ------------------------------------------------------- Hampton Capital Partners, LLC, obtained interim approval of its request to incur postpetition financing from its existing first- lien lender, Bank of America. The Court will conduct a final hearing on the DIP financing at 9:30 a.m., on Feb. 14, 2013, at Courtroom #2, U.S. Bankruptcy Court, Second Floor, 101 S. Edgeworth Street, Greensboro, North Carolina. Objections to final approval of the DIP loans are due Feb. 12. Nothing in the Interim DIP order or the budget will affect in any way the rights, claims or causes of action of INVISTA North America S.a r.l., INVISTA Technologies S.a r.l. or the Debtor concerning the alleged termination on Dec. 20, 2012, of a Trademark License Agreement, dated as of July 1, 2008, as amended, including, without limitation, by a Trademark License and Restatement Agreement, dated as of Oct. 1, 2011, and a First Amendment to the Trademark License and Restatement Agreement, dated as of September 1, 2012, and all trademark licenses granted by INVISTA to the Debtor under the Trademark Agreement, pursuant to letter from INVISTA dated as of December 20, 2012. As reported in the Jan. 11, 2013 edition of the TCR, Bank of America, already owed $10 million on a first-lien debt, has agreed to provide the Debtors liquidity to fund the Chapter 11 effort on these terms: -- During the period from the Petition Date through and including Feb. 8, 2013, the Debtor may obtain credit extensions only to the extent necessary to avoid immediate and irreparable harm to the Debtor, which will mean proceeds of DIP loan advances (in) an aggregate amount of $2,624,119 sued for purposes specified in the budget, and (ii) to reduce the amount of the prepetition debt to the extent of use or sale of prepetition inventory. -- BofA will be granted, among other things, security interests in the Debtor's assets, replacement liens, and administrative priority status for the DIP obligations. -- The Debtor would be authorized to use proceeds of the DIP loans to pay professional expenses, the DIP lender would committed to fund certain "unwind expense". About Hampton Capital Partners Hampton Capital Partners, LLC, an Aberdeen, N.C.-based manufacturer of residential and commercial tufted carpets under the Gulistan name, filed a Chapter 11 petition (Bankr. M.D.N.C. Case No. 13-bk-80015) on Jan. 7, 2013. The Company has been producing carpet under the Gulistan name since 1924, although it traces its roots back to 1818, when an Armenian textile importer established a business in Turkey. The company began manufacturing carpet in Aberdeen in 1957, and was acquired by J.P. Stevens & Co. Inc. in 1964. Over the last 25 years, Gulistan Carpet has undergone several ownership changes. In addition to its headquarters and manufacturing operations in Aberdeen, the company has a plant in Wagram, N.C. Northen Blue, LLP, serves as counsel to the Debtor. Getzler Henrich & Associates LLC is the financial consultant. HAWKER BEECHCRAFT: Lines Up $600M for Bankruptcy-Exit Financing --------------------------------------------------------------- Jacqueline Palank, writing for Dow Jones' Bankruptcy & Debt section, reported that Hawker Beechcraft Inc. said it has struck a deal for $600 million in exit financing from lenders led by J.P. Morgan Chase & Co. to take it out of Chapter 11 protection. In court papers filed Friday, the aircraft manufacturer asked a bankruptcy judge to let it commit to the financing deal with J.P. Morgan "as soon as possible." Hawker hopes to emerge from Chapter 11 protection by the end of March, the report said. J.P. Morgan, which beat out three other rival lenders, would underwrite, structure, arrange and syndicate the exit financing: a $375 million senior secured term loan, which would mature in seven years, and a $225 million secured revolving loan, which would mature in five years, the report noted. Hawker said it would use the term loan to pay off its $400 million bankruptcy loan as well as for working capital. The report added that Hawker said it likely won't draw on the revolving loan until after its restructuring and will use the cash to help support its operations going forward. To firm up the financing commitment, Hawker has asked the U.S. Bankruptcy Court in Manhattan to let it pay fees to J.P. Morgan . However, the company redacted the specific amount from public court filings on the grounds that it is "highly sensitive" and proprietary information, the report pointed out. One of Hawker's financial advisers, Agnes K. Tang of Perella Weinberg Partners, said in court papers that the fees are "fair and reasonable" and "reflect market terms." The report related that Hawker said it's been searching for bankruptcy-exit financing since November, once the company's sale plans fell apart and it became clear the company, one of the world's largest makers of business jets, would have to reorganize instead. Superior Aviation Beijing Co. had tentatively offered $1.79 billion for Hawker's business, except for its defense assets, but the two walked away from the deal in mid-October when they couldn't agree on the final terms, the report recounted. Hawker quickly turned its attention to its backup strategy of a standalone restructuring, through which it's seeking to lighten its debt load by about $2.5 billion and exit Chapter 11 under the control of a group of hedge funds, which include Bain Capital's Sankaty Advisors, Angelo Gordon & Co. and Centerbridge Partners. The hedge funds would swap more than $920 million in debt for an 81.1% stake in the restructured company. Senior bondholders, unsecured creditors and the government's pension insurer would share in the remaining 18.9% stake. Hawker's restructuring plan is subject to bankruptcy-court approval at a Jan. 31 hearing. The Wichita, Kan., company, which plans to change its name to Beechcraft Corp. upon emergence from Chapter 11, sought court protection last May. 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. HEALOGICS INC: S&P Affirms 'B' CCR; Outlook Stable -------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Jacksonville, Fla.-based Healogics Inc. The outlook is stable. At the same time, S&P assigned Healogics' proposed $30 million first-lien revolving credit agreement and $290 million first-lien term loan S&P's 'B' credit rating (the same as the corporate credit rating), with a recovery rating of '3', indicating S&P's expectation for meaningful (50% to 70%) recovery of principal in the event of payment default. "We also assigned Healogics' proposed $110 million second-lien term loan our 'CCC+' credit rating (two notches below the corporate credit rating), with a recovery rating of '6', indicating our expectation for negligible (0 to 10%) recovery of principal in the event of payment default," S&P said. "The rating on Healogics Inc., formerly National Healing Corp., reflects its "highly leveraged" financial risk profile. We believe Healogics' growth goals and financial policies of its owners will keep leverage above 5x. As of Dec. 31, 2012, we estimate pro forma adjusted debt to EBITDA was about 5.3x, slightly higher than actual adjusted leverage of 5.1x as of Sept. 30, 2012. In December 2012, we revised our business risk assessment to "weak" from "vulnerable" because we believe the late 2011 transformative acquisition of Wound Care Holdings LLC (WC) was successfully integrated. The "weak" business risk profile recognizes Healogics' good market position with a narrow operating focus providing outsourced wound care to hospitals and the risk that hospitals, now struggling to rein in costs, may impose less lucrative contract terms on Healogics. It operates about 500 specialized wound care centers in 44 states," S&P noted. HICKOK INCORPORATED: Incurs $784,000 Net Loss in Fiscal 2012 ------------------------------------------------------------ Hickok Incorporated filed on Jan. 14, 2013, its annual report on Form 10-K for the fiscal year ended Sept. 30, 2012. According to the regulatory filing, the Company has suffered recurring losses from operations during the past several years due primarily to decreasing sales of existing product lines and a general economic downturn in all markets the Company serves. "The resulting lower sales levels have impacted the Company's accounts receivable and cash balances, if this situation continues it may prevent the Company from generating sufficient cash flow to sustain its operations." "The ability of the Company to continue as a going concern is dependent on improving the Company's profitability and cash flow and securing additional financing if needed. "Management believes that the actions presently being taken by the Company will provide the stimulus for it to continue as a going concern, however, because of the inherent uncertainties there can be no assurances to that effect." The Company reported a net loss of $783,966 on $4.8 million of net sales for fiscal 2012, compared with a net loss of $672,535 on $5.1 million of net sales for fiscal 2011. The Company's balance sheet at Sept. 30, 2012, showed $3.2 million in total assets, $888,096 in total current liabilities, and stockholders' equity of $2.3 million. A copy of the Form 10-K is available at http://is.gd/gjFHtj Cleveland, Ohio-based Hickok Incorporated develops and manufactures products used by companies in the transportation industry. Primary markets served are automotive, emissions testing, aircraft, and locomotive with sales both to original equipment manufacturers (OEM's) and to the aftermarkets. The Company generated approximately 66% of its fiscal 2012 revenue from designing and manufacturing diagnostic tools for automotive diagnostics and testing. HORSHAM 410: Chapter 11 Case Dismissed After Failing to File Docs ----------------------------------------------------------------- Judge Jean K. FitzSimon has ordered the dismissal of the Chapter 11 case of Horsham 410, LLC, after the Debtor failed to file documents required by the Court. The Debtor was previously ordered by the Bankruptcy Court to file the documents on Oct. 24, 2012, and extended the filing deadline to Nov. 20, 2012. Horsham 410, LLC, owns and operates commercial real estate located at 410 Horsham Road, Horsham, Montgomery County, Pennsylvania. The Property is currently rented to two tenants under lease. Horsham 410 LLC filed a Chapter 11 petition (Bankr. E.D. Pa. Case No. 12-19941) in Philadelphia on Oct. 23, 2012. The Debtor, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), estimated at least $10 million in assets and liabilities. Judge Jean K. FitzSimon presides over the case. IMH FINANCIAL: Amends Bylaws to Protect NOL Carryforwards --------------------------------------------------------- IMH Financial Corporation amended its Bylaws and restated them in full to, among other things, provide authority to the Board of Directors to protect the Company's net operating loss carryforwards and certain other tax attributes, and include provisions restricting transfers of the Company's capital stock to 5.0% stockholders or to stockholders who become 5.0% stockholders upon that transfer. A copy of the Amended Bylaws is available for free at http://is.gd/CWUH4T About IMH Financial Scottsdale, Ariz.-based IMH Financial Corporation was formed from the conversion of IMH Secured Loan Fund, LLC, or the Fund, a Delaware limited liability company, on June 18, 2010. The conversion was effected following a consent solicitation process pursuant to which approval was obtained from a majority of the members of the Fund to effect the Conversion Transactions and involved (i) the conversion of the Fund from a Delaware limited liability company into a Delaware corporation named IMH Financial Corporation, and (ii) the acquisition by the Company of all of the outstanding shares of the manager of the Fund Investors Mortgage Holdings Inc., or the Manager, as well as all of the outstanding membership interests of a related entity, IMH Holdings LLC, or Holdings on June 18, 2010. The Company is a commercial real estate lender based in the southwest United States with over 12 years of experience in many facets of the real estate investment process, including origination, underwriting, documentation, servicing, construction, enforcement, development, marketing, and disposition. The Company focuses on a niche segment of the real estate market that it believes is underserved by community, regional and national banks: high yield, short-term, senior secured real estate mortgage loans. The intense level of underwriting analysis required in this segment necessitates personnel and expertise that many community banks lack, yet the requisite localized market knowledge of the underwriting process and the size of the loans the Company seeks often precludes the regional and community banks from efficiently entering this market. The Company reported a net loss of $35.19 million in 2011, a net loss of $117.04 million in 2010, and a net loss of $74.47 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $228.93 million in total assets, $86.63 million in total liabilities and $142.30 million in total stockholders' equity. INTERFAITH MEDICAL: Committee Hiring A&B as Bankruptcy Counsel -------------------------------------------------------------- The Official Committee of Unsecured Creditors of Interfaith Medical Center, Inc., asks the U.S. Bankruptcy Court for the Eastern District of New York for authorization to retain Alston & Bird LLP, nunc pro tunc to Dec. 13, 2012, the date the firm was selected to represent the Committee in the Debtor's case. Alston & Bird's services will include, without limitation, assisting, advising, and representing the Committee with respect to the following matters: (a) the administration of this case and the exercise of oversight with respect to the Debtor's affairs including all issues arising from or impacting the Debtor or the Committee in the Debtor's Chapter 11 case; (b) the preparation on behalf of the Committee of all necessary applications, motions, orders, reports, and other legal papers; (c) appearances in this Court to represent the interests of the Committee; (d) the negotiation, formulation, drafting, and confirmation of any plan of reorganization or liquidation and matters related thereto; (e) The exercise of oversight with respect to any transfer, pledge, conveyance, sale, or other liquidation of the Debtor's assets; (f) The investigation as the Committee may desire concerning, among other things, the assets, liabilities, financial condition, and operating issues concerning the Debtor that may be relevant to the case; (g) The communication with the Committee's constituents and others as the Committee may consider desirable in furtherance of its responsibilities; and (h) The performance of all of the Committee's duties and powers under the Bankruptcy Code and the Bankruptcy Rules or as may be ordered by the Court. The current hourly rates charged by Alston & Bird for attorneys and paralegals are: Partner $625 to $1,150 Counsel $625 to $935 Associate $390 to $695 Paralegal $205 to $315 Case Clerk $205 to $210 Craig Freeman, Esq., and Martin J. Bunin, Esq., are the A&B bankruptcy partners who will be the primary partners on this matter, and their hourly rates for this matter are $730 and $825, respectively. To the best of the Committee's knowledge, information, and belief, Alston & Bird LLP is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code in that Alston & Bird: (a) is not a creditor, an equity security holder, or an insider; (b) is not and was not, within two years before the date of the filing of the petition, a director, officer, or employee of the Debtor; and (c) does not have an interest materially adverse to the interest of the estate or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the Debtor, or for any other reason. The hearing on the Committee's motion will be held on Feb. 11, 2013, at 2:00 p.m. The objection deadline is Feb. 4, 2013, at 5:00 p.m. About Interfaith Medical Center Headquartered in Brooklyn, New York, Interfaith Medical Center, Inc., operates a 287-bed hospital on Atlantic Avenue in Bedford- Stuyvesant and an ambulatory care network of eight clinics in central Brooklyn, in Crown Heights and Bedford-Stuyvesant. The Company filed for Chapter 11 protection (Bankruptcy E.D. N.Y. Case No. 12-48226) on Dec. 2, 2012. The Debtor estimates assets and debts at $100 million to $500 million. Alan J. Lipkin, Esq., at Willkie Farr & Gallagher LLP, serves as bankruptcy counsel to the Debtor. Nixon Peabody LLP is the special corporate and healthcare counsel. Alston & Bird LLP is the proposed counsel for the Official Committee of Unsecured Creditors. JAS & ASSOCIATES: Plan Outline Fails to Pass Muster --------------------------------------------------- Bankruptcy Judge Thomas J. Tucker said he cannot grant preliminary approval of the disclosure statement explaining the plan of reorganization filed by JAS & Associates, Inc., citing problems, which the Debtor must correct. The Court wants the amended plan documents filed no later than Jan. 16, 2013. The Debtor on Jan. 2, 2013, filed a plan and disclosure statement, in a document entitled "Third Amended Combined Plan and Disclosure." The errors include a wrong caption: Instead of the caption saying "Third Amended Combined Plan and Disclosure," it should have said "Third Amended Combined Plan and Disclosure Statement." The Debtor also must correct inconsistencies. The Court noted that in Section VI of the Disclosure Statement on page 16, the Debtor lists the secured claim of the Internal Revenue Service as $61,267.73. But in the section of the Plan concerning the treatment of the Internal Revenue Service's secured claim, Class 1 on page 23, the Debtor appears to state that the amount of the secured claim is "$49,270.41 -- fully secured." As another example, in Section VI of the Disclosure Statement on page 17, the Debtor appears to list the unsecured priority claim of the Internal Revenue Service as $24,090.73, and then later in Section VI on page 17 as $24,807.27. But in the section of the Plan concerning the treatment of the Internal Revenue Service's priority claim, on page 27, the Debtor states that the amount of the Internal Revenue Service's priority claim is $36,088.05. The Debtor does not list any general unsecured claim for the Internal Revenue Service in Class 6, on page 26 of the Plan. In Section VI on page 17 of the Disclosure Statement, the Debtor lists "Administrative Claims (Class 1)." The Debtor must delete "Class 1" because administrative claims should not be classified and are not in Class 1 in the Plan. The Debtor also states in Section VIII of the Plan on page 23: "$49,270.41 -- fully secured. The IRS has a lien on all assets of the Debtor with a value of $113,235." But then on page 24, the Debtor states; "Secured by blanket lien in all property of Debtor with a value of $49,270.41." The Debtor also must change "Class 8 -- Equity Interests of Debtor" on page 26 of the Plan to "Class 7 -- Equity Interests of Debtor." The Debtor must state specifically when payments to each class will begin (e.g., payments will begin on the 15th day of the first month following the Effective date"). A copy of the Court's Jan. 11, 2013 Order is available at http://is.gd/fvoxOnfrom Leagle.com. JAS & Associates, Inc., dba Century Small Business Accounting, filed for Chapter 11 bankruptcy (Bankr. E.D. Mich. Case No. 12-46922) on March 20, 2012, listing under $1 million in both assets and debts. A copy of the petition and list of creditors is available at http://bankrupt.com/misc/mieb12-46922p.pdfand http://bankrupt.com/misc/mieb12-46922c.pdf Donald C. Darnell, Esq., serves as the Debtor's counsel. LAGUNA BRISAS: Wins Right to Use Cash Collateral Through Feb. 28 ---------------------------------------------------------------- Wells Fargo Bank, N.A., as Trustee for the registered holders of Banc of America Commercial Mortgage Inc., Commercial Mortgage Pass-Through Certificates, Series 2006-3; Byron Chapman, as state court receiver; Kay Nam Kim; and Mehrdad Elie, entered into a fifth stipulation to extend the receiver's continued interim use of cash collateral through and including Feb. 28, 2013, to permit the Receiver to continue using cash collateral in accordance with the budget. Wells Fargo is represented by: Jennifer L. Nassiri, Esq. Keith C. Owens, Esq. VENABLE LLP 2049 Century Park East, Suite 2100 Los Angeles, CA 90067 Tel: (310) 229-9900 Fax: (310) 229-9901 Email: kowens@venable.com jnassiri@venable.com About Laguna Brisas Laguna Beach, California-based Laguna Brisas, LLC doing business as Best Western Laguna Brisas Spa Hotel, is owned by A&J Mutual, LLC, which is owned and operated by Dae In "Andy" Kim and his wife Jane. The Company owns a Best Western Plus Hotel and Spa in Laguna Beach, California. The Company filed for Chapter 11 protection (Bankr. C.D. Calif. Case No. 12-12599) on Feb. 29, 2012. Bankruptcy Judge Mark S. Wallace presides over the case. The Debtor filed the Chapter 11 petition to stop foreclosure sale of the first priority trust deed holder, Wells Fargo Bank. The hotel has been in possession of and operated by a receiver, Bryon Campbell, since Oct. 3, 2011. M. Jonathan Hayes, Esq., at the Law Office of M. Jonathan Hayes represents the Debtor in its restructuring effort. The Debtor disclosed $15,097,815 in assets and $13,982,664 in liabilities. The petition was signed by Dae In "Andy" Kim, managing member. The Debtor's Plan provides that Wells Fargo Bank will be paid in full, at a contract interest rate of 6.23%, or roughly $57,000 per month. General unsecured claims will be paid in full, pro-rata, in monthly installment of $43,000 over 58 months. General unsecured claims, which are impaired under the Plan, are estimated to aggregate $2.475 million. LAKERIDGE CENTER: Second Amended Reorganization Plan Confirmed -------------------------------------------------------------- The Hon. Gregg W. Zive has confirmed the second amended plan of reorganization plan filed by Lakeridge Centre Office Complex, LP. The Plan will be funded in part by contribution from Blackwood Canyon, LLC, a Nevada limited liability company managed by Byron Topol. The following contributions will be made in cash by Blackwood Canyon, LLC: A. The sum necessary to pay administrative fees in this case estimated at approximately $200,000. B. The sum of approximately $105,000 to Class 2 and Class 3 creditors (adjusted to equal 5% of Allowed Unsecured Claims and 5% of the Wells Fargo Deficiency Claim). C. The sum of $10,945 to pay the Washoe County Treasurer for an unpaid tax penalty due and owing. The total sums to fund the Plan will be deposited into a segregated trust account prior to plan confirmation, to be disbursed upon confirmation of this plan. Adequate protection payments in the amount of $300,000 paid to Wells Fargo will be deposited into the Debtor's Reserve Account on the Effective Date. The Reserve Account funds will be used for the purposes of tenant improvements, commissions, repairs, and general capital improvements on the Office Property. Based on the Debtor's assessment of economic conditions, the Office Property will be marketed for sale at any time before the Wells Fargo Due Date as the Debtor will deem as appropriate in its business judgment. The Debtor will list the Office Property for sale with a licensed real estate broker. The listing amount will be determined by the Debtor, but will be in a minimum amount to pay Wells Fargo in full, in accordance with the Plan, unless otherwise agreed by Wells Fargo. The Debtor may obtain new financing for the Office Property at any time the Debtor deems advisable, but not later than the Wells Fargo Due Date, in a sufficient amount to pay the entire balance owed under the Wells Fargo Note, unless Wells Fargo agrees to a reduced payment. A copy of the disclosure statement is available for free at: http://bankrupt.com/misc/LAKERIDGE_CENTER_ds.pdf About Lakeridge Centre Reno, Nevada-based Lakeridge Centre Office Complex, LP, owns a commercial office complex and vacant property located in Southwest Reno, Nevada. Lakeridge Centre filed for Chapter 11 bankruptcy protection (Bankr. D. Nev. Case No. 10-53612) on Sept. 8, 2010, estimating assets and debts at $10 million to $50 million as of the Chapter 11 filing. Affiliates West Shore Resort Properties III, LLC (Bankr. D. Nev. Case No. 10-51101) and West Shore Resort Properties, LLC (Bankr. D. Nev. Case No. 10-50506) filed separate Chapter 11 petitions. LAUSELL INC: Can Access Bank's Cash Collateral Until March 31 ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Puerto Rico authorized Lausell, Inc., to use Firstbank Puerto Rico and Citibank N.A.'s cash collateral and to pay critical vendor Alcan Primary Products Company, LLC, in addition to the full amount of Alcan's post-petition invoices, 10% thereof to be credited by Alcan to its pre-petition claim. The Banks have agreed to the extension of Debtor's authority to use their cash collateral to allow the Debtor the time require to finalize its application for a postpetition financing from the Economic Development Bank for Puerto Rico in order to pay off the loans with the banks, in a discounted pay off transaction ("DPO") for a reduced amount of $6,300,000. The total authorized use of cash collateral is $5,267,000 and will be for the period of the week commencing on Dec. 13, 2012, and ending on the earlier of (i) March 31, 2012, or (ii) 30 days after the rejection or denial by the EDB of the financing being requested by the Debtor. As adequate protection, the Banks are granted replacement liens and a postpetition security interest on all of the assets and after acquired collateral of the Debtor. As additional adequate protection, the Debtor will make a payment to the Banks equivalent to the daily rate of $1,035 to cover interest becoming due during the term of the stipulation. The Debtor will also make monthly payments to the Banks of $5,000, for a total of $20,000 during the period of this stipulation to cover accrued interest. As additional adequate protection, the Banks are also granted a superpriority claim, having priority over all administrative expenses specified in Sections 503(b) and 507 of the Bankruptcy Code. About Lausell Inc. Lausell, Inc., filed a bare-bones Chapter 11 petition (Bankr. D.P.R. Case No. 12-02918) on April 17, 2012, in Old San Juan, Puerto Rico. Lausell, also known as Aluminio Del Caribe, is a manufacturer of windows and doors. Bankruptcy Judge Mildred Caban Flores oversees the case. Charles Alfred Cuprill, Esq., at Charles A. Curpill, PSC, serves as counsel to the Debtor. The Bayamon, Puerto Rico-based company disclosed $34,059,950 in assets and liabilities of $24,489,414 in its amended schedules. LCI HOLDING: Can Employ Young Conaway as Conflicts Counsel ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized LCI Holding Company, Inc., to employ Young Conaway Stargatt & Taylor, LLP, as conflicts counsel to the Debtors, effective as fo the Petition Date. Young Conaway will handle matters that the Debtors may encounter which are not handled by lead bankruptcy counsel Skadden, Arps, Slate, Meagher & Flom LLP, because of an actual or potential conflict of interest, or, alternatively, which can be more efficiently handled by Young Conaway. The principal attorneys and paralegal presently designated to represent the Debtors and their standard hourly rates are: David R. Hurst $570 Maris J. Kandestin $390 Morgan L. Seward $295 Troy Bollman $150 About LifeCare LCI Holding Company, Inc., and its affiliates, doing business as LifeCare Hospitals, operate eight "hospital within hospital" facilities and 19 freestanding facilities in 10 states. The hospitals have about 1,400 beds at facilities in Louisiana, Texas, Pennsylvania, Ohio and Nevada. LifeCare is controlled by Carlyle Group, which holds 93.4 percent of the stock following a $570 million acquisition in August 2005. LCI Holding Company, Inc., and its affiliates, including LifeCare Holdings Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-13319) on Dec. 11, 2012, with plans to sell assets to secured lenders. Ken Ziman, Esq., and Felicia Perlman, Esq., at Skadden, Arps, Slate Meagher & Flom LLP, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. The steering committee of lenders is represented by attorneys at Akin Gump Strauss Hauer & Feld LLP and Blank Rome LLP. The agent under the prepetition and postpetition secured credit facility is represented by Simpson Thacher & Barlett LLP. The Debtors disclosed assets of $422 million and liabilities totaling $575.9 million as of Sept. 30, 2012. As of the bankruptcy filing, total long-term obligations were $482.2 million consisting of, among other things, institutional loans and unsecured subordinated loans. A total of $353.4 million is owing under the prepetition secured credit facility. A total of $128.4 million is owing on senior subordinated notes. LCI HOLDING: Has Until Feb. 9 to File Schedules and Statements -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended LCI Holding Company, Inc., et al.'s time to filed their schedules of assets and liabilities, and statement of financial affairs until Feb. 9, 2013. About LifeCare LCI Holding Inc. and its affiliates, doing business as LifeCare Hospitals, operate eight "hospital within hospital" facilities and 19 freestanding facilities in 10 states. The hospitals have about 1,400 beds at facilities in Louisiana, Texas, Pennsylvania, Ohio and Nevada. LifeCare is controlled by Carlyle Group, which holds 93.4 percent of the stock following a $570 million acquisition in August 2005. LifeCare Holdings and its affiliates, including LifeCare Holdings Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-13319) on Dec. 11, 2012, with plans to sell assets to secured lenders. Ken Ziman, Esq., and Felicia Perlman, Esq., at Skadden, Arps, Slate Meagher & Flom LLP, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. The Debtors tapped Huron Management Services LLC to provide an interim chief financial officer and certain additional personnel and (ii) designate the firm's Stuart Walker as interim CFO. Kurtzman Carson Consultants LLC serves as notice and claims agent. The steering committee of lenders is represented by attorneys at Akin Gump Strauss Hauer & Feld LLP and Blank Rome LLP. The agent under the prepetition and postpetition secured credit facility is represented by Simpson Thacher & Barlett LLP. The Debtors disclosed assets of $422 million and liabilities totaling $575.9 million as of Sept. 30, 2012. As of the bankruptcy filing, total long-term obligations were $482.2 million consisting of, among other things, institutional loans and unsecured subordinated loans. A total of $353.4 million is owing under the prepetition secured credit facility. A total of $128.4 million is owing on senior subordinated notes. Robert A. DeAngelis, the U.S. Trustee for Region 3, appointed three members to the Official Committee of Unsecured Creditors. MEADE INSTRUMENTS: Incurs $1.3MM Net Loss in Fiscal 2013 3rd Qtr. ----------------------------------------------------------------- Meade Instruments Corp. filed its quarterly report on Form 10-Q, reporting a net loss of $1.3 million for the three months ended Nov. 30, 2012, compared with a net loss of $249,000 for the three months ended Nov. 30, 2011. The Company reported net sales of $5.7 million for the quarter ended Nov. 30, 2012, a decrease of $1.5 million or 21% compared to net sales of $7.2 million in the same period in the prior year. "This decrease in net sales was generally attributable to a reduction in net sales of low-end telescopes, spotting scopes and microscopes which was due to increased competition from the Company?s Chinese-owned competitors and a reduction in the amount of demand for the products by consumers." For the nine months ended Nov. 30, 2012, the Company had a net loss of $2.7 million, compared with a net loss of $748,000 for the nine months ended Nov. 30, 2011. The Company reported net sales of $13.8 million for the nine months ended Nov. 30, 2012, a decrease of $3.8 million or 22% from net sales of $17.6 million in the same period in the prior year. The Company's balance sheet at Nov. 30, 2012, showed $13.3 million in total assets, $5.8 million in total liabilities, and stockholders' equity of $7.5 million. According to the regulatory filing, the Company has incurred significant recurring losses and negative cash flows from operations which have resulted in reduced liquidity and a weakened financial position as of Nov. 30, 2012. "The Company also has endured working capital problems caused by product development delays during the past twelve months. In addition, in January 2013, the Company's largest customer, and one additional customer, notified the Company that they had unilaterally, and without prior notice, decided to indefinitely hold payment of approximately $0.6 million in accounts receivable, which will further reduce the Company's already limited liquidity. Due to these issues, the Company's management now believes substantial doubt exists about the Company's ability to continue as a going concern and that it must modify the Company's business model and operations to reduce spending to a sustainable level." "Such actions could cause the Company to be unable to execute its business plan, take advantage of future opportunities, respond to competitive pressures or customer requirements. It may also cause the Company to delay, scale back or eliminate some or all of its research and development programs, seek opportunities in a strategic relationship or business combination, or to reduce or cease operations." A copy of the Form 10-Q is available at http://is.gd/mHbquK Irvine, Calif.-based Meade Instruments Corp. is engaged in the design, manufacture, marketing and sale of consumer optics products, primarily telescopes, telescope accessories and binoculars. MEDIANNUAIRE HOLDING: 90% of Lenders Back Restructuring Proposal ---------------------------------------------------------------- Following the announcement on December 12, 2012 by MEDIANNUAIRE HOLDING of the launch of the process for its lenders to vote on its restructuring proposal, Mediannuaire Holding has already obtained the consent of circa 90% of its senior lenders and of 100% of its mezzanine lenders. Mediannuaire Holding is delighted with these very good intermediary results and has decided to extend the voting period in order to allow the lenders who have not yet cast their vote to do so. The crossing of the two-thirds threshold allows Mediannuaire Holding, if it so wishes, to request the opening of accelerated financial safeguard proceedings (procedure de sauvegarde financiere acceleree) which would however be less profitable for all parties involved than a restructuring on a unanimous basis. In addition, the restructuring is no longer subject to any condition, the consent of the majority of Pagesjaunes Finance & Co SCA's bondholders with respect to Pagesjaunes Groupe's bond documentation having been granted, as announced by Pagesjaunes Groupe on last December 21. The terms of the restructuring proposal provide the following recovery rates(*): -- 34.1% for the first lien lenders (other than RCF lenders and CERBERUS), by allotment of Pagesjaunes Groupe shares and cash payments, -- 33.4% for the RCF lenders, by allotment of Pagesjaunes Groupe shares and cash payments, their undrawn financing commitments being cancelled, -- 7.2% for the second lien lenders, by allotment of Pagesjaunes Groupe shares only, -- 2.6% for mezzanine lenders through the conversion of their debt into MEDIANNUAIRE HOLDING shares. As a reminder, on August 24, 2012, Mediannuaire Holding had requested the consent of its lenders to temporarily waive their right to request the interest due on 10 September 2012, 13 September 2012 and 24 October 2012 under the Mediannuaire Senior Credit Agreement dated 10 October 2006. This temporary waiver, which had been granted unanimously by these lenders, expired at the end of October and as at today's date, such interest remains unpaid. (*) In the context of a consensual restructuring and on the basis of a Pagesjaunes Groupe share price of EUR1.59, used since July 2012 as a theoretical reference by the parties in their discussions. METRO FUEL: Kirkland & Ellis Approved as Lead Bankruptcy Counsel ---------------------------------------------------------------- The Hon. Elizabeth S. Stong U.S. Bankruptcy Court for the Eastern District of New York authorized Metro Fuel Oil Corp., et al., to employ Kirkland & Ellis LLP as lead counsel. K&E is expected to, among other things: a. advise the Debtors with respect to their powers and duties as debtors in possession in the continued management and operation of their businesses and properties; b. advise and consult on the conduct of the Chapter 11 cases, including all of the legal and administrative requirements of operating in Chapter 11; and c. attend meetings and negotiate with representatives of creditors and other parties in interest. Christopher J. Marcus, a partner at K&E, told the Court that the hourly rates of the firm's personnel are: Partners $670 ? $1,045 Of Counsel $560 ? $1,045 Associates $370 ? $750 Paraprofessionals $145 ? $320 Mr. Marcus $845 Nicole L. Greenblatt $795 Benjamin J. Steele $670 The Debtors paid $200,000 to K&E as a classic retainer. K&E invoiced the Debtors for $150,000 on Sept. 5, 2012, $350,000 on Sept. 17, and $363,212 on Sept. 25. To the best of the Debtors' knowledge, K&E is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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. Th Debtor tapped Carl Marks Advisory Group LLC as financial advisor and investment banker, Curtis, Mallet-Prevost, Colt & Mosle LLP as co-counsel, AP Services, LLC as crisis managers for the Debtors, and appoint David Johnston as their chief restructuring officer. 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. Metro Terminals Corp., affiliate of Metro Fuel Oil Corp., disclosed $38,613,483 in assets and $71,374,410 in liabilities as of the Chapter 11 filing. The U.S. Trustee appointed seven-member creditors committee. METRO FUEL: Taps AP Services as Crisis Managers and Provide CRO --------------------------------------------------------------- Metro Fuel Oil Corp., et al., ask the U.S. Bankruptcy Court for the Eastern District of New York for permission to: i) employ AP Services, LLC as crisis managers; ii) appoint APS's David Johnston as chief restructuring officer; and iii) appoint APS's Thomas Studebaker as chief financial officer. The Debtors relate that they retained AlixPartners, LLP, an affiliate of APS, in late June 2012 to bring credibility and transparency to their accounting and credit facility issues. The Debtors believed it was critical to engage a CRO and CFO to run the business through a certain restructuring process, which includes the sale of the Debtors' assets on an expedited timeline. APS has agreed to provide other APS personnel as necessary to support Messrs. Johnston and Studebaker and the Debtors' existing management team during the Chapter 11 cases. Under the APS Engagement Letter, Mr. Johnston is responsible for assisting the Debtor's senior management team in their postpetition restructuring efforts, including negotiating with parties-in-interest and coordinating the "working group" of professionals who are or will be assisting the Debtors in the restructuring processes or who are working for the Debtors' stakeholders. Additionally, Mr. Studebaker will serve as the CFO of the Debtors, reporting to the board of directors, and directing the Debtors' financial operations. Mr. Studebaker is responsible for assisting the Debtors' senior management team in the management of their postpetition financial affairs. The Debtors believe that Messrs. Johnston and Studebaker and the additional personnel will not duplicate the services that are being provided to the Debtors in the cases by any other professionals. The Debtors agreed to compensate Mr. Johnston $815 per hour; and Mr. Studebaker $620 per hour. the hourly rates of APS's additional personnel are: Managing Directors $815 - $970 Directors $620 - $760 Vice Presidents $455 - $555 Associates $305 - $405 Analysts $270 - $300 Paraprofessionals $205 - $225 APS typically works for compensation that includes base fee and contingent incentive compensation earned upon achieving meaningful results. In the instant case, APS seeks, as part of its fee structure, a success fee composed of two components, (a) a fee of $450,000, payable upon consummation of a Transaction or confirmation of a chapter 11 plan of reorganization; and (b) a recapitalization fee based on the refinancing of the Debtors' debt or equity. In connection with AlixPartners' retention as restructuring consultants in the period leading up to the Commencement Date under the AlixPartners Engagement Letter, the Debtors paid a retainer of $200,000 to AlixPartners in four weekly installments of $50,000 over the first four weeks of the engagement. Subsequently, the Debtors increased AlixPartners' retainer by $100,000, to a total retainer of $300,000, which was later transferred to APS. As of the Commencement Date, the outstanding retainer amount was $230,000. Pursuant to the AlixPartners Engagement Letter, invoiced amounts have been recouped against the retainer. During the 90 days prior to the commencement of these chapter 11 cases, the Debtors paid AlixPartners or APS a total of $1,465,591.10 on account of services provided to the Debtors in contemplation of, and in connection with, their restructuring. To the best of the Debtors' knowledge, APS is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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. Th Debtor tapped Carl Marks Advisory Group LLC as financial advisor and investment banker, Curtis, Mallet-Prevost, Colt & Mosle LLP as co-counsel, AP Services, LLC as crisis managers for the Debtors, and appoint David Johnston as their chief restructuring officer. 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. Metro Terminals Corp., affiliate of Metro Fuel Oil Corp., disclosed $38,613,483 in assets and $71,374,410 in liabilities as of the Chapter 11 filing. The U.S. Trustee appointed seven-member creditors committee. METRO FUEL: Hires Carl Marks as Financial Advisor ------------------------------------------------- Metro Fuel Oil Corp., et al., asked the U.S. Bankruptcy Court for the Eastern District of New York for permission to employ Carl Marks Advisory Group LLC as financial advisor and investment banker nunc pro tunc to Oct 2, 2012. CMAG agreed to: a. assist the Debtors' restructuring advisor AP Services, LLC, in connection with its exploration of prospective transactions; b. review the Debtors' business plan and other information in working with management and APS to stimulate interest among potential acquirers or merger candidates; and c. formulate and implement a strategy for identifying additional prospective acquirers, approaching them and ascertaining their level of interest in a transaction. CMAG will be compensated in accordance with this fee structure: a. a fixed monthly advisory fee at the rate of $40,000 per monthly period, which will be payable in advance commencing from the date of the CMAG Agreement, and at the beginning of each subsequent monthly period in which financial advisory services are to be provided hereunder; b. a completion fee which will be paid in cash and earned in full and due upon the completion of each transaction with any party during the term of the CMAG Agreement or with any party introduced by CMAG or with whom CMAG has had discussions on behalf of the Debtors within twelve months from the date of termination of the CMAG Agreement; c. a retainer of $50,000 upon Court approval of the CMAG Agreement to be applied against unpaid fees and expenses, if any; and d. reimbursement for all reasonable expenses incurred by it in the performance of its duties, which will include travel, photocopying, business meals, delivery service, postage, vendor charges and other out-of-pocket expenses incurred in providing professional services, upon presentation of appropriate documentation therefore. To the best of the Debtors' knowledge, CMAG is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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. Th Debtor tapped Carl Marks Advisory Group LLC as financial advisor and investment banker, Curtis, Mallet-Prevost, Colt & Mosle LLP as co-counsel, AP Services, LLC as crisis managers for the Debtors, and appoint David Johnston as their chief restructuring officer. 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. Metro Terminals Corp., affiliate of Metro Fuel Oil Corp., disclosed $38,613,483 in assets and $71,374,410 in liabilities as of the Chapter 11 filing. The U.S. Trustee appointed seven-member creditors committee. MF GLOBAL: Stipulation on Securities Class Litigation Docketed -------------------------------------------------------------- BankruptcyData reported that the U.S. Bankruptcy Court docketed a stipulation regarding a securities class litigation filed by lead plaintiffs The Virginia Retirement System and Her Majesty The Queen In Right Of Alberta and pending in the U.S. District Court (In re MF Global Holdings Limited Securities Litigation (MFGHL), No. 11-cv-07866-VM. The securities litigation was initially commenced by the filing of a complaint on or about November 3, 2011 on behalf of certain purchasers or acquirers of the publicly traded securities of MFGHL and alleged violations of the federal securities laws by certain of the Debtor's current and/or former officers and directors, the report related. According to documents filed with the Court, "This Stipulation is being entered into in order to obviate the necessity at this time for the Trustee and the Committee to object or to seek other relief with respect to the Class POC, or for Lead Plaintiffs to seek class certification...and to avoid unnecessary cost and expense to the Parties and distraction to the efforts of the Trustee and the Committee to otherwise maximize the value of the estates of the Debtors," the report added. About MF Global New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/-- is one of the world's leading brokers of commodities and listed derivatives. MF Global provides access to more than 70 exchanges around the world. The firm is also one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. It is easily the largest bankruptcy filing so far this year. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. U.S. regulators are investigating about $633 million missing from MF Global customer accounts, a person briefed on the matter said Nov. 3, according to Bloomberg News. MIRAMAR REAL ESTATE: Confirms Plan, Transfers Assets to Putman -------------------------------------------------------------- Miramar Real Estate Management Inc. has confirmed a Plan of Reorganization dated Aug. 13, 2012, that transfers the assets to Banco Popular de Puerto Rico or its assignee on account of its secured claim. Together with the Disclosure Statement and Plan, the Debtor requested approval of a settlement among the Debtor, its direct subsidiary La Ciudadela de Santurce Inc., Banco Popular de Puerto Rico as agent and lender and Banco Popular de Puerto Rico's co- lenders. As per the settlement, all of the assets of La Ciudadela de Santurce, Inc. will be transferred to the Debtor, and the Debtor will in turn sell, free and clear of liens, the aforesaid assets to Putman Bridge Funding III, LLC's PBF-TEP Acquisitions, Inc. In consideration, the purchaser will pay BPPR the amount of $60,000,000, subject to certain adjustments, to reduce the existing claim of Banco Popular. The purchaser will also make an additional payment of $150,000 to the Debtor, which funds, as a result of the agreement by BPPR to forebear from distributions on its unsecured claim, will be distributed in accordance with the confirmed Plan or further order of the Court. The Plan also provides for the funding of certain carve-out accounts. A copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/MIRAMAR_REAL_ds.pdf About Miramar Real Estate San Juan, Puerto Rico-based Miramar Real Estate Management Inc. is a private corporation organized under the laws of the Commonwealth of Puerto Rico. Incorporated in 1990, Miramar began its business providing administration services to the private sector and government agencies. The Company filed for Chapter 11 bankruptcy protection (Bankr. D. P.R. Case No. 11-01786) on March 2, 2011. Fausto D. Godreau Zayas, Esq., at Latimer, Biaggi, Rachid & Godreau, LLP, serves as the Debtor's bankruptcy counsel. FPV & Galindez, CPAs, PSC, and its principal, Marcos A. Claudio Agosto, serve as its external auditors and restructuring advisors. The Debtor estimated its assets and debts at US$100 million to US$500 million. MOBIVITY HOLDINGS: Robert Prag Discloses 8.4% Equity Stake ---------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Robert B. Prag disclosed that, as of Dec. 31, 2012, he beneficially owns 1,961,418 shares of common stock of Mobivity Holdings Corp., formerly known as CommerceTel Corporation, representing 8.4% of the shares outstanding. A copy of the filing is available for free at http://is.gd/XPWPFa About Mobivity Holdings Mobivity Holdings Corp. was incorporated as Ares Ventures Corporation in Nevada in 2008. On Nov. 2, 2010, the Company acquired CommerceTel, Inc., which was wholly-owned by CommerceTel Canada Corporation, in a reverse merger. Pursuant to the Merger, all of the issued and outstanding shares of CommerceTel, Inc., common stock were converted, at an exchange ratio of 0.7268-for-1, into an aggregate of 10,000,000 shares of the Company's common stock, and CommerceTel, Inc., became a wholly owned subsidiary of the Company. In connection with the Merger, the Company changed its corporate name to CommerceTel Corporation on Oct. 5, 2010. In connection with the Company's acquisition of assets from Mobivity, LLC, the Company changed its corporate name to Mobivity Holdings Corp. and its operating company to Mobivity, Inc, on Aug. 23, 2012. Mobivity's balance sheet at Sept. 30, 2012, showed $4.53 million in total assets, $11.10 million in total liabilities and a $6.56 million total stockholders' deficit. M&K CPAs, PLLC, in Houston, Texas, expressed substantial doubt about CommerceTel Corporation's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred recurring operating losses and negative cash flows from operations and is dependent on additional financing to fund operations. MOMENTIVE SPECIALTY: Obtains Amendments to Credit Facilities ------------------------------------------------------------ Momentive Specialty Chemicals Inc. obtained amendments to its senior secured credit facilities to, among other things: (i) permit the incurrence of up to $1,100,000,000 aggregate principal amount of debt constituting first-priority senior secured debt, the net proceeds of which would be used to repay in full all term loans under the Company's senior secured credit facilities, to purchase any and all of its second-priority floating rate notes due 2014 and for general corporate purposes, including working capital; (ii) permit the incurrence of junior-priority debt that would be used, directly or indirectly, to redeem, purchase, exchange or retire loans of Momentive Specialty Chemicals Holdings LLC, the parent of the Company; and (iii) modify certain other provisions of the senior secured credit facilities. On Jan. 14, 2013, Hexion U.S. Finance Corp. and Hexion Nova Scotia Finance, ULC, each a wholly owned subsidiary of the Company, issued an additional $200,000,000 aggregate principal amount of 8.875% Senior Secured Notes due 2018 to the lenders holding the Holdings Loans in reliance on Section 4(a)(2) under the Securities Act of 1933, as amended. The Notes were issued to those lenders in exchange for the Holdings Loans, which were satisfied in full. About Momentive Specialty Momentive Specialty Chemicals, Inc., headquartered in Columbus, Ohio, is a leading producer of thermoset resins (epoxy, formaldehyde and acrylic). The company is also a supplier of specialty resins for inks and specialty coatings sold to a diverse customer base as well as a producer of commodities such as formaldehyde, bisphenol A, epichlorohydrin, versatic acid and related derivatives. Momentive Specialty reported net income of $118 million on $5.20 billion of net sales in 2011, compared with net income of $214 million on $4.59 billion of net sales in 2010. The Company's balance sheet at Sept. 30, 2012, showed $3.44 billion in total assets, $4.60 billion in total liabilities and a $1.16 billion total deficit. * * * Momentive Specialty carries a 'B-' issuer credit rating from Standard & Poor's Ratings Services. It has 'B3' corporate family and probability of default ratings from Moody's Investors Service. corporate credit rating from Standard & Poor's. As reported in the Oct. 27, 2010 edition of TCR, Moody's Investors Service assigned a 'Caa1' rating to the guaranteed senior secured second lien notes due 2020 of Momentive Specialty (formerly known as Hexion Specialty Chemicals Inc.). Proceeds from the notes were allocated for the repayment of $533 million of guaranteed senior secured second lien notes due 2014. "With this refinancing Hexion will have refinanced or extended the maturities on the vast majority of the debt that was originally slated to mature prior to 2015. There is less than $600 million of this debt remaining, which should be much easier to for the company to refinance as its credit metrics improve further," stated John Rogers, Senior Vice President at Moody's. MOMENTIVE SPECIALTY: Moody's Affirms 'B3' CFR; Outlook Stable ------------------------------------------------------------- Moody's Investors Service affirmed the ratings (B3 Corporate Family Rating - CFR) of Momentive Specialty Chemicals Inc. (MSC) based upon its planned refinancing. If MSC completes the refinancing as planned, the rating on Hexion U.S. Finance Corp.'s 6.625% first-priority senior secured notes due 2020 would be lowered to B1 from Ba3, the rating on MSC's 8.875% senior secured notes due 2018 (1.5 lien notes) would be lowered to Caa1 from B3 and the rating on its 9.0% second-priority senior secured notes due 2020 would be lowered to Caa2 from Caa1. Additionally the ratings on the debt that will be repaid would be withdrawn. The outlook is stable. The assigned ratings are subject to receipt of final documentation that is consistent with the draft documentation provided. MSC plans to add $1.1 billion of additional 6.625% First-Priority Senior Secured Notes due 2020. Proceeds will be used to repay $913 million of its senior secured first lien term loan due 2015, $120 million of its second-priority senior secured floating rate notes due 2014, pay related fees and expenses and provide a modest amount of cash to the balance sheet. MSC also plans to replace its revolving credit facility with a $400 million asset based revolving credit facility (ABL facility). Finally MSC issued an additional $200 million of 8.875% senior secured notes due 2018 (1.5 lien notes) and exchanged them for the outstanding term loans at Momentive Specialty Chemicals Holdings LLC. Moody's assigned a B3 rating to the additional $200 million 8.875% senior secured notes due 2018; this rating will be downgraded along with the rating on the initial 8.875% senior secured notes when the refinancing is completed. "This refinancing eliminates near-term maturities and greatly increases Momentive's financial flexibility; however it is clearly a negative for junior debt holders due to the increase in first lien debt," stated John Rogers, Senior Vice President at Moody's. "Additionally, the decline in financial performance in the second half of 2012 has further weakened the company's credit profile." Ratings Rationale MSC's B3 Corporate Family Rating reflect its elevated leverage, exposure to volatile commodities and the lack of consistent free cash flow generation. The rating benefits from its size, product and operational diversity, a seasoned management team that has demonstrated the ability to successfully manage through difficult end market conditions and a growing presence in Asia and Latin America (although North America and Europe still account for over 70% of sales). The rating on the first lien notes would be lowered to B1 due to the presence of the ABL facility, which would have a first lien on accounts receivable and inventory, as well as the increase in the amount of first lien debt outstanding. The ratings on the remaining secured debt would also be lowered by one notch due to the increase in the first lien and 1.5 lien debt. The secured notes will have a first lien on most of MSC's domestic assets excluding the ABL collateral and a second lien on the domestic ABL collateral. The outlook remains stable despite MSC's weak credit metrics (pro forma for the transaction) with Net Debt/EBITDA at 7.7x and Retained Cash Flow/Net Debt of 4.7%. If the current trend of revenue contraction and lower profitability in the Epoxy, Phenolic and Coating Resins segment continues into the second half of 2013 or Net Debt/EBITDA rises above 8.0x, Moody's would likely change the outlook to negative or lower the CFR. MSC Speculative Grade Liquidity Rating of SGL-2 reflect its good liquidity with the new $400 million ABL revolving credit facility and over $300 million of cash on the balance sheet. The ABL facility will not have a financial covenant until availability falls below 12.5%. This refinancing will also greatly reduce any long term debt maturities prior to 2018. Ratings affirmed: Momentive Specialty Chemicals Inc. Corporate Family Rating at B3 Probability of Default Rating at B3-PD Borden Chemical Senior unsecured notes at Caa2 (LGD6, 91%); assessment will move to 95% upon completion of the planned refinancing Ratings affirmed and will be downgraded upon completion of the planned refinancing: Hexion U.S. Finance Corp. Guaranteed senior secured first lien notes due 2020; these notes will be downgraded to B1 (LGD2, 25%) from Ba3 (LGD2, 18%) Momentive Specialty Chemicals Inc. Guaranteed senior secured notes (1.5 lien) due 2018; these notes will be downgraded to Caa1 (LGD4, 63%) from B3 (LGD4, 52%) Guaranteed senior secured second lien notes due 2020; these notes will be downgraded to Caa2 (LGD5, 85%) from Caa1 (LGD5, 77%) Ratings assigned and will be downgraded upon completion of the planned refinancing: Momentive Specialty Chemicals Inc. $200 million add-on guaranteed senior secured notes (1.5 lien) due 2018 at B3 (LGD4, 52%); these notes will be downgraded to Caa1 (LGD4, 63%) Ratings affirmed and will be withdrawn upon completion of the planned refinancing: Guaranteed senior secured credit facility due 2014 Guaranteed senior secured term loan Guaranteed senior secured second lien floating rate notes due 2014 Momentive Specialty Chemicals, Inc., headquartered in Columbus, Ohio, is a leading producer of thermoset resins (epoxy, formaldehyde and acrylic). The company is also a supplier of specialty resins for inks and specialty coatings sold to a diverse customer base as well as a producer of commodities such as formaldehyde, bisphenol A (BPA), epichlorohydrin (ECH), versatic acid and related derivatives. The principal methodology used in rating Momentive was the Global Chemical Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. MOMENTIVE SPECIALTY: S&P Affirms B- CCR & Sr. Secured Debt Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B-' corporate credit rating on Columbus, Ohio-based MSC. In addition, S&P affirmed its 'B-' senior secured debt rating on the company's first-priority notes due 2020 and revised its recovery rating on these notes to '4' from '3'. The '4' recovery rating indicates S&P's expectation of average (30% to 50%) recovery in the event of a payment default. The proposed offering increases the issue size by $1.1 billion to $1.55 billion. S&P affirmed all other issue and recovery ratings on the company including its 'CCC+' senior secured debt and '5' recovery ratings on the 8.875% senior secured notes due 2018, which are being increased by $200 million to $1.2 billion. The outlook is stable. "MSC will use proceeds from the additional first-priority notes to repay all its term loans maturing in 2015 and its second-lien notes due 2014," said Standard & Poor's credit analyst Cindy Werneth. The ratings on MSC reflect what S&P considers to be the company's "highly leveraged" financial profile and "weak" business risk profile. The stable outlook is predicated on free operating cash flow continuing to be near breakeven levels or better on an annual basis, and liquidity remaining adequate. S&P expects credit metrics to eventually and gradually improve with an upturn in the global economy. Particularly important to the company are the housing, oilfield services (particularly natural gas), European, and Asian markets. Nevertheless, S&P could lower the ratings in the near term if economic conditions worsen, or if other factors cause the company to consume cash, thereby reducing liquidity expectations, and leading to unsustainably high leverage. MONEY TREE: Payout Plan Targets Company Executives -------------------------------------------------- Katy Stech at Dow Jones' DBR Small Cap reports that bankruptcy attorneys handling what is left of Money Tree Inc. plan to go after the closed Georgia payday lender's former executives who, they claim, paid themselves handsomely while lying about the company's financial health to the U.S. Securities and Exchange Commission. About Money Tree Headquartered in Bainbridge, Georgia, The Money Tree Inc. -- http://www.moneytreeinc.com/-- operates a network of lending branches across the Southeast, concentrated in Georgia, Florida and Alabama. The Company and four affiliates filed for Chapter 11 bankruptcy (Bankr. M.D. Ala. Case Nos. 11-12254 thru 11-12258) on Dec. 16, 2011. The other debtor-affiliates are Small Loans, Inc., The Money Tree of Louisiana, Inc., The Money Tree of Florida Inc., and The Money Tree of Georgia Inc. Judge William R. Sawyer oversees the case, replacing Judge Dwight H. Williams, Jr. Max A. Moseley, Esq., at Baker Donelson Bearman Caldwell & Berkow, P.C., serves as the Debtors' counsel. The Debtors hired Warren, Averett, Kimbrough & Marino, LLC, as restructuring advisors. The Money Tree Inc. disclosed $73,413,612 in assets and $73,050,785 in liabilities as of the Chapter 11 filing. The petitions were signed by Biladley D. Bellville, president. The Company's subsidiary, Best Buy Autos of Bainbridge Inc., is not a party to the bankruptcy filing and intends to operate its business in the ordinary course. On Jan. 10, 2012, the Court appointed two separate Official Unsecured Creditors' Committees in The Money Tree Inc. case and The Money Tree of Georgia Inc. case. On Jan. 13, 2012, the Committees moved the Court to consolidate the two into one Omnibus Official Committee of Unsecured Creditors in the Chapter 11 cases, which motion was granted on Feb. 28, 2012. Greenberg Traurig LLP represents the Committee. The Committee tapped HGH Associates LLC as its accountants and financial advisors. On April 16, 2012, the Debtors filed a Plan of Reorganization and Disclosure Statement. Holders of General Unsecured Claims of The Money Tree, estimated total $586,676, were to receive 95% of their allowed claims. The Debtors, however, failed to move forward with their Plan as the Court stripped the Company's management of control and appointed S. Gregory Hays as Chapter 11 Trustee. Daniel D. Sparks, Esq., Eric J. Breithaupt, Esq., and Bradley R. Hightower, Esq., at Christian & Small LLP, represent the Trustee. MONITOR COMPANY: Wants to Use $6.7-Mil. for Transition ------------------------------------------------------ Monitor Company Group Limited Partnership, filed a supplementary motion for an order allowing it to use cash collateral to enable fulfillment of post-closing obligations in connection with the sale of substantially all of their assets to Deloitte Consulting LLP and DCSH Limited. The Debtor will use the cash collateral to fund the wind-down account in an amount to the aggregate accrued DIP expenses, plus $6,693,000 to be used in a manner consistent with the budget. The APA requires that, after closing of the sale, the Debtors will continue to operate under a transition services agreement. The Debtors' prepetition long-term secured debt obligations total $111 million. About $50 million of that amount represents senior secured obligations of the Debtors arising under a Fourth Amended & Retstated Revolving Credit Agreement, dated as of Oct. 25, 2011, by and among Monitor, as borrower, bank of America, N.A. as lender and administrative agent, and Banc of America Securities, LLC, as arranger. As reported in the Troubled Company Reporter on Jan. 14, 2013, Deloitte has acquired substantially all of the business of Monitor, one of the world's leading strategy consulting firms. This transaction combines Monitor's highly-influential brand, strong thought leadership and top-notch talent with Deloitte's extraordinary reach, access, and resources to solidify the Deloitte network as a worldwide leader in strategy consulting. Monitor's talent and assets will combine with Deloitte's consulting strategy service lines and operate under the Monitor Deloitte brand, resulting in a new global presence that will redefine our industry. The transaction was completed following approval by the Bankruptcy Court on Jan. 11, 2013. About Monitor Company Monitor Company Group LP -- http://www.monitor.com/-- is a global consulting firm with 1,200 personnel in offices across 17 countries worldwide. Founded in 1983 by six entrepreneurs, and headquartered in Cambridge, Massachusetts, Monitor advises for- profit, sovereign, and non-profit clients on growing their businesses and economies and furthering their charitable purposes. Monitor and several affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Case Nos. 12-13042 to 12-13062) on Nov. 7, 2012. Judge Hon. Christopher S. Sontchi presides over the case. Pepper Hamilton LLP and Ropes & Gray LLP serve as the Debtors' counsel. The financial advisor is Carl Marks Advisory Group LLC. Epiq Bankruptcy Solutions, LLC is the claims and noticing agent. The petitions were signed by Bansi Nagji, president. Bank of America is represented in the case by Jinsoo Kim, Esq., and Timothy Graulich, Esq., at Davis Polk & Wardwell LLP; and Mark D. Collins, Esq., at Richards Layton & Finger PA. J. Gregory Milmoe, Esq., and Shana A. Elberg, Esq., at Skadden Arps Slate Meagher & Flom LLP in New York; and Mark Chehi, Esq., and Christopher DiVirgilio, Esq., at Skadden Arps in Delaware, represent Deloitte Consulting LLP. Caltius Partners IV LP; Caltius Partners Executive IV, LP; and CP IV Pass-Through (Monitor) LP are represented by John Sieger, Esq., at Katten Muchin Rosenman LLP. Monitor's consolidated unaudited financial statements as of June 30, 2012, which include the assets and liabilities of non- Debtor foreign subsidiaries, reflected total assets of roughly $202 million (including $93 million in current assets) and total liabilities of roughly $200 million. Monitor filed for bankruptcy to sell substantially all of their businesses and assets to Deloitte Consulting LLP, a Delaware registered limited liability partnership and DCSH Limited, a UK company limited by shares, subject to higher or otherwise better offers. The base purchase price set forth in the Stalking Horse Agreement is $116.2 million, plus (i) assumption of certain liabilities and (ii) certain cure costs for assumed contracts. The Stalking Horse Agreement provides for the Stalking Horse Bidder to receive a combined breakup fee and expense reimbursement of $4 million. The Debtors propose to hold an auction on Nov. 28, 2012, at the offices of the Sellers' counsel, Ropes & Gray LLP in New York. Closing of the deal must occur by the earlier of (i) 30 days following entry of the Sale Order and (ii) Feb. 28, 2013. MONITOR COMPANY: Michael Ash Joins Creditors Committee ------------------------------------------------------ Roberta A. DeAngelis, United States Trustee for Region 3 filed an amended list of creditors appointed to the Committee of Unsecured Creditors of Monitor Company Group Limited Partnership, et al. Michael Ash replaced VHA Inc., of Irving, Texas in the Committee. The Committee now consists of the following members: 1. Dr. Reed K. Holden 25 Barnes Hill Road Concord, MA 01742 Tel: (978) 505-9449 2. Intergreon, Inc. Attn: Michael Zuercher 2011 Crystal Drive, Suite 200 Alexandria, VA 22202 Tel: (310) 375-9801 Fax: (310) 375-9801 3. Michael Ash 214 N. Louise Street, Unit 15 Glendale, CA 91206 Tel: (310) 962-6924 About Monitor Company Monitor Company Group LP -- http://www.monitor.com/-- is a global consulting firm with 1,200 personnel in offices across 17 countries worldwide. Founded in 1983 by six entrepreneurs, and headquartered in Cambridge, Massachusetts, Monitor advises for- profit, sovereign, and non-profit clients on growing their businesses and economies and furthering their charitable purposes. Monitor and several affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Case Nos. 12-13042 to 12-13062) on Nov. 7, 2012. Judge Hon. Christopher S. Sontchi presides over the case. Pepper Hamilton LLP and Ropes & Gray LLP serve as the Debtors' counsel. The financial advisor is Carl Marks Advisory Group LLC. Epiq Bankruptcy Solutions, LLC is the claims and noticing agent. The petitions were signed by Bansi Nagji, president. Cole, Schotz, Meisel, Forman & Leonard, P.A., represents the Committee of Unsecured Creditors as counsel. Bank of America is represented in the case by Jinsoo Kim, Esq., and Timothy Graulich, Esq., at Davis Polk & Wardwell LLP; and Mark D. Collins, Esq., at Richards Layton & Finger PA. J. Gregory Milmoe, Esq., and Shana A. Elberg, Esq., at Skadden Arps Slate Meagher & Flom LLP in New York; and Mark Chehi, Esq., and Christopher DiVirgilio, Esq., at Skadden Arps in Delaware, represent Deloitte Consulting LLP. Caltius Partners IV LP; Caltius Partners Executive IV, LP; and CP IV Pass-Through (Monitor) LP are represented by John Sieger, Esq., at Katten Muchin Rosenman LLP. Monitor's consolidated unaudited financial statements as of June 30, 2012, which include the assets and liabilities of non- Debtor foreign subsidiaries, reflected total assets of roughly $202 million (including $93 million in current assets) and total liabilities of roughly $200 million. Monitor filed for bankruptcy to sell substantially all of their businesses and assets to Deloitte Consulting LLP, a Delaware registered limited liability partnership and DCSH Limited, a UK company limited by shares, subject to higher or otherwise better offers. The base purchase price set forth in the Stalking Horse Agreement is $116.2 million, plus (i) assumption of certain liabilities and (ii) certain cure costs for assumed contracts. The Stalking Horse Agreement provides for the Stalking Horse Bidder to receive a combined breakup fee and expense reimbursement of $4 million. The Debtors propose to hold an auction on Nov. 28, 2012, at the offices of the Sellers' counsel, Ropes & Gray LLP in New York. Closing of the deal must occur by the earlier of (i) 30 days following entry of the Sale Order and (ii) Feb. 28, 2013. MONITOR COMPANY: Can Employ McGladrey LLP as Tax Advisor -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Monitor Company Group Limited Partnership, et al., to employ McGladrey LLP as tax advisor for the Debtors, effective as of Nov. 29, 2012. McGladrey LLP will provide tax consulting and analysis in connection with the proposed transaction between Monitor Company Group Limited Partnership and Deloitte Consulting LLP and affiliate or, in the event other offers are received, proposed transactions with other purchasers. The initial phase of the work will consider the tax ramifications to the partner group of the proposed sale of assets. The analysis will consider U.S. federal tax consequences, state tax matters and the U.S. implications of the sale of foreign assets. Tax consulting services would include: 1) preparation of tax filings, 2) review of Debtor-prepared filings, 3) preparation and/or review of supporting workpapers and analysis, and 4) any related guidance and advice. In the wind down phase, services would include: 1) withdrawal from states and/or liquidation of entities, 2) tax matters involving severance and other payments during the bankruptcy and wind down, and 3) any related guidance and advice. McGladrey will also assist in preparing tax related disclosures for any disclosure statement filed in connection with a plan of reorganization or plan of liquidation filed in the Debtors' Chapter 11 bankruptcy cases. McGladrey's services will be billed at McGladrey's standard rates which are: Partner $572 Director $317 to $459 Manager $257 to $405 Staff $130 to $180 About Monitor Company Monitor Company Group LP -- http://www.monitor.com/-- is a global consulting firm with 1,200 personnel in offices across 17 countries worldwide. Founded in 1983 by six entrepreneurs, and headquartered in Cambridge, Massachusetts, Monitor advises for- profit, sovereign, and non-profit clients on growing their businesses and economies and furthering their charitable purposes. Monitor and several affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Case Nos. 12-13042 to 12-13062) on Nov. 7, 2012. Judge Hon. Christopher S. Sontchi presides over the case. Pepper Hamilton LLP and Ropes & Gray LLP serve as the Debtors' counsel. The financial advisor is Carl Marks Advisory Group LLC. Epiq Bankruptcy Solutions, LLC is the claims and noticing agent. The petitions were signed by Bansi Nagji, president. Cole, Schotz, Meisel, Forman & Leonard, P.A., represents the Committee of Unsecured Creditors as counsel. Bank of America is represented in the case by Jinsoo Kim, Esq., and Timothy Graulich, Esq., at Davis Polk & Wardwell LLP; and Mark D. Collins, Esq., at Richards Layton & Finger PA. J. Gregory Milmoe, Esq., and Shana A. Elberg, Esq., at Skadden Arps Slate Meagher & Flom LLP in New York; and Mark Chehi, Esq., and Christopher DiVirgilio, Esq., at Skadden Arps in Delaware, represent Deloitte Consulting LLP. Caltius Partners IV LP; Caltius Partners Executive IV, LP; and CP IV Pass-Through (Monitor) LP are represented by John Sieger, Esq., at Katten Muchin Rosenman LLP. Monitor's consolidated unaudited financial statements as of June 30, 2012, which include the assets and liabilities of non- Debtor foreign subsidiaries, reflected total assets of roughly $202 million (including $93 million in current assets) and total liabilities of roughly $200 million. Monitor filed for bankruptcy to sell substantially all of their businesses and assets to Deloitte Consulting LLP, a Delaware registered limited liability partnership and DCSH Limited, a UK company limited by shares, subject to higher or otherwise better offers. The base purchase price set forth in the Stalking Horse Agreement is $116.2 million, plus (i) assumption of certain liabilities and (ii) certain cure costs for assumed contracts. The Stalking Horse Agreement provides for the Stalking Horse Bidder to receive a combined breakup fee and expense reimbursement of $4 million. The Debtors propose to hold an auction on Nov. 28, 2012, at the offices of the Sellers' counsel, Ropes & Gray LLP in New York. Closing of the deal must occur by the earlier of (i) 30 days following entry of the Sale Order and (ii) Feb. 28, 2013. MONITOR COMPANY: Committee Retains MFC as Financial Advisors ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware authorized the Committee of Unsecured Creditors of Monitor Company Group Limited Partnership, et al., to retain Mesirow Financial Consulting, LLC, as financial advisors to the Committee nunc pro tunc to Nov. 15, 2012. MFC will render these professional services to the Committee, among others: a. Assistance in the review of reports or filings as required by the Bankruptcy Court or the Office of the United States Trustee, including, but not limited to, schedules of assets and liabilities, statements of financial affairs and monthly operating reports; b. Review of the Debtors' financial information, including, but not limited to, analyses of cash receipts and disbursements, financial statement items and proposed transactions for which Bankruptcy Court approval is sought; c. Review and analysis of the reporting regarding cash collateral and any debtor-in-possession financing arrangements and budgets; d. Review of bidding procedures and any asset purchase agreements associated with the sale of the business in whole or in part as administered under a Section 363 bankruptcy auction; and e. Evaluation of stalking horse bid associated with auction proceeding. MFS's hourly rates are: senior managing director, managing director and director at $895 to $950, senior vice-president at $725 to $795, vice president at $625 to $695, senior associate at $495 to $595, associate at $295 to $445 and paraprofessional at $160 to $250. About Monitor Company Monitor Company Group LP -- http://www.monitor.com/-- is a global consulting firm with 1,200 personnel in offices across 17 countries worldwide. Founded in 1983 by six entrepreneurs, and headquartered in Cambridge, Massachusetts, Monitor advises for- profit, sovereign, and non-profit clients on growing their businesses and economies and furthering their charitable purposes. Monitor and several affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Case Nos. 12-13042 to 12-13062) on Nov. 7, 2012. Judge Hon. Christopher S. Sontchi presides over the case. Pepper Hamilton LLP and Ropes & Gray LLP serve as the Debtors' counsel. The financial advisor is Carl Marks Advisory Group LLC. Epiq Bankruptcy Solutions, LLC is the claims and noticing agent. The petitions were signed by Bansi Nagji, president. Cole, Schotz, Meisel, Forman & Leonard, P.A., represents the Committee of Unsecured Creditors as counsel. Bank of America is represented in the case by Jinsoo Kim, Esq., and Timothy Graulich, Esq., at Davis Polk & Wardwell LLP; and Mark D. Collins, Esq., at Richards Layton & Finger PA. J. Gregory Milmoe, Esq., and Shana A. Elberg, Esq., at Skadden Arps Slate Meagher & Flom LLP in New York; and Mark Chehi, Esq., and Christopher DiVirgilio, Esq., at Skadden Arps in Delaware, represent Deloitte Consulting LLP. Caltius Partners IV LP; Caltius Partners Executive IV, LP; and CP IV Pass-Through (Monitor) LP are represented by John Sieger, Esq., at Katten Muchin Rosenman LLP. Monitor's consolidated unaudited financial statements as of June 30, 2012, which include the assets and liabilities of non- Debtor foreign subsidiaries, reflected total assets of roughly $202 million (including $93 million in current assets) and total liabilities of roughly $200 million. Monitor filed for bankruptcy to sell substantially all of their businesses and assets to Deloitte Consulting LLP, a Delaware registered limited liability partnership and DCSH Limited, a UK company limited by shares, subject to higher or otherwise better offers. The base purchase price set forth in the Stalking Horse Agreement is $116.2 million, plus (i) assumption of certain liabilities and (ii) certain cure costs for assumed contracts. The Stalking Horse Agreement provides for the Stalking Horse Bidder to receive a combined breakup fee and expense reimbursement of $4 million. The Debtors propose to hold an auction on Nov. 28, 2012, at the offices of the Sellers' counsel, Ropes & Gray LLP in New York. Closing of the deal must occur by the earlier of (i) 30 days following entry of the Sale Order and (ii) Feb. 28, 2013. MORGANS HOTEL: JPMorgan Hikes Equity Stake to 9.3% -------------------------------------------------- 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 2,934,261 shares of common stock of Morgans Hotel Group Co. representing 9.3% of the shares outstanding. JPMorgan previously reported beneficial ownership of 2,253,524 common shares or a 7.3% equity stake as of Dec. 30, 2011. A copy of the amended filing is available for free at: http://is.gd/VOMIJI About Morgans Hotel Group Based in New York, Morgans Hotel Group Co. (Nasdaq: MHGC) -- http://www.morganshotelgroup.com/-- is widely credited as the creator of the first "boutique" hotel and a continuing leader of the hotel industry's boutique sector. Morgans Hotel Group operates and owns, or has an ownership interest in, Morgans, Royalton and Hudson in New York, Delano and Shore Club in South Beach, Mondrian in Los Angeles and South Beach, Clift in San Francisco, Ames in Boston, and Sanderson and St Martins Lane in London. Morgans Hotel Group and an equity partner also own the Hard Rock Hotel & Casino in Las Vegas and related assets. Morgans Hotel Group also manages hotels in Isla Verde, Puerto Rico and Playa del Carmen, Mexico. Morgans Hotel Group has other property transactions in various stages of completion, including projects in SoHo, New York and Palm Springs, California. The Company reported a net loss of $87.95 million in 2011, a net loss of $83.64 million in 2010, and a net loss of $101.60 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $577.02 million in total assets, $702.21 million in total liabilities, $6.39 million in redeemable noncontrolling interest, and a $131.58 million total deficit. MSR RESORT: Gets OK to Obtain Additional $7-Mil. in Loans --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York, in a sixth final order, authorized MSR Resort Golf Course LLC, et al., to obtain additional secured, postpetition financing and incur additional debt on a superpriority basis, up to the aggregate principal amount of $7 million, pursuant to (i) the Secured, Superpriority Debtor-in-Possession Credit Agreement, dated as of March 21, 2011, among the DIP Facility Debtors, as borrowers, MSR Resort Golf Course, LLC, as administrative borrower, CNL DIP Recovery Acquisition, LLC, successor to Paulson Real Estate Recovery Fund LP, and Five Mile Capital II CNL DIP Administrative Agent LLC, as co-agents, and the lenders thereunder. The Debtors would use the funding as: a) working capital and general corporate purposes; b) payment of fees, costs, administration expenses and other expenses associated with the DIP Facility and the cases; and c) interest payments to the mortgage lender. Five Mile Capital II Equity Pooling LLC has indicated a willingness to provide additional financing to the DIP Facility Debtors in accordance with the Sixth DIP Amendment. The amendment also provides that all DIP obligations will be immediately due and payable on termination date; provided, however, that the term "Calendar Maturity Date" will be Jan. 31, 2013. As adequate protection from any diminution in value of the lenders' collateral, the Debtor will grant automatically perfected security interests and liens in and on all of the DIP Collateral; an allowed superpriority administrative expense claim in each of the DIP Facility Debtors' respective cases, subject only to the carve out. The Debtors have not been able to obtain unsecured credit allowable under Bankruptcy Code Section 503(b)(1) as an administrative expense on more favorable terms and conditions than those provided in the original DIP Credit Agreement, as amended by the DIP Amendments, the Previous Final Orders and the sixth final order. A copy of the terms of the sixth amendment is available for free at http://bankrupt.com/misc/MSRRESORT_dipfinancingorder.pdf About MSR Resort MSR Hotels & Resorts, formerly known as CNL Hotels & Resorts Inc., owned a portfolio of eight luxury hotels with over 5,500 guest rooms, including the Arizona Biltmore Resort & Spa in Phoenix, the Ritz-Carlton in Orlando, Fla., and Hawaii's Grand Wailea Resort Hotel & Spa in Maui. On Jan. 28, 2011, CNL-AB LLC acquired the equity interests in the portfolio through a foreclosure proceeding. CNL-AB LLC is a joint venture consisting of affiliates of Paulson & Co. Inc., a joint venture affiliated with Winthrop Realty Trust, and affiliates of Capital Trust, Inc. Morgan Stanley's CNL Hotels & Resorts Inc. owned the resorts before the Jan. 28 foreclosure. Following the acquisition, five of the resorts with mortgage debt scheduled to mature on Feb. 1, 2011, were sent to Chapter 11 bankruptcy by the Paulson and Winthrop joint venture affiliates. MSR Resort Golf Course LLC and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 11-10372) in Manhattan on Feb. 1, 2011. The resorts subject to the filings are Grand Wailea Resort and Spa, Arizona Biltmore Resort and Spa, La Quinta Resort and Club and PGA West, Doral Golf Resort and Spa, and Claremont Resort and Spa. James H.M. Sprayregen, P.C., Esq., Paul M. Basta, Esq., Edward O. Sassower, Esq., and Chad J. Husnick, Esq., at Kirkland & Ellis, LLP, serve as the Debtors' bankruptcy counsel. Houlihan Lokey Capital, Inc., is the Debtors' financial advisor. Kurtzman Carson Consultants LLC is the Debtors' claims agent. The five resorts had $2.2 billion in assets and $1.9 billion in debt as of Nov. 30, 2010, according to court filings. In its schedules, debtor MSR Resort disclosed $59,399,666 in total assets and $1,013,213,968 in total liabilities. Bankruptcy Judge Sean H. Lane signed off on MSR Resort Golf Course LLC's disclosure statement, clearing the resort owner to begin soliciting votes for its Chapter 11 plan following a recent agreement to sell off its five-resort portfolio for $1.5 billion. The Official Committee of Unsecured Creditors is represented by Martin G. Bunin, Esq., and Craig E. Freeman, Esq., at Alston & Bird LLP, in New York. NATIONAL RETAIL: Fitch Ups $288MM Preferred Stock Rating from BB+ ----------------------------------------------------------------- Fitch Ratings has upgraded the credit ratings of National Retail Properties, Inc. (NYSE: NNN) as: -- Issuer Default Rating (IDR) to 'BBB+' from 'BBB'; -- $500 million unsecured revolving credit facility to 'BBB+' from 'BBB'; -- $1.2 billion senior unsecured notes to 'BBB+' from 'BBB'; -- $223 million senior unsecured convertible notes to 'BBB+' from 'BBB'; -- $288 million preferred stock to 'BBB-' from 'BB+'. The Rating Outlook is Stable. Upgrade Rationale The upgrade is driven by Fitch's expectation of leverage sustaining at a level consistent with a 'BBB+' rating, coupled with growth in the overall size of the triple net leased retail portfolio that has contributed to declines in tenant and industry concentration. The upgrade also reflects the company's flexible funding profile, laddered debt maturity schedule, and strong access to capital. NNN also has a strong management team. The rating takes into account credit concerns including exposure to non-necessity-based retailers that may be adversely affected through retail demand cycles, as well as tenant credit risk. Stable Leverage In Fitch's view, NNN's leverage metrics are consistent with a 'BBB+' rating. Net debt-to-last 12 months recurring operating EBITDA was 5.0x as of Sept. 30, 2012, down from 5.9x as of Dec. 31, 2011, and 5.7x as of Dec. 31, 2010. Leverage in 2011 and 2010 was skewed higher by the timing of acquisitions toward the latter half of the year. Adjusting for this timing, leverage in both periods would be approximately 5.0x. Leverage at Sept. 30, 2012 based on annualized 3Q'12 EBITDA was 4.7x and management targets leverage on a normalized basis in the high 4.0x range. Fitch expects leverage to remain in the 4.7x-5.0x range through 2014, which is consistent with the 'BBB+' IDR. In a more adverse operating environment than currently anticipated by Fitch wherein net operating income (NOI) declines by 3% in each of 2013 and 2014, leverage would decline to 5.5x in 2014, which would be at the upper end of the range appropriate for the 'BBB+' rating. Portfolio Growth Enhances Diversification NNN's asset base has grown significantly over the past few years, enhancing an already granular triple net leased retail property portfolio. Recurring operating EBITDA grew to $277.4 million for the TTM ended Sept. 30, 2012, from $205.7 million in 2009. As of Sept. 30, 2012 the portfolio consisted of 1,530 properties totaling 18.3 million square feet, up from 1,015 properties with 11.4 million square feet at Dec. 31, 2009. Tenant diversification has improved, with the largest tenant representing just 6.0% of annualized base rent (ABR), and the top 10 tenants representing 38.8% of ABR at Sept. 30, 2012. This is a decline from 9.1% and 45.9%, respectively, as of Dec. 31, 2009. The largest industry segment (convenience stores) represents 21.6% of ABR as of Sept. 30, 2012, and is down from 26.7% at Dec. 31, 2009. Stable Operating Performance Occupancy was 97.9% as of Sept. 30, 2012, up from 97.2% as of Sept. 30, 2011. NNN's fixed-charge coverage ratio (defined as recurring operating EBITDA less recurring capital expenditures and straight-line rents, divided by total interest incurred and preferred stock distributions) was solid at 2.9x for the 12 months ended Sept. 30, 2012, up from 2.8x for full year 2011. Fitch expects fixed charge coverage to improve to just above 3.0x through 2014 due to recent acquisitions at attractive spreads (capitalization rates averaging 8.5%, approximately 450 basis points (bps)over recent bond issuance), combined with long average remaining lease terms of 12 years, stable occupancy and fixed charges. In a more adverse operating environment than currently anticipated by Fitch wherein NOI declines by 3% in each of 2013 and 2014, fixed charge coverage would decline to 2.7x in 2014, which would be at the low end of the range appropriate for the 'BBB+' rating. The company also has an Adjusted Funds from Operations (AFFO) payout ratio of approximately 88% for the TTM ended Sept. 30, 2012. Fitch projects that the AFFO payout ratio will remain in the mid-to-high 80% range, which is appropriate for the rating. Strong Management Team NNN has a long-term track record of astute implementation of its business strategy that entails acquiring, owning, and investing in single-tenant retail properties, generally under long-term triple net leases. Fitch views positively NNN's laddered debt maturity schedule, which contributes to a liquidity coverage ratio of 1.6x for the period Oct. 1, 2012 through Dec. 31, 2014. Fitch defines liquidity coverage as liquidity sources divided by liquidity uses. Liquidity sources include unrestricted cash, availability under the company's unsecured revolving credit facility and expected retained cash flow after dividends. Liquidity uses include debt maturities, development expenditures and expected recurring capital expenditures. Access to Multiple Capital Sources NNN's recent issuances include a $325 million 3.8% 10-year unsecured notes offering in August 2012 at a yield of 3.98% and a $287.5 million 6.625% series D preferred stock issuance which refinanced the series C preferred that had a coupon of 7.375%. Additionally, the company amended its unsecured revolving line of credit, increasing the capacity by $50 million to $500 million, expandable to $1 billion, with a borrowing rate of L + 117.5bps (down from L + 150bps), and extended the maturity to 2016, with a one-year extension option to 2017. Finally, the company established an at-the-market (ATM) equity offering program in May 2012, with a total capacity to sell 9 million shares. YTD as of Sept. 30, 2012, NNN has sold 2.3 million shares for net proceeds of $65.4 million. These transactions highlight NNN's robust access to various sources of capital on increasingly favorable terms. NNN's unencumbered asset coverage of unsecured debt (based on a 9.0% capitalization rate on 3Q'12 annualized unencumbered NOI) was 2.6x as of Sept. 30, 2012. This level is adequate for the rating and provides ample contingent liquidity for NNN. Moderate Geographic Concentration Texas represents 21.8% of ABR, with the next largest concentration in Florida (9.2% of ABR). However, within both of these large states, NNN's properties are well-distributed, mitigating the geographic concentration risk. Higher Risk Tenants NNN's tenants include non-necessity-based retailers (e.g. electronics, full-service restaurants, movie theatres, sporting goods) and NNN may continue to experience tenant bankruptcies due to the nature of the retail business. It is possible that some of the locations leased to these tenants will be vacated in bankruptcy, leading to lost revenue until a property is re- tenanted, or a potential decline in value if the property is sold vacant. Notably, only two of the top 15 tenants are rated by Fitch, and those tenants have speculative-grade ratings (AMC Entertainment - IDR 'B'; Best Buy - IDR 'BB-'). The lower credit quality highlights the risk of potential revenue losses. Preferred Stock Notching The two-notch differential between NNN's IDR and its preferred stock rating is consistent with Fitch's criteria for corporate entities with a 'BBB+' IDR. Based on Fitch's report 'Treatment and Notching of Hybrids in Nonfinancial Corporate and REIT Credit Analysis,' available on Fitch's Web site at www.fitchratings.com, these preferred securities are deeply subordinated and have loss absorption elements that would likely result in poor recoveries in the event of a corporate default. Stable Outlook The Stable Outlook centers on Fitch's expectation that NNN's credit metrics will remain consistent with a 'BBB+' rating over the next 12-24 months. In addition, NNN's long-term triple net leases (typically 15-20 years in term) and manageable lease expiration schedule contribute to the stable cash flows of the portfolio. What Could Trigger A Rating Action Fitch does not anticipate additional positive rating momentum in the near term; however, the following factors may have a positive impact on NNN's ratings and/or Outlook: -- Fitch's expectation of fixed charge coverage sustaining above 3.5x (coverage was 2.9x for the 12 months ended Sept. 30, 2012); -- Fitch's expectation of leverage sustaining below 4.0x (leverage was 5.0x as of Sept. 30, 2012); -- Fitch's expectation of the ratio of unencumbered assets to unsecured debt based on a 9% capitalization rate, sustaining above 3.0x (this ratio was 2.6x as of Sept. 30, 2012). The following factors may have a negative impact on NNN's ratings and/or Outlook: -- Fitch's expectation of fixed-charge coverage sustaining below 2.7x; -- Fitch's expectation of leverage sustaining above 5.5x; -- Fitch's expectation of unencumbered asset-to-unsecured debt ratio sustaining below 2.4x; -- A liquidity coverage ratio sustaining below 1.0x. NATURAL PORK: Conway MacKenzie OK'd to Market Operating Assets -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Iowa authorized Natural Pork Production II, LLP to employ Conway MacKenzie to market and sell operating assets, including those identified as Crawfordsville, Brayton and South Harlan. The Court also ordered that the sale of the assets described as non- operating, and including North Harlan, will not involve an investment banker. About Natural Pork Production II Hog raiser Natural Pork Production II, LLP filed for Chapter 11 bankruptcy (Bankr. S.D. Iowa Case No. 12-02872) on Sept. 11, 2012, in Des Moines. The Company formerly did business as Natural Pork Production, LLC. It does business as Crawfordsville, LLC, Brayton, LLC, South Harlan, LLC, and North Harlan, LLC. The Debtor disclosed $31.9 million in asset and $27.9 million in liabilities, including $7.49 million of secured debt in its schedules. Bankruptcy Judge Anita L. Shodeen oversees the case. Donald F. Neiman, Esq., and Jeffrey D. Goetz, Esq., at Bradshaw, Fowler, Proctor & Fairgrave, P.C., in Des Moines, Iowa, represent the Debtor as general reorganization counsel. John C. Pietila, Esq., at Davis, Brown, Koehn, Shors & Roberts, P.C., in West Des Moines, Iowa, represents the Debtor as special corporate counsel, effective as of the Petition Date. Aaron L Hammer, Esq., Mark S. Melickian, Esq., and Michael A. Brandess, Esq., at Sugar, Felsenthal Grais & Hammer LLP, in Chicago, represent the Official Committee of Unsecured Creditors. Conway MacKenzie, Inc., serves as its financial advisor. Gary W. Koch, Esq., and Michael S. Dove, Esq., represent AgStar Financial Services, ACA, and AgStar Financial Services, FLCA, as counsel. Michael P. Mallaney, Esq., at Hudson Mallaney Schindler & Anderson, in West Des Moines, Iowa, represent the IC Committee as counsel. NATURAL PORK: Court OKs Appointment of Chapter 11 Trustee --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Iowa, in a minutes of hearing held Dec. 10, 2012, ordered that a formal ruling on the motion to appoint Chapter 11 trustee for Natural Pork Production II, LLP, et al., will be entered into the record telephonically. As reported in the Troubled Company Reporter on Oct. 18, 2012, the IC Committee requested for the appointment of a Chapter 11 trustee for the Debtors. The IC Committee is an unincorporated association which represents persons who disassociated from Natural Pork Production II, LLP, between March 28, 2008, and December 4, 2008, and became Creditors in National Pork Production II, LLP, at the time of the disassociation. The persons represented by the IC Committee are parties to a Settlement and Intercreditor Agreement dated November 30, 2011, between Natural Pork Production II, LLP. The SIA Agreement was entered into by Natural Pork Production II, LLP, and the SIA parties to settle litigation after certain of the SIA parties won the case of Cration Capital, L.P. and Kruse Investment Company vs. Natural Pork Production II, L.L.P., in the Iowa Court of Appeals No. 0-887/1-0608. About Natural Pork Production II Hog raiser Natural Pork Production II, LLP filed for Chapter 11 bankruptcy (Bankr. S.D. Iowa Case No. 12-02872) on Sept. 11, 2012, in Des Moines. The Company formerly did business as Natural Pork Production, LLC. It does business as Crawfordsville, LLC, Brayton, LLC, South Harlan, LLC, and North Harlan, LLC. The Debtor disclosed $31.9 million in asset and $27.9 million in liabilities, including $7.49 million of secured debt in its schedules. Bankruptcy Judge Anita L. Shodeen oversees the case. Donald F. Neiman, Esq., and Jeffrey D. Goetz, Esq., at Bradshaw, Fowler, Proctor & Fairgrave, P.C., in Des Moines, Iowa, represent the Debtor as general reorganization counsel. John C. Pietila, Esq., at Davis, Brown, Koehn, Shors & Roberts, P.C., in West Des Moines, Iowa, represents the Debtor as special corporate counsel, effective as of the Petition Date. Aaron L Hammer, Esq., Mark S. Melickian, Esq., and Michael A. Brandess, Esq., at Sugar, Felsenthal Grais & Hammer LLP, in Chicago, represent the Official Committee of Unsecured Creditors. Conway MacKenzie, Inc., serves as its financial advisor. Gary W. Koch, Esq., and Michael S. Dove, Esq., represent AgStar Financial Services, ACA, and AgStar Financial Services, FLCA, as counsel. Michael P. Mallaney, Esq., at Hudson Mallaney Schindler & Anderson, in West Des Moines, Iowa, represent the IC Committee as counsel. NEXT 1 INTERACTIVE: Delays Form 10-Q for Nov. 30 Quarter -------------------------------------------------------- Next 1 Interactive, Inc., notified the U.S. Securities and Exchange Commission regarding the delay in the filing of its quarterly report on Form 10-Q for the period ended Nov. 30, 2012. The Company was not able to obtain all information prior to filing date, the accountant was not able to complete the required financial statements and management was not able to complete Management's Discussion and Analysis of those financial statements by Jan. 14, 2013. About Next 1 Interactive Weston, Fla.-based Next 1 Interactive, Inc., is the parent company of RRTV Network (formerly Resort & Residence TV), Next Trip -- its travel division, and Next One Realty -- its real estate division. The Company is positioning itself to emerge as a multi revenue stream "Next Generation" media-company, representing the convergence of TV, mobile devices and the Internet by providing multiple platform dynamics for interactivity on TV, Video On Demand (VOD) and web solutions. The Company has worked with multiple distributors beta testing its platforms as part of its roll out of TV programming and VOD Networks. The list of multi- system operators the Company has worked with includes Comcast, Cox, Time Warner and Direct TV. At present the Company operates the Home Tour Network through its minority owned/joint venture real estate partner -- RealBiz Media. As of July 17, 2012, the Home Tour Network features over 4,300 home listings in four cities on the Cox Communications network. As reported in the TCR on June 21, 2012, Sherb & Co., LLP, in Boca Raton, Florida, issued a "going concern" qualification on the consolidated financial statements for the year ended Feb. 29, 2012. The independent auditors noted that the Company had an accumulated deficit of $66,983,176 and a working capital deficit of $14,546,150 at Feb. 29, 2012, net losses for the year ended Feb. 29, 2012m of $13,651,066 and cash used in operations during the year ended Feb. 29, 2012, of $4,822,423. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company's balance sheet at Aug. 31, 2012, showed $1.1 million in total assets, $13.1 million in total liabilities, and a stockholders' deficit of $12.0 million. NEOGENIX ONCOLOGY: Has Until Jan. 22 to Propose Chapter 11 Plan --------------------------------------------------------------- The Hon. Thomas J. Catliota of the U.S. Bankruptcy Court for the District of Maryland extended Neogenix Oncology, Inc.'s exclusive periods to file the proposed Chapter 11 Plan until Jan. 22, 2013, and to solicit acceptances of that plan until March 25. About Neogenix Oncology Neogenix Oncology Inc. in Rockville, Maryland, filed a Chapter 11 petition (Bankr. D. Md. Case No. 12-23557) on July 23, 2012, in Greenbelt with a deal to sell the assets to Precision Biologics Inc., absent higher and better offers. Founded in December 2003, Neogenix is a clinical stage, pre- revenue generating, biotechnology company focused on developing therapeutic and diagnostic products for the early detection and treatment of cancer. Neogenix, which has 10 employees, says it its approach and portfolio of three unique monoclonal antibody therapeutics -- mAb -- hold the potential for novel and targeted therapeutics and diagnostics for the treatment of a broad range of tumor malignancies. Thomas J. McKee, Jr., Esq., at Greenberg Traurig, LLP, in McLean, Virginia, serves as counsel. Kurtzman Carson Consultants LLC is the claims and notice agent. The Debtor estimated assets of $10 million to $50 million and debts of $1 million to $10 million. W. Clarkson McDow, Jr., U.S. Trustee for Region 4, appointed seven members to the committee of equity security holders. Sands Anderson PC represents the Official Committee of Equity Security Holders. The Committee tapped FTI Consulting, Inc., as its financial advisor. NET TALK.COM: Obtains Add'l $400,000 from 1080 NW 163rd Drive ------------------------------------------------------------- Net Talk.com, Inc., received an additional advance of $400,000 pursuant to its existing lending facility with 1080 NW 163rd Drive, LLC. The additional advance of $400,000 was memorialized by a Future Advance Promissory Note issued by the Company, which was consolidated with an initial advance of $1,000,000 from 1080 NW 163rd Drive, LLC. The Consolidated Promissory Note has an aggregate principal balance of $1,400,000. The Consolidated Promissory Note, among other matters, accrues interest at 12% per annum, is payable in full on Nov. 29, 2014, and is secured by the Company's corporate office building, located at 1080 NW 163rd Drive, Miami Gardens, FL 33169. Proceeds from the additional advance of $400,000 were used for marketing and general working capital. About Net Talk.com Based in Miami, Fla., Net Talk.com, Inc., is a telephone company, that provides, sells and supplies commercial and residential telecommunication services, including services utilizing voice over internet protocol technology, session initiation protocol technology, wireless fidelity technology, wireless maximum technology, marine satellite services technology and other similar type technologies. The Company's balance sheet at Sept. 30, 2012, showed $5.58 million in total assets, $20.52 million in total liabilities, $7.20 million in redeemable preferred stock, and a $22.15 million total stockholders' deficit. Net Talk.com incurred a net loss of $26.17 million for the year ended Sept. 30, 2011, compared with a net loss of $6.30 million during the prior year. NORTEL NETWORKS: Former Executives Acquitted in Fraud Case ---------------------------------------------------------- Ben Dummett at Daily Bankruptcy Review reports that a Canadian judge Monday 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. NPS PHARMACEUTICALS: Amends Third Quarter Form 10-Q --------------------------------------------------- NPS Pharmaceuticals, Inc., has amended its quarterly report on Form 10-Q for the period ended Sept. 30, 2012, that was originally filed with the U.S. Securities and Exchange Commission on November 9. Certain portions of Exhibit 10.2 that were previously redacted in the original filing have been unredacted. In addition, at the request of the SEC, Appendices 10 and 11 have been attached to Exhibit 10.2. Copies of the Exhibits are available at: http://is.gd/kiiM9y http://is.gd/ij3u7z http://is.gd/emohKc About NPS Pharmaceuticals Based in Bedminster, New Jersey, NPS Pharmaceuticals Inc. (Nasdaq: NPSP) -- http://www.npsp.com/-- is developing new treatment options for patients with rare gastrointestinal and endocrine disorders. NPS reported a net loss of $36.26 million in 2011, a net loss of $31.44 million in 2010 and a net loss of $17.86 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $165.46 million in total assets, $212.20 million in total liabilities and a $46.74 million total stockholders' deficit. OCALA FUNDING: Has Until March 7 to Propose Chapter 11 Plan -------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida extended Ocala Funding LLC's exclusive period to propose a chapter 11 plan until March 7, 2013, and to solicit acceptances for that plan until May 6, 2013. 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. OCWEN FINANCIAL: Moody's Affirms 'B1' CFR; Outlook Stable --------------------------------------------------------- Moody's Investors Service affirmed Ocwen Financial Corporation's (Ocwen) corporate family and senior secured ratings at B1. The outlook for all ratings are stable. Ratings Rationale Ocwen's ratings reflect the company's extraordinarily rapid growth balanced by the company's solid capital and leverage metrics for a B1 rated financial services company. In addition, the ratings reflect the company's solid track record as a non-prime residential mortgage servicer along with its record of integrating servicer acquisitions. The ratings are also constrained by the fact that virtually all new servicing volume is obtained through opportunistic bulk acquisitions and that the company is a monoline financial services company concentrating on the residential mortgage servicing market. Management also has a history of exploring new ancillary business opportunities, potentially distracting management from its focus on the core servicing franchise. On January 14, 2013, Ocwen announced their intention to obtain a new $1.3 billion 5-year senior secured term loan to finance the announced acquisition of certain mortgage servicing assets from Residential Capital, LLC as well as to refinance the company's current senior secured term loan facility. On October 24, 2012 Ocwen announced that it was the successful bidder of the servicing platform along with $160 billion in servicing and subservicing rights at the bankruptcy auction of Residential Capital, LLC. Upon completion of the ResCap acquisition, Ocwen's servicing portfolio will double and it will surpass US Bank and is projected to become the sixth largest US residential mortgage servicer. While the exposure to integration complexities and growing pains is credit negative, the company's solid capital and leverage metrics for a B1 rated financial services company along with its solid track record and success at integrating other servicing platforms. Given the high rate of recent growth, an upgrade is unlikely at this time. Negative ratings pressure could result if the company's servicing performance or financial fundamentals weaken. Particular focus will be on: a) the rate of amortization of the term loan b) call center metrics, c) delinquency rates of the servicing portfolio, d) cash reconciliation statistics. Ocwen Financial, a publicly-traded company (NYSE: OCN), is a provider of residential and commercial loan servicing, special servicing and asset management services with headquarters in Atlanta, Georgia. The principal methodology used in this rating was Finance Company Global Rating Methodology published in March 2012. OLYMPIC HOLDINGS: Plan Offers Payment to Unsecureds in 2 Years -------------------------------------------------------------- Olympic Holdings, LLC, has filed a proposed Chapter 11 Plan of Reorganization and explanatory Disclosure Statement. J.P. Morgan Chase Bank, N.A., which claims to be owed $14,424,546 (including prepayment penalty of some $2,000,000) holds a first priority deed of trust on the Debtor's Alameda Property. Daaus Funding, LLC, owed $624,000, holds a second priority deed of trust on the Alameda Property. The Daaus Funding debt is also a debt of Golden Oak Partners, LLC, which is itself in a Chapter 11 proceeding before the Court, Case No. 12-33650). Chase has alleged in its Motion for Relief that the Alameda Property is worth $13,500,000 which the Debtor believes is significantly understated. Pursuant to the Plan's terms, Chase's secured claim will be amortized over a period of 30 years from the Effective Date, with a balloon payment of all unpaid principal and all accrued but unpaid interest on Dec. 31, 2018. The monthly payments will be $57,805 per month, starting on the first day of the first month following the Effective Date, estimated to be March 1, 2013. The Debtor will continue paying the monthly adequate protection payment to the Bank until the Effective Date of the Plan. The Debtor will pay Dauss the full amount of its Class 2 Claim with 7% annual interest, amortized over 15 years, or $5,3930 per month, starting on the first day of the first month following the Effective Date, estimated to be March 1, 2013. Holders of Class 5 Unsecured Claims will be paid in full over 24 months. The monthly payments will be $1,666 and will begin on the first day of the third month following the Effective Date, estimated to be April 1, 2012. The Debtor estimates that there are approximately $40,000 of general unsecured debts other than tenant deposits The Debtor will fund the Plan from the tenant income it receives from the lease of its real property. A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/olympicholdings.doc57.pdf About Olympic Holdings Beverly Hills, California-based Olympic Holdings, LLC, filed a bare-bones Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-32707) on June 29, 2012, in Los Angeles. The Debtor estimated assets and liabilities at $10 million to $50 million. Affiliates of the Debtor that filed separate Chapter 11 petitions in the same Court are Wooton Group, LLC (Case No. 12-31323, filed June 19, 2012) and Golden Oak Partners, LLC (Case No. 12-33650 filed July 9, 2012). The Debtor is a California Limited Liability Company formed in 1996 which owns and manages real property. This is a single asset case. The Debtor owns property comprised of three (3) continguous, multi-tenant industrial/warehouse buildings located at 4851 S. Alameda Street, in Los Angeles, California. The law offices of M. Jonathan Hayes represents the Debtor as general bankruptcy counsel. ONE SILVER: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: One Silver Tree, Inc. dba Jewelry Max International fka Team Family, Inc. 250 Spring Street NW Suite 6N-319 Atlanta, GA 30303-1101 Bankruptcy Case No.: 13-50928 Chapter 11 Petition Date: January 16, 2013 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Debtor's Counsel: Edward F. Danowitz, Jr., Esq. DANOWITZ & ASSOCIATES, P.C. 300 Galleria Parkway, NW Suite 960 Atlanta, GA 30339 Tel: (770) 933-0960 E-mail: edanowitz@danowitzlegal.com Scheduled Assets: $107,345 Scheduled Liabilities: $1,006,381 A list of the Company?s 20 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/ganb13-50928.pdf The petition was signed by Yong H. Yang, CEO. OPEN SOLUTIONS: Moody's Reviews 'Caa2' CFR for Possible Upgrade --------------------------------------------------------------- Moody's Investors Service placed the ratings of Open Solutions Inc.'s under review for possible upgrade following Fiserv, Inc.'s announcement that it has acquired Open Solutions for $55 million and assumed Open Solutions' debt. Moody's has withdrawn the ratings for Open Solutions' senior secured credit facilities as the bank facilities have been repaid. Ratings Rationale According to the terms of the Agreement and Plan of Merger, Fiserv intends to repay Open Solutions' $325 million of senior subordinated notes on February 13, 2013. If so, Moody's will withdraw all Open Solutions debt ratings including the senior subordinated notes. To the extent that Open Solutions' senior subordinated notes remain outstanding beyond the contemplated date, the ratings review would focus on the level of credit support Fiserv provides to the senior subordinated debt and structural considerations for the notes in the capital structure. Moody's placed the following ratings under review for possible upgrade: Issuer: Open Solutions, Inc. Corporate Family Rating -- Caa2 Probability of Default Rating -- Caa2-PD $325 million of 9.75% senior subordinated notes due February 2015 -- Caa3, LGD5 (86%) Moody's has withdrawn the following ratings: $30 million senior secured revolving credit facility -- B3, LGD2 (27%) $539 million outstanding senior secured term loan facility due January 2014 -- B3, LGD2 (27%) Headquartered in Glastonbury, Connecticut, Open Solutions Inc. is a provider of data processing and information management software and services to banks, thrifts and credit unions. The company is owned by funds affiliated to The Carlyle Group and Providence Equity Partners. The principal methodology used in this rating was the Global Software Industry published in October 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. OVERSEAS SHIPHOLDING: Wants to Obtain $10-Mil. DIP Loan From OIN ---------------------------------------------------------------- Overseas Shipholding Group, Inc., et al., ask the U.S. Bankruptcy Court for the District of Delaware to obtain up to $10,000,000 in debtor-in-possession postpetition financing from OSG International, Inc. The borrowers under the DIP facility are 1372 Tanker Corporation, Alcesmar Limited, Alcmar Limited, Andromar Limited, Antigmar Limited, Ariadmar Limited, Shirley Tanker Srl, Samar Tanker Corporation, Leyte Product Tanker Corporation, and Rosalyn Tanker Corporation. The DSF Borrowers will use proceeds from the DSF DIP Facility for working capital and other corporate needs, and paying certain administrative costs, including certain fees and expenses of the professionals retained by the Debtors, during the pendency of the Chapter 11 cases. Some of the material terms of the DSF DIP Facility are as shown below: Borrowers : The DSF Borrowers Guarantor : None DIP Lender : OSG International, Inc. DIP Facility Amount: $10,000,000 Fees : None Interest Rate : Rate as in effect for the Loan and for the applicable Interest Period or Interest Periods plus 1.00%. Collateral and Priority : The liens and security interests under the Security Documents (as defined in the DIP Loan Agreement) have the senior status afforded by Sections 364(c) and 364(d) of the Bankruptcy Code. The hearing on the motion has been scheduled for Jan. 24, 2013, at 9:30 a.m. The Objection Deadline is Jan. 17, 2013, at 4:00 p.m. A copy of the motion is available at: http://bankrupt.com/misc/osg.doc252.pdf 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. OVERSEAS SHIPHOLDING: CEXIM Borrowers to Obtain $15-Mil. DIP Loan ----------------------------------------------------------------- Overseas Shipholding Group, Inc., et al., ask the U.S. Bankruptcy Court for the District of Delaware to authorize certain debtors to obtain up to $15 million in debtor-in-possession postpetition financing from OSG International, Inc. The CEXIM Borrowers are Delta Aframax Corporation, Epsilon Aframax Corporation, Front President, Inc., Maple Tanker Corporation and Oak Tanker Corporation. The CEXIM Borrowers are five vessel-holding indirect subsidiaries of OSG that entered into a Loan Agreement dated Aug. 10, 2009, with the Export-Import Bank of China as original lender and security agent, and OSG as guarantor (the"CEXIM Facility"). Borrowings under the CEXIM Facility financed the construction in China of five vessels that carry crude oil or finished petroleum products. Each of the CEXIM Vessels is owned by a CEXIM Borrower. As of the Petition Date, approximately $311,751,114.08 in aggregate principal amount was outstanding under the CEXIM Facility. The CEXIM Borrowers will use the proceeds from the CEXIM DIP Facility for working capital and other corporate needs, and paying certain administrative costs, including certain fees and expenses of the professionals retained by the Debtors, during the pendency of the Chapter 11 cases. Some of the material terms of the CEXIM DIP Facility are as shown below: Borrowers : The CEXIM Borrowers Guarantor : None DIP Lender : OSG International, Inc. DIP Facility Amount: $15,000,000 Fees : None Interest Rate : Rate as in effect for the Loan and for the applicable Interest Period or Interest Periods plus 1.00%. Collateral and Priority : The liens and security interests under the Security Documents (as defined in the DIP Loan Agreement) have the senior status afforded by Sections 364(c) and 364(d) of the Bankruptcy Code. The hearing on the motion has been scheduled for Jan. 24, 2013, at 9:30 a.m. The Objection Deadline is Jan. 17, 2013, at 4:00 p.m. A copy of the motion is available at: http://bankrupt.com/misc/osg.doc251.pdf 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. OVERSEAS SHIPHOLDING: Wants Actions vs. Execs Halted During Ch. 11 ------------------------------------------------------------------ Jamie Santo of BankruptcyLaw360 reported that Overseas Shipholding Group Inc. asked a Delaware bankruptcy judge Monday to halt a series of putative class actions currently proceeding against its top brass in New York federal court, claiming the securities suits threaten to disrupt the shipping giant's Chapter 11 reorganization. OSG, whose fleet of 111 oil tankers ranks among the world's largest, said the four shareholder actions should be subject to the bankruptcy court's automatic stay for while they are not aimed directly at the company they are still harmful to its financial well-being, the report said. 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. PELICAN COVE: Case Summary & 11 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Pelican Cove of Lauderdale-by-the-Sea, LLC 229 Hibiscus Ave. Fort Lauderdale, FL 33308 Bankruptcy Case No.: 13-10985 Chapter 11 Petition Date: January 16, 2013 Court: United States Bankruptcy Court Southern District of Florida (Fort Lauderdale) Judge: John K. Olson Debtor's Counsel: Susan D. Lasky, Esq. 2101 N Andrews Ave #405 Wilton Manors, FL 33311 Tel: (954) 565-5854 Fax: (954) 206-0628 E-mail: ECF@suelasky.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company?s 11 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/flsb13-10985.pdf The petition was signed by Charles Bradford, manager. PENNFIELD CORP: Creditors Balk at Cargill's Bid to Buy Mills ------------------------------------------------------------ Stephanie Gleason at Dow Jones' DBR Small Cap reports that the committee representing unsecured creditors in Pennfield Corp.'s Chapter 11 case balked at the livestock-feed company's proposal to sell two of its three mills for $8.5 million to Cargill Inc. About Pennfield Corp Pennfield Corporation and Pennfield Transport Company filed a Chapter 11 petition (Bankr. E.D. Pa. Case No. 12-19430 and 12-19431) on Oct. 3, 2012, in Philadelphia. Founded in 1919, Pennfield is a Lancaster, Pennsylvania-based manufacturer of bulf and bagged feeds for dairy, equine and other commercial and backyard livestock. The company owns and operates three production mills located in Mount Joy, Martinsburg, and South Montrose, in Pennsylvania. The Debtors filed for bankruptcy to sell their assets to Carlisle Advisors, LLC, subject to higher and bettr offers. Carlisle has also agreed to provide a $2.0 million DIP Loan. Judge Bruce I. Fox presides over the case. Attorneys at Maschmeyer Karalis P.C., in Philadelphia, serve as the Debtors' bankruptcy counsel. Skadden, Arps, Slate, Meagher & Flom LLP is the special counsel. Groom Law Group, Chartered, is the employee benefits counsel. AEG Partners LLC is the financial advisor. Lakeshore Food Advisors, LLC, is the investment banker. Pennfield filed official lists showing assets of $7.2 million and liabilities totaling $26.1 million, including $11.3 million in secured claims. Debt includes $10 million owing to secured lender Fulton Bank NA. PENSON WORLDWIDE: Wins OK for KCC as Claims and Notice Agent ------------------------------------------------------------ Penson Worldwide Inc. and its affiliates obtained an order appointing Kurtzman Carson Consultants LLC as the claims and noticing agent 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: Files Chapter 11 Liquidation Plan --------------------------------------------------- Penson Worldwide Inc. and its affiliates, just days after filing for bankruptcy, filed a proposed Joint Liquidation Plan pursuant to the terms of a restructuring support agreement negotiated with second lien noteholders and convertible noteholders. The Debtors have not filed the required explanatory disclosure statement as of Jan. 16. PWI was a borrower under a $50 million senior secured revolving credit facility, but has completely paid down its obligations as of March 31, 2012. PWI is the issuer of $200 million in principal amount of $12.5% senior second lien secured notes due 2017, with a maturity date of May 15, 2017, with U.S. Bank N.A. serving as indenture trustee. PWI is also the issuer of $60 mililon in principal amount of 8% senior convertible notes due 2014, with a maturity date of June 1, 2014, and U.S. Bank serving as indenture trustee. There's also $83.5 million outstanding under certain intercompany notes. Under the Plan, secured creditors, if any, are receiving a full recovery and are deemed to accept the Plan. Holders of general unsecured claims, second lien note claims, and convertible note claims will receive membership interests in a new company formed by the Debtors and are voting on the Plan. Holders of equity interests, company claims and securities law claims are not receiving anything and are deemed to reject the Plan. On or before the effective date of the Plan, Penson Liquidating Company LLC -- PLC -- will be formed as a Delaware limited liability company and all assets of the Debtors will be conveyed and transferred to PLC. In connection with the vesting and transfer of the PLC Assets, including causes of action, any attorney-client privilege, work-product protection or other privilege or immunity attaching to any documents or communications transferred to PLC shall vest in PLC. The Debtors and the Chief Officer are authorized to take all necessary actions to effectuate the transfer of such privileges, protections and immunities. The Limited Liability Company Agreement of PLC will provide for the creation of four classes of membership interests: Class A Units. Each holder of second lien note claims will against PWI will receive its pro rata share of the Class A Units. Class B Units. Each holder of an allowed general unsecured claim or a convertible note claim against PWI will receive its pro rata share of the Class B Units. Class C Units. Class C Units will be held by the liquidation trust for the benefit of holders of general unsecured claims of any debtor other than pwi. Class D Units. The liquidation trust will hold the Class D units and will make a distribution to holders of equity interests to the extent that asset recoveries exceed current expectations in an amount that would permit a distribution to a class of equity interests, then after the payment in full of all allowed claims. The ad hoc committee of second lien noteholders, who are parties to the RSA, are represented by: Gary Kaplan, Esq. Richard Tisdale, Esq. FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP One New York Plaza New York, NY 10004 Telephone: (212) 859-8520 Facsimile: (212) 859-4000 The ad hoc committee of holders of convertible notes, who are parties to the RSA, are represented by: Larry J. Nyhan, Esq. Bojan Guzina, Esq. SIDLEY AUSTIN LLP One South Dearborn Chicago, IL 60603 Telephone: (312) 853-7323 Facsimile: (312) 853-7036 A copy of the Plan is available for free at: http://bankrupt.com/misc/PWI_LiquidatingPlan.pdf Ownership Statement Penson Worldwide filed an amendment to its Chapter 11 petition with respect to the attached ownership statement. The ownership statement erroneously listed Apex Clearing and TD Ameritrade as corporations holding 10% or more of the equity interests in Penson. Customers or correspondents of Apex and TD are beneficial holders of 10% or more of the equity interests in Penson, however, neither corporation holds 10% or more of the equity interests in Penson. 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. PHIL'S CAKE: Cash Collateral Hearing Continued to Jan. 24 --------------------------------------------------------- The Bankruptcy Court has continued to Jan. 24, 2013, at 9:30 a.m. the hearing on the motion of Phil's Cake Box Bakeries, Inc., to use cash that constitute collateral of its pre-bankruptcy creditors. The Debtor said it needs access to the Cash Collateral to continue operating its businesses or manage its financial affairs, substantially in compliance with a budget. In a third interim order, the Court authorized the Debtor to use the cash collateral that these parties may assert liens and security interests: i) Southern Commerce Bank, N.A.; ii) Zions First National Bank; iii) Heritage Bank; and iv) Colson, as successor in interest to the United States Small Business Association and the Florida Business Development Corporation. Pursuant to the third interim order, the Debtor is authorized to use cash collateral, including but not limited to funds on-hand prepetition or transferred postpetition into the Debtor's bank accounts maintained with SCB. As reported in the Troubled Company Reporter on Sept. 11, 2012, at different times, the Debtor executed loan agreements in favor of Southern Commerce Bank, N.A., Zions First National Bank, Heritage Bank, and Colson Services Corp., as successor in interest to the United States Small Business Association and the Florida Business Development Corporation: Amount Owed as of Lender the Petition Date ------ ----------------- Southern Commerce $1,600,000 ($660,000 relates to a line of credit) Zions $6,000,000 Heritage $250,000 Colson $3,000,000 BankAtlantic $43,000 SCB asserts that it has a first priority position with respect to accounts receivable and inventory. According to the Debtor, Zions may assert that it has perfected first position mortgage lien on the Debtor's Eagle Trail Facility, including any fixtures, including freezers and associated equipment located at the property. The Debtor asserts that Zions does not assert a lien on Cash Collateral. Heritage may assert that it has perfected first position mortgage liens on certain real property located in the vicinity of the Debtor's retail facility. The Debtor asserts that Heritage does not assert a lien on Cash Collateral. Colson may assert that it has perfected junior liens and security interest in the Eagle Trail Facility, including fixtures and equipment. The Debtor asserts that Colson does not assert a lien on Cash Collateral. BankAtlantic may assert liens on and security interests in certain items of equipment located at 1009 and 1017 N. Excelda Avenue. The Debtor asserts that BankAtlantic does not assert a lien on Cash Collateral. In exchange for the use of Cash Collateral, the Debtor proposes to provide the Secured Creditors with replacement liens identical in extent, validity and priority as such liens existed on the Petition Date. As additional adequate protection to SCB, the Debtor proposes to pay SCB on a monthly basis accrued interest on (i) the line of credit obligation; and (ii) the commercial loan obligation, Loan Number x125. SCB has filed in the case docket a Notice of Consent to Entry of Agreed Interim Bridge Order Authorizing Use of Cash Collateral. About Alessi's Bakeries Phil's Cake Box Bakeries, Inc., dba Alessi's Bakeries, Inc., is a family-owned bakery and catering business owned and operated in Tampa, Fla., by four generations of the Alessi family. The operations have grown from a small bakery delivering bread by horse and wagon, to the current 100,000 square foot manufacturing facility serving retail customers nationwide, with a retail location maintaining and continuing its historic traditions in Tampa. Alessi's operates from two locations: a manufacturing facility and a retail bakery. The Eagle Trail manufacturing facility is located at 5202 Eagle Trail Drive, Tampa. The Eagle Trail Facility is a 100,000 sq. ft. building which houses various production lines including five ovens, 40,000 sq. ft. of refrigerated space with four walk-in freezers and two coolers, and 20,000 sq. ft. of raw material and packing supplies warehouse space. Alessi's also operates a retail bakery facility, located at 2909 West Cypress Street, Tampa. Alessi's owns both locations. As of the Petition Date, Alessi's estimates that it has assets of roughly $14.5 million and liabilities of roughly $14.7 million. Liabilities include $5.9 million owing to Zions. There is another $3 million owing to the Small Business Administration and $820,000 to trade suppliers. Alessi's filed for bankruptcy to address the over-leveraging due to the Eagle Trail Facility acquisition and the inability fully and timely to service debt during the period in which sales dropped. Alessi's filed for Chapter 11 bankruptcy (Bankr. M.D. Fla. Case No. 12-13635) on Sept. 5, 2012. Bankruptcy Judge K. Rodney May oversees the case. Harley E. Riedel, Esq., at Stichter Riedel Blain & Prosser, P.A., serves as the Debtor's counsel. The petition was signed by Philip Alessi, Jr., president. PHIL'S CAKE: Okayed to Transfer Tampa Property to FDIC ------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Florida, in an amended order, authorized Phil's Cake Box Bakeries, Inc., to abandon certain residential real property collateral to the Federal Deposit Insurance Corporation as receiver for Heritage Bank. The amended order substitutes FDIC for Heritage Bank. At the Nov. 8, 2012, hearing, the attorney for Heritage Bank announced that the appropriate party-in-interest is now the FDIC as receiver for Heritage Bank of Florida. The Debtor is authorized to abandon these real property, subject to the existing liens of FDIC as receiver for Heritage Bank, TC 12, LLC, Lienbase-FL 12, and ABRTL, LLC and AM Cert, LLC: 1. Corner of 903 N. Excelda Ave. Tampa (Lots 8 and 9, block 1, HAVANA, according to the plat thereof as recorded in Plat Book 4, Page 52, of the Public Records of Hillsborough County, Florida); and 2. 1014 Paddock St., Tampa (Lot 1, block 11 of WEST NAPLES SUBDIVISION, according to the Map or Plat thereof as recorded in Plat Book 3, Page 20, of the public records of Hillsborough County, Florida). The Debtor is authorized to transfer title to the residential real property to FDIC or its assigns by deed in lieu of foreclosure or to consent to foreclosure judgment in state court at the election of the FDIC or its assigns. The automatic stay is lifted as to the residential real property to allow for the abandonment from the bankruptcy estate. About Alessi's Bakeries Phil's Cake Box Bakeries, Inc., dba Alessi's Bakeries, Inc., is a family-owned bakery and catering business owned and operated in Tampa, Fla., by four generations of the Alessi family. The operations have grown from a small bakery delivering bread by horse and wagon, to the current 100,000 square foot manufacturing facility serving retail customers nationwide, with a retail location maintaining and continuing its historic traditions in Tampa. Alessi's operates from two locations: a manufacturing facility and a retail bakery. The Eagle Trail manufacturing facility is located at 5202 Eagle Trail Drive, Tampa. The Eagle Trail Facility is a 100,000 sq. ft. building which houses various production lines including five ovens, 40,000 sq. ft. of refrigerated space with four walk-in freezers and two coolers, and 20,000 sq. ft. of raw material and packing supplies warehouse space. Alessi's also operates a retail bakery facility, located at 2909 West Cypress Street, Tampa. Alessi's owns both locations. As of the Petition Date, Alessi's estimates that it has assets of roughly $14.5 million and liabilities of roughly $14.7 million. Liabilities include $5.9 million owing to Zions. There is another $3 million owing to the Small Business Administration and $820,000 to trade suppliers. Alessi's filed for bankruptcy to address the over-leveraging due to the Eagle Trail Facility acquisition and the inability fully and timely to service debt during the period in which sales dropped. Alessi's filed for Chapter 11 bankruptcy (Bankr. M.D. Fla. Case No. 12-13635) on Sept. 5, 2012. Bankruptcy Judge K. Rodney May oversees the case. Harley E. Riedel, Esq., at Stichter Riedel Blain & Prosser, P.A., serves as the Debtor's counsel. The petition was signed by Philip Alessi, Jr., president. PHOENIX COS: S&P Affirms 'B-' Longterm Counterparty Credit Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its 'B-' long-term counterparty credit rating on The Phoenix Cos. Inc. (NYSE:PNX). At the same time, S&P affirmed its 'BB-' financial strength ratings on subsidiaries Phoenix Life Insurance Co. and PHL Variable Insurance Co. (collectively Phoenix). S&P removed all the ratings from CreditWatch Negative, where they were placed Dec. 7, 2012. The outlook is stable. PNX has received the required approval from a majority of its bond holders to amend its indenture regarding its third-quarter 2012 SEC filing. The company had previously breached a covenant when it didn't file its third-quarter 2012 SEC filing with the trustee within 15 days of the SEC filing deadline. If not remedied, this breach of covenant may have led to an acceleration of principal payments. On Dec. 12, 2012, PNX began a consent solicitation to amend the indenture. As of Jan. 15, 2013, the company had received a one-time consent from at least 65% of its bond holders, allowing PNX to extend the date for providing its third-quarter 2012 form 10-Q to the bond trustee to March 31, 2013. The stable outlook reflects S&P's view that Phoenix's financial profile is stabilizing and incrementally improving, mainly because of improving operating performance and its continuous strengthening of its capital base. However, its business profile remains marginal. "In the short term, we expect Phoenix to be able to make all timely payments on its obligations. In the longer term, we expect PNX's repositioning strategy to be successful and to add new distribution relationships that increase sales," said Standard & Poor's credit analyst Deep Banerjee. PICCADILLY RESTAURANTS: Wants 90-Day Extension in Exclusivity ------------------------------------------------------------- Piccadilly Restaurants, LLC, et al., asks the U.S. Bankruptcy Court for the Western District of Louisiana to extend by 90 days their exclusive periods in which they may file a chapter 11 plan and solicit acceptances for that plan. The Debtors relate that they have been involved in significant negotiations with its primary vendor of food and supplies, its secured creditor, and the official committee of unsecured creditors regarding several different issues. About Piccadilly Restaurants Piccadilly Restaurants, LLC, and two affiliated entities sought Chapter 11 bankruptcy protection (Bankr. W.D. La. Case Nos. 12-51127 to 12-51129) on Sept. 11, 2012. The affiliates are Piccadilly Food Service, LLC, and Piccadilly Investments LLC. Piccadilly Restaurants, LLC, headquartered in Baton Rouge, Louisiana, is the largest cafeteria-style restaurant in the United States, with operations in 10 states in the Southeast and Mid- Atlantic regions. It is wholly owned by Piccadilly Investments, LLC. Piccadilly operates an institutional foodservice division through a wholly owned subsidiary, Piccadilly Food Service, LLC, servicing schools and other organizations. With a history dating back to 1944, the Company operates 81 restaurants at three owned and 78 leased locations. Then known as Piccadilly Cafeterias, Inc., the Company filed for Chapter 11 relief (Bankr. S.D. Fl. Case No. 03-27976) on Oct. 29, 2003. Paul Steven Singerman, Esq., and Jordi Guso, Esq., at Berger Singerman, P.A. represented the Debtor in the case. After Piccadilly declared bankruptcy under Chapter 11, but before its plan was submitted to the Bankruptcy Court for the Southern District of Florida, the Bankruptcy Court authorized Piccadilly to sell its assets to Yucaipa Cos., for about $80 million. In October 2004, the Bankruptcy Court confirmed the plan. Judge Robert Summerhays oversees the 2012 cases. Lawyers at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, in New Orleans, serve as the 2012 Debtors' counsel. BMC Group, Inc., serves as claims agent, noticing agent and balloting agent. In its schedules, the Debtor disclosed $34,952,780 in assets and $32,000,929 in liabilities. New York-based vulture fund Atalaya Administrative LLC, in its capacity as administrative agent for Atalaya Funding II, LP, Atalaya Special Opportunities Fund IV LP (Tranche B), and Atalaya Special Opportunities Fund (Cayman) IV LP (Tranche B), the Debtors' prepetition secured lender, is represented in the case by lawyers at Carver, Darden, Koretzky, Tessier, Finn, Blossman & Areaux, L.L.C.; and Patton Boggs, LLP. Henry G. Hobbs, Jr., Acting United States Trustee for Region 5, in October appointed seven members to the official committee of unsecured creditors in the Chapter 11 cases of Piccadilly Restaurants, LLC. PINNACLE AIRLINES: Plan Next After Delta Deal Wins Court Okay ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the agreement where Delta Air Lines Inc. will finance the reorganization of Pinnacle Airlines Corp. attracted no creditor opposition. As a result, the bankruptcy judge in Manhattan gave approval Jan. 16, challenging Pinnacle to confirm a reorganization plan and emerge from Chapter 11 by May 15 as the Delta contract requires. The report adds that on Jan. 16 the judge also approved a new labor contract ratified by members of the pilots' union. The pilots' contract was the last union agreement to garner court approval. The contract saves Pinnacle $30 million a year largely from a 9% wage reduction. According to the report, Pinnacle will be filing a reorganization plan where Atlanta-based Delta will convert secured financing into the new stock, in the process making Pinnacle a wholly owned subsidiary of Delta. The plan calls for Pinnacle eventually to operate 81 regional jets for the larger airline. 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. PIPKIN'S MOTORS: Case Summary & 10 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Pipkin's Motors, Inc. 4140 North Valdosta Road Valdosta, GA 31602 Bankruptcy Case No.: 13-70056 Chapter 11 Petition Date: January 16, 2013 Court: United States Bankruptcy Court Middle District of Georgia (Valdosta) Judge: John T. Laney III Debtor's Counsel: David E. Mullis, Esq. DAVID E. MULLIS, P.C. 2301 Mimosa Drive Valdosta, GA 31602 Tel: (229) 245-8817 Fax: (229) 245-1515 E-mail: dmullis@businesslawhelp.com Scheduled Assets: $8,289,306 Scheduled Liabilities: $8,241,080 A list of the Company?s 10 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/gamb13-70056.pdf The petition was signed by David Pipkin, president. PMI GROUP: Jan. 23 Hearing on Sixth Exclusivity Extension --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware will convene a hearing on Jan. 23, 2013, at 11:30 a.m., to consider The PMI Group, Inc.'s request for a sixth exclusivity extension. The Debtors are requesting that the Court extend their exclusive periods to propose a Plan until March 4 and solicit acceptances of that plan until May 3, respectively. The Debtors need additional time to negotiate and prepare adequate information in relation to the plan. About The PMI Group The PMI Group, Inc., is an insurance holding company whose stock had, until Oct. 21, 2011, been publicly-traded on the New York Stock Exchange. Through its principal regulated subsidiary, PMI Mortgage Insurance Co., and its affiliated companies, the Debtor provides residential mortgage insurance in the United States. The PMI Group filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 11-13730) on Nov. 23, 2011. In its schedules, the Debtor disclosed $167,963,354 in assets and $770,362,195 in liabilities. Stephen Smith signed the petition as chairman, chief executive officer, president and chief operating officer. The Debtor said in the filing that it does not have the financial resources to pay the outstanding principal amount of the 4.50% Convertible Senior Notes, 6.000% Senior Notes and the 6.625% Senior Notes if those amounts were to become due and payable. The Debtor is represented by James L. Patton, Esq., Pauline K. Morgan, Esq., Kara Hammond Coyle, Esq., and Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor LLP. The Official Committee of Unsecured Creditors appointed in the case retained Morrison & Foerster LLP and Womble Carlyle Sandridge & Rice, LLP, as bankruptcy co-counsel. Peter J. Solomon Company serves as the Committee's financial advisor. RADIOSHACK CORP: Dissolves Target Mobile Partnership with Target ---------------------------------------------------------------- RadioShack Corp. ended its relationship with Target, where it helps operate Target Mobile in 1,500 Target stores, effective April 8, 2013. The RadioShack and Target partnership provided RadioShack access to manage Target's post-paid mobility business, but RadioShack did not manage the prepaid mobility business or the wider range of accessories offered in Target stores. Since October 2012, RadioShack had been renegotiating the terms of the relationship with Target to establish an agreement that would be profitable to both companies. At that time, RadioShack executed a termination notice that would allow the company to exit the Target business if an agreement could not be reached. "In order for RadioShack to have continued this relationship, we needed to establish a new agreement that would be financially appealing to both companies," said Telvin Jeffries, RadioShack executive vice president, chief human resources officer, and general manager of retail services. "Ultimately, we amicably agreed to dissolve the relationship." About Radioshack RadioShack sells consumer electronics and peripherals, including cellular phones. It operates roughly 4,700 stores in the U.S. and Mexico. It also operates about 1,500 wireless phone kiosks in Target stores. The company also generates sales through a network of 1,100 dealer outlets worldwide. Revenues for the last 12 months' period ending June 30, 2012, were roughly $4.4 billion. The Company's balance sheet at Sept. 30, 2012, showed $2.23 billion in total assets, $1.57 billion in total liabilities and $662.4 million in total stockholders' equity. * * * As reported by the TCR on Nov. 23, 2012, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Fort Worth, Texas-based RadioShack Corp. to 'CCC+' from 'B-'. The outlook is negative. "The downgrade of RadioShack reflects our view that it will be very difficult for the company to improve its gross margin in the fourth quarter of this year, given the highly promotional nature of year-end holiday retailing in the wireless and consumer electronic categories," said Standard & Poor's credit analyst Jayne Ross. In the July 27, 2012, edition of the TCR, Fitch Ratings has downgraded its long-term Issuer Default Rating (IDR) for RadioShack Corporation to 'CCC' from 'B-'. The downgrade reflects the significant decline in RadioShack's profitability, which has become progressively more pronounced over the past four quarters. RADIOSHACK CORP: Ended Target Deal No Impact on Moody's 'B3' CFR ---------------------------------------------------------------- Moody's Investors Service said that RadioShack Corporation's announcement that it will end its relationship with Target effective April 8, 2013 will not affect RadioShack' B3 corporate family rating or its negative outlook. RadioShack currently operates wireless phone kiosks under the Target Mobile banner in 1,500 Target stores. The principal methodology used in rating RadioShack was the Global Retail Industry Methodology published in June 2011. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. RadioShack is a retailer of consumer electronics and peripherals, as well as a retailer of cellular phones. It operates roughly 4,700 stores in the U.S. and Mexico. It also operates 1,500 wireless phone kiosks in Target stores. The company also generates sales through a network of about 1,100 dealer outlets worldwide. REAL ESTATE ASSOCIATES: Eric Mathis Quits as CFO ------------------------------------------------ Real Estate Associates Limited VII announced that Mr. Eric Mathis, who served as the equivalent of the chief financial officer of the Partnership, has resigned effective as of Jan. 25, 2013. About Real Estate Associates Real Estate Associates Limited VII is a limited partnership which was formed under the laws of the State of California on May 24, 1983. On February 1, 1984, the Partnership offered 2,600 units consisting of 5,200 limited partnership interests and warrants to purchase a maximum of 10,400 additional limited partnership interests through a public offering managed by E.F. Hutton Inc. The Partnership received $39,000,000 in subscriptions for units of limited partnership interests (at $5,000 per unit) during the period from March 7, 1984 to June 11, 1985. The general partners of the Partnership are National Partnership Investments Corp., a California Corporation, and National Partnership Investments Associates II. The business of the Partnership is conducted primarily by NAPICO, a subsidiary of Apartment Investment and Management Company, a publicly traded real estate investment trust. As of Sept. 30, 2012, and Dec. 31, 2011, the Partnership holds limited partnership interests in 1 and 11 Local Limited Partnerships, respectively, and a general partner interest in REA IV which, in turn, holds limited partnership interests in 3 and 8 additional Local Limited Partnerships, respectively; therefore, the Partnership holds interests, either directly or indirectly through REA IV, in 4 and 19 Local Limited Partnerships, respectively. The other general partner of REA IV is NAPICO. The Local Limited Partnerships own residential low income rental projects consisting of 403 and 1,237 apartment units at Sept. 30, 2012, and Dec. 31, 2011, respectively. The mortgage loans of these projects are payable to or insured by various governmental agencies. The Partnership reported a net loss of $861,000 on $0 of revenue in 2011, compared with net income of $171,000 on $0 of revenue in 2010. The Company's balance sheet at Sept. 30, 2012, showed $1.1 million in total assets, $13.3 million in total liabilities, and a total partners' deficit of $12.2 million. Going Concern The Partnership continues to generate recurring operating losses. In addition, the Partnership is in default on notes payable and related accrued interest payable that matured between December 1999 and January 2012. Three of the Partnership's four remaining investments involved purchases of partnership interests from partners who subsequently withdrew from the operating partnership. As of Sept. 30, 2012, and Dec. 31, 2011, the Partnership is obligated for non-recourse notes payable of approximately $3,741,000 and $6,070,000, respectively, to the sellers of the partnership interests, bearing interest at 9.5% to 10%. Total outstanding accrued interest is approximately $9,524,000 and $15,215,000 at Sept. 30, 2012, and Dec. 31, 2011, respectively. These obligations and the related interest are collateralized by the Partnership's investment in the local limited partnerships and are payable only out of cash distributions from the Local Limited Partnerships, as defined in the notes. Unpaid interest was due at maturity of the notes. All of the notes payable have matured and remain unpaid at Sept. 30, 2012. No payments were made on the notes payable during the nine months ended Sept. 30, 2012 or 2011. The holder of the non-recourse notes payable collateralized by the Partnership's investment in five Local Limited Partnerships purchased the projects owned by these Local Limited Partnerships, which resulted in the extinguishment of notes payable of approximately $2,329,000 and accrued interest of approximately $6,036,000 during the nine months ended Sept. 30, 2012. The Partnership has agreements with the non-recourse note holder for the remaining three notes payable in which the note holder agreed to forebear taking any action under these notes in order to permit the Partnership to negotiate the sale of its limited partnership interests in these Local Limited Partnerships to the local general partner of the respective Local Limited Partnerships. Subsequent to Sept. 30, 2012, the Partnership sold its interest in one of these Local Limited Partnerships, Aristocrat Manor, to the local general partner of the Local Limited Partnership. The two remaining sales are expected to close during 2013. After auditing the 2011 results, Ernst & Young LLP, in Greenville, South Carolina, expressed substantial doubt about the Partnership's ability to continue as a going concern. The independent auditors noted that the Partnership continues to generate recurring operating losses. In addition, notes payable and related accrued interest totalling $16.2 million are in default due to non-payment. RED MOUNTAIN: Incurs $3.2-Mil. Net Loss in Fiscal 2013 2nd Quarter ------------------------------------------------------------------ Red Mountain Resources, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $3.2 million on $1.1 million of revenue for the three months ended Nov. 30, 2012, compared with a net loss of $2.2 million on $946,000 of revenue for the three months ended Nov. 30, 2011. For the six months ended Nov. 30, 2012, the Company reported a net loss of $6.9 million on $2.5 million of revenue as compared to a net loss of $4.9 million on $2.1 million of revenue for the six months ended Nov. 30, 2011. The Company's balance sheet at Nov. 30, 2012, showed $37.9 million in total assets, $18.6 million in total liabilities, and stockholders' equity of $19.3 million. A copy of the Form 10-Q is available at http://is.gd/s6RKz8 Dallas-based Red Mountain Resources, Inc., is engaged in the acquisition, development and exploration of oil and natural gas properties in established basins with demonstrable prolific producing zones. Currently, it has established acreage positions and production primarily in the Permian Basin of West Texas and Southeast New Mexico and the onshore Gulf Coast of Texas. RESIDENTIAL CAPITAL: Examiner Has Wolf as Conflicts Counsel ----------------------------------------------------------- Arthur J. Gonzalez, the Court-appointed Chapter 11 examiner in Residential Capital's cases, sought and obtained approval to retain Wolf Haldenstein Adler Freeman & Herz LLP as conflicts counsel, nunc pro tunc to Oct. 15, 2012. The current limited scope of Wolf Haldenstein's engagement will be to represent the Examiner in connection with aspects of his investigation involving J.P. Morgan Securities, LLC, Morgan Stanley & Co. LLC, Goldman Sachs & Co., Citibank, N.A., and their affiliates, each of whom appear only to be subjects of discovery needed to complete the Investigation. The Conflict Parties are clients of the Examiner's primary counsel, Chadbourne & Parke LLP, as to which Chadbourne has a potential conflict of interest. In the event that the Examiner learns, through future document discovery or witness interviews, of the need to investigate other parties as to which Chadbourne has potential conflicts, Wolf Haldenstein may represent the Examiner in the discharge of his duties with respect to those entities. Wolf Haldenstein will be paid according to its customary hourly rates: $390 to $865 for partners, $350 to $605 for counsel, $200 to $530 for associates, and $110 to $290 for paraprofessionals The firm will also be reimbursed for necessary out-of-pocket expenses. Eric B. Levine, Esq., a member of the firm of Wolf Haldenstein Adler Freeman & Herz LLP, in New York, assures the Court that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code; and does not represent any interest adverse to the Examiner's. Mr. Levine, however, disclosed that his firm represents or has represented the Police and Fireman Retirement System of the City of Detroit, Wachovia Bank, and Oppenheimer & Co., Inc., in matters unrelated to the Debtors' case. 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: CHFA Wants to Recover Servicing Portfolio -------------------------------------------------------------- Connecticut Housing Finance Authority and Debtor GMAC Mortgage, LLC, were parties to a Home Mortgage Servicing Agreement, dated July 15, 1987. As of Sept. 30, 2012, GMAC Mortgage serviced a portfolio of approximately 880 residential mortgage loans belonging to CHFA, worth approximately $83,981,213. As part of the Debtors' sale of its mortgage servicing portfolio, the Debtors notified the Court that they intend to termite the servicing agreement with CHFA. By this motion, CHFA asks relief from the automatic stay in ResCap's case to allow it to recover its loan portfolio and related property from the Debtors. CHFA also asks the Court to enter an order directing the Debtors to turn over the loan portfolio in an orderly fashion, segregate the documents, computer data, and assets related to the portfolio, and provide CHFA a complete accounting with respect to the portfolio. According to CHFA's counsel, James J. Tancredi, Esq., at Day Pitney LLP, in Harford, Connecticut, under the servicing agreement, the Debtors are obligated to provide a variety of critical functions for CHFA -- including collecting and remitting monies due to CHFA from mortgages; ensuring that mortgages have proper arrangements; paying property taxes on mortgaged property; reporting defaults, initiating and completing foreclosure proceedings at CHFA's direction; and submitting timely claims to insurers and government guarantors on defaulted loans. Mr. Tancredi says the Debtors have failed to meaningfully respond to any requests for a dialogue about transitioning the portfolio back to CHFA in an appropriate fashion. Meanwhile, CHFA has seen a serious deterioration in GMAC Mortgage's performance of its servicing obligation. Mr. Tancredi notes that CHFA has recently received a request from the Debtors' document service provider, Xerox, for documents that should have been in the Debtors' possession pursuant to the servicing agreement. He adds that the Debtors have also failed to properly submit insurance claims on defaulted loans and failed to continue providing foreclosure services on defaulted loans through eviction. Mr. Tancredi may be reached at: James J. Tancredi, Esq. DAY PITNEY LLP 242 Trumbull Street Hartford, CT 06103 Tel: (860) 275-0100 Fax: (860) 275-0343 Email: jjtancredi@daypitney.com 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: MassMutual Seeks Limited Discovery ------------------------------------------------------- Massachusetts Mutual Life Insurance Company asks the Bankruptcy Court to modify the limitation on discovery imposed pursuant to the Memorandum Opinion and Order Denying the Motions of the Federal Housing Finance Agency and Underwriter Defendants to Compel Document Discovery from the Debtors. MassMutual seeks narrowly tailored relief compelling the Debtors to produce 12 loan tapes and associated originator information in their possession related to securitizations of residential mortgage loans sponsored by the Debtors. Discovery of the loan- level information, which is unavailable from other sources, is necessary in connection with the action Massachusetts Mutual Life Insurance Company v. Merrill Lynch, Pierce, Fenner & Smith Inc., et al., according to Philippe Z. Selendy, Esq., at Quinn Emanuel Urquhart & Sullivan, LLP, in New York. The MassMutual Action is not subject to any bankruptcy stay and currently is pending before the Honorable Michael A. Ponsor in the United States District Court for the District of Massachusetts as Civil Action No. 3:11-cv-30285. REVEL AC: S&P Lowers Rating on First-Lien Term Loan to 'CC' ----------------------------------------------------------- Standard & Poor's Ratings Services revised its recovery rating on Atlantic City-based Revel AC's (Revel) first-lien term loan to '6', indicating S&P's expectation for negligible (0% to 10%) recovery for lenders in the event of default, from '3' (50% to 70% recovery expectation). In addition, S&P lowered its issue-level rating on the loan to 'CC' from 'CCC', in accordance with S&P's notching criteria. The revised recovery rating reflects the recent $150 million increase in unrated revolving credit commitments and term loan that are senior in priority to the rated term loan, as well as the lowering of S&P's estimated run rate EBITDA that it assumes the company would be valued at emergence versus S&P's previous analysis. "These factors reduced the recovery prospects for the rated term loan enough to warrant the downward revision to our recovery rating on the loan," said Standard & Poor's credit analyst Jennifer Pepper. S&P's rating on Revel AC Inc. reflects its view that the additional $150 million of financing provides only near-term operating liquidity as S&P do not believe the company will be able to generate sufficient cash flow to service its capital structure over the longer term. While one of the tenets of the company's strategy is to appeal to the nongaming customer, the property is heavily reliant on the success of its casino - S&P had expected about 80% of revenue to come from gaming. In its first nine months of operations, Revel's gaming revenue was well below expectations and the property has generated negative EBITDA. S&P believes the property is unlikely to ramp up operations sufficiently to cover approximately $140 million of fixed charges in 2013, including about $130 million of interest expense, $5 million of scheduled amortization, and about $5 million of capital expenditures. Furthermore, in 2014, fixed charges increase, as interest on the company's second-lien notes convert to cash pay. In addition, the company's senior secured term loan contains financial maintenance covenants that will be measured beginning in the June 2013 quarter. S&P do not believe that the company will be able to meet those covenants and will need to negotiate an amendment with lenders. Also factored into S&P's rating is the persisting weakness in the overall Atlantic City market. Despite the opening of Revel, revenues for Atlantic City casinos fell 8% in 2012, representing the sixth straight year of casino win declines for the Atlantic City gaming market. Although 2013 will face an easier year-over- year fourth quarter comparison with the effects of superstorm Sandy, S&P expects that casino win in the market will be, at best, flat in 2013 due to lingering storm effects on Jersey shore customers, as well as intensifying competitive pressures (including the likely addition of table games in Maryland sometime this year). RG STEEL: Sues to Wind Up Coke Fuel Joint Venture ------------------------------------------------- Brian Mahoney of BankruptcyLaw360 reported that bankrupt steel producer RG Steel Wheeling LLC asked a Delaware bankruptcy court Monday to wind up a coke-producing joint venture with a Severstal US Holdings LLC subsidiary, saying it was allegedly strong-armed out of the partnership after it filed for Chapter 11. Severstal's SNA Carbon LLC unfairly blocked RG Steel from participating in the management of the coke-producing joint venture -- Mountain State Carbon LLC -- after RG Steel filed for Chapter 11 in May, RG Steel says, according to the report. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. The Debtor has sold off the principal plants. The sale of the Wheeling Corrugating division to Nucor Corp. brought in $7 million. That plant in Sparrows Point, Maryland, fetched the highest price, $72.5 million. RITZ CAMERA: Heads to Ch. 7 After Failing to Sell Assets -------------------------------------------------------- Maria Chutchian of BankruptcyLaw360 reported that a Delaware bankruptcy judge on Tuesday approved Ritz Camera & Image LLC's conversion from a Chapter 11 case into a Chapter 7 bankruptcy, clearing the erstwhile camera giant to appoint a trustee to liquidate its remaining assets following its failed attempts to find a way back to solvency. U.S. Bankruptcy Judge Kevin Gross issued an order approving the fallen specialty camera company's unopposed motion to convert after a hearing in which he agreed with the debtors that Chapter 7 would be the most cost-effective means, the report said. DIP Facility In November, the Bankruptcy Court authorized the Debtors to enter into an amendment No. 3 to senior secured superpriority debtor in possession credit agreement dated Oct. 22, 2012. A copy of the amendment is available for free at http://bankrupt.com/misc/RITZCAMERA_A_creditagreement.pdf About Ritz Camera Beltsville, Maryland-based Ritz Camera & Image LLC -- http://www.ritzcamera.com-- sold digital cameras and accessories, and electronic products. It sought Chapter 11 protection (Bankr. D. Del. Case No. 12-11868) on June 22, 2012, to close unprofitable stores. Ritz claims to be the largest camera and image chain the U.S., operating 265 camera stores in 34 states as well as an Internet business. When it filed for bankruptcy, Ritz Camera intended to shut 128 locations and cut its staff in half. Included in the closing are 10 locations in Maryland and 4 in Virginia. Affiliate Ritz Interactive Inc., owner e-commerce Web sites that include RitzCamera.com and BoatersWorld.com, also filed for bankruptcy. RCI's predecessor, Ritz Camera Centers, Inc., sought Chapter 11 protection (Bankr. D. Del. Case No. 09-10617) on Feb. 22, 2009. Ritz generated $40 million by selling all 129 Boater's World Marine Centers. A group that included the company's chief executive officer, David Ritz, formed Ritz Camera & Image to buy at least 163 of the remaining 375 camera stores. The group paid $16.25 million in cash and a $7.8 million note. Later, Ritz sold a $4 million account receivable for $1.5 million to an owner of the company that owed the debt. In the 2009 petition, Ritz disclosed total assets of $277 million and total debts of $172.1 million. Lawyers at Cole, Schotz, Meisel, Forman & Leonard, P.A., served as bankruptcy counsel. Thomas & Libowitz, P.A., served as the Debtor's special corporate counsel and conflicts counsel. Marc S. Seinsweig, at FTI Consulting, Inc., served as the Debtor's chief restructuring officer. Kurtzman Carson Consultants LLC acted as claims and noticing agent. Attorneys at Cooley Godward Kronish LLP and Bifferato LLC represented the official committee of unsecured creditors as counsel. In April 2010, the Court approved a liquidating Chapter 11 plan proposed by the company and the official creditor's committee. Under the Plan, unsecured creditors were to recover 4% to 14% of their claims. Ritz Camera disclosed $43,692,961 in assets and $49,147,316 in liabilities as of the Chapter 11 filing. The Debtors owe not less than $16.32 million for term and revolving loans provided by secured lenders led by Crystal Finance LLC, as administrative agent. Attorneys at Cole, Schotz, Meisel, Forman & Leonard, P.A., serve as bankruptcy counsel. Kurtzman Carson Consultants LLC is the claims agent. WeinsweigAdvisors LLC's Marc Weinsweig has been appointed as Ritz's CRO. Mark L. Desgrosseilliers, Esq., and Ericka F. Johnson, Esq., at Womble Carlyle Sandridge & Rice, LLP, represent liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC. Crystal Finance, the DIP lender, is represented by Morgan, Lewis & Bockius and Young Conaway Stargatt & Taylor LLP. Roberta A. DeAngelis, U.S. Trustee for Region 3, pursuant to Section 1102(a)(1) of the Bankruptcy Code, appointed six persons to Official Committee of Unsecured Creditors. RITZ CAMERA: Converting to Chapter 7 to Continue Lawsuits --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Chapter 11 reorganization of Ritz Camera & Image LLC was converted this week to liquidation in Chapter 7 where a trustee was appointed automatically. Once the operator of 265 camera stores and an Internet business, Ritz sold all the assets in going-out-of-business sales that ended in October. The company said the secured lender can't be paid in full until there is successful conclusion to "certain substantial and complex litigation claims" believed to have "very significant value." The company itself sought conversion to Chapter 7. About Ritz Camera Beltsville, Maryland-based Ritz Camera & Image LLC -- http://www.ritzcamera.com-- sold digital cameras and accessories, and electronic products. It sought Chapter 11 protection (Bankr. D. Del. Case No. 12-11868) on June 22, 2012, to close unprofitable stores. Ritz claims to be the largest camera and image chain the U.S., operating 265 camera stores in 34 states as well as an Internet business. When it filed for bankruptcy, Ritz Camera intended to shut 128 locations and cut its staff in half. Included in the closing are 10 locations in Maryland and 4 in Virginia. Affiliate Ritz Interactive Inc., owner e-commerce Web sites that include RitzCamera.com and BoatersWorld.com, also filed for bankruptcy. RCI's predecessor, Ritz Camera Centers, Inc., sought Chapter 11 protection (Bankr. D. Del. Case No. 09-10617) on Feb. 22, 2009. Ritz generated $40 million by selling all 129 Boater's World Marine Centers. A group that included the company's chief executive officer, David Ritz, formed Ritz Camera & Image to buy at least 163 of the remaining 375 camera stores. The group paid $16.25 million in cash and a $7.8 million note. Later, Ritz sold a $4 million account receivable for $1.5 million to an owner of the company that owed the debt. In the 2009 petition, Ritz disclosed total assets of $277 million and total debts of $172.1 million. Lawyers at Cole, Schotz, Meisel, Forman & Leonard, P.A., served as bankruptcy counsel. Thomas & Libowitz, P.A., served as the Debtor's special corporate counsel and conflicts counsel. Marc S. Seinsweig, at FTI Consulting, Inc., served as the Debtor's chief restructuring officer. Kurtzman Carson Consultants LLC acted as claims and noticing agent. Attorneys at Cooley Godward Kronish LLP and Bifferato LLC represented the official committee of unsecured creditors as counsel. In April 2010, the Court approved a liquidating Chapter 11 plan proposed by the company and the official creditor's committee. Under the Plan, unsecured creditors were to recover 4% to 14% of their claims. Ritz Camera disclosed $43,692,961 in assets and $49,147,316 in liabilities as of the Chapter 11 filing. The Debtors owe not less than $16.32 million for term and revolving loans provided by secured lenders led by Crystal Finance LLC, as administrative agent. Attorneys at Cole, Schotz, Meisel, Forman & Leonard, P.A., serve as bankruptcy counsel. Kurtzman Carson Consultants LLC is the claims agent. WeinsweigAdvisors LLC's Marc Weinsweig has been appointed as Ritz's CRO. Mark L. Desgrosseilliers, Esq., and Ericka F. Johnson, Esq., at Womble Carlyle Sandridge & Rice, LLP, represent liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC. Crystal Finance, the DIP lender, is represented by Morgan, Lewis & Bockius and Young Conaway Stargatt & Taylor LLP. Roberta A. DeAngelis, U.S. Trustee for Region 3, pursuant to Section 1102(a)(1) of the Bankruptcy Code, appointed six persons to Official Committee of Unsecured Creditors. RTW PROPERTIES: Selling Tank Farm to Pay Arvest Bank's Claim ------------------------------------------------------------ RTW Properties, Ltd., has a Chapter 11 plan of reorganization that proposes to resolve the claim of the Internal Revenue Service, sell the tank farm and pay the Arvest Bank claim in full and continue leasing the Schertz property. According to the explanaotory disclosure statement, the Debtor will continue to make regular debt payments to Wells Fargo Bank from the rental income from the Schertz property. The Debtor will pay any allowed IRS claim from the remaining proceeds from the sale of the tank farm. No unsecured claims have been filed with the Court other than the IRS claim. One Cypress Energy, LLC, signed a letter of intent to purchase the Debtor's interest, including the leases in the tank farm assets. If the sale of the tank farm does not close, the Debtor will continue to lease the tanks and storage facilities. Plan payments will be sourced from revenue generate through rental income or sales proceeds from the sale of the tank farm after Arvest Bank's claim is paid in full. Arvest holds a valid lien on the Debtor's interest in the tank farm and related equipment. Arvest, owed some $6.5 million according to the Debtor's schedules, will be paid from the sale proceeds of the tank farm. If the sale of the tank farm does not close from 120 days after the Effective Date of the Plan, the Debtor will pay, on the 121st day all accrued debt in cash, including interest, attorney fees and costs and the terms and conditions set out in the current loan documentation between Arvest and the Debtor will control the payment of the remainder of the Allowed Claim to Arvest. The lending arrangement with Wells Fargo will remain undisturbed. The Debtor continue to comply with the covenants in its guarantee and will continue to main all ad valorem taxes "current." Wells Fargo is not impaired. The scheduled amount of the secured claims of IRS (Class 5) is $21 million. The Debtor believes that the total IRS claims is $100,000 or less. The Debtor has initiated proceedings in the form of any objection under 11 U.S.C. Sec. 505 to liquidate this claim. The allowed claim will be paid from proceeds of the sale of the tank farm when liquidated. The Debtor disputes the Unsecured Claims of the IRS in Class 6 in the amount of approximately $10 million. The Debtor has disputed these claims and has objected to these claims. Holders of equity interests (Class 7) will retain their ownership interests in the Debtor. A copy of the disclosure statement is available at: http://bankrupt.com/misc/rtwproperties.doc138.pdf About RTW Properties Schertz, Texas-based RTW Properties, LP, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-20319) in Corpus Christi on June 18, 2012. RTW Properties owns a petroleum-storage facility in the Port of Brownville, Texas. The facility includes tanks with storage capacity of 230,000 barrels. The Debtor also owns a tract of land in Schertz, Texas. The Schertz property is being leased to an affiliate of the Debtor, Royal Manufacturing Co. The Debtor sought bankruptcy protection to resolve a dispuet with the Internal Revenue Service involving excise and other taxes related to the Debtor's tank farm operation. The IRS filed a proof of claim in the amount of $24,919,118.66. Langley & Banack, Inc., serves as the Debtor's bankruptcy counsel. William O. Grimsinger and Chamberlain Hrdlicka serve as special counsel to prosecute an adversary complaint in connection with the tax lien. William R. Mallory, member manager of Royal Holding, LLC, the general partner of the Debtor, explains in a court filing that before the petition date, the Internal Revenue Service asserted a federal tax lien in the amount of $22 million on account of unpaid excise taxes dating back to years as early as 2003. For years prior to the petition date, the Debtor has attempted to resolve the IRS tax lien to no avail. The Debtor believes that the Federal tax lien claimed by the IRS is overstated. The Debtor intends to resolve the tax lien through an adversary proceeding. S&W AIRCRAFT: Case Summary & 13 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: S&W Aircraft Leasing LLC 7402 Wentwood Dr Dallas, TX 75225 Bankruptcy Case No.: 13-30208 Chapter 11 Petition Date: January 16, 2013 Court: United States Bankruptcy Court Northern District of Texas (Dallas) Judge: Barbara J. Houser Debtor's Counsel: Penny Randy Schmidt 5656 Milton St., Ste 130 Dallas, TX 75206 Tel: (214) 912-5402 Scheduled Assets: $4,201,838 Scheduled Liabilities: $4,356,314 A list of the Company?s 13 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/txnb13-30208.pdf The petition was signed by Donal B. Schmidt, Jr., managing member. SANUWAVE HEALTH: David Nemelka Lowers Equity Stake to 19.9% ----------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, David N. Nemelka disclosed that, as of Dec. 31, 2012, he beneficially owns 5,048,510 shares of common stock of Sanuwave Health, Inc., representing 19.9% of the shares outstanding. Mr. Nemelka previously reported beneficial ownership of 5,958,033 common shares or a 23.5% equity stake as of Nov. 27, 2012. A copy of the amended filing is available for free at: http://is.gd/cup5H5 About SANUWAVE Health Alpharetta, Ga.-based SANUWAVE Health, Inc., is an emerging global regenerative medicine company focused on the development and commercialization of noninvasive, biological response activating devices for the repair and regeneration of tissue, musculoskeletal and vascular structures. BDO USA, LLP, in Atlanta, Georgia, expressed substantial doubt about SANUWAVE'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 is economically dependent upon future issuances of equity or other financing to fund ongoing operations. For the nine months ended Sept. 30, 2012, the Company reported a net loss of $4.70 million on $627,153 of revenue, compared with a net loss of $7.82 million on $577,180 of revenue for the same period a year ago. The Company's balance sheet at Sept. 30, 2012, showed $2.28 million in total assets, $7.80 million in total liabilities and a $5.52 million total stockholders' deficit. Bankruptcy Warning "The continuation of our business is dependent upon raising additional capital. We expect to devote substantial resources to continue our research and development efforts, including clinical trials. Because of the significant time it will take for our products to complete the clinical trial process, and for us to obtain approval from regulatory authorities and successfully commercialize our products, we will require substantial additional capital. We incurred a net loss of $4,707,212 for the nine months ended September 30, 2012 and a net loss of $10,238,797 for the year ended December 31, 2011. These operating losses create uncertainty about our ability to continue as a going concern. As of September 30, 2012, we had cash and cash equivalents of $361,263. We are working with select accredited investors to raise up to $1.25 million in capital in a private placement. The accredited investors will receive a convertible promissory note that will convert, at the Company?s option, at the completion of a larger funding which is expected to close no later than the first quarter of 2013. If these efforts are unsuccessful, we may be forced to seek relief through a filing under the U.S. Bankruptcy Code," the Company said in its quarterly report for the period ended Sept. 30, 2012. SATCON TECHNOLOGY: Fraser Milner Approved as Canadian Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Satcon Technology Corporation, et al., to employ the law firm of Fraser Milner Casgrain, LLP as Canadian counsel. About Satcon Technology Based in Boston, SatCon Technology Corporation (NasdaqCM: SATC) -- http://www.satcon.com/-- and its wholly owned subsidiaries provide utility-grade power conversion solutions for the renewable energy market, primarily for large-scale commercial and utility- scale solar photovoltaic markets. Satcon Technology Corporation, along with six related entities, filed Chapter 11 petitions (Bankr. D. Del. Case No. 12-12869) on Oct. 17, 2012. Satcon disclosed assets of $92.3 million and liabilities totaling $121.9 million. Liabilities include $13.5 million in secured debt owing to Silicon Valley Bank. There is another $6.5 million in secured subordinated debt. Unsecured liabilities include $16 million on subordinated notes. The Hon. Kevin Gross presides over the case. Dennis A. Meloro, Esq., at Greenberg Traurig serves as the Debtors' counsel. Fraser Milner Casgrain LLP acts as the general Canadian counsel. Lazard Middle Market LLC serves as the Debtors' financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors tapped to retain Holland & Knight LLP as its counsel, Sullivan Hazeltine Allinson LLC as its co-counsel SATCON TECHNOLOGY: Greenberg Traurig OK'd as Bankruptcy Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Satcon Technology Corporation, et al., to employ Greenberg Traurig, LLP as counsel. As reported in the Troubled Company Reporter on Nov. 15, 2012, the hourly rates of Greenberg Traurig's personnel are: Nancy A. Mitchell $955 Maria J. DiConza $810 Dennis A. Meloro $530 Burke Dunphy $480 Matthew L. Hinker $460 Sohyoung Ward $460 Shannon M. Thompson $320 Elizabeth Thomas, paralegal $245 Other attorneys and paralegals will render services to the Debtors as needed. Generally Greenberg Traurig's hourly rates are: Shareholders $350 - $1,100 Of Counsel $230 - $1,010 Associates $120 - $720 Legal Assistants/Paralegals $50 - $320 Prepetition, Greenberg Traurig received from the Debtors various advance retainers totaling $225,00. Greenberg Traurig does not hold any retainer for postpetition fees or expenses. To the best of the Debtors' knowledge, Greenberg Traurig is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About SatCon Technology Based in Boston, SatCon Technology Corporation (NasdaqCM: SATC) -- http://www.satcon.com/-- and its wholly owned subsidiaries provide utility-grade power conversion solutions for the renewable energy market, primarily for large-scale commercial and utility- scale solar photovoltaic markets. Satcon Technology Corporation, along with six related entities, filed Chapter 11 petitions (Bankr. D. Del. Case No. 12-12869) on Oct. 17, 2012. Satcon disclosed assets of $92.3 million and liabilities totaling $121.9 million. Liabilities include $13.5 million in secured debt owing to Silicon Valley Bank. There is another $6.5 million in secured subordinated debt. Unsecured liabilities include $16 million on subordinated notes. The Hon. Kevin Gross presides over the case. Dennis A. Meloro, Esq., at Greenberg Traurig serves as the Debtors' counsel. Fraser Milner Casgrain LLP acts as the general Canadian counsel. Lazard Middle Market LLC serves as the Debtors' financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors tapped to retain Holland & Knight LLP as its counsel, Sullivan Hazeltine Allinson LLC as its co-counsel SATCON TECHNOLOGY: OK'd to Pay $6.4MM Critical Vendors Claims ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized, on a final basis, Satcon Technology Corporation, et al., to pay all or a portion of each critical vendor claim that the aggregate payments will not exceed $6,400,000. About SatCon Technology Based in Boston, SatCon Technology Corporation (NasdaqCM: SATC) -- http://www.satcon.com/-- and its wholly owned subsidiaries provide utility-grade power conversion solutions for the renewable energy market, primarily for large-scale commercial and utility- scale solar photovoltaic markets. Satcon Technology Corporation, along with six related entities, filed Chapter 11 petitions (Bankr. D. Del. Case No. 12-12869) on Oct. 17, 2012. Satcon disclosed assets of $92.3 million and liabilities totaling $121.9 million. Liabilities include $13.5 million in secured debt owing to Silicon Valley Bank. There is another $6.5 million in secured subordinated debt. Unsecured liabilities include $16 million on subordinated notes. The Hon. Kevin Gross presides over the case. Dennis A. Meloro, Esq., at Greenberg Traurig serves as the Debtors' counsel. Fraser Milner Casgrain LLP acts as the general Canadian counsel. Lazard Middle Market LLC serves as the Debtors' financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors tapped to retain Holland & Knight LLP as its counsel, Sullivan Hazeltine Allinson LLC as its co-counsel SECUREALERT INC: Incurs $19.9 Million Net Loss in Fiscal 2012 ------------------------------------------------------------- SecureAlert, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss attributable to SecureAlert common stockholders of $19.93 million on $19.79 million of total revenues for the year ended Sept. 30, 2012, compared with a net loss attributable to SecureAlert common stockholders of $11.92 million on $17.96 million of total revenues during the prior fiscal year. SecureAlert's balance sheet at Sept. 30, 2012, showed $26.53 million in total assets, $22.10 million in total liabilities and $4.42 million in total equity. Hansen, Barnett & Maxwell, P.C., in Salt Lake City, Utah, issued a "going concern" qualification on the consolidated financial statements for the fiscal year ended Sept. 30, 2012, citing losses, negative cash flows from operating activities, notes payable in default and an accumulated deficit, which conditions raise substantial doubt about its ability to continue as a going concern. A copy of the Form 10-K is available for free at: http://is.gd/fOLKie About SecureAlert Inc. Sandy, Utah-based SecureAlert, Inc. (OTC BB: SCRA) -- http://www.securealert.com/-- is an international provider of electronic monitoring systems, case management and services widely utilized by more than 650 law enforcement agencies worldwide. SEARS HOLDINGS: Edward Lampert Buys 332,048 Add'l Common Shares --------------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Edward S. Lampert and his affiliates disclosed that, as of Jan. 9, 2013, they beneficially own 60,136,171 common shares of Sears Holdings Corporation representing 56.5% based upon 106,425,638 common shares outstanding as of Nov. 9, 2012, as disclosed in Holdings' quarterly report on Form 10-Q for the quarter ended Oct. 27, 2012. Holdings' Board of Directors appointed Mr. Lampert to serve as Chief Executive Officer of Holdings, effective as of the close of business on February 2. In open-market purchases on Jan. 9, 2013, and Jan. 10, 2013, Mr. Lampert acquired an aggregate of 332,048 shares of Holdings common stock for aggregate consideration of approximately $13,582,295 using personal funds. Mr. Lampert previously reported beneficial ownership of 59,804,123 common shares or a 56.2% equity stake as of Nov. 28, 2012. A copy of the amended filing is available for free at: http://is.gd/Su4uHh About Sears Hoffman Estates, Illinois-based Sears Holdings Corporation (Nasdaq: SHLD) -- http://www.searsholdings.com/-- operates full- line and specialty retail stores in the United States and Canada. Sears Holdings operates through its subsidiaries, including Sears, Roebuck and Co. and Kmart Corporation. Sears Holdings also owns a 94% stake in Sears Canada and an 80.1% stake in Orchard Supply Hardware. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has the Country Living collection, which is offered by Sears and Kmart. Kmart Corporation and 37 of its U.S. subsidiaries filed voluntary Chapter 11 petitions (Bankr. N.D. Ill. Lead Case No. 02-02474) on Jan. 22, 2002. Kmart emerged from chapter 11 protection on May 6, 2003, pursuant to the terms of an Amended Joint Plan of Reorganization. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. Kmart completed its merger with Sears on March 24, 2005. The Company's balance sheet at Oct. 27, 2012, showed $21.80 billion in total assets, $17.90 billion in total liabilities and $3.90 billion in total equity. Negative Outlook Standard & Poor's Ratings Services in January 2012 lowered its corporate credit rating on Hoffman Estates, Ill.-based Sears Holdings Corp. to 'CCC+' from 'B'. "We removed the rating from CreditWatch, where we had placed it with negative implications on Dec. 28, 2011. We are also lowering the short-term and commercial paper rating to 'C' from 'B-2'. The rating outlook is negative," S&P said. "The corporate credit rating reflects our projection that Sears' EBITDA will be negative in 2012, given our expectations for continued sales and margin pressure," said Standard & Poor's credit analyst Ana Lai. She added, "We further expect that liquidity could be constrained in 2013 absent a turnaround or substantial asset sales to fund operating losses." Moody's Investors Service in January 2012 lowered Sears Holdings Family and Probability of Default Ratings to B3 from B1. The outlook remains negative. At the same time Moody's affirmed Sears' Speculative Grade Liquidity Rating at SGL-2. The rating action reflects Moody's expectations that Sears will report a significant operating loss in fiscal 2011. Moody's added that the rating action also reflects the company's persistent negative trends in sales, which continue to significantly underperform peers. As reported by the TCR on Dec. 7, 2012, Fitch Ratings has affirmed its long-term Issuer Default Ratings (IDR) on Sears Holdings Corporation (Holdings) and its various subsidiary entities (collectively, Sears) at 'CCC' citing that The magnitude of Sears' decline in profitability and lack of visibility to turn operations around remains a major concern. SHERIDAN GROUP: Has Access to $10MM BOA Facility After Oct. 15 -------------------------------------------------------------- The Sheridan Group, Inc., and Bank of America, N. A., entered into the Third Amendment to Third Amended and Restated Credit Agreement to provide for the Company to have access to $10,000,000 of availability under the facility after the current scheduled maturity date of Oct. 15, 2013, and until the new scheduled maturity date of Jan. 14, 2014. A copy of the amended Credit Agreement is available at http://is.gd/WxQmtQ About The Sheridan Group Hunt Valley, Maryland-based The Sheridan Group, Inc. -- http://www.sheridan.com/-- is a specialty printer offering a full range of printing and value-added support services for the journal, catalog, magazine and book markets. The Company reported a net loss of $8.96 million in 2011, compared with a net loss of $5.94 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $206.51 million in total assets, $177.24 million in total liabilities, and $29.27 million in total stockholders' equity. * * * As reported by the TCR on Sept. 16, 2011, Standard & Poor's Ratings Services lowered its corporate credit rating on Hunt Valley, Md.-based printing company The Sheridan Group Inc. to 'CCC+' from 'B-'. "The 'CCC+' corporate credit rating reflects Sheridan's ongoing thin margin of compliance with its minimum EBITDA covenant," said Standard & Poor's credit analyst Tulip Lim. "It also reflects our expectation of continued difficult operating conditions across the company's niche printing segments, its vulnerability to prevailing economic pressures, its high debt leverage, and the secular shift away from print media." In the Dec. 14, 2012, edition of the TCR, Moody's Investors Service downgraded the Corporate Family Rating (CFR) for The Sheridan Group, Inc. (Sheridan) to Caa1 from B3. Sheridan's Caa1 CFR reflects risks that the intense secular challenges facing the printing industry will compromise refinance activities as the company addresses its upcoming maturities, including the $15 million revolving working capital facility due October 2013 and the $128 million senior secured notes in April 2014. SOUTHERN MONTANA: Valuation Consultant Now Known as Harper Hofer ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Montana approved the supplemental motion of Lee A. Freeman, the duly appointed and acting Chapter 11 trustee for Southern Montana Electric Generation and Transmission Cooperative, Inc., to employ Harper Hofer and Associates, LLC, as valuation consultant. According to the trustee, on May 3, 2012, the Court authorized the employment of valuation firm Harper Lutz Zuber Hofer and Associates as valuation consultant, and on June 8, Harper Lutz Zuber Hofer and Associates changed its name to Harper Hofer and Associates, LLC. The trustee stated, among other things, "[t]he name change does not substantively impact any of the statements in the firm's retention application or affidavit in support thereof, and the trustee intends to treat the Court-approved retention letter as applying to the renamed firm." As reported in the Troubled Company Reporter on May 14, 2012, Harper Lutz is expected to provide valuation consultation services, including those related to (i) opining on the values of the Debtor's wholesale power contracts with its members; and (ii) serving as a consulting expert on valuation issues related to the Contracts. The trustee may also use the firm for litigation support; if so, the trustee will separately move to expand the scope of the firm's retention. About Southern Montana Electric Based in Billings, Montana, Southern Montana Electric Generation and Transmission Cooperative, Inc., was formed to serve five other electric cooperatives. The city of Great Falls later joined as the sixth member. Including the city, the co-op serves a population of 122,000. In addition to Great Falls, the service area includes suburbs of Billings, Montana. Southern Montana filed for Chapter 11 bankruptcy (Bankr. D. Mont. Case No. 11-62031) on Oct. 21, 2011. Southern Montana estimated assets of $100 million to $500 million and estimated debts of $100 million to $500 million. Timothy Gregori signed the petition as general manager. Malcolm H. Goodrich, Esq., at Goodrich Law Firm, P.C., in Billings, Montana, serves as the Debtor's counsel. After filing for reorganization in October, the co-op agreed to a request for appointment of a Chapter 11 trustee. Lee A. Freeman was appointed as the Chapter 11 trustee in December 2011. He is represented by Joseph V. Womack, Esq., at Waller & Womack, and John Cardinal Parks, Esq., Bart B. Burnett, Esq., Robert M. Horowitz, Esq., and Kevin S. Neiman, Esq., at Horowitz & Burnett, P.C. SUGARLEAF TIMBER: Andrew Brumby Appointed as Mediator ----------------------------------------------------- The Hon. Paul M. Glenn The U.S. Bankruptcy Court for the Middle District of Florida appointed Andrew Brumby, Esq., to serve as mediator in the Chapter 11 case of Sugarleaf Timber LLC. Pursuant to an agreed order directing mediation and appointing mediator, these persons and parties agreed to participate in mediation as to the matters scheduled in the case on Jan. 10-11, 2012: the Debtor, Farm Credit of Florida, ACA; AgFirst Farm Credit Bank; Federal agricultural Mortgage Corporationg, also known as Farmer Mac; Gary A. Miller; Richard A. Miller; Frank E. Miller; A.J. Johns; Lawrence R. Towers; and Avery C. Roberts. Mr Brumby's compensation is $440/hour. Payment for the mediation will be allocated equally between the parties -- 33% to be paid by the Farm credit entities, 33% to be paid by the Debtor and 33% to be paid by the individual guarantors. About Sugarleaf Timber Sugarleaf Timber, LLC, in Jacksonville, Florida, is in the business of purchasing, developing, and reselling real property in Northeast Florida. The Company filed for Chapter 11 bankruptcy (Bankr. M.D. Fla. Case No. 11-03352) on May 8, 2011. Chief Bankruptcy Judge Paul M. Glenn presides over the case. Robert D. Wilcox, Esq., at Brennan, Manna & Diamond, P.L., in Jacksonville, Fla., serves as the Debtor's bankruptcy counsel. In its schedules, the Debtor disclosed assets of $31,016,486 and liabilities of $26,781,079. The petition was signed by Victoria D. Towers, manager of Diversified Investments of Jacksonville LLC, which serves as manager to the Debtor. The Debtor's plan that was filed in October 2011 provides for the delivery of a portion of the Debtor's properties which are subject to Farm Credit's liens, which delivery the Debtor asserts will provide the "indubitable equivalent" of Farm Credit's secured claim. Management of the reorganized Debtor will remain the same after the bankruptcy exit. Counsel for Farm Credit has opposed the Plan, citing that the Plan is a partial "dirt for debt" plan seeking to force Farm Credit to receive a portion of its real property in full satisfaction of approximately $27,400,000 in secured claims while the Debtor retains approximately 622 acres of real property collateral which Farm Credit is forced to release under the Plan. An Official Committee of Unsecured Creditors has not been appointed. Additionally, no trustee or examiner has been appointed. SUNY DOWNSTATE MEDICAL: Facing Liquidity Crunch ----------------------------------------------- Gale Scott, writing for Crain's New York Business, reports the State University of New York Downstate Medical Center has been losing $3 million a week and could run out of cash by May, according to an audit released Thursday by State Comptroller Thomas DiNapoli. The report relates the medical center's president, Dr. John Williams, and the auditors agreed that the financial problems are due in part to the system's acquisition of money-losing Long Island College Hospital, a drop in hospital-bed occupancy amid reductions in state and federal aid, and an increase in the cost of labor and pension plans. But the auditors blamed part of the problem on bad decisions by prior hospital management. According to Crain's, the auditors noted that in June 2011 the state advanced the ailing system $75 million. The medical center spent that money in four months. It continues to hemorrhage cash. The hospital's operating loss for the six months ended June 30, 2012, was $113.5 million, the audit said. Losses for 2012 could exceed $200 million. Operating and non-operating losses for 2011 were $275.8 million. The auditors called the financial outlook "very bleak." Downstate is the fourth largest employer in Brooklyn, with 8,000 employees, Crain's says. SYNTAX-BRILLIAN: Del. Court Won't Reinstate Suit Against Bank ------------------------------------------------------------- Bankruptcy Judge Brendan Linehan Shannon denied the request of SB Liquidation Trust, successor-in-interest to Syntax-Brillian Corporation and its affiliated debtors, to reinstate a lawsuit against Preferred Bank. Syntax in November 2004entered into a loan agreement with the Bank for $3.75 million. The Bank provided letters of credit and trust receipts to finance Syntax's acquisition of imported inventory from Taiwan Kolin Company. The Trust initiated adversary proceeding against the Bank to recover damages allegedly owed to the Debtors. In its Complaint, the Trust alleged that the Bank aided and abetted the Debtors' officers and directors in breaching their fiduciary duties and perpetuating fraud. Further, the Complaint alleged avoidance actions for purportedly fraudulent transfers received by the Bank. The Bank won dismissal of the complaint pursuant to an Order and Opinion dated July 25, 2011. The Trust moved for relief from the dismissal order, arguing that newly discovered evidence warrants relief under Fed.R.Civ.P. Rules 60(b)(2) and 60(b)(6). Through an investigation by the Securities and Exchange Commission, and statements from Brian Pak, a graphics designer at SBC, whose full involvement in the fraud was not previously known to the Trust, the Trust discovered that SBC sold its HD TVs at a loss, i.e., it was under-cost selling, which caused significant losses. Because of the under-cost selling, the Trust said it now understands the true extent and nature of the fraud perpetuated by the Insiders. The Trust also argues that the Court should grant leave to amend its complaint to incorporate the newly discovered evidence. However, the Bank argues the Bankruptcy Court lacks jurisdiction because the Plaintiff timely appealed the dismissal order. The Bank also argues that the Trust's Motion fails to satisfy the requirements of both Rules 60(b)(2) and 60(b)(6). Judge Shannon agrees with the Bank. The judge also held that the Trust fails to show that the "new evidence" would have changed the result of the lawsuit. The Trust's new information stems from the SEC investigation and complaint. The SEC's complaint does not mention the Bank nor does it implicate the Bank in any wrongdoing. The statements made by Brian Pak led the Trust to understand the mechanics of the fraud in greater detail, but this new understanding fails to implicate the Bank in any new way. The case is, SB Liquidation Trust, Plaintiff, v. Preferred Bank, Defendant, Adv. Proc. No. 10-51389 (Bankr. D. Del.). A copy of the Court's Jan. 15, 2013 is available at http://is.gd/pC9eRsfrom Leagle.com. About Syntax-Brillian Based in Tempe, Arizona, Syntax-Brillian Corporation manufactured and marketed LCD HDTVs, digital cameras, and consumer electronics products including Olevia(TM) brand high-definition widescreen LCD televisions and Vivitar brand digital still and video cameras. Syntax-Brillian was the sole shareholder of California-based Vivitar Corporation. The Company and two of its affiliates -- Syntax-Brillian SPE, Inc., and Syntax Groups Corp. -- filed for Chapter 11 protection on July 8, 2008 (Bankr. D. Del. Lead Case No.08-11407. Lawyers at Greenberg Traurig LLP represented the Debtors as counsel. Five members composed the official committee of unsecured creditors. Pepper Hamilton, LLP, represented the Committee as counsel. Epiq Bankruptcy Solutions, LLC, served as the Debtors' balloting, notice, and claims agent. When the Debtors filed for protection against their creditors, they disclosed total assets of $175,714,000 and total debts of $259,389,000. The Bankruptcy Court confirmed the Debtors' Joint Chapter 11 Liquidation Plan in an order dated July 6, 2009. Under the Plan, general unsecured claims were to received pro rata distributions from a liquidating trust after payment of the trust's expenses and a "liquidating trust funding reimbursement." Holders of allowed prepetition credit facility claims were to receive their pro rata distributions from a lender trust, after payment in full of allowed DIP facility claims. A full-text copy of the Debtors' 2nd amended Chapter 11 liquidating plan is available at: http://bankrupt.com/misc/syntax-brillian2ndamendedplan.pdf The SB Liquidation Trust is represented by David M. Fournier, Esq., and Evelyn J. Meltzer, Esq., at Pepper Hamilton LLP; and Allan B. Diamond, Esq., Andrea L. Kim, Esq., Eric D. Madden, Esq., and Michael J. Yoder, Esq., at Diamond McCarthy LLP. TELETOUCH COMMUNICATIONS: Delays Form 10-Q for Nov. 30 Quarter -------------------------------------------------------------- Teletouch Communications, Inc.'s quarterly report on Form 10-Q for the fiscal quarter ended Nov. 30, 2012, was not filed within the prescribed time period because the Company requires additional time to finalize the Quarterly Report and the financial statements included therein. As previously disclosed, the Company has been engaged and is currently in the process of renegotiating the terms of its debt facility and, therefore, the Company was unable to complete the Quarterly Report without unreasonable effort or expense. The Company expects that the Quarterly Report will be filed within the 5-day time frame allowed by the extension. The Company expects to report a net loss from continuing operations of $376,000 for the quarter ended Nov. 30, 2012, comared with net income from continuing operations of $7.81 million for the same period a year ago. The Company also estimated a net loss from continuing operation sof $487,000 for the six months ended Nov. 30, 2012, compared with net income from continuing operations of $7.10 million for the same period during the prior year. A copy of the regulatory filing is available for free at: http://is.gd/J5wSX0 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. TESORO CORP: Moody's Assigns 'Ba1' Rating to $500-Mil. Term Loan ---------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Tesoro Corporation's (TSO) proposed $500 million term loan credit facility. At the same time, Moody's affirmed TSO's Ba1 Corporate Family Rating, placed on review for downgrade TSO's Ba1 rated senior unsecured notes and its Baa2 rated secured revolving bank credit facility. Moody's upgraded TSO's Speculative Grade Liquidity (SGL) rating to SGL-2 from SGL-3. Proceeds from the proposed $500 million term loan will be used to partially finance the pending acquisition of BP p.l.c.'s Carson refinery and related marketing and logistics assets for $1.075 billion plus working capital (estimated at roughly $1.3 billion). The acquisition is expected to close before mid-2013, subject to regulatory approvals. Issuer: Tesoro Corporation Assignments: US$500M Senior Secured Bank Credit Facility, Assigned Ba1 US$500M Senior Secured Bank Credit Facility, Assigned a range of LGD3, 48 % Upgrades: Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3 On Review for Possible Downgrade: US$1850M Senior Secured Bank Credit Facility, Placed on Review for Possible Downgrade, currently Baa2 US$300M 9.75% Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Ba1 US$450M 4.25% Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Ba1 US$475M 5.375% Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Ba1 Ratings Rationale The Ba1 rating on TSO's proposed $500 million secured term loan reflects both the overall probability of default of TSO, to which Moody's assigns a Probability of Default Rating of Ba1-PD, and a loss given default of LGD 3 (48%). The proposed term loan is secured by a first lien in the equity of Tesoro Refining & Marketing Company LLC and Tesoro Alaska Company and a first lien in Tesoro and USA Gasoline trademarks and all trademarks to be acquired in the pending Carson acquisition. The term loan also benefits from a second lien in the collateral security of TSO's revolving bank credit facility, which includes substantially all of TSO's crude oil and refined product inventories plus the cash and receivables of its active domestic subsidiaries. The review for downgrade of the Ba1 rated senior unsecured notes reflects the expected increase in secured debt in TSO's capital structure relative to unsecured debt. At closing of the Carson acquisition, Moody's expects to downgrade the Ba1 rated senior unsecured notes one notch to Ba2. The review for downgrade of the Baa2 rated secured revolving bank credit facility reflects the expected increase in the revolver's size at closing of the Carson acquisition relative to the size of more junior claims in TSO's capital structure. At closing of the Caron acquisition and depending on the level of expected drawings on the revolver, Moody's may downgrade TSO's secured revolving credit facility to Baa3. The SGL-2 rating reflects a good liquidity profile, based on TSO healthy cash balances and cash flow from operations. In addition, assuming the successful close of the $500 million term loan, TSO will have secured all financing needed in order to close the Carson acquisition. As of September 30, 2012, TSO had about $1.4 billion in cash and there were no borrowings under its $1.85 billion secured borrowing base credit facility due January 4, 2018. The revolver will increase to $3 billion once TSO receives regulatory approval for Carson, and then will have two automatic step downs of $500 million within 18 months of this date and an additional $500 million within 24 months of this date. After about $1 billion in outstanding letters of credit, availability under the credit facility was $850 million with a borrowing base of $3.0 billion. Availability under the facility is tied to cash, accounts receivable and inventory valuations, and covenant clearance on minimum fixed charge coverage and tangible net worth is sound. TSO has only $2 million of long term debt maturing in 2013. TSO is ramping up its growth capital, and Moody's estimates that Tesoro's capital budget will exceed $600 million in 2013. In addition, the company has a $500 million share buyback program and an ongoing dividend. An additional source of liquidity in 2013 will come from the winding down of working capital at its Hawaii refinery, which is in the process of being shut down and converted to a terminal. The rating affirmation of TSO's Ba1 Corporate Family Rating reflects its reasonably large and diversified refining portfolio concentrated in the Western US, and an adequate capital structure and liquidity profile relative to both its ratings and the inherent cyclicality and volatility in the refining sector. The ratings continue to be constrained both by an oversupplied and weak US gasoline market, significant crude distillation concentration in California, where TSO faces an increasingly prohibitive regulatory environment and relatively weak demand, and management's degree of shareholder return focus. The pending Carson acquisition will bring significant scale and strategic benefits to TSO's refining, marketing and logistics businesses including increased operational efficiencies and synergies expected from combining the operations of the Wilmington and Carson refining and marketing businesses, which combined will represent the largest refinery in the West Coast; the relatively more stable cash flows provided by the logistics and retail components of the acquisition; and a reasonable purchase price. These positive factors help mitigate TSO's increased earnings and cash flow exposure to the California refining market. In addition, TSO has been successful in maintaining large cash balances since the Carson acquisition was announced in August of 2012. As such, the level of debt financing of the Carson acquisition appears to be reasonable for TSO's Ba1 Corporate Family Rating, which would support the return of the rating outlook to stable at closing of the acquisition. The Carson acquisition is expected to initially financed with a combination of cash already on the balance sheet and secured debt (including drawings under TSO's revolving credit facility). During the first year post closing, management anticipates dropping down around $1 billion of the purchased assets to its MLP, Tesoro Logistics LP (Ba3 stable) in order to permanently finance the transaction. Nevertheless, the ultimate degree of debt financing will largely be dependent on TSO's cash balances at closing and Tesoro Logistics' level of equity financing of drop downs, which faces a degree of execution risk. The principal methodology used in rating Tesoro was the Global Refining and Marketing Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Tesoro Corporation is headquartered in San Antonio, Texas. TESORO CORP: S&P Assigns 'BB+' Corporate Credit Rating ------------------------------------------------------ Standard & Poor's Ratings Services said that it assigned its 'BBB-' issue rating and '2' recovery rating to San Antonio, Texas- based Tesoro Corp.'s proposed $500 million term loan B that will mature in 2016. The company intends to use net proceeds from the offering to finance the purchase of British Petroleum's integrated Southern California refining and marketing business and for general corporate purposes. The term loan will be secured by a perfected security interest in all equity interests of certain subsidiaries and certain trademarks owned and acquired by the borrower and a second priority interest in other tangible and intangible assets. The rating reflects the consolidated credit quality of Tesoro and its operating subsidiaries, its "fair" business risk profile, and "significant" financial risk profile. The issue rating is one notch above the corporate credit rating given the collateral package. S&P expects "substantial" recovery on the debt in case of a payment default. Currently, Tesoro Corp. has about $1.3 billion in debt outstanding. In 2013, S&P expects Tesoro's debt/EBITDA to be roughly at 1.5x to 2x, and for the company to maintain adequate liquidity. RATINGS LIST Tesoro Corp. Corp. credit rating BB+/Stable/-- New Rating Proposed $500 mil term loan B BBB- Recovery rating 2 THQ INC: Gibson, Young Conaway Hiring Approvals Sought ------------------------------------------------------ BankruptcyData reported that THQ Inc. filed with the U.S. Bankruptcy Court motion to retain Gibson, Dunn & Crutcher as counsel at hourly rates ranging from $555 to 995 and Young Conaway Stargatt & Taylor, as attorney at the following hourly rates: attorney at $285 to 975 and paralegal at $80 to 250. Meanwhile, Stephanie Gleason at Dow Jones' DBR Small Cap reports that THQ Inc. is requesting bankruptcy-court permission to use a $1.5 million trust fund, set up in 2005 as an employment benefit for management-level employees, to instead be used to pay its creditors. 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. TPC GROUP: $100MM Add-On Notes No Impact on Moody's 'B2' CFR ------------------------------------------------------------ Moody's Investors Service said that TPC Group's (TPC, B2, Stable outlook) B2 Corporate Family Rating (CFR) and the B3 rating on the 8.75% Senior Secured Notes due 2020 are not affected by the $100 million add-on to the notes issue. The following summarizes the ratings: TPC Group Inc. Corporate Family Rating -- B2 Probability of Default Rating -- B2-PD $755mm 8.75% Senior Secured Notes due 2020 -- B3 (LGD4, 61%) from B3 (LGD4, 63%) Outlook - Stable Ratings Rationale The principal methodology used in rating TPC was the Global Chemical Industry Methodology, published in December 2009. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published June 2009. TPC is a processor of crude C4 hydrocarbons (primarily butadiene, butene-1, isobutylene), differentiated isobutylene derivatives and nonene and tetramer. For its product lines, TPC is either the largest or second largest independent North American producer. The company operates three Texas-based manufacturing facilities in Houston, Baytown and Port Neches. Revenues were $2.4 billion for the twelve months ended September 30, 2012. TPC GROUP: S&P Keeps 'B' Rating over New $100MM Add-On Notes ------------------------------------------------------------ Standard & Poor's Ratings Services updated its recovery analysis on Houston, Texas-based TPC Group Inc. to reflect the company's proposed $100 million add-on to its existing $655 million senior secured notes. S&P has maintained its 'B' issue-level rating and '4' recovery rating on the senior secured notes, indicating its expectation of average (30% to 50%) recovery in the event of a payment default. "We expect that the proceeds from the add-on offering will be used to pre-fund capital spending associated with the restart of one of the company's idle dehydrogenation units, which will produce on- purpose isobutylene. All of our other existing ratings on the company, including the 'B' corporate credit rating, remain unchanged. The outlook is stable," S&P said. The ratings on TPC Group reflect its narrow product range of commodity compounds, limited customer and geographic diversity, cyclicality in its key markets, modest EBITDA margins, and very aggressive financial policies. These risk factors are partially offset by the company's favorable competitive position and S&P's expectation that butadiene will remain structurally short over the next few years due to the shift toward light cracking. Standard & Poor's characterizes TPC Group's business risk as "weak" and its financial risk as "highly leveraged." RATINGS LIST TPC Group Inc. Corporate Credit Rating B/Stable/-- Ratings Affirmed TPC Group Inc. Senior Secured B Recovery Rating 4 TRIBUNE COMPANY: Elects Bruce Karsh as Board Chairman ----------------------------------------------------- Tribune Company on Jan. 17 disclosed that its Board of Directors has elected Bruce Karsh as Chairman of the Board and Peter Liguori as Chief Executive Officer. The appointments are effective immediately. The company also announced that former Chief Executive Officer Eddy Hartenstein will continue to serve as Publisher of the Los Angeles Times and CEO of the Los Angeles Times Media Group, and will act as special advisor to the Office of the CEO. "The Board is very optimistic about Tribune's future," said Mr. Karsh. "The company is well-positioned across its markets and now has a strong balance sheet, significant liquidity and low debt, so there is a lot of opportunity ahead." Since 1995, Mr. Karsh has served as President and co-founder of Oaktree Capital Management, L.P., formerly Oaktree Capital Management, LLC, a Los Angeles-based investment management firm. Prior to co-founding Oaktree, Karsh was a Managing Director of the TCW Group and the portfolio manager of its Special Credits Funds for seven years. "Peter is the ideal choice to be Tribune's next Chief Executive Officer," said Mr. Karsh. "He has the talent and experience to lead the company forward, and has a track record of success. The Board has every confidence in him." Mr. Liguori most recently served as Chief Operating Officer of Discovery Communications. Before joining Discovery in 2009, he served as Chairman of Entertainment for the Fox Broadcasting Company. Prior to assuming that position in 2005, Mr. Liguori was president and CEO of News Corp.'s FX Networks since 1998. "Tribune is a great company with an incredible collection of media assets, iconic brands in major markets across the country, tremendous journalism, and very talented people," said Mr. Liguori. "Collectively, the company's digital operations, broadcast outlets and newspapers are some of the best in the country. In many ways, Tribune is like a 165-year old start-up-- there is a lot to build upon." Mr. Liguori and the Board of Directors also thanked Mr. Hartenstein for his leadership of the company during its recently completed Chapter 11 process. "Tribune was fortunate to have Eddy guiding it through bankruptcy- -his commitment to keeping operations on track, the businesses focused and employees energized, was exactly what the company needed," said Mr. Karsh. "I am very pleased that Eddy will be staying with Tribune and The Times." Mr. Hartenstein said, "I'm pleased that the Chapter 11 process is complete and we can all turn our full attention to growing our business and making this company as successful as possible." About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8, 2008. The Debtors proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North America LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Chadbourne & Parke LLP and Landis Rath LLP serve as co-counsel to the Official Committee of Unsecured Creditors. AlixPartners LLP is the Committee's financial advisor. Landis Rath Moelis & Company serves as the Committee's investment banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, represents the Committee in connection with the lawsuit filed against former officers and shareholders for the 2007 LBO of Tribune. Protracted negotiations and mediation efforts and numerous proposed plans of reorganization filed by Tribune Co. and competing creditor groups have delayed Tribune's emergence from bankruptcy. Many of the disputes among creditors center on the 2007 leveraged buyout fraudulence conveyance claims, the resolution of which is a key issue in the bankruptcy case. The bankruptcy court has scheduled a May 16 hearing on Tribune's plan. Judge Kevin J. Carey issued an order dated July 13, 2012, overruling objections to the confirmation of Tribune Co. and its debtor affiliates' Plan of Reorganization. In November 2012, Tribune received approval from the Federal Communications Commission to transfer media licenses, one of the hurdles to implementing the reorganization plan. Aurelius Capital Management LP failed in halting implementation of the plan pending appeal. Tribune Co. exited Chapter 11 protection Dec. 31, 2012, ending four years of reorganization. The reorganization allowed a group of banks and hedge funds, including Oaktree Capital Management and JPMorgan Chase & Co., to take over the media company. TRIBUNE CO: To Drop Clawback Lawsuits Against Many Top Executives ----------------------------------------------------------------- Peg Brickley at Daily Bankruptcy Review reports that just out of bankruptcy, Tribune Co. intends to drop the bulk of some 170 lawsuits that targeted senior media executives who cashed in on the going-private deal that ruined the company's finances. The in-court announcement came as Tribune moved to take control of part of the flood of litigation touched off by its 2008 collapse into Chapter 11, which happened less than a year after a leveraged buyout, according to the report. The report relates that lawsuits will continue against upper- echelon executives such as former Chief Executive Dennis FitzSimons, who pocketed $47 million out of the deal, court papers say. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8, 2008. The Debtors proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North America LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Chadbourne & Parke LLP and Landis Rath LLP serve as co-counsel to the Official Committee of Unsecured Creditors. AlixPartners LLP is the Committee's financial advisor. Landis Rath Moelis & Company serves as the Committee's investment banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, represents the Committee in connection with the lawsuit filed against former officers and shareholders for the 2007 LBO of Tribune. Protracted negotiations and mediation efforts and numerous proposed plans of reorganization filed by Tribune Co. and competing creditor groups have delayed Tribune's emergence from bankruptcy. Many of the disputes among creditors center on the 2007 leveraged buyout fraudulence conveyance claims, the resolution of which is a key issue in the bankruptcy case. The bankruptcy court has scheduled a May 16 hearing on Tribune's plan. Judge Kevin J. Carey issued an order dated July 13, 2012, overruling objections to the confirmation of Tribune Co. and its debtor affiliates' Plan of Reorganization. In November 2012, Tribune received approval from the Federal Communications Commission to transfer media licenses, one of the hurdles to implementing the reorganization plan. Aurelius Capital Management LP failed in halting implementation of the plan pending appeal. Tribune Co. exited Chapter 11 protection Dec. 31, 2012, ending four years of reorganization. The reorganization allowed a group of banks and hedge funds, including Oaktree Capital Management and JPMorgan Chase & Co., to take over the media company. TWG CAPITAL: Wins Extension to File Creditor-Payment Plan --------------------------------------------------------- Patrick Fitzgerald at Dow Jones' DBR Small Cap reports that Indianapolis insurance finance firm TWG Capital Inc. won a 90-day extension of its sole control of its Chapter 11 case while it works to close the sale of its assets. TWG Capital filed a Chapter 11 petition (Bankr. S.D. Ind. Case No. 12-11019) on Sept. 14, 2012. Attorneys at Faegre Baker Daniels LLP, in Indianapolis, serve as counsel to the Debtor. The Debtor estimated less than $1 million in assets and at least $1 million in liabilities. UNIFRAX I: Moody's Affirms B2 CFR; Rates Sr. Unsec. Notes Caa1 -------------------------------------------------------------- Moody's Investors Service affirmed heat-resistant ceramic fiber products company Unifrax I LLC's B2 Corporate Family Rating ("CFR") with a stable outlook. At the same time, Moody's assigned Ba3 ratings to the company's proposed $450 million first lien senior secured bank credit facilities and a Caa1 rating to its proposed $250 million senior unsecured notes. Unifrax plans to apply the proceeds from the new unsecured notes to repay about $125 million of existing senior secured debt, fund a business acquisition, and pay related fees and expenses. "The proposed transactions stretch the boundaries of the B2 CFR, but we believe Unifrax will be able to expand cash flow generation and reduce leverage to more comfortable levels over the next several quarters. Improved liquidity as a result of the transaction helps offset the expected temporary increase in leverage," said Moody's analyst Ben Nelson. The transaction will cause Debt/EBITDA to rise to the mid 5 times area on a pro forma basis from about 5 times for the twelve months ended September 30, 2012. Leverage would be higher than the 5 times expected for the B2 rating, but only temporarily as the rating assumes the company will grow EBITDA and/or apply excess cash flow to repay debt. The acquisition would increase scale, add new product categories, and is expected to be accretive to free cash flow. The new financing would improve liquidity by increasing balance sheet cash, repaying all revolver borrowings, and eliminating financial maintenance covenants. These positive factors offset the temporary increase in leverage and integration risk related to the acquisition, and drives the affirmation of the B2 CFR. Moody's continues to expect a difficult macroeconomic environment will challenge Unifrax to achieve organic earnings growth. However, interest coverage remains solid for the rating category and much of the company's capital spending is discretionary. Free cash flow should improve with a reduction in capital spending following the completion of major capital projects related to the Saffil acquisition and with the addition of incremental cash flow from the acquired business. The actions: Issuer: Unifrax I LLC Corporate Family Rating, Affirmed B2 Probability of Default Rating, Upgraded to B2-PD from B3-PD Proposed $50 million First Lien Senior Secured Revolving Credit Facility, Assigned Ba3 (LGD2, 28%) Proposed $400 million First Lien Senior Secured Term Loan B, Assigned Ba3 (LGD2, 28%) Proposed $250 million Senior Unsecured Notes Due 2019, Assigned Caa1 (LGD5, 83%) Outlook, Stable The B2 ratings on the existing senior secured credit facilities will be withdrawn following the completion of the proposed transactions and full repayment of these obligations. The ratings are subject to Moody's review of the final terms and conditions of the proposed transactions. Ratings Rationale The B2 CFR is constrained by modest size, a narrow product line of ceramic fiber products, and exposure to cyclical automotive and industrial end markets. The rating acknowledges cyclical end market characteristics and incorporates some tolerance for variation in earnings, but incorporates expectations for relatively stable profit margins through economic cycles. The rating benefits from high margins, strong market positions, broad customer base, and operational and geographic diversity. Good liquidity also supports the rating. The stable rating outlook anticipates improved free cash flow and that the company will maintain a good liquidity position. Moody's could downgrade the rating with adverse developments with respect to the company's operations or end markets, expectations for leverage sustained above 5 times, marginal or negative free cash flow generation, or deterioration in the company's liquidity position. Conversely, Moody's could upgrade the rating with expectations for leverage below 4 times and retained cash flow to debt above 10% on a sustained basis. An upgrade likely would require a commitment to more conservative financial policies. The principal methodology used in this rating was the Global Chemical Industry published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. Unifrax I LLC produces heat-resistant ceramic fiber products for a variety of industrial applications. Private equity firm American Securities acquired the company in a secondary leveraged buyout transaction from private equity firm AEA Investors in late 2011. Headquartered in Niagara Falls, New York, the company generated revenues of approximately $437 million for the twelve months ended September 30, 2012 on a pro forma basis for the Saffil acquisition of October 31, 2011. UNIFRAX HOLDING: S&P Affirms 'B' Corporate Credit Rating -------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its 'B' corporate credit rating (CCR) on Niagara Falls, N.Y.-based Unifrax Holding Co. (Unifrax). At the same time, S&P assigned a 'BB-' issue-level rating (two notches higher than the CCR) to the company's proposed new first-lien debt, which includes a $50 million revolver and a $400 million term loan. The recovery rating is '1', indicating S&P's expectation of very high (90%- 100%) recovery in a payment default scenario. S&P also assigned a 'B-' issue-level rating (one notch below the CCR) to the company's proposed $250 million senior unsecured notes. The recovery rating on this debt is '5', indicating S&P's expectation of modest (10%- 30%) recovery in a payment default scenario. Unifrax I LLC will be the borrower under the term loan and revolving credit facility, and will issue the senior unsecured notes. Unifrax UK Holdco Ltd., Unifrax Ltd., and Unifrax GMBH will be co-borrowers under the revolving credit facility. S&P expects the company to use proceeds from the new facility and notes to redeem all outstanding debt under its existing credit facilities and to fund the acquisition of a specialty fiber producer. The outlook is stable. Standard & Poor's ratings on Niagara Falls, N.Y.-based thermal management and insulation solutions provider Unifrax Holding Co. reflect S&P's assessment of the company's "weak" business risk profile and "highly leveraged" financial risk profile. "The business risk profile assessment reflects the company's limited scale of operations as a niche producer in its core industrial and automotive application markets," said Standard & Poor's credit analyst Svetlana Olsha. We expect Unifrax's organic revenues to grow by low single digits next year, given our expectations for a continuing slowdown in industrial production as well as macroeconomic weakness in Europe. Some improvement in automotive products sales stemming from increasingly stringent emission control regulations and increased vehicle demand in emerging economies should partially offset this. We expect Unifrax to sustain EBITDA margins at good levels of about 24%. Our assessment of the company's management and governance is "fair." Unifrax is a global producer of ceramic fiber insulation products for high-temperature applications used for metal and ceramic/glass processing, automotive emission control, and fire protection purposes. Ceramic fiber is a heat-resistant material that a variety of industries use for its stability at high temperatures and lightweight, low-heat-transmission properties. The acquisition will provide Unifrax with exposure to filtration and battery separator markets. S&P expects the company to maintain significant market share as one of the top two competitors in the global refractory ceramic fiber market, with the remaining competition composed of smaller regional players. "We expect the company's end markets to remain cyclical, fragmented, and highly competitive. However, Unifrax's relatively diverse customer base, as well as a significant proportion of revenue from maintenance and replacement, should help reduce earnings and cash flow volatility. Unifrax's North American and European markets are mature, and we expect the company to expand its operations in higher-growth emerging markets, especially China and India, where it currently has a limited presence," S&P said. Unifrax has a highly leveraged financial profile and an aggressive financial policy. Pro forma for the transaction, Unifrax's credit metrics include total debt to EBITDA of about 5.7x and EBITDA interest coverage of about 2.6x as of Sept. 30, 2012. S&P believes the company will maintain metrics in line with what it considers appropriate for the ratings, specifically total debt to EBITDA of 5x to 6x and EBITDA interest coverage of 2.0x to 2.5x. S&P expects that Unifrax will make bolt-on acquisitions and could fund purchases with both cash on hand and debt. S&P expects the company to make acquisitions that complement its existing manufacturing capabilities and products. The outlook is stable. The company's good niche market positions and operating margins should help sustain credit measures that are appropriate for the rating, specifically debt to EBITDA of 5x to 6x and EBITDA interest coverage of 2.0x to 2.5x. S&P could lower the rating if weak operating performance causes credit measures to deteriorate, specifically if leverage exceeds 6x for an extended period. S&P believes this could happen if weakening industrial and automotive markets cause revenue to decline by about 10% and lower fixed-cost absorption pressures margins. S&P could raise the rating if stronger-than-expected growth in the company's end markets leads to high cash flow generation and debt reduction such that financial leverage declines to and remains below 5x. UNIVERSITY GENERAL: To Present at Equity Conference on Jan. 22 -------------------------------------------------------------- University General Health System, Inc., will be presenting at the Noble Financial Capital Markets 9th Annual Equity Conference. The conference will be held Jan. 21-23, 2013, at the Hard Rock Hotel in Hollywood, Florida. The University General Health System presentation will be delivered by Donald Sapaugh, president, and Mike Griffin, chief financial officer, at 9:00 a.m. Eastern Time on Tuesday, Jan. 22, 2013, in Room 1. At the time of the presentation, a live audio and high-definition video webcast of University General Health System's presentation and a copy of the presentation materials will be available on the Company's Web site at www.ughs.net and through the Noble Financial websites at www.noblefcm.com and www.nobleresearch.com/NINE/home.htm. University General Health System recommends registering at least 10 minutes prior to the start of the presentation in order to ensure timely access. A Microsoft SilverLight viewer will be required to participate in the "live" webcast. A free download of the Microsoft SilverLight viewer will be available on the presentation link at: http://noble.mediasite.com/Play/a0f0bdd71d0c47dfb835aa9ff14e156c1d About University General University General Health System, Inc., located in Houston, Texas, is a diversified, integrated multi-specialty health care provider that delivers concierge physician- and patient-oriented services. UGHS currently operates one hospital and two ambulatory surgical centers in the Houston area. It also owns a revenue management company, a hospitality service provider and facility management company, three senior living facilities and manages six senior living facilities. In the auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Moss, Krusick & Associates, LLC, in Winter Park, Florida, expressed substantial doubt about University General's ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses and negative operating cash flows, and has negative working capital. University General reported a net loss of $2.38 million in 2011, following a net loss of $1.71 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $140.67 million in total assets, $128.38 million in total liabilities and $3.79 million in series C, convertible redeemable preferred stock, and $8.49 million in total equity. URANIUM ONE: S&P Revises Outlook to Developing; Affirms 'BB-' CCR ----------------------------------------------------------------- Standard & Poor's Ratings Services said it revised its outlook on Uranium One Inc. to developing from stable. At the same time, Standard & Poor's affirmed its 'BB-' long-term corporate credit rating on the company. S&P base the outlook revision on Uranium One's agreement to be acquired by its majority shareholder, JSC Atomredmetzoloto (ARMZ), for C$1.3 billion. "The developing outlook is partially based on the potential for an improvement in the company's credit quality related to possible enhancements, in our view, of parental or government-related support due to the prospect of greater integration between Uranium One and ARMZ," said Standard & Poor's credit analyst George Economou. " Conversely, the outlook also reflects several downside risks associated with the proposed deal including potential changes to the company's asset profile, financial policies and financial flexibility, and uncertain regulatory responses in several jurisdictions," Mr. Economou added. A developing outlook means that S&P could raise or lower the rating over a period of about one year. "The rating on Uranium One reflects our view of the company's narrow operating and geographic diversification, exposure to foundering uranium spot prices, relatively short collective mine life, limited track record, and reliance on residual cash flows from its joint venture mine operations. This is somewhat offset, in our opinion, by Uranium One's attractive cost profile, increasing production base, relatively low debt leverage, and a resilient long-term demand outlook for uranium from a growing worldwide nuclear reactor fleet," S&P noted. Standard & Poor's assesses Uranium One's stand-alone credit profile (SACP) at 'b+'. Majority shareholder ARMZ is a wholly owned subsidiary of Atomic Energy Power Corp. (BBB/Stable/A-2), which in turn is a wholly owned subsidiary of State Atomic Energy Corp. Rosatom (not rated), a state-owned entity of the Russian Federation (foreign currency: BBB/Stable/A-2). "We view the proposed acquisition as providing an opportunity to strengthen the alignment of interests between Uranium One and majority shareholder ARMZ, which could lead to stronger incentives for the majority holders to support Uranium One's credit quality. We believe that the demonstration of stronger alignment could manifest by ARMZ fully capturing Uranium One's output into the group's operating profile, which would not only highlight the strategic importance of Uranium One to ARMZ but also underscore the consequently improved relative standing of ARMZ in the global nuclear industry. Moreover, Uranium One could have broader access to the financial capacity of its state-backed parents, particularly at a time when Uranium One's capital requirements could rise substantially to fund the development of the Mkuju River project in Tanzania," S&P added. "The developing outlook reflects our view that we could raise or lower the rating or SACP on Uranium One depending on the potential changes to the company's strategic direction and financial policies. That said, we expect that Uranium One's low-cost production profile and long-term sale contracts should help support the company's operating performance through this year with an adjusted debt-to-EBITDA leverage ratio near 3x, on a proportionately consolidated basis, with EBITDA generation of more than US$250 million," S&P said. S&P could raise the rating if the proposed acquisition leads them to improve its view of potential support from the company's parent or via its status as a government-related entity under its criteria. Alternatively, S&P could lower the rating if it believes that the company's asset quality could deteriorate or debt levels were to increase significantly causing its adjusted debt-to-EBITDA leverage ratio to surpass 4.5x, a key threshold for downward ratings pressure. UTSTARCOM HOLDINGS: Himanshu Shah Hikes Equity Stake to 17.7% ------------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Himanshu H. Shah and his affiliates disclosed that, as of Jan. 15, 2013, they beneficially own 20,706,948 shares of common stock of UTStarcom Holdings Corp. representing 17.68% of the shares outstanding. Mr. Shah previously reported beneficial ownership of 19,004,034 common shares or a 12.56% equity stake as of July 11, 2012. A copy of the amended filing is available at: http://is.gd/q4y4GT About UTStarcom, Inc. UTStarcom, Inc. (Nasdaq: UTSI) -- http://www.utstar.com/-- is a global leader in IP-based, end-to-end networking solutions and international service and support. The Company sells its solutions to operators in both emerging and established telecommunications markets around the world. UTStarcom enables its customers to rapidly deploy revenue-generating access services using their existing infrastructure, while providing a migration path to cost-efficient, end-to-end IP networks. The Company's headquarters are currently in Alameda, California, with its research and design operations primarily in China. The Company had income of $11.77 million in 2011, following a net loss of $65.29 million in 2010, and a net loss of $225.70 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $505.93 million in total assets, $279.29 million in total liabilities and $226.64 million in total equity. VERTICAL COMPUTER: Secures $1.7 Million Loan from Lakeshore ----------------------------------------------------------- Vertical Computer Systems, Inc.'s subsidiary, Now Solutions, Inc., secured financing in the aggregate amount of $1,759,150, which amount was utilized to pay off existing indebtedness of the Company and its subsidiaries to Tara Financial Services, Inc., and Robert Farias, an employee of the Company. The Company and several of its subsidiaries entered into a loan agreement, dated as of Jan. 9, 2013, with Lakeshore Investment, LLC, under which Now Solutions issued a secured 10 year promissory note bearing interest at 11% per annum to Lakeshore in the amount of $1,759,150 payable in equal monthly installments of $24,232 until Jan. 31, 2022. The Note contains provisions requiring additional principal reductions in the event sales by Now Solutions exceed certain financial thresholds. Pursuant to the Loan Agreement, the Company agreed to make principal payments toward the Note of $90,000 by Jan. 31, 2013, which is secured by 10% of the Company's ownership interest in Priority Time Systems, Inc., and $600,000 by Feb. 28, 2013, which is secured by 20% of the Company's ownership interest in Now Solutions. The Loan Agreement also contains provisions requiring certain additional principal prepayments toward the Note by the Company from any litigation or settlement proceeds regarding its SiteFlash technology less any attorney fees and direct Costs. The Notes are secured by the assets of the Company's subsidiaries, Now Solutions, Priority Time, SnAPPnet, Inc., and the Company's SiteFlash technology and are cross-collateralized. Upon the aggregate principal payment of $290,000 toward the Note, the Company has the option to have Lakeshore release either the Priority Time collateral or the SiteFlash collateral. Upon payment of the aggregate principal $590,000 toward the Note, Lakeshore shall release either the Priority Time collateral or the SiteFlash collateral. Upon payment of the aggregate principal $890,000 toward the Note, Lakeshore WIll release the SnAPPnet collateral and upon full payment of the Note, Lakeshore shall release the Now Solutions collateral. As additional consideration for the loan, the Company granted a 5% interest in net claim proceeds from any litigation or settlement proceeds related to the SiteFlash technology to Lakeshore. In addition, until the Note is paid in full, Now Solutions agreed to pay a Lakeshore royalty of 5% of its annual gross revenues in excess of $5 million dollars up to a maximum of $1,759,150. About Vertical Computer Richardson, Tex.-based Vertical Computer Systems, Inc., is a multinational provider of Internet core technologies, application software, and software services through its distribution network with operations or sales in the United States, Canada and Brazil. In the auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, MaloneBailey, LLP, in Houston, Texas, noted that the Company suffered net losses and has a working capital deficiency, which raises substantial doubt about its ability to continue as a going concern. The Company reported a net loss of $167,588 in 2011, compared with a net loss of $245,164 in 2010. The Company's balance sheet at Sept. 30, 2012, showed $1.27 million in total assets, $13.70 million in total liabilities, $9.90 million in convertible cumulative preferred stock, and a $22.33 million total stockholders' deficit. VERTIS HOLDINGS: Quad/Graphics Completes Acquisition of Assets -------------------------------------------------------------- Quad/Graphics, Inc. on Jan. 16 disclosed that it has completed its acquisition of substantially all of the assets of Vertis Holdings, Inc., for a net purchase price of $170 million. This assumes the purchase price of $267 million less the payment of $97 million for current assets that are in excess of normalized working capital requirements. Quad/Graphics used cash on hand and drew on its revolving credit facility to finance the acquisition. The Company expects the acquisition of Vertis to strengthen and expand its client offering with: -- An enhanced range of products, services and revenue-generating solutions; -- Expanded industry vertical expertise; -- Increased manufacturing flexibility and distribution efficiencies from an extended geographic footprint; and -- New opportunities to help clients realize mailing and distribution cost-savings from the combined volumes and capabilities of the two companies. "We are excited about our acquisition of Vertis and the opportunities it brings to advance our business and create value for our clients, employees and shareholders," said Joel Quadracci, Chairman, President & CEO of Quad/Graphics. "We have strengthened our retail ad insert, direct marketing and in-store marketing solutions, and have expanded our support services to include media planning and placement, and marketing services. With more talent and broader solutions, we are better positioned than ever to drive business results for our clients." Vertis generated an estimated $1.1 billion in revenues in 2012 and approximately $55 million in annual EBITDA on an unaudited basis, adjusted for restructuring, impairment and other transaction- related expenses. The combined company will employ approximately 25,000 employees from more than 70 print-production facilities in North America, Latin America and Europe. Gerald Sokol, Jr., Chief Executive Officer of Vertis, said: "We have had the opportunity to work very closely with Joel Quadracci and his team over these last several months in planning a successful integration. More than ever, we are convinced that this combination represents the best possible outcome for our customers, employees and other stakeholders." "We are excited to begin our work as an expanded company and build on our long-standing commitment to take print to a higher level," Mr. Quadracci said. "Print has power in today's multichannel world and we know how to leverage that power to make print perform better than ever." 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. VERTIS HOLDINGS: Cousins Chipman Is Committee's Del. Counsel ------------------------------------------------------------ The Official Committee of Unsecured Creditors in the Chapter 11 cases of Vertis Holdings, Inc., et al., asked the U.S. Bankruptcy Court for the District of Delaware for permission to retain Cousins Chipman & Brown, LLP as its Delaware counsel. The hourly rates of CCB's personnel are: Scott D. Cousins $645 Mark D. Olivere $435 Ann M. Kashishian $250 Partners $450 - $645 Associates $225 - $435 Legal Assistance/Paralegals $180 - $225 To the best of the Committee, CCB is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Vertis Holdings Vertis Holdings Inc. -- http://www.thefuturevertis.com/-- provides advertising services in a variety of print media, including newspaper inserts the 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 again 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. The Debtor tapped Alvarez & Marsal North America to provide the Debtors with a chief restructuring officer and certain additional personnel and designating Andrew Hede as C.R.O. The Court approved procedures for the bidding, auction and sale of Vertis Holdings Inc.'s assets. The Court also approved, on a final basis, the Debtor's $150 million DIP loan and use of cash collateral. Roberta A. DeAngelis, U.S. Trustee for Region 3 appointed seven creditors to serve in the Official Committee of Unsecured Creditors. VERTIS HOLDINGS: Perella Weinberg Is Financial Advisor ------------------------------------------------------ Vertis Holdings, Inc., et al., asked the U.S. Bankruptcy Court for the District of Delaware for permission to employ Perella Weinberg Partners LP as financial advisors and investment banker. Perella Weinberg will, among other things: -- keep up to date with the Debtors' business operations, properties financial condition and prospects; -- continue to review the Debtors' financial condition and outlook; and -- analyze the Debtors' financial liquidity and evaluating alternatives to improve the liquidation. The Debtor agreed to pay Perella Weinberg: -- a month fee of $150,000; -- a restructuring fee of $1,200,000 after restructuring, financing or sale being consummated; and -- reimbursement of reasonable expenses. Prepetition, PWP received $1,500,000 in fees and $65,281 in expenses from the Debtors for prepetition services rendered, and expenses incurred. PWP has not received any payment since the petition date. To the best of the Debtors' knowledge, Perella Weinberg is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Vertis Holdings Vertis Holdings Inc. -- http://www.thefuturevertis.com/-- provides advertising services in a variety of print media, including newspaper inserts the 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 again 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. The Debtor tapped Alvarez & Marsal North America to provide the Debtors with a chief restructuring officer and certain additional personnel and designating Andrew Hede as C.R.O. The Court approved procedures for the bidding, auction and sale of Vertis Holdings Inc.'s assets. The Court also approved, on a final basis, the Debtor's $150 million DIP loan and use of cash collateral. Roberta A. DeAngelis, U.S. Trustee for Region 3 appointed seven creditors to serve in the Official Committee of Unsecured Creditors. VERTIS HOLDINGS: Richards Layton Is Debtors' Co-Counsel ------------------------------------------------------- Vertis holdings, Inc., et al., asked the U.S. Bankruptcy Court for the District of Delaware for permission to employ Richards, Layton & Finger, P.A., as co-counsel. Jason M. Madron, a counsel at RL&F, tells the Court that the firm received a total retainer of $85,000 for services rendered and expenses incurred. The Debtors propose that the remainder of the retainer paid to RL&F and not expended for prepetition services and disbursements be treated as an evergreen retainer. The Debtors intend and believe that the services of RL&F will compliment and not duplicate the services rendered by any other professional retained in the Chapter 11 cases. The Debtors also filed an application seeking to employ Cadwalader, Wickersham & Taft LLP as their lead counsel. To the best of the Debtors' knowledge, RL&F is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Vertis Holdings Vertis Holdings Inc. -- http://www.thefuturevertis.com/-- provides advertising services in a variety of print media, including newspaper inserts the 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 again 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. The Debtor tapped Alvarez & Marsal North America to provide the Debtors with a chief restructuring officer and certain additional personnel and designating Andrew Hede as C.R.O. The Court approved procedures for the bidding, auction and sale of Vertis Holdings Inc.'s assets. The Court also approved, on a final basis, the Debtor's $150 million DIP loan and use of cash collateral. Roberta A. DeAngelis, U.S. Trustee for Region 3 appointed seven creditors to serve in the Official Committee of Unsecured Creditors. VIGGLE INC: Terminates Merger Agreement with GetGlue ---------------------------------------------------- The merger agreement between Viggle Inc. and GetGlue has been terminated. "During the time we started talking to GetGlue about an acquisition and since the merger agreement was signed in November, we have seen impressive growth in our business," Robert F.X. Sillerman, Executive Chairman and CEO of Viggle said. "We are pleased with this positive momentum." He added that the termination of the agreement was cordial. "We wish GetGlue and Alex all the best." As a result of the termination, Viggle will be obligated to reimburse AdaptiveBlue up to $500,000 for its costs, fees and expenses incurred in connection with the negotiation of and performance of its obligations under the Merger Agreement. AdaptiveBlue is the company that develops GetGlue, a leading social entertainment network. Viggle Has Single Busiest Day Viggle announced that following on the significant growth of the last quarter it had its biggest single day, January 13, with nearly 870,000 verified audio check-ins. As of the end of the quarter ended Dec. 31, 2012, 1,732,528 users have registered for Viggle's application, of which 108,883 have been deactivated, for a total of 1,623,645 registered users. This represents a 42% increase over the number of registered users as of Sept. 30, 2012. Viggle is continuing its steady growth, adding 351,000 monthly active users in the first 13 days of January alone. For the months of October, November, and December, 2012, monthly active users were 233,607, 369,630 and 443,292, respectively. Everyday, Viggle users are heavily engaged in the service, learning about new shows to watch, engaging in real-time synched experiences such as MyGuy and Viggle LIVE, chatting with other users about their favorite shows and all the while earning points that can be redeemed for real rewards. "We are very pleased with the user growth we experienced in our second fiscal quarter," said Greg Consiglio, President and COO of Viggle. "We are excited to carry that momentum into the new year and believe that this positive momentum will position us well for the year ahead." 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. WEST PENN ALLEGHENY: Pursues Out-of-Court Restructuring ------------------------------------------------------- Highmark Inc., West Penn Allegheny Health System (WPAHS) and selected WPAHS bondholders on Jan. 16 disclosed that they have reached an agreement on the financial future of the health system. The agreement paves the way to advance the proposed Highmark-WPAHS affiliation to the Pennsylvania Insurance Department (PID) for its consideration, enables WPAHS to restructure its debt out of court, and preserves the pensions of some 12,000 health system employees. "Paramount to our affiliation with West Penn Allegheny is preserving provider competition and choice in health care providers for the entire community," said William Winkenwerder, Jr., M.D., president and CEO of Highmark. "Throughout this process we all worked hard to develop a financial plan for the short and long term financial stability of the health system. We are glad to have reached common ground with everyone, and we appreciate the strong support from the community and elected officials." In the consensual plan, which does not require any bankruptcy court approvals, Highmark has offered to purchase the outstanding series 2007A bonds issued for WPAHS by the Allegheny County Hospital Development Authority for cash at 87.5 percent of par amount. The plan will reduce WPAHS' outstanding debt and strengthen its balance sheet, forming a more solid foundation for the health system's future success as part of Highmark's integrated delivery network. "We are pleased that West Penn Allegheny, our bondholders and Highmark have reached this important milestone to help further our pending affiliation with Highmark," said Jack Isherwood, WPAHS board chair. "We believe our partnership will preserve this important community asset that provides high-quality, efficient health care for our patients." The original affiliation agreement with WPAHS was amended to strengthen the financial position of the health system. A Form A reflecting the amended Highmark and WPAHS affiliation agreement will be filed with the PID seeking the necessary approval. "We realize the PID has important diligence and review work ahead. Highmark will work responsively to ensure all further needed information is provided so that a good and prompt decision can be made," said Dr. Winkenwerder. Maintaining competitive health delivery systems boosts the economic vitality of the region, and it ensures that costs will be kept lower, while preserving stronger, more economically viable communities throughout Western Pennsylvania. West Penn Allegheny is an important part of our community and delivers high-quality health care. It is also important to preserve competition in the health insurance marketplace, according to Dr. Winkenwerder. In a rapidly changing health care environment, Highmark is firmly committed to working with all segments of the community to make necessary changes to help control health care costs, improve quality of patient care and patient safety, preserve options and choice for individuals, employers, physicians and other health care practitioners and create a better patient experience. WPAHS is an important piece of Highmark's objective of creating an integrated delivery network to better serve the community. Highmark previously announced plans to affiliate with Jefferson Regional Medical Center and Saint Vincent Health System, while maintaining strong working relationships with community hospitals throughout the region. In addition, Highmark has launched construction of a Medical Mall. * * * As reported by the October 3, 2012, Dow Jones' DBR Small Cap related that Pittsburgh's West Penn Allegheny Health System broke off its agreement to be acquired by Highmark Inc., saying the insurer had breached the deal's terms and was demanding the hospital operator file for bankruptcy. WESTERN POZZOLAN: Trustee Taps Kim Firm as General Purpose Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court District of Nevada authorized David A. Rosenberg, the Chapter 11 trustee for Western Pozzolan Corp., to employ Howard Kim & Associates as his general purpose counsel. The Kim Firm is expected to: a) advise the trustee of his rights and obligations and performance of his duties during the administration of the bankruptcy case; b) represent the trustee in all proceedings before the Court and any other court, which assumes jurisdiction of a matter related to or arising in the bankruptcy case; c) assist the trustee in the performance of his duties; d) assist the trustee in developing legal positions and strategies with respect to all facets of these proceedings; and e) provide other counsel and advice as the trustee may require in connection with the bankruptcy case. The compensation will be $150 per hour for paraprofessionals and $350 per hour for the services of attorneys, subject to change from time to time. To the best of the trustee's knowledge, the Kim Firm represents no interest that is adverse to the trustee, or to the Debtors' estate, in matters upon which it will be engaged. About Western Pozzolan Western Pozzolan Corp., is in the business of mining and selling pozzolan ore. Western Pozzolan operates the Long Valley Pozzolan Plant in Lassen County, California. The Company filed a Chapter 11 bankruptcy petition (Bankr. D. Nev. Case No. 12-11040) in Las Vegas, Nevada, on Jan. 30, 2012. Judge Mike K. Nakagawa presides over the case, taking over from Judge Linda B. Riegle. Matthew Q. Callister, Esq., at Callister & Associates, serves as the Debtor's counsel. The Debtor disclosed $10,825,304 in assets and $2,916,012 in liabilities as of the Chapter 11 filing. August B. Landis, Acting U.S. Trustee for Region 17, appointed three creditors to serve in the Official Committee of Unsecured Creditors. Western Pozzolan first filed for bankruptcy protection (Bankr. D. Nev. Case NO. 10-27096) in Las Vegas on Sept. 9, 2010. On Dec. 3, 2012 the Hon. Mike K. Nakagawa, in response to Interest Income Partners, L.P.'s request for the dismissal of the Debtor's case, ordered the appointment of a Chapter 11 trustee. The Debtor said that the bankruptcy case will benefit from the appointment of a Chapter 11 trustee, given the development of the cases associated with the Debtor's principal, James W. Scott. WESTSIDE MEDICAL: Court Confirms Liquidating Plan ------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California confirmed on Sept. 10, 2012, Westside Medical Park, LLC's liquidating plan of reorganization. Holders of general unsecured claims (Class 4) voted to accept the Plan. As reported in the Troubled Company Reporter on Jan. 18, 2012, the Plan dated Dec. 21, 2011, lists the sources of money earmarked to pay creditors. No payments to interest holders will be made. Sources of distribution to creditors will be (i) cash on hand, which totaled $666,770 as of Nov. 30, 2011; and (ii) any recovery generated from "avoidance power actions" and litigation, all of which will be pursued by the Official Committee of Unsecured Creditors. The Debtor owned real estate properties in California intended to be developed primarily for health care uses, but defaulted on a $61 million debt in November 2011. The Debtor thus sought bankruptcy protection to try to preserve value for unsecured creditors. Most likely, general unsecured creditors can expect payments to commence within 30 days after entry of a final unappealable order confirming the Debtor's liquidating plan. The Debtor calculates the claims of general unsecured creditors aggregate $1,143,846. Under the Plan, unsecured creditors will receive pro rata distributions from the Available Cash and any recovery from any Avoidance Power Action or litigation. A copy of the Disclosure Statement dated Dec. 21, 2012, is available for free at http://bankrupt.com/misc/WESTSIDEMEDICAL_DiscStmDec21.PDF About Westside Medical Los Angeles, California-based Westside Medical Park, LLC, filed for Chapter 11 bankruptcy protection on November 3, 2010 (Bankr. C.D. Calif. Case No. 10-57457). John P. Kreis, P.C., is the Debtor's general bankruptcy counsel. Garfield & Tepper serves as special litigation counsel. Peregrine Realty Partners has been tapped as appraiser. The Debtor estimated assets and debts at $50 million to $100 million as of the Chapter 11 filing. On Dec. 28, 2010, Peter C. Anderson, the U.S. Trustee, appointed four creditors to serve in the Official Committee of Unsecured Creditors in the Debtor's case. Greenberg Traurig, LLP, represents the Official Committee of Unsecured Creditors as counsel. WILLIAMS MANAGEMENT: Case Summary & 14 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Williams Management Company, LLC 505 Woodward Avenue Kalamazoo, MI 49007 Bankruptcy Case No.: 13-00321 Chapter 11 Petition Date: January 16, 2013 Court: United States Bankruptcy Court Western District of Michigan (Grand Rapids) Judge: Jeffrey R. Hughes Debtor's Counsel: Kerry D. Hettinger, Esq. HETTINGER & HETTINGER PC 200 Admiral Avenue Portage, MI 49002-3503 Tel: (269) 344-1100 E-mail: khett57@hotmail.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 A copy of the list of 14 largest unsecured creditors is available for free at http://bankrupt.com/misc/miwb13-00321.pdf The petition was signed by David Williams, authorized agent. YMCA RIVERSIDE: Shutters Doors; To Liquidate in Chapter 7 --------------------------------------------------------- Richard K. De Atley and Dayna Straehley, writing for The Press- Enterprise, report the YMCAs in Riverside and Hemet, shuttered since Friday, Jan. 11, have been permanently closed, officials said. The YMCA of Riverside City and County announced last month it was filing for bankruptcy reorganization as it grappled with financial problems stemming from the opening of a Temecula facility that ended up closing months ago. But its situation worsened Jan. 14, when a deal for the Orange County YMCA to take over and run its facilities fell through, according to officials and court documents. Also, the Y is changing its bankruptcy filing from a reorganization known as Chapter 11 to Chapter 7, which could lead to the sale of its property and assets, court filings show. The Y told a federal bankruptcy court that its doors have been closed since Friday, that it cannot get a loan or other aid to stay open, and agreed to a Chapter 7 bankruptcy that could see the sale of its property to satisfy creditors. A court filing Tuesday showed assets of less than $5.3 million and liabilities of $4.6 million. Young Men's Christian Association of Riverside City and County -- fka Youn Mens Christian Association of Riverside, California; fka Young Mens Christian Association of Riverside; pka YMCA of Riverside; fka Young Mens Christian Association; pka YMCA of Riverside City and County; pka YMCA -- filed for Chapter 11 bankruptcy (Bankr. C.D. Calif. Case No. 12-38087) on Dec. 27, 2012. Judge Mark D. Houle oversees the case. Franklin C. Adams, Esq., at Best Best & Krieger LLP, serves as Chapter 11 counsel. A list of the Company's 20 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/cacb12-38087.pdf The petition was signed by Jaclyn A. Fielder, chief executive officer. ZUERCHER TRUST: Files Schedules of Assets and Liabilities --------------------------------------------------------- The Zuercher Trust of 1999 filed with the U.S. Bankruptcy Court for the Northern District of California its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $23,597,500 B. Personal Property $4,120,000 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $7,739,000 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $1,069,349 ----------- ----------- TOTAL $27,717,500 $8,808,349 A copy of the schedules is available for free at http://bankrupt.com/misc/THE_ZUERCHER_TRUST_sal.pdf San Mateo, California-based The Zuercher Trust of 1999 filed for Chapter 11 bankruptcy (Bankr. N.D. Calif. Case No. 12-32747) on Sept. 26, 2012. Bankruptcy Judge Thomas E. Carlson presides over the case. Derrick F. Coleman, Esq., at Coleman Frost LLP, serves as the Debtor's counsel. The Debtor, a business trust, estimated assets and debts of $10 million to $50 million. The Debtor owns property in 621 S. Union Avenue, in Los Angeles. The property is currently in REAP for alleged city health code violations. The petition was signed by Monica H. Hujazi, trustee. ZUERCHER TRUST: List of 20 Largest Unsecured Creditors ------------------------------------------------------ The Zuercher Trust of 1999 filed with the U.S. Bankruptcy Court Northern District of California a list of its largest unsecured creditors, disclosing: Name of Creditor Nature of Amount of Claim ---------------- Claim --------------- --------- Bank of America Loan Costs $800,000 P.O. Box 45144 FL9-100-04-24 Building 100, 4th floor Jacksonville, FL 32232-9923 City of Los Angeles REAP REAP Program Unknown Charges Law Firm of George Eshoo Legal Services Unknown Law Office of Allan Hyman Legal Services Unknown Los Angeles County Tax Unknown Collector Los Angeles Dept. of Inspection Fees Unknown Building and Safety Los Angeles Dept. of Water Utilities $3,326 and Power Los Angeles Housing Inspection Fees Unknown Department Luscutoff, Lendormy & Legal Services Unknown Associates Michael Grodsky Legal Services $261,820 5900 Wilshire Blvd. #26068 Los Angeles, CA 90036 Niven and Smith c/o Leo Legal Services Unknown LaRocca Wasserman-Stern Law Legal Services $4,202 Offices About The Zuercher Trust of 1999 San Mateo, California-based The Zuercher Trust of 1999 filed for Chapter 11 bankruptcy (Bankr. N.D. Calif. Case No. 12-32747) on Sept. 26, 2012. Bankruptcy Judge Thomas E. Carlson presides over the case. Derrick F. Coleman, Esq., at Coleman Frost LLP, serves as the Debtor's counsel. The Debtor, a business trust, disclosed $27,717,500 in assets and $8,808,349 in liabilities as of the Chapter 11 filing. The Debtor owns property in 621 S. Union Avenue, in Los Angeles. The property is currently in REAP for alleged city health code violations. The petition was signed by Monica H. Hujazi, trustee * Two Circuits Retain Absolute Priority Rule for Individuals ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Court of Appeals in Denver ruled on Jan. 15 that two federal courts of appeal have now held that Congress didn't repeal the absolute priority rule for individuals in Chapter 11 when amending the U.S. Bankruptcy Code in 2005. The 10th Circuit thus joins the Fourth Circuit in Richmond, Virginia, which reached the same result for the same reasons in June. According to the report, both cases involved individuals in Chapter 11 who owned small businesses. They both proposed plans where at least one class of creditors voted no. The plans allowed the individuals to retain the businesses and use income to pay creditors over time. In the Denver case, the bankruptcy judge confirmed the plan, adopting the so-called broad view of the 2005 amendments to Sections 1115 and 1129(b)(2)(B)(ii) of the Bankruptcy Code. A creditor appealed the Denver case. On its own, the Bankruptcy Appellate Panel sent the appeal directly to the circuit court because lower courts are divided and there was no higher authority in the 10th Circuit. The report relates that Tenth Circuit Judge Paul J. Kelly Jr. wrote a 15-page opinion agreeing with the sister circuit in logic and result. The absolute priority rule derives from in Section 1129(b)(2)(B)(ii). It provides that owners or shareholders may not retain any property if a class of creditors isn't paid in full and votes against the plan. According to Judge Kelly, one bankruptcy appellate panel and five bankruptcy courts ruled that absolute priority for individuals was repealed when Congress amended Section 1129 in 2005. As amended, the subsection provides that an individual nonetheless may "retain property included in the estate under section 1115." The Fourth Circuit and 17 bankruptcy courts, according to Judge Kelly, concluded that the revision didn't repeal the absolute priority rule. Judge Kelly, the report relates, found the revised statute to be ambiguous since it's "susceptible to two different yet plausible interpretations." Given an ambiguous statute, Kelly decided to "heed the presumption against implied repeal." The case is Dill Oil Co. v. Stephens (In re Stephens), 11-6309, 10th U.S. Circuit Court of Appeals (Denver). * Foreclosure Activity Increased in 25 States in 2012 ----------------------------------------------------- RealtyTrac(R), an online marketplace for foreclosure properties, on Jan. 17 released its Year-End 2012 U.S. Foreclosure Market Report(TM), which shows a total of 2,304,941 foreclosure filings -- default notices, scheduled auctions and bank repossessions -- were reported on 1,836,634 U.S. properties in 2012, down 3 percent from 2011 and down 36 percent from the peak of 2.9 million properties with foreclosure filings in 2010. The report also shows that 1.39 percent of U.S. housing units (one in every 72) had at least one foreclosure filing during the year, down from 1.45 percent of housing units in 2011 and down from 2.23 percent of housing units in 2010. Other high-level findings from the report: -- Foreclosure activity in 2012 increased from 2011 in 25 states -- 20 of which primarily use the longer judicial foreclosure process -- including New Jersey (55 percent increase), Florida (53 percent increase), Connecticut (48 percent increase), Indiana (46 percent increase), Illinois (33 percent increase) and New York (31 percent increase). -- Foreclosure activity in 2012 decreased from 2011 in 25 states -- 19 of which primarily use the more streamlined non- judicial foreclosure process -- including Nevada (57 percent decrease), Utah (40 percent decrease), Oregon (40 percent decrease), Arizona (33 percent decrease), California (25 percent decrease) and Michigan (23 percent decrease). -- Florida posted the nation's highest state foreclosure rate in 2012, with 3.11 percent of housing units (one in 32) receiving a foreclosure filing during the year. Other states with top 5 foreclosure rates were Nevada (2.70 percent), Arizona (2.69 percent), Georgia (2.58 percent), and Illinois (2.58 percent). -- December foreclosure activity dropped 10 percent from the previous month to the lowest level since April 2007, a 68- month low, and fourth quarter foreclosure activity was at the lowest quarterly level since the third quarter of 2007 despite a 9 percent quarterly increase in bank repossessions. -- The average time to complete a foreclosure nationwide in the fourth quarter increased 8 percent from the previous quarter to a record-high 414 days. -- Lower foreclosure inventory gave sellers the upper hand and helped median sales prices in the first 10 months of 2012 to increase from the same time period in 2011 in 25 states. Median sales prices nationwide during the first 10 months of 2012 on average were 99 percent of median list prices. -- In January 2013, 10.9 million homeowners nationwide -- representing 26 percent of all outstanding homes with a mortgage -- were seriously underwater, meaning they owed at least 25 percent more on their home than what it was worth. That was down from 12.5 million homeowners representing 28 percent of all homes with a mortgage a year earlier in January 2012. "2012 was the year of the judicial foreclosure, with foreclosure activity increasing from 2011 in 20 of the 26 states that primarily use the judicial process, and a judicial state -- Florida -- posting the nation's highest state foreclosure rate for the first time since the housing crisis began," said Daren Blomquist, vice president at RealtyTrac. "Meanwhile foreclosure activity continued to decline in 19 of the 24 states that use the more streamlined non-judicial foreclosure process, but there could be a backlog of delayed foreclosures building up in some of those states as well as the result of recent state legislation and court rulings that raise the bar for lenders to foreclose." "That could mean that although we are comfortably past the peak of the foreclosure problem nationally, 2013 is likely to be book- ended by two discrete jumps in foreclosure activity," Mr. Blomquist added. "We expect to see continued increases in judicial foreclosure states near the beginning of the year as lenders finish catching up with the backlogs in those states, and another set of increases in some non-judicial states near the end of the year as lenders adjust to the new laws and process some deferred foreclosures in those states." December activity hits 68-month low, bank repossessions increase in fourth quarter Foreclosure filings were reported on 162,511 U.S. properties in December, a 10 percent decrease from the previous month and down 21 percent from December 2011. December's total was the lowest monthly total since April 2007 -- a 68-month low. All three types of foreclosure filings -- default notices (NOD, LIS), scheduled foreclosure auctions (NTS, NFS), and bank repossessions (REO) decreased both on a monthly and annual basis in December. Foreclosure filings were reported on 503,462 U.S. properties during the fourth quarter, a 5 percent decrease from the previous quarter -- despite a 9 percent quarter-over-quarter increase in bank repossessions -- and a 14 percent decrease from the fourth quarter of 2011. The fourth quarter total was the lowest quarterly total since the third quarter of 2007, when 448,145 U.S. properties received foreclosure filings. Florida, Nevada, Arizona post top state foreclosure rates More than 3 percent of Florida housing units (3.11 percent, or one in 32) had at least one foreclosure filing in 2012, giving it the nation's highest state foreclosure rate for the year. A total of 279,230 Florida properties had a foreclosure filing during the year, a 53 percent increase from 2011 but still 42 percent below the more than 485,000 Florida properties with foreclosure filings in 2010. After five consecutive years with the highest state foreclosure rate, Nevada dropped to No. 2 on the list in 2012 thanks to a 57 percent drop in foreclosure activity from 2011. A total of 31,658 Nevada properties had a foreclosure filing during the year, 2.70 percent of all housing units in the state (one in every 37). Arizona foreclosure activity in 2012 decreased 33 percent from 2011 and was down 51 percent from 2010, lowering the state's foreclosure rate to the third highest in the nation following three consecutive years with the second highest rate. A total of 76,487 Arizona properties had foreclosure filings during the year, 2.69 percent of all housing units in the state (one in 37). Georgia posted the nation's fourth highest state foreclosure rate, with 2.58 percent of housing units (one in 39) receiving at least one foreclosure filing in 2012, and Illinois posted the nation's fifth highest state foreclosure rate, also with 2.58 percent of housing units (one in 39) receiving at least one foreclosure filing during the year. Other states with foreclosure rates among the nation's 10 highest were California (2.33 percent), Ohio (1.75 percent), Michigan (1.69 percent), South Carolina (1.66 percent), and Colorado (1.64 percent). Foreclosure inventory rises from low point in May, still 31 percent below peak As of the end of the year, more than 1.5 million homes were in some stage of foreclosure or bank-owned, up 9 percent from the end of 2011, but still 31 percent below the peak of 2.2 million at the end of 2010. Foreclosure inventory had dropped to a 57-month low of 1.3 million in May 2012, but has since risen off that 57-month low. Florida accounted for the biggest share of foreclosure inventory of any state with 305,766 properties in some stage of foreclosure or bank owned (20 percent of the national total), followed by California with 212,172 (14 percent), Illinois with 135,858 (9 percent), Ohio with 76,015 (5 percent), and New York with 69,044 (5 percent). Lenders with the most inventory of bank-owned (REO) properties were the government-backed entities of Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development (HUD) with a combined 26 percent of all REO inventory, followed by Bank of America with 8 percent, Wells Fargo with 6 percent, US BankCorp with 4 percent and Chase with 4 percent. Of the properties in some stage of foreclosure or bank owned at the end of 2012, an estimated 37 percent had a market value between $100,000 and $200,000, while an estimated 27 percent had a market value between $50,000 and $100,000, and an estimated 15 percent had a market value between $200,000 and $300,000. Median home prices up in 25 states, 1.6 million fewer homeowners underwater Lower foreclosure inventory during the year may have helped home prices to hit bottom and start rising in many markets during the year. Median home prices during the first 10 months of 2012 rose compared to the same time period in 2011 in 25 states and in 16 of the nation's 20 largest metro areas. Nationwide the average monthly median home price during the first 10 months of 2012 was $164,712 -- nearly identical to the average monthly median home price of $164,960 during the same time period in 2011. The average monthly list price during the first 12 months of 2012 was $166,110, showing that sellers on average were getting 99 percent of their asking price during the year. "The influx of foreclosure activity in 20 12 in many local markets should translate into more foreclosure inventory available for sale in 2013 in those markets," Mr. Blomquist noted. "That is good news for buyers and investors, but could result in some short-term weakness in home prices as the often-discounted foreclosure sales weigh down overall home values." Rising home prices helped boost home values in 2012, thereby lifting many homeowners across the country out of negative equity compared to a year ago. About 10.9 million homeowners nationwide -- representing 26 percent of all homeowners with a mortgage -- owed at least 25 percent more on their combined mortgages than what their homes were worth as of January 2013, down from 12.5 million seriously underwater homeowners representing 28 percent of all homeowners with a mortgage in January 2012. Average days to foreclose nationwide jumps to 414 U.S. properties foreclosed in the fourth quarter took an average of 414 days to complete the foreclosure process, up from 382 days in the third quarter and up from 348 days in the fourth quarter of 2011. It was the longest time to complete the foreclosure process since RealtyTrac began tracking the metric in the first quarter of 2007. New York had the longest average time to foreclose, at 1,089 -- up from 1,072 days in the third quarter and up from 1,019 days in the fourth quarter of 2011 -- followed by New Jersey at 987 days -- up from 931 days in the third quarter and up from 964 days in the fourth quarter of 2011. The average time to foreclose in Florida decreased for the second straight quarter but was still the third highest in the country at 853 days, followed by Hawaii at 781 days and Illinois at 697 days. The average time to foreclose in Texas increased 17 percent from the previous quarter and was up 26 percent from a year ago, but the state still documented the shortest average time to complete a foreclosure, at 113 days. Other states with the shortest foreclosure timelines in the fourth quarter were Delaware (145 days), Virginia (146 days), Alabama (163 days), Maine (168 days) and Georgia (170 days). Top metro foreclosure rates Despite a 25 percent decrease in foreclosure activity from 2011, Stockton, Calif., posted the nation's highest foreclosure rate in 2012 among metropolitan statistical areas with a population of 200,000 or more: 3.98 percent of housing units (one in 25) with a foreclosure filing during the year. Six other California cities ranked in the top 20 highest metro foreclosure rates for the year, including Riverside-San Bernardino-Ontario at No. 2 (3.86 percent of housing units with a foreclosure filing), Modesto at No. 3 (3.82 percent), and Vallejo- Fairfield at No. 4 (3.73 percent). All seven California metro areas in the top 20 posted decreasing foreclosure activity from 2011. Florida cities accounted for eight of the top 20 highest metro foreclosure rates in 2012, led by Miami at No. 5 (3.71 percent of housing units with a foreclosure filing), Palm Bay-Melbourne- Titusville at No. 6 (3.60 percent), and Orlando at No. 8 (3.46 percent). Seven out of the eight Florida metro areas in the top 20 documented an increase in foreclosure activity for the year. Other metro areas with foreclosure rates in the top 20 were Atlanta at No. 7 (3.51 percent of housing units with a foreclosure filing), Chicago at No. 9 (3.31 percent), Rockford, Ill., at No. 10 (3.28 percent), Las Vegas at No. 16 (3.10 percent), and Phoenix at No. 17 (3.09 percent). Report License The RealtyTrac U.S. Foreclosure Market Report is the result of a proprietary evaluation of information compiled by RealtyTrac; the report and any of the information in whole or in part can only be quoted, copied, published, re-published, distributed and/or re-distributed or used in any manner if the user specifically references RealtyTrac as the source for said report and/or any of the information set forth within the report. Data Licensing and Custom Report Order Investors, businesses and government institutions can contact RealtyTrac to license bulk foreclosure and neighborhood data or purchase customized reports. We can provide you with nationwide, regional or local data and reports dating back to 2005 for both internal use and resale. For more information contact our Data Licensing Department at 800.462.5193 or datasales@realtytrac.com About RealtyTrac Inc. RealtyTrac -- http://www.realtytrac.com-- is a supplier of U.S. real estate data, with more than 1.5 million active default, foreclosure auction and bank-owned properties, and more than 1 million active for-sale listings on its website, which also provides essential housing information for more than 100 million homes nationwide. This information includes property characteristics, tax assessor records, bankruptcy status and sales history, along with 20 categories of key housing-related facts provided by RealtyTrac's wholly-owned subsidiary, Homefacts(R). RealtyTrac's foreclosure reports and other housing data are relied on by the Federal Reserve, U.S. Treasury Department, HUD, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate. * National Credit Default Rates Up in Fourth Quarter 2012 --------------------------------------------------------- Data through December 2012, released on Jan. 15 by S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed an increase in national default rates during the month. After hitting a post-recession low of 1.46% in September 2012, the national composite increased for three consecutive months, posting 1.55% in October, 1.64% in November and reaching 1.72% in December. The first mortgage default rate showed the same pattern; it increased from its post-recession low of 1.36% in September, to 1.47% in October, 1.58% in November, reaching 1.68% in December. The second mortgage went up to 0.69% in December from its historic low of 0.62% posted last month. Auto loan default rates remain flat at 1.09% since November. Bank card default rate hit the lowest post-recession rate of 3.53% in December; it was 3.58% in November. "Overall, 2012 showed improvement in consumer credit quality," says David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Dow Jones Indices. "However, fourth quarter consumer default rates reversed some of the recent declines and pushed the composite default rate above its level of last May. The principal culprits were first and second mortgages. Default rates for auto loans were roughly stable over the year and default rates for bank cards continued to drop. All loan types remain below their respective levels a year ago. "The national composite rate was 1.72% in December, eight basis points above the November rate and 26 basis points above September's post-recession low. It was primarily driven by the first mortgage rate at 1.68% in December, ten basis points above the previous month's rate and 32 basis points above September's post-recession low. The second mortgage rate rose seven basis points from last month's historic low, auto loans remained flat, and bank cards were down five basis points to a new post-recession low of 3.53%. Bank card default rate moved down for eight consecutive months, it was 96 basis points down from its April 2012 level. "All five cities we cover showed increases in their default rates in December. The major increases were Miami, up 41 basis points, Chicago up 27, and Los Angeles up 24 basis points. New York and Dallas were marginally higher by four and one basis points. Miami had the highest default rate at 3.07% and Dallas -- the lowest at 1.26%. All five cities remain below default rates they posted a year ago, in December 2011." The table on the next page summarizes the December 2012 results for the S&P/Experian Credit Default Indices. These data are not seasonally adjusted and are not subject to revision. S&P/Experian Consumer Credit Default Indices National Indices Index December 2012 November 2012 December 2011 Index Level Index Level Index Level Composite 1.72 1.64 2.24 First Mortgage 1.68 1.58 2.19 Second Mortgage 0.69 0.62 1.33 Bank Card 3.53 3.58 4.60 Auto Loans 1.09 1.09 1.27 Source: S&P/Experian Consumer Credit Default Indices Data through December 2012 The table below provides the S&P/Experian Consumer Default Composite Indices for the five MSAs: Metropolitan December 2012 November 2012 December 2011 Statistical Area Index Level Index Level Index Level New York 1.51 1.47 2.13 Chicago 2.12 1.85 2.84 Dallas 1.26 1.25 1.56 Los Angeles 1.84 1.60 2.54 Miami 3.07 2.66 4.73 Source: S&P/Experian Consumer Credit Default Indices Data through December 2012 About S&P Dow Jones Indices S&P Dow Jones Indices LLC, a subsidiary of The McGraw-Hill Companies, Inc., -- http://www.spdji.com-- is the world's largest, global resource for index-based concepts, data and research. Home to iconic financial market indicators, such as the S&P 500 and the Dow Jones Industrial AverageSM, S&P Dow Jones Indices LLC has over 115 years of experience constructing innovative and transparent solutions that fulfill the needs of institutional and retail investors. About Experian Experian is a global information services company, providing data and analytical tools to clients in more than 80 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score and protect against identity theft. Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2011 was $4.2 billion. Experian employs approximately 15,000 people in 41 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and Sao Paulo, Brazil. * Fitch Says No Economic Boost to Come from Global Corporate Capex ------------------------------------------------------------------ Fitch Ratings' newly-published research report suggests that there will be no investment boom among its rated non-financial corporates that would stimulate growth in the weakly growing major advanced economies. Capex will be flat or only have modest growth in 2013 and 2014. Fitch does not believe that it will fall substantially, simply that there is not a "boom" stored up. Fitch's historical capex data show that Fitch-rated entities have not underinvested in recent years. Fitch has used the capex: corporate revenues and capex: depreciation and amortisation ratios to show this. The first ratio is a more dynamic measure of capex performance in that it tracks capex against non-financial corporates' revenue growth. The second can be classified as an accounting measure, but captures well how non-financial corporates are investing in their business relative to its use as measured by depreciation and amortisation. In 2005 the capex to corporate revenue ratio among US corporates was 5.8% and had grown to 6.8% by 2008. It fell sharply to 5.9% in 2009. However, capex grew over the next three years, with the ratio increasing to a forecast estimate of 6.7% in 2012. The lowest the capex to depreciation and amortisation ratio fell to was 1.01x in 2009, suggesting that plants and equipment was not unduly run down among Fitch's rated entities. There is a similar picture for Fitch's rated corporate entities in EMEA. At its low in 2010, one year after that of the US, capex to revenue fell to just over 6%. It started to grow in 2011, rising to 6.7% for the 2012 forecast. The capex to depreciation and amortisation ratio remained above 1x throughout the period under review. Fitch forecasts falls in US corporates' aggregate capex in 2013 and a further fall in 2014. The agency expects the ratio of forecast capex to forecast revenue to be 6.5% in 2013, just below the 2012 forecast, with a fall to 6.2% in 2014. In EMEA Fitch expects a fall in capex in 2013 and a recovery in 2014. Fitch also believes that if there is a radical improvement in market sentiment corporates have the capacity/firepower to increase capex accordingly. The report, entitled 'No Economic Boost to Come from Global Corporate Capex' is available at www.fitchratings.com. * Moody's Says 2013 Outlook for US Higher Education Sector Neg. --------------------------------------------------------------- The 2013 outlook for the entire US higher education sector is negative, including the market-leading, research-driven colleges and universities, says Moody's Investors Service in its annual industry outlook. Previously Moody's had a stable outlook for these leading institutions and a negative outlook for the rest of the sector since 2009. Moody's perceives mounting fiscal pressure on all key university revenue sources. "The US higher education sector has hit a critical juncture in the evolution of its business model," says Eva Bogaty, the Moody's Assistant Vice President -- Analyst who is the lead author on the report "US Higher Education Outlook Negative in 2013." "Even market-leading universities with diversified revenue streams are facing diminished prospects for revenue growth." The rating agency says that most universities will have to lower their cost structures to achieve long-term financial sustainability and fund future initiatives. Universities have been restraining costs in response to the weak economic conditions since the 2008-2009 financial crisis, but they have only recently begun examining the cost structure of their traditional business model. "The sector will need to adjust to the prospect of prolonged muted revenue growth," says Ms. Bogaty. "Strong governance and management will be needed by most universities as they navigate through this period of intensified change and challenge." One critical factor behind the negative outlook is that price sensitivity continues to suppress the growth in revenue from net tuition. Moody's says all but the most elite universities face diminished student demand and increased price sensitivity. Reasons include the prolonged period of depressed family income and household net worth, as well as the dip in the number of domestic high school graduates since the peak of 3.34 million for school year 2007-2008. Another factor behind the negative outlook is all non-tuition revenue sources are also strained. Public universities can expect the share of their operating revenues from state appropriations to continue to stagnate or even decline. Research funding, already flat, is vulnerable to cuts in federal budget negations. In addition, universities that count on endowments must contend with weak returns in fiscal 2012 and what is likely to be a volatile investment environment in 2013. For universities that own and operate hospitals, patient care revenues continue to face downward pressure. The rising burden of loans on students and increase in student loan defaults is also negatively impacting universities, leading more people to question the value of a college degree. Most universities remain well below the threshold for being cut off from federal aid because of the rate of students default, says Moody's. However, some for-profit universities as well as universities that serve low income populations have very high default rates. Additional risks to the sector include negative accreditation actions, which increased by almost 50% from 2009 through 2011. The outlook expresses Moody's expectations for the fundamental credit conditions in the sector over the next 12 to 18 months. It does not speak to expectations for individual rating changes and is not a prediction of the expected balance of rating changes during this time frame. * Bank of America Takes a Mortgage Mulligan ------------------------------------------- Shayndi Raice, Nick Timiraos and Dan Fitzpatrick of The Wall Street Journal wrote that less than two years after embarking on a painful retreat from home lending, Bank of America Corp. is girding for a new run at the U.S. mortgage business. Whether that gamble pays off will depend in large measure on how long the mortgage market's run of record profits continues, the report said. The Charlotte, N.C., company aims to sell more mortgages through its 5,000-plus branches, executives said. The fourth-biggest U.S. mortgage lender, after Wells Fargo & Co., J.P. Morgan Chase & Co. and U.S. Bancorp, is intent on "growing that business," Chief Executive Brian Moynihan said at a December investor conference, the report noted. The decision is Bank of America's latest about-face in a business that the company once sought to dominate, the report said. It also underscores the plight of many U.S. banks, which are struggling to find profitable businesses in the face of a sluggish economy, tougher regulation and hefty legal costs. Bank of America's $2.5 billion purchase of Countrywide Financial Corp. in 2008 briefly made it the top U.S. home lender before the housing market crash saddled the company with billions of dollars in losses, the report noted. The seeds for the latest shift were planted in 2010 and 2011, when the bank moved to roll back its home-lending business as it sought to raise capital, according to the report. Some executives who came to Bank of America from Countrywide warned that ceding its mortgage franchise was a big mistake, but Mr. Moynihan was a fierce advocate, said people familiar with the discussions. WSJ, however, said the retreat couldn't have come at a worse time. Declining interest rates and federal housing-aid programs spurred a rush of home refinancing, ushering in what has been the mortgage sector's most profitable stretch in the past decade. Into the breach stepped Bank of America's rivals led by Wells Fargo, which last Friday reported record 2012 net income largely because of a booming mortgage business, and J.P. Morgan, which is expected to do the same Wednesday. In 2007, when BofA took its first stake in Countrywide, "making money on mortgages was like picking up pennies in front of steamrollers," Scott Simon, who heads the mortgage-backed securities group at Pacific Investment Management Co., or Pimco, a unit of Allianz SE, told WSJ. "Today, it's like you're standing in a field, you can see 20 miles in every direction, and there's $1,000 bills lying everywhere." As part of the 2010-2011 retreat, the company stopped offering certain mortgage products, sold an insurance unit and exited wholesale lending, in which loans are bought from independent brokers. The most drastic decision was to stop purchasing loans from correspondent banks, a practice that once accounted for nearly half of Bank of America's mortgage originations. "What we found is there is tail risk," Ron D. Sturzenegger, the executive BofA hired in 2011 to run its legacy mortgage portfolio, on the risk of buying loans from third parties, told WSJ. If the bank must take risks, "I want to do it for my own customers," he said. "We're going to use our capital, our balance sheet to focus in on our customers." WSJ said that should BofA succeed in its latest expansion, it would add a new competitor in a market that has enjoyed fat margins, which would help home buyers while pressuring results at other big banks. Mr. Moynihan's plan centers on growing consumer "wallet share" by selling more products, such as asset management and investment accounts, to its existing customers, WSJ related. The company plans to offer lower rates to clients who have more assets with the bank. For example, a borrower with $250,000 in assets at Bank of America might receive a 0.5 percentage-point discount on a loan. Bank of America is expected on Thursday to report its first quarterly gain in home-lending volume versus the year-ago period since 2009. The bank also plans to resume mortgage marketing and shift some employees who have been working through delinquent loans to processing new mortgages, say executives in charge of the home-lending unit. Bank of America hired 4,000 loan processors in 2012, said executives. Some analysts say a retail-only strategy, which carries high overhead costs but is profitable during periods of heavy refinancing, could prove difficult when interest rates rise and home purchases take a larger share of the market?something they expect to happen in the next year or two. "What BofA is doing is difficult to pull off," Guy Cecala, publisher of Inside Mortgage Finance, told WSJ. "The problem is that most retail banking customers don't go to their own bank for a new mortgage." Even if the mortgage business continues to boom, expansion isn't a given. The company has been criticized for poor customer service, and many top-producing loan officers have departed, WSJ said. WSJ related that Chris Bridgman left BofA in late 2011 after six years as a loan officer in Sunnyvale, Calif., frustrated by closing times that could take six months and jeopardized his clients' ability to close on home sales. "It was ruining my referral relationships with Realtors," he says. Turning those deals around quickly is "what keeps you in business." Matt Vernon, a Bank of America executive in charge of home loans, said that in 2012 the bank made a decision to keep capacity low as it was pulling back from the mortgage business. Now, he said, the company is increasing its ability to serve its customers, which should alleviate some problems with customer service. "In 2013, the constraints begin to come off," he said. Executives have said the bank's new strategy will take time to put in place. "We are not doing the job we need to do in mortgage yet," Mr. Moynihan said last month. "We know that. Everybody knows that. The volumes are high. The process is difficult." BofA may not be done cutting ties to the old Countrywide. As part of its 2011 mortgage review, the bank began looking at selling the 353,000-square-foot Countrywide headquarters, a gated complex that sits on 20 acres located near the Ventura Freeway, said a person familiar with the review. A spokesman for the bank said that the Calabasas, Calif., building, along with all facilities, was reviewed for potential sale and lease-back, in which the team would continue to occupy the site. The company continues to own and occupy the site, he said. Bank of America Corporation is a bank holding company and a financial holding company. * Morgan Stanley to Defer Bonuses to Top Bankers, Traders --------------------------------------------------------- Michael J. Moore of Bloomberg News reported that Morgan Stanley (MS), the investment bank that's cutting 1,600 jobs, is deferring 100 percent of bonuses for some senior bankers and traders over three years, according to a person briefed on the matter. The deferrals apply to employees who have both total pay of more than $350,000 and bonuses of at least $50,000, said the person, who asked not to be identified because the plans hadn't been announced, according to the report. Bloomberg recalled that Morgan Stanley last year capped most cash bonuses at $125,000 as it seeks to tie employees to the firm and satisfy regulators' demands for long-term incentives. Chief Executive Officer James Gorman, 54, has said banks need to balance rewards to employees with shareholder returns. Morgan Stanley, Bloomberg added, set aside $5.17 billion for compensation in its investment-banking and trading division in the first nine months of 2012, a 9 percent decline from a year earlier. Return on equity (MS), excluding charges tied to changes in the value of the company's own debt (MS), was about 5 percent in the first three quarters and below Gorman's target of 15 percent. Deutsche Bank The Bloomberg report pointed out that banks are cutting pay and increasing deferrals as investors demand higher returns. Deutsche Bank AG (DBK) is weighing 2012 bonus cuts of as much as 20 percent for investment bankers in Europe, while those in New York will see smaller declines, four people briefed on the matter said this week. The Frankfurt-based lender also is increasing the vesting period for deferred bonuses for about 150 senior managers to five years from three, and will make a single payout after the deferral period ends rather than staggered payments each year. Jefferies Group Inc. (JEF), the investment bank selling itself to Leucadia National Corp., has broken from that trend, saying it will pay employees year-end bonuses in immediately available cash. Deferred bonuses for affected employees at Morgan Stanley will be paid 50 percent in cash and 50 percent in stock, said the person briefed on the matter, Bloomberg reported. Bankers will get a quarter of the cash in May, with another quarter coming in each of the following three Decembers, the person said. The stock (MS) also will be paid over three years with the first installment in December. * FASB Calls for More Disclosure on Repurchase Deals ---------------------------------------------------- Erin Coe of BankruptcyLaw360 reported that the Financial Accounting Standards Board on Tuesday proposed requirements for companies to provide more financial disclosure on repurchase agreements, seeking to prevent a repeat of MF Global Inc.'s meltdown and misplacement of more than $1 billion in customer funds. The board aims to clarify the guidance for how to distinguish these transactions as sales or as secured borrowings and improve disclosures to ensure that investors are receiving useful information about the arrangements, the report said. It is seeking comment on the proposal until March 29, the report added. * House Approves Sandy Aid Package ---------------------------------- Stephanie Kirchgaessner, writing for The Financial Times, reported that the House of Representatives has passed a $51bn aid package to states battered by superstorm Sandy, despite strong opposition from the Republican majority. Passage of the law on Tuesday came three weeks after Chris Christie, the Republican governor of New Jersey, and other Republicans from the northeast of the country, slammed Republican leader John Boehner for delaying a vote on the measure because of conservative unease with the bill, the report noted. The Financial Times article said the measure must now go back to the Senate for final passage. An amendment sponsored by a conservative Republican that would have forced dollar-for-dollar domestic and defence spending cuts to pay for $17bn in storm relief was defeated with the help of Democrats although it received the support of a majority of Republicans, the report said. The Club for Growth, the anti-tax group, led opposition to the legislation and supported the call for across-the-board discretionary spending cuts, although Congress has traditionally passed disaster relief legislation without offsetting the charges, the Financial Times related. "It's the very least Congress can do to start acting in a fiscally responsible manner," the Club for Growth said in an email to members of Congress before it was defeated. The $51bn package passed by 241 to 180, according to the report. It will help rebuild damaged public transport systems in the two hardest-hit states of New York and New Jersey, shore up funding for the Federal Emergency Management Agency that is leading rebuilding efforts, and help other long-term projects. The passage of the bill was significant beyond storm relief, the Financial Times noted. It showed, at least on this issue, that Mr Boehner was willing to bring a bill to the floor of the House that did not have the majority support of his Republican conference. The Financial Times pointed out that it is an unusual move for a House speaker but one that was likely considered politically expedient given Mr. Christie's recent admonishment of his party in Washington. * Gonzalez Saggio Adds Three Attorneys in Atlanta Office -------------------------------------------------------- Gonzalez Saggio & Harlan LLP, (GSH), a full-service minority-owned law firm, announced on Jan. 17 the hiring of three attorneys in its Atlanta office to grow its financial services practice. James W. "Beau" Hays and B. Emory Potter join as Partners, and Alexander Yusupov as an associate, all from the firm Hays & Potter, P.C., a full service commercial and construction litigation firm focused on a full range of commercial collection services. The attorneys become a vital part of Gonzalez Saggio & Harlan LLP which has 15 offices across the country. The Atlanta office has grown from three to nine attorneys since opening in 2010. "The depth of experience the Hays & Potter attorneys bring to Gonzalez Saggio & Harlan aids in rounding out the firm's full complement of litigation services for our clients and prospects, both locally and nationally," said Tracey Blackwell, Managing Partner of the firm's Atlanta Office and National Co-Chair of the firm's Litigation Practice Group. "We are pleased to welcome Beau, Emory, and Alex to the firm. Their talent will help fulfill the growing business needs of our clients for cost effective, one stop, turnkey solutions to commercial debt collection." James W. "Beau" Hays Mr. Hays has acted as lead counsel in litigation matters for over twenty years, specializing in commercial disputes and bankruptcy law. He also has extensive experience in all areas of creditors' rights, collections, construction law, business law, and civil litigation. Mr. Hays is Immediate Past President of the Commercial Law League of America (CLLA), an Associate Member of the National Association of Bankruptcy Trustees and has served as Legislative Liaison for the Creditors Rights Section of the State Bar of Georgia. He is an editor for the National Association of Credit Management's Handbook of Credit and Commercial Laws, focusing on chapters related to materialman's liens and construction bonds. Mr. Hays earned his J.D. at the University of North Carolina School of Law, where he was a member of the Holderness Moot Court Bench. He received a B.A. in History and Political Science at the University of North Carolina at Chapel Hill. He is admitted to practice in Georgia, the U.S. District Court for the Northern, Middle, and Southern Districts of Georgia. He is a member of the State Bar of Georgia and has earned the AV Preeminent peer review rating by Martindale-Hubbell. B. Emory Potter Mr. Potter is a construction, commercial and civil litigation attorney with extensive trial experience. He specializes in materialman's liens, construction bonds, creditors' rights, and commercial collections, handling a large volume of litigation from initiation of suit through post-judgment collection. He has served as a Municipal Court Judge for the City of Chamblee, acted as a Special Master for the Superior Court of Fulton County, and he founded and served as the Charter Chair of the Creditors' Rights Section of the State Bar of Georgia, He has served as Chair of the Nominating Committee, and on the Board of Governors of The Commercial Law League of America [CLLA]. He currently serves as an attorney coach for the Wesleyan High School Mock trial team which has won three region championships under his leadership. Mr. Potter earned his J.D. at Georgia State University College of Law. He holds a B.S. in Biochemistry from Auburn University. Potter is admitted to practice in Georgia, the U.S. District Court for the Northern District of Georgia, and U.S. Court of Appeals for the Federal Circuit. Alexander Yusupov Mr. Yusupov will represent clients in commercial, business, construction and civil law, creditors' rights, and collection matters. Prior to joining GSH, Mr. Yusupov served as lead counsel in numerous bench and jury trials, as well as in appellate courts. Graduating in the top 5% of his class, Mr. Yusupov earned his J.D. at John Marshall Law School of Atlanta, where he was the Articles Editor of the inaugural edition of John Marshall Law School Law Journal. He received a BBA in Business Administration graduating magna cum laude. Mr. Yusupov is admitted to practice in Georgia, the U.S. District Courts of the Northern and Middle Districts, and Georgia's appellate courts. He is a member of the Georgia Bar Association, where he is a member of the Creditors' Rights Section Gonzalez Saggio & Harlan LLP financial services litigation attorneys provide transactional, legislative, litigation, and counseling services to financial institutions and financial service providers, as well as holding companies and investors in such institutions. Its experience includes representing financial institutions and subsidiaries in consumer litigation against claims made under the Fair Credit Reporting Act (FCRA), the Fair Debt Collections Practices Act, the Truth in Lending Act and the Real Estate Settlement Practices Act. The firm counsels and assists financial sector firms with respect to business and contract disputes, including those involving securities, annuities, insurance, mortgage and consumer fraud, RICO, foreclosure and bankruptcy, professional negligence and other misconduct. About Gonzalez Saggio & Harlan Gonzalez Saggio & Harlan LLP -- http://www.gshllp.com-- is a national minority-owned law firm with 15 offices located in Atlanta; Boca Raton, Fla.; Boston; Chicago; Cleveland; Indianapolis; Los Angeles; Milwaukee; Nashville, Tenn.; New York; Phoenix; Stamford, Conn.; Washington, D.C.; Wayne, N.J; and West Des Moines, Iowa. The firm represents midsized to Fortune 1000 Corporations, governmental entities, and individuals in the areas of litigation, employment, environmental, corporate and transactional, public finance, intellectual property & technology, energy, communications & utilities law, restaurant & hospitality, and education law. Gonzalez Saggio & Harlan LLP practices law with a commitment to quality, diversity and to the communities it serves. * Law360 Names Weil Gotshal Bankruptcy Group of the Year -------------------------------------------------------- Brian Mahoney of BankruptcyLaw360 reported that the bankruptcy practice group at Weil Gotshal & Manges LLP continued a long tradition of managing and litigating large, global restructurings in 2012, negotiating the distribution of more than $6.5 billion to creditors on behalf of Washington Mutual Inc. and winning a major trial for MF Global UK Limited administrators over multibillion- dollar repurchase-to-maturity transactions, earning a spot among Law360's Bankruptcy Practice Groups of the Year. Weil's portfolio of past and current bankruptcy clientele includes corporate giants like Lehman Brothers and General Motors and smaller portfolio companies, the report added. * Wiley Rein Picks Bankruptcy Vet from Dickstein Shapiro -------------------------------------------------------- George R. Pitts, one of Washington, DC's most prominent bankruptcy law practitioners, has joined Wiley Rein LLP as a partner in its Bankruptcy & Financial Restructuring Practice, according to a statement issued by the firm. For more than 25 years, Mr. Pitts has handled complex insolvency cases and commercial litigation in courts throughout the United States. Over his distinguished career, he has represented numerous financial institutions in connection with a wide range of difficult matters, including multiple jury and bench trials. "We are delighted to welcome George to our firm," said Chairman Richard E. Wiley. "His arrival strengthens our impressive roster of bankruptcy attorneys, and he will be a great asset to our clients." Mr. Pitts comes to Wiley Rein from the Washington, DC office of Dickstein Shapiro, where he had been a partner since 1995. Handling bankruptcy cases spanning 10 states and the District of Columbia, he has represented debtors, financial institutions, financing companies, franchisors, creditors' committees, trustees, the Federal Deposit Insurance Corporation and the Resolution Trust Corporation. His other casework has involved receiverships, mechanics' liens, foreclosures and issues related to the Uniform Commercial Code. His extensive litigation experience includes federal and state trials involving unfair competition claims, insurance, real estate, business torts, truth in lending and commercial and partnership disputes. "George is highly respected and distinguished in the national bankruptcy bar," said H. Jason Gold, chair of Wiley Rein's Bankruptcy & Financial Restructuring Practice. "His significant background will complement our core bankruptcy practice, and his broad and deep litigation experience will be of particular value to our team." Mr. Pitts' arrival will bolster Wiley Rein's acclaimed Bankruptcy & Financial Restructuring Practice, which was named to the top tier in Washington, DC in the 2013 "Best Law Firms" rankings published annually by U.S. News & World Report. In addition, Chambers USA and The Legal 500 US consistently rank the group as among the best in Washington, DC and the nation respectively. The team, one of the largest bankruptcy practices in the Washington, DC area, includes five business bankruptcy lawyers certified by the American Board of Certification. Mr. Gold, a bankruptcy trustee, was recently elected to the Board of Directors of the National Association of Bankruptcy Trustees. Mr. Pitts earned his J.D. from the University of Virginia School of Law, his M.A. and Ph.D. from the University of Pennsylvania, and his B.A., with high honors, from Swarthmore College (Phi Beta Kappa). Mr. Pitts may be reached at: George R. Pitts, Esq. WILEY REIN LLP 1776 K Street NW Washington, DC 20006 Tel: (703) 905-2840 Email: gpitts@wileyrein.com * BOOK REVIEW: Corporate Venturing -- Creating New Businesses ------------------------------------------------------------- Authors: Zenas Block and Ian C. MacMillan Publisher: Beard Books, Washington, D.C. 2003 (reprint of 1993 book published by the President and Fellows of Harvard College). List Price: 371 pages. US$34.95 trade paper, ISBN 1-58798-211-0. Creating new businesses within a firm is a way for a company to try to tap into its potential while at the same time minimizing risks. A new business within a firm is like an entreprenuerial venture in that it would have greater flexibility to opportunistically pursue profits apart from the normal corporate structure and decision-making processes. Such a business is different from a true entrepreneurial venture however in that the business has corporate resources at its disposal. Such a company business venture has to answer to the company management too. Corporate venturing--to use the authors' term--offers innovative and stimulating business opportunities. Though venturing is in a somewhat symbiotic relationship with the parent firm, the venture would never threaten to ruin the parent firm as a entrepreneur might be financially devastated by failure. Block and MacMillan contrast an entreprenuerial enterprise with their subject of corporate venturing, "When a new entrepreneurial venture is created outside an existing organization, a wide variety of environmental factors determine the fledgling business's survival. Inside an organization . . . senior management is the most critical environmental factor." This circumstance is the basis for both the strengths and limitations of a corporate venture. In their book, the authors discuss how senior management working with the leadership of a corporate venture can work in consideration of these strengths and weaknesses to give the venture the best chances for success. If the venture succeeds beyond the prospects and goals going into its formation, it can always be integrated into the parent company as a new division or subsidiary modeled after the regular parts of a company with the open-ended commitment, regular hiring practices, and reporting and coordination, etc., going with this. As covered by the authors, done properly with the right commitment, sense of realism and practicality, and preliminary research and ongoing analysis, corporate venturing offers a firm new paths of growth and a way to reach out to new markets, engage in fruitful business research, and adapt to changing market and industry conditions. The principle of corporate venturing is the familiar adage, "nothing ventured, nothing gained." While it is improbable that a corporate venture can save a dying firm, a characteristic of every dying firm is a blindness about venturing. Just thinking about corporate ventures alone can bring to a firm a vibrancy and imagination needed for business longevity. Ideas, insights, and vision are the essence of corporate venturing. But these are not enough by themselves. Corporate venturing is based as much on the right personnel, especially the top leaders. The authors advise to select current employees of a firm to lead a corporate venture whenever feasible because they already have relationships with senior management who are the ultimate overseers of a venture and they understand the corporate culture. In one of their several references to the corporate consultant and motivational speaker Peter Drucker, the authors quote him as identifying only half jokingly the most promising employees to lead the corporate venture as "the troublemakers." These are the ones who will be given the "great freedom and a high level of empowerment" required to make the venture workable and who also are most suited to "adapt rapidly to new information." Such employees for top management of a venture are not entirely on their own. The other side of this, as Brock and MacMillan go into, is for such venture management to earn and hold the trust and confidence of the firm's top management and work within the framework and follow the guidelines set for the venture. Corporate venturing is an operation which is a hybrid of the standard corporate interests and operations and an independent business with entrepreneurial flexibility mainly from focus on one product or service or at most a few interrelated ones, simplified operations, and streamlined decision-making. From identifying opportunities and getting starting through the business plan and corporate politics, Brock and MacMillan guide the readers into all of the areas of corporate venturing. Zenas Block is a former adjunct professor with the Executive MBA Program at the NYU Stern School of Business. Ian C. MacMillan is associated with Wharton as a professor and a director of a center for entrepreneurial studies. ********* 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 US$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 Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com 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/booksto order any title today. ********* 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 ***