/raid1/www/Hosts/bankrupt/TCR_Public/130131.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, January 31, 2013, Vol. 17, No. 30
Headlines
1701 COMMERCE: Dougherty Okayed to Foreclose on Property
250 AZ: Seeks to Use Rental Proceeds From 84.7% Owned Building
250 AZ: Terminating Daymark Contract as Asset Manager
250 AZ: Proposes CBRE Inc. as Property Manager
AEMETIS INC: Laird Cagan Discloses 13.7% Equity Stake
ALG INTERMEDIATE: S&P Gives Prelim. 'B' CCR, Rates New Loans 'B+'
AMERICAN POWER: Receives $1.5 Million Order From Cudd Energy
ARCHDIOCESE OF MILWAUKEE: Wants to Stop Claims Objection Deadline
ARCHDIOCESE OF MILWAUKEE: Hamilton Fee Cap Hiked by $10,000
BEAZER HOMES: Fitch Assigns 'CCC+' Rating to $200MM Senior Notes
BEAZER HOMES: S&P Assigns CCC Rating to $200MM Sr. Unsecured Notes
BERRY PLASTICS: S&P Affirms 'B' Corporate Credit Rating
BIOLITEC INC: Proposes Lowenstein Sandler as Counsel
BIOLITEC INC: Former COO Says Claims Not Estate Property
BIOLITEC INC: Proposes Mazzotta for ADI Litigation
CAPITOL BANCORP: Combined Hearing on Plan Set for March 5
CAPROCK WINERY: Failed Buyer Files Personal Bankruptcy
CHAMPION INDUSTRIES: Has Until March 31 to Comply with Covenants
COOKE AQUACULTURE: Moody's Assigns 'B3' CFR; Outlook Stable
COOKE AQUACULTURE: S&P Assigns 'B-' CCR; Rates $250MM Notes 'CCC+'
COPYTELE INC: Obtains $1.7 Million From Private Placement
CW MINING: Utah Court Rules on COP Coal Appeal
DAE AVIATION: S&P Affirms 'B-' CCR; Outlook Stable
DEX ONE: S&P Revises 'CCC' Rating Outlook to Negative
DIAL GLOBAL: Terminates Offerings Under Various Plans
DIGITAL DOMAIN: Seeks Payments Under KEIP's 3rd Performance Goal
DREIER LLP: Court Rules on Bid to Seal Documents
E-DEBIT GLOBAL: Appoints CDO, President and COO for Group-Link
EMERGENCY MEDICAL: S&P Affirms 'B+' Corporate Credit Rating
FIRST DATA: Incurs $179 Million Net Loss in Fourth Quarter
GLOBAL NAPS: Judge OKs $36M Verizon Settlement
GO DADDY: Loan Repricing No Impact on Moody's 'Ba3' CFR
GRANITE DELLS: CMS's Stay Not Applicable in Prosecution of Plans
GRANITE DELLS: March 6 Confirmation Hearing on Noteholders' Plan
GSC GROUP: Kaye Scholer Admits 'Mistakes Were Made' in Disclosures
HD SUPPLY: Moody's Assigns 'Caa1' Rating to Sr. Unsecured Notes
HD SUPPLY: S&P Rates $1.275-Bil. Senior Unsecured Notes 'CCC+'
HOSTESS BRANDS: Private Equity Team Offers $400M for Twinkies
INTERFAITH MEDICAL: Files Schedules of Assets and Liabilities
INTERFAITH MEDICAL: Hearing on Further Use of Cash on Feb. 11
INTERFAITH MEDICAL: Nixon Peabody Approved as Corporate Counsel
ISC8 INC: Amends Fiscal 2012 Annual Report
IVOICE INC: Appoints Norris Lipscomb as Chairman and CEO
JACUZZI BRANDS: Moody's Cuts CFR to 'Ca'; Outlook Developing
LAURENT GRUET: Files Bankruptcy to Ward of Seizure of Assets
JETSTAR PARTNERS: Wins Confirmation of Chapter 11 Plan
LCI HOLDING: Court Directs Appointment of Patient Care Ombudsman
LEAR CORP: Moody's Corrects January 14 Rating Release
LEHMAN BROTHERS: Aussie Unit Appeals Ruling Favoring Charities
LEHMAN BROTHERS: Class Certification for Suit vs. E&Y, UBS
LEHMAN BROTHERS: Withdraws Bid for $200-Mil. Essex Reserve
LEHMAN BROTHERS: NLIC Opposes Stay of Distributed Action
LEHMAN BROTHERS: More Subpoenas for Deutsche, 13 Companies
LEHMAN BROTHERS: Committee Backs Traxis Bid for New Checks
LEHMAN BROTHERS: UK Watchdog Clears E&Y Over Client Funds Audit
LKA INTERNATIONAL: Releases Vein Samples for Golden Wonder Mine
LODGENET INTERACTIVE: Automatic Stay in Effect
LON MORRIS: Has Final OK to Obtain $500,000 in Additional Loans
MARINA BIOTECH: Amends 5 Million Common Shares Prospectus
MARINA BIOTECH: Sabby Volatility Discloses 2% Equity Stake
METROPLAZA HOTEL: Hires Goldstein Lieberman as Accountant
MODERN PRECAST: Panel Hires Ciardi Ciardi & Astin as Counsel
MONITOR COMPANY: Can Use Cash Collateral to Fund Wind-Down Account
MONITOR COMPANY: Court Appoints Warren H. Smith as Fee Auditor
MSR RESORT: Plan Confirmation Hearing on Adjourned to Feb. 4
MUNIMAE TE: Moody's Assigns 'Ba1' Rating to Series A-5 Shares
NATIONAL HOLDINGS: Amends Fiscal 2012 Annual Report
NETFLIX INC: Moody's Assigns 'Ba3' Rating to Sr. Unsecured Notes
NETFLIX INC: S&P Revises Outlook on 'BB-' CCR to Negative
NEXSTAR BROADCASTING: Initiates Cash Dividend of $0.12 Per Share
NEXTWAVE WIRELESS: Suspending Filing of Reports with SEC
NEXTWAVE WIRELESS: AT&T No Longer Owns Common Shares
NYTEX ENERGY: To Issue 20 Million Shares Under 2013 Equity Plan
NNN LENOX: Balks at Motion to Transfer Venue of Bankruptcy Case
OMEGA NAVIGATION: Delos Is Stalking Horse Bidder
OSCAR BRAUN: Unused Retainer Belongs to Personal Bankruptcy Estate
OVERSEAS SHIPHOLDING: Can Hire Mullin Hoard as Litigation Counsel
OVERSEAS SHIPHOLDING: Court OKs Garden City as Information Agent
PEAK RESORTS: Committee Objects to Add'l Financing of $400,000
REALOGY CORP: Names Former CBRE CEO to Board of Directors
RADIAN GROUP: To Hold Fourth Quarter Conference Call on Feb. 11
RESIDENTIAL CAPITAL: CHFA Wants Stay Relief for Return of Docs
RESIDENTIAL CAPITAL: Minor Amendment to Berkshire's APA
RESIDENTIAL CAPITAL: Resolves SBO Servicers' Sale Objections
RESIDENTIAL CAPITAL: To Close $3B Mortgage Biz Sale By Mid-Feb.
REVSTONE INDUSTRIES: Pachulski Takes Over as Counsel
REVSTONE INDUSTRIES: Creditors Committee Hiring Womble Carlyle
RYLAND GROUP: Reports $28.6 Million Net Income in Fourth Quarter
SABINE PASS: Moody's Affirms 'Ba3' Rating on Sr. Secured Notes
SAGAMORE PARTNERS: Plan Declared Effective on Jan. 9
SCHAHIN OIL: Fitch Assigns 'BB-' Issuer Default Ratings
SCHAHIN OIL: S&P Assigns 'BB+' Corporate Credit Rating
SCHOOL SPECIALTY: List of 40 Largest Unsecured Creditors
SCHOOL SPECIALTY: U.S. Trustee, Noteholders Balk at Roll-Up
SOUTHERN AIR: Wants Until May 28 to Propose Chapter 11 Plan
SOUTHERN AIR: Court OKs PricewaterhouseCoopers as Tax Consultant
SOUTHERN AIR: Lowenstein Sandler Approved as Committee's Counsel
SOUTHERN AIR: Court OKs Pachulski as Committee's Co-Counsel
SUPERVALU INC: S&P Puts 'B' CCR on CreditWatch Positive
SWIFT SERVICES: S&P Retains 'B+' Rating on Second-Lien Notes
TALOS ENERGY: S&P Assigns 'B-' CCR, Rates $300MM Notes 'CCC+'
TELETOUCH COMMUNICATIONS: Stratford Put Option Extended to March
TERVITA CORP: Moody's Assigns 'B2' Ratings to Term Loan & Notes
TERVITA CORP: S&P Gives 'B-' Rating on Proposed 1st Lien Notes
TRIAD GUARANTY: Voluntarily Deregisters Common Stock With SEC
VIGGLE INC: 176MM TV Hours Checked in with Viggle in One Year
VIVARO CORP: Sues Distributor for $1.1M Over Missed Payments
VENTANA 20/20: Pima County Says Plan Understates Claims by $115K
WILLIAM JOHNSON: Creditor Says Bankruptcy 'Collusive'
* Fitch Says Hess Sale Shows Pressure on Smaller Models
* ABL Facilities Show Full Recovery in Bankruptcy, Fitch Says
* Fitch Says Index Fund, ETF Price Competition Rising for US Banks
* U.S. Student Loan Delinquency Rate Increases, FICO Labs Says
* U.S. Movie Theater Operators Grapple with Declining Audiences
* Debtwire Survey Shows Investors Keen on the Americas
* Recent Small-Dollar & Individual Chapter 11 Filings
*********
1701 COMMERCE: Dougherty Okayed to Foreclose on Property
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The U.S. Bankruptcy Court for the Northern District of Texas
authorized Dougherty Funding, LLC, as lender and servicing agent,
to post for foreclosure sale the property of 1701 Commerce, LLC,
subject to Dougherty's security interest.
The Construction Deed of Trust and Fixture Filing between
Dougherty and Presidio Hotel Fort Worth. L.P., dated as of March
16, 2007, as amended, encumbers the real and personal property
located at 1701 Commerce Street, Forth Worth, Texas, commonly
known as the Sheraton Fort Worth Hotel and Spa, Tarrant County,
Texas.
An on-judicial foreclosure sale has been set for Feb. 5, 2013.
Objections, if any, are due Feb. 3.
In the event Dougherty becomes the owner of the property through
foreclosure, Richfield Hospitality, Inc., will continue as the
property's operator and manager pursuant to the terms of the
operating agreement for Sheraton-Fort Worth.
Dougherty will instruct Richfield to honor the customer bookings
and reservations made by Richfield provided that the terms of the
bookings and reservations are commercially reasonable and are in
accord with industry standards for the Fort Worth hospitality
market for similarly situated hotel operations.
About 1701 Commerce
1701 Commerce LLC, owner and operator of a full service "Sheraton
Hotel" located at 1701 Commerce, Fort Worth, Texas, filed for
Chapter 11 protection (Bankr. N.D. Tex. Case No. 12-41748) on
March 26, 2012. The Debtor also was the former operator of a
Shula's steakhouse at the Hotel.
1701 Commerce was previously named Presidio Ft. Worth Hotel LLC,
but changed its name to 1701 Commerce, prior to the bankruptcy
filing date to reduce and minimize any potential
confusion relating to an entity named Presidio Fort Worth Hotel
LP, an unrelated and unaffiliated partnership that was the former
owner of the hotel property owned by the Debtor.
1701 Commerce is a Nevada limited liability company whose members
are Vestin Realty Mortgage I, Inc., Vestin Mortgage Realty II,
Inc., and Vestin Fund III, LLC. 1701 Commerce LLC's operations are
managed by Richfield Hospitality Group, an independent management
company that is not affiliated with the Debtor or any of its
members.
Judge D. Michael Lynn presides over the bankruptcy case. The
Debtor disclosed $71,842,322 in assets and $44,936,697 in
liabilities.
The Plan co-proposed by the Debtor and Vestin Realty Mortgage I,
Inc., Vestin Realty Mortgage II, Inc., and Vestin Fund III, LLC,
provides that, among other things, Convenience Class of Unsecured
Claims of $5,000 will be paid 100% in cash without interest within
30 days after Effective Date, and Unsecured Claims in Excess of
$5,000 will be paid 100% with interest at 5% through 20 quarterly
payments.
250 AZ: Seeks to Use Rental Proceeds From 84.7% Owned Building
--------------------------------------------------------------
250 AZ, L.L.C., filed with the Bankruptcy Court an emergency
motion for an order authorizing its use of rental and other income
deemed to be cash collateral generated by its office building in
Cincinnati, Ohio.
The Debtor seeks an expedited hearing in order to coordinate the
transfer of the accounts of record, the management of the
building, the various checking accounts where deposits are held
while at the same time maintaining the required operations for a
29 story office building with over 30 major tenants.
As the 84.7% owner, the Debtor is requesting that the Court allow
it to collect 100% of the rents and other income from the building
pay for the building's ordinary and necessary operating expenses,
reasonable management, development and tenant improvements. From
the balance remaining the Debtor will utilize its 84.7% to make
adequate protection payments to the Lender of $111,137 per month
and remit the other 15.3% to the other tenants-in-common (TIC's)
or as the Court may otherwise direct.
The Debtor requests that it be allowed to use cash collateral for
120 days after entry of a final order.
U.S. Bank, National Association, through CW Capital Asset
Management, as servicer for COBALT CMBS CM Mortgage Trust, is owed
$64.4 million, secured by the Debtor's interest in the office
building.
The Debtor asks the Court to order CW Capital to release to the
Debtor funds that it is holding in one or more reserve accounts
for building operations, capital improvements, and tenant
improvement obligations.
The Debtor says it will send CW Capital monthly adequate
protection payments, based on its 84.7% share ownership.
About 250 AZ LLC
250 AZ, LLC, filed a Chapter 11 petition (Bankr. D. Ariz. Case No.
13-00851) in Tucson, Arizona, on Jan. 22, 2013.
In its schedules, the Debtor disclosed $25 million in assets and
$70.8 million in liabilities. 250 AZ owns an 84.70818% tenant in
common interest in a 29-story office building located at 250 East
Fifth Street, in Cincinnati, Ohio.
Breen Olson & Trenton, LLP, serves as counsel to the Debtor.
250 AZ: Terminating Daymark Contract as Asset Manager
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250 AZ, LLC, filed with the bankruptcy court a motion to terminate
a contract that appointed Daymark Realty Advisors Inc. as asset
manager for the Debtor.
The contract is between the predecessors in interest of the Debtor
and the predecessors in interest of Daymark Realty Advisors Inc.
and its affiliates.
According to the Debtor, the termination of the contract is in the
best interest of the estate and creditors of the estate on
multiple levels:
1. Daymark is in a conflict with the Debtor in that it is a
creditor of the Debtor.
2. Daymark or one of its affiliates is the Managing member of
another Tenant in Common owner of the building at 250 East
5th Street, which has adverse interests to the Debtor.
3. Daymark, under the provisions of this contract being
terminated, subcontracted for CBRE Inc. to act as the
property manager for the Debtor, to manage its property
located at 250 East Fifth Street, Cincinnati, Ohio 45202
and thus with the direct employment of CBRE Inc. by the
Debtor as property Manager and Hammel, Beal & Lauer PC
[HBL] as accountants, Daymark's oversight is not needed.
About 250 AZ, LLC
250 AZ, LLC, filed a Chapter 11 petition (Bankr. D. Ariz. Case No.
13-00851) in Tucson, Arizona, on Jan. 22, 2013.
In its schedules, the Debtor disclosed $25 million in assets and
$70.8 million in liabilities. 250 AZ owns an 84.70818% tenant in
common interest in a 29-story office building located at 250 East
Fifth Street, in Cincinnati, Ohio.
Breen Olson & Trenton, LLP, serves as counsel to the Debtor.
250 AZ: Proposes CBRE Inc. as Property Manager
----------------------------------------------
250 AZ, LLC, filed with the bankruptcy court an application to
employ CBRE Inc., as the property manager for the Debtor to manage
its property located in Cincinnati, Ohio.
The Debtor has CBRE because it has significant experience in
property management, and specifically the Debtor's 29-story office
building property since Feb. 6, 2012. The proposed property
manager is well qualified to perform the services for which it is
proposed to be employed.
CBRE will be paid $11,000 to manage the property, plus
reimbursement of base wages and labor and salary charges incurred,
plus a 32% burden fee to cover the incidental costs related to
employees taxes, health benefits, and other salary charges.
About 250 AZ, LLC
250 AZ, LLC, filed a Chapter 11 petition (Bankr. D. Ariz. Case No.
13-00851) in Tucson, Arizona, on Jan. 22, 2013.
In its schedules, the Debtor disclosed $25 million in assets and
$70.8 million in liabilities. 250 AZ owns an 84.70818% tenant in
common interest in a 29-story office building located at 250 East
Fifth Street, in Cincinnati, Ohio.
Breen Olson & Trenton, LLP, serves as counsel to the Debtor.
AEMETIS INC: Laird Cagan Discloses 13.7% Equity Stake
-----------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Laird Q. Cagan disclosed that, as of Dec. 31, 2012, he
beneficially owns 24,648,872 shares of common stock of Aemetis,
Inc., representing 13.67% of the shares outstanding. Mr. Cagan
previously reported beneficial ownership of 22,014,496 common
shares or a 12.9% equity stake as of Dec. 12, 2007.
A copy of the filing is available at http://is.gd/1bGSF8
About Aemetis
Headquartered in Cupertino, California, Aemetis, formerly AE
Biofuels Inc., is an advanced fuels and renewable chemicals
company. Aemetis owns and operates a 55 million gallon renewable
fuels plant in California; and owns and operates a 50 million
gallon capacity renewable chemicals and advanced fuels production
facility on the east coast of India. Aemetis operates a research
and development laboratory at the Maryland Biotech Center, and
holds four granted patents and ten pending patents on its Z-
microbe and related technology for the production of renewable
fuels and chemicals. For additional information about Aemetis,
please visit www.aemetis.com.
Aemetis disclosed a net loss of $18.29 million for the year ended
Dec. 31, 2011, compared with a net loss of $8.56 million during
the prior year.
The Company's balance sheet at Sept. 30, 2012, showed $98.84
million in total assets, $87.46 million in total liabilities and
$11.37 million in total stockholders' equity.
ALG INTERMEDIATE: S&P Gives Prelim. 'B' CCR, Rates New Loans 'B+'
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Standard & Poor's Ratings Services assigned U.S.-based resort
management and packaged vacation provider ALG Intermediate
Holdings B.V. a preliminary corporate credit rating of 'B'. The
outlook is stable.
At the same time, S&P assigned the proposed $170 million first-
lien credit facility (comprised of a $20 million revolver due 2018
and a $150 million term loan due 2019) S&P's preliminary issue-
level rating of 'B+', with a preliminary recovery rating of '2',
indicating S&P's expectation for substantial (70% to 90%) recovery
in the event of a payment default. ALG B.V. and ALG USA Holdings
LLC are co-borrowers of this debt.
In addition, S&P assigned the proposed $65 million second-lien
term loan due 2020 its preliminary issue-level rating of 'CCC+',
with a preliminary recovery rating of '6', indicating S&P's
expectation for negligible (0% to 10%) recovery in the event of a
payment default. ALG Intermediate Holdings B.V. is the direct
parent of the co-borrowers and will be a guarantor of the first-
lien and second-lien credit facilities.
Bain Capital will use proceeds from the credit facilities and a
$159 million equity contribution to acquire ALG from founder
Mullen Family L.P. for $343.5 million. ALG is a vertically
integrated travel company comprised of all-inclusive resort
management company AMResorts, packaged vacation provider Apple
Vacations, and destination management company Amstar. In addition
to acquiring ALG, Bain is also acquiring affiliated entity
Unlimited Vacation Club (UVC) from Mullen Family L.P. Mullen
Family L.P. will retain control of related entity Mullen Real
Estate Holdings (MREH). S&P has not incorporated the risk
profiles of either UVC or MREH into ALG's credit risk profile,
because S&P believes they are not strategic to ALG's operations
and in the case of MREH, there is no common ownership control. As
a result, S&P do not believe ALG would support these affiliated
and related parties as they are currently organized and operated.
S&P also anticipates that there will be restricted payments
covenants in the proposed credit facilities that will limit
transfers out of ALG over the intermediate term.
The 'B' preliminary corporate credit rating reflects S&P's
assessment of the company' s financial risk profile as "highly
leveraged" and its assessment of its business risk profile as
"weak," according to its criteria.
"Our assessment of ALG's financial risk profile as highly
leveraged reflects our expectation for total lease-adjusted debt
to EBITDA to be in the 6x area and for EBITDA margin to be around
4% in 2013. ALG's EBITDA margin is low and compares unfavorably
with many other leisure sector companies, primarily because of the
relatively modest mark-up the company receives on the gross sale
of vacation packages (which can include hotel room, airfare,
transportation, and other amenities). The gross value of the
vacation package sold is recognized by ALG in its financial
statements and comprises more than 90% of total revenue. Partly
mitigating the low EBITDA margin is management's assertion that
ALG takes only a moderate level of inventory risk in booking
vacation packages related solely to the chartering of full-plane
flights, and that there are operating controls in place to ensure
that vacation packages in the aggregate are not sold at a loss.
Also, ALG's EBITDA coverage of interest expense is expected to be
in the low-2x area in 2013, which is good for the rating," S&P
said.
"Our assessment of ALG's business risk profile as weak reflects
high levels of competition for discretionary leisure spending by
the company's mostly U.S. and Canadian customer base, high levels
of competition and travel-related event risk in the company's
mostly Mexican and Caribbean all-inclusive resort market
destinations, limited geographic and business diversity compared
with other global leisure companies, and a limited track record of
operating results. Partly mitigating these risk factors are a
portfolio of long-term management contracts in the company's
AMResorts resort management business (which is anticipated to be
about 62% of 2013 EBITDA) that contain reasonable protections
against cancellation, the company's focus on the affluent North
American travel market, and the company's good position in, and
the increasing popularity of, the all-inclusive resort vacation
market," S&P added.
AMERICAN POWER: Receives $1.5 Million Order From Cudd Energy
------------------------------------------------------------
American Power Group Corporation's subsidiary, American Power
Group, Inc., has received purchase orders totaling $1.5 million
from Cudd Energy Services to upgrade and convert diesel pumps used
for hydraulic fracturing to APG's Turbocharged Natural GasTM Dual
Fuel System. APG will provide full turnkey installation including
engineering services under an EPA Test Exemption while completing
the EPA Memo 1A Testing and Compliance process, similar to the
procedure APG completed in June 2012 for a different high-
horsepower non-road compression ignition engine family. APG
expects the installations to be completed during the next two
calendar quarters in conjunction with the scheduled completion of
the Memo 1A Testing.
Cudd Energy Services (www.cudd.com), a subsidiary of RPC Inc., is
an oilfield service company offering a broad range of technical
and specialized oilfield services to companies engaged in the
exploration and production of oil and natural gas worldwide.
Prometheus Energy (www.prometheusenergy.com) will manage the
onsite supply of liquefied natural gas (LNG) as the primary
natural gas fuel source. Prometheus Energy provides turnkey fuel
solutions that enable oilfield and other industrial users of
diesel and other crude-derived fuels to use secure domestic LNG,
reducing fuel cost and emissions.
The Company is vertically integrated from LNG production,
distribution and logistics to onsite storage and vaporization.
Lyle Jensen, CEO of American Power Group stated, "We are extremely
pleased that Cudd Energy Services has selected APG's dual fuel
technology for the conversion of a hydraulic fracturing rig in the
Marcellus Shale region. This marks our first full hydraulic
fracturing rig conversion and our third major customer
installation this year in the Marcellus Shale. APG's dual fuel
system gives the oil and gas service contractor the maximum
flexibility to utilize either liquefied natural gas (LNG),
compressed natural gas (CNG), pipeline gas, or qualified well-head
gas as a natural gas fuel source to displace diesel for a
significant net fuel savings and lower emissions. We are now
seeing a dramatic increase in interest across the industry for the
use of APG's dual fuel conversion technology in both drilling and
hydraulic fracturing applications."
Mr. Jensen further added, "This installation will include our
newly developed 'Over Pressure Protection System', a combined
hardware and software solution designed to ensure the safe and
reliable use of natural gas when variations in gas pressure occur.
We believe that APG delivers the most sophisticated dual fuel
solution at the lowest total cost of ownership in the industry."
About American Power Group
American Power Group's alternative energy subsidiary, American
Power Group, Inc., provides a cost-effective patented Turbocharged
Natural GasTM conversion technology for vehicular, stationary and
off-road mobile diesel engines. American Power Group's dual fuel
technology is a unique non-invasive energy enhancement system that
converts existing diesel engines into more efficient and
environmentally friendly engines that have the flexibility to run
on: (1) diesel fuel and liquefied natural gas; (2) diesel fuel and
compressed natural gas; (3) diesel fuel and pipeline or well-head
gas; and (4) diesel fuel and bio-methane, with the flexibility to
return to 100% diesel fuel operation at any time. The proprietary
technology seamlessly displaces up to 80% of the normal diesel
fuel consumption with the average displacement ranging from 40% to
65%. The energized fuel balance is maintained with a proprietary
read-only electronic controller system ensuring the engines
operate at original equipment manufacturers' specified
temperatures and pressures. Installation on a wide variety of
engine models and end-market applications require no engine
modifications unlike the more expensive invasive fuel-injected
systems in the market. See additional information at:
www.americanpowergroupinc.com.
American Power incurred a net loss available to common
shareholders of $14.66 million for the year ended Sept. 30, 2012,
compared with a net loss available to common shareholders of $6.81
million during the prior year.
The Company's balance sheet at Sept. 30, 2012, showed $9.08
million in total assets, $4.11 million in total liabilities and
$4.97 million in total stockholders' equity.
ARCHDIOCESE OF MILWAUKEE: Wants to Stop Claims Objection Deadline
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The Archdiocese of Milwaukee asks the U.S. Bankruptcy Court for
the Eastern District of Wisconsin to refrain from setting pleading
deadlines or hearings as to its objections to proofs of claim.
Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in
Milwaukee, Wisconsin, contends that the Court should refrain from
setting any deadlines or hearings until the Archdiocese is able
to sample the parties as to the most convenient method to proceed
with responses and related matters.
About Archdiocese of Milwaukee
The Diocese of Milwaukee was established on Nov. 28, 1843, and
was elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius
IX. The region served by the Archdiocese consists of 4,758 square
miles in southeast Wisconsin which includes counties Dodge, Fond
du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth,
Washington and Waukesha. There are 657,519 registered Catholics
in the Region.
The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for
Chapter 11 bankruptcy protection (Bankr. E.D. Wis. Case No.
11-20059) on Jan. 4, 2011, to address claims over sexual abuse
by priests on minors.
The Archdiocese became at least the eighth Roman Catholic diocese
in the U.S. to file for bankruptcy to settle claims from current
and former parishioners who say they were sexually molested by
priests.
Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in
Milwaukee, Wisconsin, serves as the Archdiocese's counsel. The
Official Committee of Unsecured Creditors in the bankruptcy case
has retained Pachulski Stang Ziehl & Jones LLP as its counsel, and
Howard, Solochek & Weber, S.C., as its local counsel.
The Archdiocese estimated assets and debts of $10 million to
$50 million in its Chapter 11 petition.
(Catholic Church Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ARCHDIOCESE OF MILWAUKEE: Hamilton Fee Cap Hiked by $10,000
-----------------------------------------------------------
Judge Susan V. Kelley of the U.S. Bankruptcy Court for the
Eastern District of Wisconsin granted the request of the Official
Committee of Unsecured Creditors appointed in the Chapter 11 case
of the Archdiocese of Milwaukee to increase by $10,000 the fee
cap of Marci A. Hamilton for a total of $35,000.
Professor Hamilton was employed by the Committee as its special
constitutional and federal statutory law counsel to assist in
connection with litigation brought against the Committee by the
Archdiocese of Milwaukee Catholic Cemetery Perpetual Care Trust.
About Archdiocese of Milwaukee
The Diocese of Milwaukee was established on Nov. 28, 1843, and
was elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius
IX. The region served by the Archdiocese consists of 4,758 square
miles in southeast Wisconsin which includes counties Dodge, Fond
du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth,
Washington and Waukesha. There are 657,519 registered Catholics
in the Region.
The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for
Chapter 11 bankruptcy protection (Bankr. E.D. Wis. Case No.
11-20059) on Jan. 4, 2011, to address claims over sexual abuse
by priests on minors.
The Archdiocese became at least the eighth Roman Catholic diocese
in the U.S. to file for bankruptcy to settle claims from current
and former parishioners who say they were sexually molested by
priests.
Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in
Milwaukee, Wisconsin, serves as the Archdiocese's counsel. The
Official Committee of Unsecured Creditors in the bankruptcy case
has retained Pachulski Stang Ziehl & Jones LLP as its counsel, and
Howard, Solochek & Weber, S.C., as its local counsel.
The Archdiocese estimated assets and debts of $10 million to
$50 million in its Chapter 11 petition.
(Catholic Church Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
BEAZER HOMES: Fitch Assigns 'CCC+' Rating to $200MM Senior Notes
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Fitch Ratings has assigned a 'CCC+/RR5' rating to Beazer Homes
USA, Inc.'s (NYSE: BZH) proposed offering of $200 million
principal amount of senior notes due 2023. This notes issue will
be ranked on a pari passu basis with the company's existing senior
unsecured notes. Net proceeds from the notes offering will be used
to fund or replenish cash that is expected to be used to fund the
redemption of its 6 7/8% senior notes due 2015 and for general
corporate purposes.
The Rating Outlook is Stable. A complete list of ratings follows
at the end of this release.
Sensitivity/Rating Drivers
The rating for BZH is based on the company's execution of its
business model in the current moderately recovering housing
environment, land policies, and geographic diversity. BZH's rating
is also supported by the company's solid liquidity position.
Risk factors include the cyclical nature of the homebuilding
industry, the company's high debt load and high leverage, BZH's
underperformance relative to its peers in certain operational and
financial categories, and its current over-exposure to the credit-
challenged entry level market (approximately 60% of BZH's
customers are first-time home buyers).
The Stable Outlook takes into account the improving housing
outlook for 2013. However, the industry growth rate this year
reflects a below-trend-line cyclical rise off a very low bottom.
In a slowly growing economy with somewhat diminished distressed
home sales competition, less competitive rental cost alternatives,
and new and existing home inventories at historically low levels,
2013 single-family housing starts should improve about 18%, while
new home sales increase approximately 22% and existing home sales
grow 7%. However, as Fitch has noted in the past, recovery will
likely occur in fits and starts.
Challenges (although somewhat muted) remain, including continued
relatively high levels of delinquencies, potential of short-term
acceleration in foreclosures, and consequent meaningful distressed
sales, and restrictive credit qualification standards.
Improving Financial Results
BZH's homebuilding revenues for its 2013 fiscal first quarter
(ended Dec. 31, 2012) increased 30.8% to $244.4 million as home
deliveries grew 19.7% to 1,038 homes and the average selling price
advanced 9.3% to $235,500. The company has also reported improved
quarterly net sales in each of the last seven quarters,
contributing to a 39% increase in homes in backlog at Dec. 31,
2012, compared with year ago levels. The significant increase in
backlog, combined with the company's strategy to grow community
count, should result in moderately higher deliveries in fiscal
2013 compared with 2012. Nevertheless, Fitch does not expect BZH
to be profitable in fiscal 2013.
Liquidity Position
The company has taken steps to strengthen its balance sheet and
improve its liquidity position to better participate in the
housing recovery. In July 2012, BZH completed underwritten public
offerings of its common stock, tangible equity units and a private
placement of $300 million of 6.625% senior secured notes. Net
proceeds from these transactions were roughly $466 million.
Concurrently with the debt offering, BZH called for redemption of
all of its $250 million 12% senior secured notes due 2017 and
repaid $20 million under its outstanding cash secured term loan.
These transactions are projected to lower annual interest expense
by approximately $15 million.
In September 2012, BZH also amended and expanded its secured
revolving credit facility from $22 million to $150 million. The
credit facility matures in September 2015.
BZH ended the December 2012 quarter with $396.7 million of
unrestricted cash and no borrowings under its revolving credit
facility. The improved liquidity position provides BZH with some
cushion as Fitch expects the company will continue to have
operating losses and negative cash flow through fiscal 2013. With
higher land and development spending expected this year,
unrestricted cash could fall below $300 million by the end of
fiscal 2013.
Land Position
At Dec. 31, 2012, the company controlled 25,104 lots, of which 82%
were owned and the remaining lots controlled through options.
Based on the latest 12-month closings, BZH controlled 5.3 years of
land and owned roughly 4.3 years of land.
BZH spent roughly $185.5 million on land and development during
fiscal 2012 compared with $221.6 million during fiscal 2011.
During its 2013 fiscal first quarter, land and development
spending totaled $90 million. This compares to $58.2 million
expended during the same period last year. Management expects to
spend at least twice as much on land and development during 2013
as it did during 2012. Fitch is comfortable with this strategy
given the company's enhanced liquidity position. Assuming that the
company is able to redeem all of its 2015 notes, BZH will not have
any major debt maturities until 2016, when $172.9 million of
senior notes become due. Furthermore, management has demonstrated
in the past that it is capable of pulling back on land and
development spending when necessary.
Guidelines for Further Ratings Actions
Future ratings and Outlooks will be influenced by broad housing
market trends as well as company specific activity, such as trends
in land and development spending, general inventory levels,
speculative inventory activity (including the impact of high
cancellation rates on such activity), gross and net new order
activity, debt levels, especially free cash flow trends and uses,
and the company's cash position.
BZH's ratings are constrained in the intermediate term due to weak
credit metrics and high leverage. However, positive rating actions
may be considered if the recovery in housing is maintained and is
meaningfully better than Fitch's current outlook, BZH shows
continuous improvement in credit metrics (particularly debt to
EBITDA consistently below 8x and interest coverage above 2x), and
preserves a healthy liquidity position.
Negative rating actions could occur if the recovery in housing
dissipates, resulting in revenues and operating losses approaching
2011 levels, and the company maintains an overly aggressive land
and development spending program. This could lead to consistent
and significant negative quarterly cash flow from operations and
diminished liquidity position. In particular, Fitch will review
BZH's ratings if the company's liquidity position (unrestricted
cash plus revolver availability) falls below $200 million.
Fitch currently rates BZH as follows:
--Long-term Issuer Default Rating 'B-';
--Secured revolver 'BB-/RR1';
--Second lien secured notes 'BB-/RR1';
--Senior unsecured notes 'CCC+/RR5';
--Junior subordinated debt 'CCC/RR6'.
The Rating Outlook is Stable.
The Recovery Rating (RR) of 'RR1' on BZH's secured credit
revolving credit facility and second-lien secured notes indicates
outstanding recovery prospects for holders of these debt issues.
The 'RR5' on BZH's senior unsecured notes indicates below-average
recovery prospects for holders of these debt issues. BZH's
exposure to claims made pursuant to performance bonds and joint
venture debt and the possibility that part of these contingent
liabilities would have a claim against the company's assets were
considered in determining the recovery for the unsecured
debtholders. The 'RR6' on the company's mandatory convertible
subordinated notes and junior subordinated notes indicates poor
recovery prospects for holders of these debt issues in a default
scenario. Fitch applied a liquidation value analysis for these
recovery ratings.
BEAZER HOMES: S&P Assigns CCC Rating to $200MM Sr. Unsecured Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC' issue-level
rating and '6' recovery rating to Beazer Homes USA Inc.'s proposed
$200 million senior unsecured notes due 2023. S&P's '6' recovery
rating indicates its expectation for a negligible recovery
(0%-10%) in the event of default. The company intends to use
proceeds from the debt offering to fund the redemption of the
$172.5 million outstanding of 6.875% senior unsecured notes due
2015.
"We view the proposed notes and subsequent redemption of the 2015
notes to be a net positive from a credit perspective. The new
notes will modestly increase Beazer's interest burden by close to
$3 million per year, but will also extend the company's debt
maturity schedule with the closest maturity now coming due in
June 2016. In addition, the indenture governing the new notes
will not contain the tangible net worth covenant that existed in
the 2015 notes. Under the indenture governing both the 2015 and
2016 notes, Beazer would be required to offer to repurchase 10% of
the original amount of the notes (equal to $35 million of the
2015's and $27.5 million of the 2016's) at par if consolidated
tangible-net-worth falls below $85 million for two consecutive
quarters. As of Dec. 31, 2012, consolidated tangible-net-worth
was $216.7 million. As a result of the redemption of the 2015
notes, any potential future capital calls from a tangible net
worth covenant breach will be reduced to $27.5 million from
$62.5 million," S&P said.
S&P's current ratings on Beazer reflect the company's "highly
leveraged" financial risk profile, as measured by a heavy debt
load and sizable interest obligations. S&P also acknowledges the
company's success in pushing scheduled debt maturities to 2016 and
beyond and boosting its liquidity position. S&P considers the
homebuilder's business risk profile to be "vulnerable" given the
considerable operating improvements necessary to reach
profitability in conjunction with an improving but fragile housing
environment.
"Our current rating outlook on Beazer is negative. Management's
strategy to increase average community count as part of its "path
to profitability plan" will not be realized until fiscal 2014,
which is slower than our previous expectations. We would lower
the rating if volume from operations remains depressed and the
company's EBITDA growth fails to meet our base-case expectations.
Furthermore, the ratings could come under pressure if liquidity
becomes constrained, possibly from aggressive land acquisitions or
accelerated cash burn. We would consider revising our outlook to
stable if Beazer comfortably meets our base-case expectations for
operating results, leverage shows signs of material improvement,
and the company maintains adequate liquidity," S&P added.
Ratings List
Beazer Homes USA Inc.
Corporate credit rating B-/Negative
New Ratings
Beazer Homes USA Inc.
$200 million sr unsecured notes due 2023 CCC
Recovery rating 6
BERRY PLASTICS: S&P Affirms 'B' Corporate Credit Rating
-------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed all of its
existing ratings, including the 'B' corporate credit rating, on
Evansville, Ind.-based plastic packaging producer Berry Plastics
Corp. (Berry).
S&P affirmed the 'B+' issue ratings on Berry's existing first-lien
senior debt. The '2' recovery rating indicates S&P's expectation
of substantial (70% to 90%) recovery in the event of a payment
default.
S&P affirmed the 'CCC+' issue ratings on Berry's existing second-
lien and subordinated debt and its parent company's senior
unsecured debt. The '6' recovery rating indicates S&P's
expectation of negligible (0% to 10%) recovery in the event of
payment default.
At the same time, S&P assigned its 'B+' issue ratings and '2'
recovery ratings to its proposed $1.03 billion incremental first-
lien term loan due 2020. The '2' recovery rating indicates S&P's
expectation of substantial (70% to 90%) recovery in the event of a
payment default.
The proceeds from the proposed $1.03 billion first-lien term loan
will be used to refinance its existing $681 million first-priority
senior secured notes due 2015, $210 million second priority senior
secured notes due 2014, and $127 million senior subordinated notes
due 2016.
"Our ratings on Berry reflect the risks associated with its high
debt leverage and growth-via-acquisition strategy, as well as its
'fair' business risk profile," said Standard & Poor's credit
analyst Henry Fukuchi.
The ratings also incorporate S&P's expectation of stable volumes,
manageable raw materials costs, ongoing cost reduction efforts,
positive free cash generation, and modest debt reduction in the
next few years.
Berry is a leading producer of rigid plastic packaging products
for relatively stable dairy, food, beverage, health care, and
other consumer product applications. It also manufactures
flexible packaging products, some of which serve more-cyclical end
markets. Berry is a leading supplier of plastic injection-molded
and thermoformed open-top containers, aerosol overcaps, drinking
cups, housewares, and closures for the food, beverage, and health
care industries. EBITDA margins in the rigid-packaging business
have been attractive at 15%-20%. Berry's flexible packaging
offerings include various plastic film and adhesive products, such
as institutional can liners, plastic sheeting, retail trash bags,
stretch films, shrink films, and tapes.
The stable outlook reflects S&P's expectation that modest free
cash generation will result in gradual deleveraging. However, if
economic conditions and consumer demand are somewhat better than
S&P anticipates, and Berry doesn't undertake any leveraging
acquisitions, S&P believes credit metrics could strengthen
sufficiently to warrant a modest upgrade in the next two years.
S&P could raise the ratings by one notch if adjusted debt to
EBITDA decreases to less than 5x and FFO to adjusted debt
increases to the mid-teens percentage area and remains consistent
through the business cycle. In addition, for a higher rating, S&P
would also need greater clarity on future financial policy
decisions related to growth, acquisitions, and shareholder
rewards.
S&P could lower the ratings if the company's liquidity
deteriorates or if earnings and cash flow decline unexpectedly
because of weaker demand for its products or challenges related to
passing through raw material costs. S&P could also lower the
ratings if financial policy decisions weaken its financial profile
or if the company is unable to demonstrate additional progress
toward extending its 2015 debt maturities.
Based on S&P's downside scenario forecasts, it could lower the
ratings if operating margins (before depreciation and
amortization) weaken by 300 basis points or more from current
levels. At this point, FFO to total adjusted debt will decrease
toward the mid-single digit percentage area and total adjusted
debt to EBITDA will increase to about 7x.
BIOLITEC INC: Proposes Lowenstein Sandler as Counsel
----------------------------------------------------
Biolitec, Inc., seeks approval from the U.S. Bankruptcy Court for
the District of New Jersey to employ Lowenstein Sandler LLP as
counsel in connection with the prosecution of its Chapter 11 case.
Lowenstein will be compensated on an hourly basis at its ordinary
billing rates less a 10% discount. Lowenstein will also be
entitled to reimbursement of reasonable and necessary expenses.
The Debtor believes Lowenstein is "disinterested" and does not
hold or represent an interest adverse to the Debtor's estates.
Paul Kizel, Esq., a partner at Lowenstein, says the firm's normal
hourly rates are as follows:
Hourly Rate
-----------
Partners $475 to $945
Senior Counsel and Counsel $385 to $685
Associates $260 to $495
Paralegals and Assistants $155 to $260
Attorneys who will be involved in the representation of the Debtor
are Kenneth A. Rosen, Paul Kizel, Wojciech F. Jung and Keara
Waldron.
About Biolitec Inc.
Biolitec Inc. is a member of the Biolitec Group, a multinational
group of affiliated companies that is a global market leader in
the manufacture and distribution of fiber optic devices and
products such as medical lasers and fibers, photo-pharmaceuticals
and industrial fiber optics. Biolitec AG, a German public company
listed on the highly regulated Prime Standard segment of the
Frankfurt stock exchange, is the ultimate parent of the Debtor.
Biolitec Inc. sought Chapter 11 bankruptcy protection (Bankr.
D.N.J. Case No. 13-11157) Jan. 22, 2013, to stop competitor
AngioDynamics Inc. from collecting $23 million it won in a breach
of contract lawsuit.
Kenneth A. Rosen, Esq., and Paul Kizel, Esq., at Lowenstein
Sandler, LLP, serve as bankruptcy counsel. The Debtor estimated
assets and debts of at least $10 million.
BIOLITEC INC: Former COO Says Claims Not Estate Property
--------------------------------------------------------
Biolitec, Inc., filed on the bankruptcy petition date a motion to
lift the automatic stay so that it can continue to expeditiously
prosecute an appeal of a ruling in a lawsuit filed by
AngioDynamics, Inc. and to permit plaintiffs in two pending court
actions to prosecute claims that constitute property of the
Debtors' estate against non-debtor defendants in those actions.
Prepetition, Kelly Moran, and his wife, Carol Morello, each of
whom has 5% ownership interest in the Debtor, commenced lawsuits,
asserting claims against, inter alia, the Debtor under the New
Jersey Oppressed Shareholder Act and the Massachusetts Wage Act.
Both Moran and Morello are disgruntled former employees who seek
to destroy the Debtor, Biolitec said in court filings.
Kelly Moran and Carol Morello -- calling themselves the New Jersey
Plaintiffs -- have objections to the lift stay request with
respect to the New Jersey Actions.
The New Jersey Plaintiffs point out that the claims against
affiliates of the Debtor, i.e., Wolfgang Neuberger, Biolitec AG
and Biomed Technology Holdings, Ltd., do not belong to the Debtor
or its estates but to the New Jersey Plaintiffs.
"The claims are grounded in a New Jersey statute which provides
express remedies to minority shareholders, such as the New Jersey
Plaintiffs, who are injured by the oppressive and wrongful conduct
of individuals and entities who control the companies in which
they have an interest. It is possible that these wrongful actions
might also give rise to independent claims of the company against
the same wrongdoers; but in the New Jersey Action, the New Jersey
Plaintiffs alone have the standing and the right to pursue their
non-derivative claims. In any event, the New Jersey Plaintiffs
submit that a motion to lift the stay is neither the time nor the
place for this Court to consider who owns their claims and who
might be entitled to any recovery on the claims," says Kenneth L.
Baum, counsel to the New Jersey Plaintiffs.
Accordingly, the New Jersey Plaintiffs ask that any order entered
approving the lifting of the automatic stay should expressly
recognize that the Bankruptcy Court is not now making a
determination as to the merits of the Debtor's assertion that the
New Jersey Plaintiffs' claims are property of the Debtor's estate
under 11 U.S.C. Sec. 541.
They ask that the order should also expressly provide that should
the claims be found to belong to the Debtor, the recoveries on the
claims must be subject to allowed administrative claims against
the Debtor's estate and that the New Jersey Plaintiffs and their
counsel be entitled to substantial contribution as expressly
provided for in 11 U.S.C. Sec. 503(b)(3) and (4).
About Biolitec Inc.
Biolitec Inc. is a member of the Biolitec Group, a multinational
group of affiliated companies that is a global market leader in
the manufacture and distribution of fiber optic devices and
products such as medical lasers and fibers, photo-pharmaceuticals
and industrial fiber optics. Biolitec AG, a German public company
listed on the highly regulated Prime Standard segment of the
Frankfurt stock exchange, is the ultimate parent of the Debtor.
Biolitec, Inc. sought Chapter 11 bankruptcy protection (Bankr.
D.N.J. Case No. 13-11157) Jan. 22, 2013, to stop competitor
AngioDynamics Inc. from collecting $23 million it won in a breach
of contract lawsuit.
Kenneth A. Rosen, Esq., and Paul Kizel, Esq., at Lowenstein
Sandler, LLP, serve as bankruptcy counsel. The Debtor estimated
assets and debts of at least $10 million.
In papers explaining the bankruptcy filing, the Debtor has said
that due to management errors made by former chief operating
officer Kelly Moran, it sustained operating losses in 2008 and
2009 and incurred more than $12 million in litigation defense fees
over the last six years.
BIOLITEC INC: Proposes Mazzotta for ADI Litigation
--------------------------------------------------
Biolitec, Inc., seeks approval from the Bankruptcy Court to employ
Mazzotta, Siegel, & Vagianelis, P.C., as special litigation
counsel to represent the Debtor in litigation against its
competitor, AngioDynamics, Inc.
AngioDynamics brought a lawsuit in federal court in New York and
Massachusetts to recover defense and liability costs in now-
settled underlying patent infringement litigation. On Nov. 8,
2012, the U.S. District Court for the Northern District of New
York entered a partial final judgment in favor of ADI for
$23,156,287. The judgment arises from a Sept. 27, 2011 memorandum
decision that granted ADI's claim that the Debtor breached a
"knowledge qualified" representation in an April 1, 2002 Supply
and Distribution Agreement. The Debtor has appealed the judgment
and expects that appeal to result in reversal of the ADI judgment
and dismissal of ADI's breach of contract lawsuit.
MSV filed a notice of appeal in the ADI NY Action on Oct. 26,
2012. MSV perfected Biolitec's appeal from the judgment by filing
a brief and 13-volume joint appendix on Jan. 18, 2013.
The Debtor wishes to continue to retain MSV to pursue the appeal
and the representation of the Debtor in the ADI NY Action.
The Debtor proposes to compensate MSV and reimburse MSV's ordinary
out of pocket expenses in accordance with MSV's ordinary billing
rates and customary billing practices.
The charges for the attorneys and paralegals who will render
services to the Debtor range between $165 to $275. Paul
Feigenbaum, with an hourly rate of $275, is the principal attorney
responsible for the representation of the Debtor.
MSV is holding $23,000 as retainer to be applied against fees and
expenses incurred postpetition.
About Biolitec Inc.
Biolitec Inc. is a member of the Biolitec Group, a multinational
group of affiliated companies that is a global market leader in
the manufacture and distribution of fiber optic devices and
products such as medical lasers and fibers, photo-pharmaceuticals
and industrial fiber optics. Biolitec AG, a German public company
listed on the highly regulated Prime Standard segment of the
Frankfurt stock exchange, is the ultimate parent of the Debtor.
Biolitec, Inc. sought Chapter 11 bankruptcy protection (Bankr.
D.N.J. Case No. 13-11157) Jan. 22, 2013, to stop competitor
AngioDynamics Inc. from collecting $23 million it won in a breach
of contract lawsuit.
Kenneth A. Rosen, Esq., and Paul Kizel, Esq., at Lowenstein
Sandler, LLP, serve as bankruptcy counsel. The Debtor estimated
assets and debts of at least $10 million.
CAPITOL BANCORP: Combined Hearing on Plan Set for March 5
---------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
adjourned to March 5, 2013, at 10:30 a.m., the combined hearing to
consider approval of the Disclosure Statement and confirmation of
Capitol Bancorp Ltd., et al.'s Chapter 11 Plan.
The Debtors represented that, in furtherance of the equity
infusion and bulk sale contemplated by the Plan, the Debtors are
in negotiations with potential new investors relating to a
potential equity infusion and bulk sale which would allow the
Debtors to successfully effectuate the Plan upon its confirmation.
The combined hearing was slated for Jan. 29 but the Debtors sought
adjournment to allow for the completion of both the negotiations
with potential investors and their due diligence processes.
Pursuant to a stipulation, the deadline for the Official Committee
of Unsecured Creditors to file and serve any objections to the
solicitation procedures, the adequacy of the Disclosure Statement
and confirmation of the Plan is extended until Feb. 26.
As reported in the Dec. 13, 2012 edition of the TCR, Capitol
Bancorp hit a snag in the attempt at a quick conclusion to the
prepackaged Chapter 11 filing. The Debtor had a tentative
agreement where affiliates of Valstone Partners LLC would finance
the reorganization plan by paying $50 million for common and
preferred stock while buying $207 million in face amount of
defaulted commercial and residential mortgages. Although the
bankruptcy court authorized Capitol to pay Valstone's expenses in
connection with a financial investigation, bank regulators didn't
give approval in time for the buyer to finish due diligence by the
Nov. 30 cutoff. Consequently, Valstone terminated the purchase
agreement.
About Capitol Bancorp
Capitol Bancorp Ltd. and Financial Commerce Corporation filed
voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case
Nos. 12-58409 and 12-58406) on Aug. 9, 2012.
Capitol Bancorp -- http://www.capitolbancorp.com/-- is a
community banking company with a network of individual banks and
bank operations in 10 states and total consolidated assets of
roughly $2.0 billion as of June 30, 2012. CBC owns roughly 97% of
FCC, with a number of CBC affiliates owning the remainder. FCC,
in turn, is the holding company for five of the banks in CBC's
network. CBC is registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841,
et seq., and trades on the OTCQB under the symbol "CBCR."
Lawyers at Honigman Miller Schwartz and Cohn LLP represent the
Debtors as counsel. John A. Simon, Esq., of Foley & Lardner LLP
represents the Official Committee of Unsecured Creditors as
counsel.
In its petition, Capitol Bancorp scheduled $112,634,112 in total
assets and $195,644,527 in total liabilities. The petitions were
signed by Cristin K. Reid, corporate president.
The Company's balance sheet at Sept. 30, 2012, showed
$1.749 billion in total assets, $1.891 billion in total
liabilities, and a stockholders' deficit of $141.8 million.
The Debtor's plan would exchange debt and trust-preferred
securities for equity. Holders of $6.8 million in senior notes
would see a full recovery by receipt of new stock. Holders of
$151.3 million in trust-preferred securities would take equity
worth $50 million, for a one-third recovery. Holders of $5
million in preferred stock would have a 20% recovery from new
equity, while common stockholders would take stock worth
$15 million.
CAPROCK WINERY: Failed Buyer Files Personal Bankruptcy
------------------------------------------------------
Walt Nett, writing for Lubbock Avalanche-Journal, reports that
Laurent Gruet, a winery owner in Albuquerque, N.M., filed for
Chapter 11 bankruptcy protection on Jan. 11 to head off the chance
that his piece of a family-owned New Mexico winemaking operation
would be seized and sold to satisfy a $4 million debt owed in the
bankruptcy case of Caprock Wine Co.
As reported by the Troubled Company Reporter on April 10, 2012,
French-born winemaker Laurent L. Gruet won a July 2010 auction of
Caprock with a bid of $6.5 million. The second-highest bid was
$6.25 million. Mr. Gruet never made the required 10% deposit
after winning the auction and later admitted he couldn't raise
funds to complete the sale. According to a Bloomberg News report,
after trial in bankruptcy court, a judge assessed damages of $4
million in an April 3, 2012 opinion, because the Chapter 11
trustee for Caprock was later able to mitigate the loss by
reselling the winery at a second auction for $2.5 million. The
bankruptcy judge ruled that Mr. Gruet didn't commit fraud even
though he lacked funds sufficient even to pay the $650,000
deposit.
Avalanche-Journal reports Mr. Gruet is a partner at Albuquerque-
based Devalmont Vineyards and Gruet Winery. He listed himself as
the company's winemaker and owner of a 28% stake in the business
in documents filed with the U.S. Bankruptcy Court in Albuquerque.
Mr. Gruet's three sisters hold the remaining shares of the
Albuquerque operation.
Avalanche-Journal, meanwhile, recounts that in a subsequent
auction, the Caprock winery was sold to San Antonio fast-food
investor Jim Bodenstedt. Trustee Max Tarbox sued Mr. Gruet for
the difference, and Bankruptcy Judge Robert L. Jones in Lubbock
awarded the Cap*Rock bankruptcy estate more than $3.9 million in
damages plus attorneys' fees.
Avalanche-Journal recounts Bankruptcy Judge Robert H. Jacobvitz in
Albuquerque ruled in October that Mr. Gruet's share of the New
Mexico winery business, and his ownership in the family's GFA
Gruet-Guerin champagne business in Bethon, France, could be
attached to help settle the Caprock judgment.
Judge Jacobvitz oversees Mr. Gruet's Chapter 11 case.
According to Avalanche-Journal, Mr. Tarbox said a French court has
approved conservatory seizures of Mr. Gruet's shares of Gruet-
Guein and the SAS Paul Laurent champagne business. The seizures,
similar to liens in American property law, prevent Mr. Gruet from
transferring the shares or proceeds of those assets until a French
court issues a final ruling on the claims.
Avalanche-Journal also relates two large creditors are still
waiting to be paid in the Cap*Rock bankruptcy. PlainsCapital
Bank, a one-time owner of the winery, is owed more than $4
million, while Lubbock Central Appraisal District is owed more
than $160,000 in property taxes.
Lubbock, Texas-based Caprock Wine Company, LLC, doing business as
Cap*Rock Winery and Cap Rock Winery, filed for Chapter 11
protection (Bankr. N.D. Tex. Case No. 09-50576) on Dec. 23, 2009.
Caprock Real Estate Holdings, L.L.C, filed a separate Chapter 11
petition (Bankr. N.D. Tex. Case No. 09-50577) on the same day.
Both petitions estimated assets and debts of $1 million to $10
million. Harold H. Pigg, Esq., in Lubbock, served as the Debtors'
counsel. The Court, at the behest of the United States Trustee,
ordered the appointment of a Chapter 11 trustee on February 5,
2010.
CHAMPION INDUSTRIES: Has Until March 31 to Comply with Covenants
----------------------------------------------------------------
Champion Industries, Inc. on Jan. 29 reported a net loss from
continuing operations of $(23.5) million or $(2.09) per share on a
basic and diluted basis for the year ended October 31, 2012
compared to a net loss from continuing operations of $(4.2)
million or $(0.41) per share on a basic and diluted basis for the
year ended October 31, 2011. The Company reported a net loss from
continuing operations of $(1.4) million for the quarter ended
October 31, 2012 compared to a net loss from continuing operations
of $(5.5) million for the quarter ended October 31, 2011. The
Company reported net income from discontinued operations for the
year ended October 31, 2012 of $0.6 million compared to net income
from discontinued operations for the year ended October 31, 2011
of $0.3 million or $0.06 and $0.03 on a basic and diluted per
share basis.
The results for 2012 over 2011 reflected a substantial decrease in
earnings, primarily as a result of pre-tax non-cash impairment
related charges associated with goodwill of $(9.5) million and
trade name and masthead in the amount of $(1.6) million and an
increase in the deferred tax asset valuation allowance of
approximately $(15.6) million primarily related to taxes
associated with continuing operations. The impairments are
associated with the acquisition of The Herald-Dispatch daily
newspaper in 2007. The Company recorded pre-tax asset impairment
charges associated with assets held for sale of $(0.3) million for
continuing operations and $(0.3) million for discontinued
operations in 2012 and a pre-tax gain on the sale of a division in
2012 of $1.6 million as a component of discontinued operations.
The 2012 results were also unfavorably impacted by various costs
associated with legal fees and costs and professional fees,
resulting in part from provisions related to the various
forbearance and credit agreements with the Company's secured
lenders. In 2011, the Company incurred impairment charges for
goodwill and other intangible assets of $(8.7) million ($(5.4)
million, net of deferred tax benefit) associated with The Herald-
Dispatch acquisition. In 2011 the Company incurred restructuring
related charges of $(0.6) million or $(0.3) million net of tax and
other asset impairment charges of $(0.1) million or $(0.1) million
net of tax. These charges were partially offset by a gain on
early extinguishment of debt to a related party of $1.3 million,
or $0.8 million net of tax, or $0.08 per share on a basic and
diluted basis in 2011.
Marshall T. Reynolds, Chairman of the Board and Chief Executive
Officer of Champion, said, "Our results continue to be impacted by
various cash and non-cash events in both 2012 and 2011. If we
examine our gross profit, which is a key starting point for
profitability, our gross profit dollars were $30.9 million in 2012
and $31.2 million in 2011, which is essentially flat. In other
words, in spite of the numerous hurdles, challenges and actions we
have taken in 2012, in the final analysis we were able to
essentially hold our core business stable. In 2013 we are
continuing to review operations and will adjust where necessary.
In addition, we intend to work with our secured creditors and
advisors to address our debt maturities and liquidity to the best
of our ability."
The net (loss) figures resulted in basic and diluted loss per
share from continuing operations of $(0.13) for the quarter ended
October 31, 2012 compared with a loss of $(0.48) on a basic and
diluted earnings per share basis for the comparable quarter of
2011. The Company recorded a net loss from continuing operations
per share of $(2.09) for the year ended October 31, 2012 compared
with a net loss per share on a basic and diluted basis of $(0.41)
for the year ended October 31, 2011. The Company's results in
2012 and in 2011 are reflective of a continuation of the most
difficult operating environment the Company has ever faced,
primarily within the printing segment and secondarily in the
newspaper segment. Even in this extremely difficult operating
environment, the Company was able to essentially hold sales and
gross profit stable.
The Company experienced a decrease in sales for the year of $ 0.1
million, or 0.1%, from $104.5 million in 2011 to $104.4 million in
2012. The printing segment of the business reflected a sales
increase of $70,000, or 0.1%, with the office products and office
furniture segment showing an overall sales increase of $ 0.4
million, or 1.2%. The newspaper segment reported sales of $14.0
million in 2012 compared to $14.6 million in 2011, a decrease of
$0.6 million or 4.1%. The sales compression experienced by the
Company in recent years was partially attributable to the residual
effect of the overall global economic crisis and the related
impact on the core business segments in which the Company
operates, and is reflective of a continued difficult operating
environment as well as macro industry dynamics within the
newspaper segment.
At October 31, 2012 the Company had approximately $39.8 million of
interest bearing debt, of which $36.6 million is syndicated (both
totals net of unamortized debt discount of $1.3 million). Actual
contractual syndicated debt is $37.8 million. The contractual
syndicated debt has been reduced by approximately $47.7 million
since inception of the debt, which resulted primarily from the
acquisition of The Herald-Dispatch in September 2007. This
represents a reduction of over 55% in a period slightly over five
years. This debt was paid down during a significant economic
downturn and severe secular decline within our printing and
newspaper segments. The Company has achieved this debt reduction
through a combination of earnings, cash flow, assets sales, equity
additions and working capital management.
"The Company is subject to certain restrictive financial covenants
requiring the Company to maintain certain financial ratios among
other conditions. The Company was in compliance with these
covenants at October 31, 2012, however, due to the short term
nature of the credit expiration and the multitude of covenants we
are required to comply with there is a reasonable possibility of
default at or before March 31, 2013 and our ability to operate as
a going concern is dependent on our ability to address our current
credit situation," the company said in its press release.
Mr. Reynolds concluded, "We will continue to focus on our core
businesses and identify opportunities to improve our performance
and efficiencies. We must focus on improving our core business
which should be a key component of a fundamental solution to our
pending credit maturities."
About Champion Industries
Champion Industries, Inc., is a commercial printer, business forms
manufacturer and office products and office furniture supplier in
regional markets in the United States. The Company also publishes
The Herald-Dispatch daily newspaper in Huntington, WV. The
Company's sales force sells printing services, business forms
management services, office products, office furniture and
newspaper advertising. Its subsidiaries include Interform
Corporation, Blue Ridge, Champion Publishing, Inc., The Dallas
Printing, The Bourque Printing, The Capitol, and The Herald-
Dispatch.
The Company reported a net loss of $3.97 million for the year
ended Oct. 31, 2011, compared with net income of $488,134 during
the prior year.
The Company's balance sheet at July 31, 2012, showed
$51.21 million in total assets, $51.98 million in total
liabilities, and a $767,157 total shareholders' deficit.
COOKE AQUACULTURE: Moody's Assigns 'B3' CFR; Outlook Stable
-----------------------------------------------------------
Moody's Investors Service assigned a B3 Corporate Family and a B3-
PD Probability of Default Rating to Cooke Aquaculture, Inc. as
well as a Caa1 (LGD 5, 73%) rating to its proposed senior
unsecured notes. The outlook is stable. This is a first time
rating assignment. The proceeds from the proposed notes offering
will be used to repay a portion of the company's term loan, all
amounts borrowed under the revolving credit facilities, and for
general corporate purposes.
Rating Rationale
Cooke's B3 CFR reflects its very high financial leverage, limited
free cash flow available for debt repayment. It also reflects the
volatility in operating profits and cash flows driven by
fluctuations in fish harvests and market prices for salmon, as
well as susceptibility to episodic disease outbreaks. The rating
is also constrained by the limited product diversification and
small scale relative to its larger and more diversified peers in
the consumer product and protein industries. The rating benefits
from the company's position as the largest producer of Atlantic
salmon in North America. Cooke has a solid portfolio of
aquaculture licenses on the East coast of North America that
creates significant barriers to entry, and positions it at
relatively short distances to its major customer markets. In
addition, the company benefits from its vertically integrated
structure in North America which gives it a cost advantage. The
rating also reflects the potential for further profitability
improvement as management either stabilizes or pursues other
strategic alternatives for its Chilean business, which has been a
drag on Cooke's performance in the past 12 months. The company's
long term growth prospects in the aquaculture industry are
attractive. The growing demand for seafood combined with the
limited supply will keep fish prices elevated over the long run.
Moody's expects Cooke's leverage to remain high over the next 12
to 18 months. At closing, Moody's calculates total leverage to be
almost 8 times, including the company's redeemable preferred stock
as debt and the results of its Chilean subsidiary. The preferred
stock is held by the co-founders of the company, who are also the
common stockholders of the company, and was put in place for
estate planning purposes. Moody's considers it to be 100% debt for
analytical purposes given the structural characteristics of these
securities. Excluding the preferred stock, total leverage would be
closer to 6 times. Moody's also analyzes Cooke's business on a
consolidated basis, which includes the Chilean business that
generated negative EBITDA for the nine months ending September
2012. However, the Chilean subsidiary is excluded from the
restricted group, which is the contractual borrower under the
notes, and Cooke will be limited in its ability to transfer cash
to this business.
Ratings Assigned:
Corporate Family Rating at B3
Probability of Default rating at B3-PD
Senior Unsecured notes due 2021 at Caa1 (LGD-5, 73%)
The stable outlook reflects Moody's view that Cooke will remain
highly levered in the near to intermediate term, but that it will
improve its operations to profitably grow its business.
A rating upgrade is dependent on Cooke's ability to manage its
earnings and cash flow volatility, resolve the uncertainty around
the Chilean business, as well as improve and then sustain its
profitability margins. It would also require that the company
delever, and maintain healthy liquidity and good covenant cushion.
An upgrade would also require leverage reduction such that debt to
EBITDA is sustained below 5 times on a consolidated basis
(including Chile).
The rating could be lowered should operating performance fail to
improve above current levels, or if liquidity weakens. Rating
could be downgraded if free cash flow remains negative or if the
company fails to reduce its debt to EBITDA to below 6 times within
the next 12 to 18 months on a consolidated basis including Chile.
A rating downgrade could also result if North American resources
used to support the Chilean operations.
The principal methodology used in this rating was the Global Food
- Protein and Agriculture Industry published in September 2009.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Cooke Aquaculture Inc., headquartered in Blacks Harbour, New
Brunswick, Canada, is a privately owned integrated aquaculture
company. It is involved in the raising, harvesting, processing and
selling of Atlantic salmon, trout, sea bass, sea bream and related
products. The company has operations in Canada, the US, Chile, and
Spain. Sales for the latest twelve months ended September 2012
were approximately CAD $489 million.
COOKE AQUACULTURE: S&P Assigns 'B-' CCR; Rates $250MM Notes 'CCC+'
------------------------------------------------------------------
Standard & Poor's Ratings Services said it assigned its 'B-' long-
term corporate credit rating to Blacks Harbour, N.B.-based Cooke
Aquaculture Inc. The outlook is stable.
S&P also assigned its 'CCC+' issue-level rating (one notch below
the corporate credit rating on the company) to Cooke's proposed
US$250 million senior unsecured notes due 2021. S&P assigned a
recovery rating of '5' to the debt, indicating its expectation of
modest (10%-30%) recovery in the event of default.
"The company is in the process of refinancing its debt, which will
result in the repayment of a significant portion of its secured
debt with proceeds from the unsecured note issuance," said
Standard & Poor's credit analyst Lori Harris. "Cooke plans to
repay all of its revolver debt outstanding, while reducing the
facility's authorized limit to C$75 million from C$200 million.
In addition, Cooke plans to repay some of its term debt through
the proposed refinancing," Ms. Harris added.
The ratings on Cooke reflect Standard & Poor's view of the
company's "vulnerable" business risk profile and "highly
leveraged" financial risk profile. S&P base its business risk
assessment on Cooke's narrow product portfolio, customer
concentration, and participation in the commodity-oriented
commercial seafood industry. Partially offsetting these factors,
in S&P's view, is the company's solid market position in its niche
as a leading producer of farmed Atlantic salmon in North America.
S&P base its financial risk assessment on the company's aggressive
financial policy, weak credit protection measures, volatile
operating performance, and acquisitive nature.
The stable outlook reflects Standard & Poor's belief that Cooke's
performance will meet S&P's expectations in the next year,
including maintaining its solid market position in salmon
production and generating positive free cash flow.
S&P could raise the ratings if Cooke demonstrates improvement in
its operating performance, cash flow, and adjusted credit metrics,
resulting in leverage remaining below 4.5x on a sustainable basis
and good covenant cushion. S&P could lower the ratings if there
is further deterioration in Cooke's operations or negative free
cash flow causing less-than-adequate liquidity or less than a 10%
EBITDA cushion within the financial covenants.
COPYTELE INC: Obtains $1.7 Million From Private Placement
---------------------------------------------------------
CopyTele, Inc., has completed the private placement of $1,765,000
of 8% convertible debentures, due Jan. 25, 2015, to accredited
investors, including the Company's Chief Executive Officer and two
other members of the Company's Board of Directors. The debentures
pay interest quarterly and are convertible into shares of the
Company's common stock at a conversion price of $0.15 per share on
or before Jan. 25, 2015. The Company may prepay the debentures at
any time without penalty if certain conditions are met.
The private placement also includes the issuance to the investors
of three-year warrants to purchase a total of 5,882,745 common
shares at an exercise price of $0.30 per share. Gross proceeds to
the Company from the private placement were $1,765,000, which will
be used for general working capital purposes.
The CopyTele securities being sold have not been registered under
the Securities Act of 1933, or any state securities laws and may
not be offered or sold in the United States absent registration or
an exemption from the registration requirements of the Securities
Act and applicable state laws.
About CopyTele
Melville, N.Y.-based CopyTele, Inc.'s principal operations include
the development, production and marketing of thin flat display
technologies, including low-voltage phosphor color displays and
low-power passive E-Paper(R) displays, and the development,
production and marketing of multi-functional encryption products
that provide information security for domestic and international
users over several communications media.
The Company's balance sheet at July 31, 2012, showed $5.9 million
in total assets, $6.8 million in total liabilities, and a
shareholders' deficit of $893,071.
According to the Company's quarterly report for the period ended
July 31, 2012, based on information presently available, the
Company does not believe that its existing cash, cash equivalents,
and investments in certificates of deposit, together with cash
flows from expected sales of its encryption products and revenue
relating to its display technologies, and other potential sources
of cash flows or necessary expense reductions including employee
compensation, will be sufficient to enable it to continue its
marketing, production, and research and development activities for
12 months from the end of this reporting period. "Accordingly,
there is substantial doubt about our ability to continue as a
going concern.
CW MINING: Utah Court Rules on COP Coal Appeal
----------------------------------------------
Utah District Judge Ted Stewart ruled on consolidated appeals
arising out of the involuntary bankruptcy proceedings of C.W.
Mining Company. The cross-appeals were filed by COP Coal
Development Company and Kenneth A. Rushton, the Chapter 7 trustee.
Prior to entering bankruptcy, CWM was in the business of mining
coal. CWM's primary asset was the Bear Canyon mine, an
underground coal mine located in Emery County, Utah. The Bear
Canyon mine is located on property owned by COP. In March 1997,
COP and CWM entered into a coal mining agreement, pursuant to
which COP granted CWM the right to mine the Bear Canyon mine.
Under the Agreement, CWM was to pay COP a royalty "equal to the
lesser of 8% or the maximum royalty allowed by law of the average
gross realization on every ton (2000 lbs.) of coal mined and
removed from the described premises." CWM and COP executed two
amendments to the Agreement. The first amendment reduced the
royalty payable from 8% to 4%. The second amendment to the
Agreement defers payment of a portion of the royalties CWM owed
COP.
On May 5, 2009, COP submitted its Proof of Cure Claim for the
Agreement to the bankruptcy court in the total amount of
$10,982,993. COP included with its Cure Claim various documents,
including: copies of the Agreement and relevant amendments;
reports of tonnage and sales; invoices; and summary calculations
of amounts allegedly owed.
The Chapter 7 Trustee objected to the Cure Claim. The Trustee did
not dispute that an outstanding debt was owed COP under the
Agreement; rather, the Trustee objected to the amount of the Cure
Claim.
Prior to the originally scheduled trial date, the Chapter 7
Trustee filed a motion in limine alleging that COP failed to
fulfill its discovery obligations and deliberately and egregiously
withheld documents requested by the Trustee. The Trustee sought
exclusion of (1) the original and any copy of the Deferral
Amendment; (2) the expert report of L. Scott Kimber; and (3) the
expert report of Albert H. Lyter III. In addition, the Trustee
requested that the bankruptcy court impose sanctions, among
others, on COP (1) an order declaring the Deferral Amendment to be
a fraud; and (2) disallowance of the Cure Claim.
At a hearing on Oct. 26, 2009, the bankruptcy court granted, in
part, the Chapter 7 Trustee's request to preclude the testimony of
Dr. Lyter and the use of Dr. Lyter's expert report at trial. The
bankruptcy court also imposed substantial monetary sanctions
against COP. The bankruptcy court did not exclude Mr. Kimber's
report because it appeared that Mr. Kimber's report could be of
some assistance. To the extent the Trustee sought as a sanction
the striking of the Cure Claim, the bankruptcy court summarily
denied such relief.
On Nov. 30, 2009, the bankruptcy court entered an order on the
Chapter 7 Trustee's motion in limine and awarded the Trustee its
attorney fees for bringing the motion. On Dec. 10, 2009, the
bankruptcy court entered its Order and Judgment on Trustee's
Objection to COP's Proof of Claim. As part of that order, the
bankruptcy court awarded, as "a sanction for failing to provide
discovery timely and in good faith," all the Trustee's attorney
fees and expenses "associated with the objection, discovery, and
trial." The bankruptcy court indicated that the amount of
attorney fees and expenses would be determined by separate order.
On April 4, 2010, the Chapter 7 Trustee filed his sanction request
seeking $107,572 in attorney fees and $1,118.30 in expenses. The
Trustee also requested accounting fees of $50,766, for a total
sanctions request of $159,456.30. Shortly thereafter, the
bankruptcy judge on the case, Judge Bouldin, recused and the case
was assigned to Judge Mosier. On May 24, 2010, COP filed an
objection to the Trustee's sanction request. On Oct. 26, 2010,
the bankruptcy court issued a memorandum opinion regarding
sanctions and awarded the Trustee $12,558.50 in attorney fees and
expenses it determined were caused by COP's discovery violations.
The parties raise these issues on appeal: (1) did the bankruptcy
court err in excluding Dr. Lyter and his expert report; (2) did
the bankruptcy court err in finding that the Deferral Amendment
was not entered into until February 2007; (3) did the bankruptcy
court err in ruling that COP was not entitled to prejudgment
interest; (4) did the bankruptcy court err in allowing COP's Cure
Claim despite COP's failure to comply with the Cure Claim Order;
(5) should Scott Kimber's expert report have been excluded; and
(6) did the bankruptcy court improperly reduce the amount of
attorney fees and costs awarded to the Trustee.
Judge Stewart affirmed the bankruptcy court judgment except as to
its determination of prejudgment interest and sanctions. The case
is remanded for further proceedings before the bankruptcy court.
The case before the District Court is, COP COAL DEVELOPMENT
COMPANY, Appellant and Cross-Appellee, v. KENNETH A. RUSHTON,
Trustee, Appellee and Cross-Appellant, Case No. 2:10-CV-39 TS (D.
Utah). A copy of the Court's Jan. 28, 2013 Memorandum Decision
and Order on Combined Appeal is available at http://is.gd/jkE69T
from Leagle.com.
Based in Salt Lake City, Utah, C.W. Mining Co. dba Co-Op Mining
Company operated the Bear Canyon Mine in Emery County, Utah, under
the terms of a lease with C.O.P. Coal Development Company, which
owns the mine. Aquila Inc., Owell Precast, LLC, and House of
Pumps, Inc., filed an involuntary Chapter 11 petition (Bankr. D.
Utah Case No. 08-20105) on Jan. 8, 2008. In November 2008, the
Chapter 11 case was converted to a Chapter 7 liquidation
proceeding. Kenneth A. Rushton serves as the Chapter 7 Trustee,
and is represented by Brent D. Wride, Esq., at Ray Quinney &
Nebeker, in Salt Lake City.
DAE AVIATION: S&P Affirms 'B-' CCR; Outlook Stable
--------------------------------------------------
Standard & Poor's Ratings Services said that it affirmed its
ratings, including the 'B-' corporate credit rating, on DAE
Aviation Holdings Inc. S&P revised the outlook to stable from
negative.
"The outlook revision reflects DAE Aviation's successful
refinancing of its credit facilities in November 2012, when it
pushed out upcoming maturities and loosened covenants that the
company would likely have otherwise violated in the next few
quarters," said Standard & Poor's credit analyst Christopher
DeNicolo. The new revolver is $150 million, up from $100 million,
and the new term loan is $545 million, up from $470 million. The
refinancing resulted in us revising our liquidity assessment to
"adequate" from "less than adequate."
The ratings on Phoenix, Ariz.-based aircraft engine repair
services provider DAE Aviation reflect the company's "highly
leveraged" financial risk profile due to high debt leverage and
weak cash generation. The ratings also reflect DAE Aviation's
exposure to the competitive and cyclical general aviation markets.
The less-cyclical military business, leading positions in markets
served, and fairly high barriers to entry mitigate its weaknesses
in Standard & Poor's analysis. S&P assess DAE Aviation's business
risk profile as "weak," as defined under S&P's criteria.
Profitability remains poor because of continued losses at the
aircraft completions business (5% of sales). Since 2011, the unit
has experienced continual losses related to lower volumes.
However, a recent three-year contract to modify the interior of a
Boeing 747-8 for a VIP client should improve revenues in the first
half of 2013. Business jet operations (25%-30%) continued to
recover in 2012. Further improvement is possible in 2013 but
depends on the strength of the economy. Sales related to the
repair of engines for regional jets, regional turboprops, and
narrowbody airliners (about 35%) were strong in 2012 and are
likely to remain the key source of growth for the company. Demand
for repair of military turboprop engines (about 20%) was down
for the nine months ended Sept. 30, 2012, due to a decrease in
maintenance, repair, and overhaul (MRO) services for the US Air
Force KAC contract. These sales are likely to continue to fall as
flight hours decline and new aircraft enter service.
S&P believes credit protection measures deteriorated modestly in
2012 from 2011 levels due to flat EBITDA (adjusted for the impact
of the termination of the Delta Air Lines contract) and the higher
debt from the refinancing. S&P expects credit protection measures
to be flat to modestly up in 2013, with total adjusted debt to
EBITDA of less than 6x, funds from operations (FFO) to total debt
at about 10%, and EBITDA interest coverage of 2x-2.5x. The
business and regional jet markets have started to pick up, but
continued high oil prices and a weak economy could temper this
improvement. However, the company's revenues and earnings could
still increase modestly in 2013 given the strength in the engine
repair business, especially for larger engines, and the recent
completions project win.
S&P believes free cash flow improved in 2012 due to advances
related to the 747-8 completion contract and the termination of
DAE Aviation's "power by the hour" contract with Delta, which was
terminated in August 2012 and had been consuming a significant
amount of cash. However, free cash flow is likely to decline in
2013 because of less favorable working capital changes offsetting
higher earnings.
DAE Aviation is a leading provider of MRO services to engines for
business and regional jets. In addition, the company provides
component and airframe repairs, large business jet completions and
modifications, and MRO services for certain military aircraft
engines. The company provides MRO services and has original
equipment manufacturer authorizations for a range of engines that
popular regional and business aircraft use. The MRO business
competes with other providers, including the original
manufacturers of the engines, numerous large and small independent
MRO shops, airlines (for regional jets), and military depots (for
military aircraft). However, DAE Aviation has a No. 1 or No. 2
market share position in almost all of its key engine types. The
key factors for MRO services are hours flown and the size of the
aircraft fleet, which are both increasing. DAE Aviation has
expanded its engine MRO capabilities to include larger engines for
narrowbody aircraft, which should be a significant revenue source
in the future.
The outlook is stable. Revenues and earnings should continue to
grow in 2013 due to the pick up in the business and regional jet
markets, the 747-8 completions project, and increasing revenues
from servicing larger engines. Cash generation remains weak but
should start to improve in 2014. S&P could lower the ratings if
lower-than-expected earnings and cash generation cause them to
revise its liquidity assessment to "less than adequate" or "weak."
S&P do not expect to raise the ratings in the next year but could
do so if the company refinances the notes due in 2015 and better
profitability and cash flow generation result in sustained
improvements in credit protection measures such that debt to
EBITDA falls below 5x and FFO to debt rises above 12%.
DEX ONE: S&P Revises 'CCC' Rating Outlook to Negative
-----------------------------------------------------
Standard & Poor's Ratings Services revised its 'CCC' rating
outlook on Dex One Corp. to negative from developing. Existing
ratings on the company, including the 'CCC' corporate rating, were
affirmed.
"The outlook revision to negative reflects our view that the
company has sufficient lender support to effectively pursue a
prepackaged reorganization," said Standard & Poor's credit analyst
Chris Valentine.
"It also reflects our expectation, given the large lender group
and the diversity of lender interests, that the company may not
get support from all of its lenders to amend its credit agreement
out-of-court. If Dex One files for bankruptcy, we would lower our
corporate credit rating to 'D' and reassess the corporate credit
rating, business risk, and financial risk of the combined company
after emergence," S&P added.
"Our 'CCC' corporate credit rating reflects Standard & Poor's
Ratings Services' view of the company's strong motivation to use
the bankruptcy court to complete its proposed merger with
SuperMedia, and our assessment of its business risk profile as
"vulnerable" and financial risk profile as "highly leveraged."
Furthermore, the rating reflects continued structural and cyclical
decline in the print directory sector, increased competition from
online and other distribution channels as small business
advertising expands across a greater number of marketing channels,
and the potential for additional subpar debt repurchases. Our
management and governance assessment is fair," S&P noted.
The negative rating outlook reflects S&P's expectation that Dex
One may pursue a voluntary prepackaged bankruptcy reorganization
plan to consummate the merger agreement with SuperMedia. S&P
could also lower its rating if declining business fundamentals
hinder 2014 debt refinancing or if S&P becomes convinced the
company could violate financial covenants as a result of a faster-
than-expected decline in EBITDA.
Less likely, a revision of the outlook to stable or an upgrade
would require a resumption of revenue growth and for Dex One to
address its 2014 debt maturities.
DIAL GLOBAL: Terminates Offerings Under Various Plans
-----------------------------------------------------
Dial Global, Inc., filed with the U.S. Securities and Exchange
Commission post-effective amendments in connection with the
following registration statements:
* Registration No. 033-28849 registering of 2,800,000 shares of
the common stock authorized for issuance pursuant to the
potential exercise of stock options issued under the 1989
Stock Incentive Plan;
* Registration No. 333-85609 relating to the sale of up to
3,062,729 shares of the Company's common stock issuable upon
the exercise of options;
* Registration No. 333-68785 registering 4,000,000 shares of
the Common Stock authorized for issuance pursuant to the
potential exercise of stock options issued under the 1989
Stock Incentive Plan;
* Registration No. 033-17066 registering 750,000 shares of the
Common Stock authorized for issuance pursuant to the potential
exercise of stock options issued under the 1984 Non-Qualified
Stock Option Plan;
* Registration No. 333-128362 registering 9,200,000 shares
of the Common Stock authorized for issuance pursuant to the
potential exercise of stock options issued under the Westwood
One, Inc. 2005 Equity Compensation Plan;
* Registration No. 033-07313 relating to the 140,000 shares of
the Common Stock authorized for issuance pursuant to the
potential exercise of stock options issued under the 1984
Incentive Stock Option Plan and 300,000 shares of the Common
Stock authorized for issuance pursuant to the potential
exercise of stock options issued under the 1984 Non-Qualified
Stock Option Plan;
* Registration No. 033-57637 registering 525,000 shares of the
Common Stock authorized for issuance pursuant to the potential
exercise of stock options issued under the Employment
Agreement, dated as of Dec. 1, 1986, by and between Westwood
One, Inc., and Norman J. Pattiz;
* Registration No. 333-149725 registering 500,000 shares of the
Common Stock authorized for issuance pursuant to the potential
exercise of stock options issued under the Stand-Alone Stock
Option Agreement, dated as of Jan. 8, 2008, by and between
Westwood One, Inc. and Thomas F.X. Beusse;
* Registration No. 033-64666 registering 41,500 shares of the
Common Stock authorized for issuance pursuant to the potential
exercise of stock options issued under the Executive Stock
Bonus Plan;
* Registration No. 333-89595 registering 4,000,000 shares of the
Common Stock authorized for issuance pursuant to the potential
exercise of stock options issued under the Westwood One, Inc.
1999 Stock Incentive Plan.
The post-effective amendments terminate the Registration
Statements and remove from registration any securities registered
thereby which remain unsold as of Jan. 25, 2013.
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.
"...[I]f 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.
DIGITAL DOMAIN: Seeks Payments Under KEIP's 3rd Performance Goal
----------------------------------------------------------------
DDMG Estate, et al., ask the U.S. Bankruptcy Court for the
District of Delaware to authorize the payments to eligible
employees pursuant to the Debtors' key employee incentive program.
On October 22, 2012, the Court granted the KEIP motion and entered
its order approving key employee incentive plan and authorizing
payments thereunder.
The purpose of the KEIP Motion was to enable the Debtors to
implement a KEIP to motivate certain key employees to accomplish
certain performance goals that would enable the Debtors to
maximize creditor recoveries in these Chapter 11 cases.
Specifically, the approved KEIP contemplated separate monetary
incentives for the sale of (i) the Debtors' intellectual property
relating to the conversion of two dimensional to three dimensional
images; (ii) The Debtors' intellectual property rights associated
with four (4) feature-length animated films entitled The Legend of
Tembo, The Art Project, Birds of a Feather, and The lightning
Catcher; and (iii) all other assets remaining in the estates,
including those related to (x) Digital Domain Institute, a joint
undertaking between Florida State University and the Debtors; (y)
Tradition Studios, a fully-functional, purpose-built animation
studio in Port St. Lucie, Florida; and (z) all other fixed assets
owned or used by the Debtors in the State of Florida, including a
4-acre parcel of owned real property adjacent to Tradition
Studios.
The KEIP has three performance goals:
a. First Performance Goal. If the IP Assets are sold for an
amount equal to or greater than $10 million, the Eligible
Employees will earn a payment equal to 70% of the total incentive
payment;
b. Second Performance Goal. If the Tembo Assets are sold for
an amount equal to or greater than $750,000, the Eligible
Employees will earn a payment equal to 10% of the total incentive
payment; and
c. Third Performance Goal. If the Other Assets are sold for an
aggregate amount equal to or greater than $1.75 million, the
Eligible Employees will earn a payment equal to 20% of the total
incentive payment.
The Debtors request for authorization to make incentive payments
pursuant to the KEIP's Third Performance Goal. The Debtors have
conferred with the Senior Lenders and Creditors Committee and
each supports the relief requested.
As reported in the Troubled Company Reporter on Jan. 21, 2013, the
Debtors asked for a bankruptcy court's permission to pay $63,000
in employee-incentive bonuses as a reward for meeting one of three
sale goals.
A hearing on Feb. 7, 2013, at 12 p.m. has been set. Objections,
if any, are due Jan. 31, at 4 p.m.
About Digital Domain
Port St. Lucie, Florida-based Digital Domain Media Group, Inc. --
http://www.digitaldomain.com/-- engaged in the creation of
original content animation feature films, and development of
computer-generated imagery for feature films and trans-media
advertising primarily in the United States.
Digital Domain Media Group, Inc. and 13 affiliates sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on
Sept. 11, 2012, to sell its business for $15 million to
Searchlight Capital Partners LP, subject to higher and better
offers.
At a bankruptcy auction, the principal part of the business was
purchased by a joint venture between Galloping Horse America LLC,
an affiliate of Beijing Galloping Horse Co., and an affiliate of
Reliance Capital Ltd., based in Mumbai. The $36.7 million total
value of the contact includes $3.6 million to cure defaults on
contracts and $2.9 million in reimbursement of payroll costs.
Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the
Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief
restructuring officer. Kurtzman Carson Consultants LLC is the
claims and notice agent.
An official committee of unsecured creditors appointed in the case
is represented by lawyers at Sullivan Hazeltine Allinson LLC and
Brown Rudnick LLP.
The company disclosed assets of $205 million and liabilities
totaling $214 million. Debt includes $40 million on senior
secured convertible notes plus $24.7 million in interest. There
is another issue of $8 million in subordinated secured convertible
notes.
The Debtors also have sought ancillary relief in Canada, pursuant
to the Companies' Creditors Arrangement Act in the Supreme Court
of British Columbia, Vancouver Registry.
DREIER LLP: Court Rules on Bid to Seal Documents
------------------------------------------------
In the case, SHEILA M. GOWAN, Chapter 11 Trustee For the Estate of
Dreier LLP, Plaintiff, v. WESTFORD ASSET MANAGEMENT LLC, SGS ASSET
MANAGEMENT, STAFFORD TOWNE, LTD., BENNINGTON, INTERNATIONAL
HOLDINGS, LTD., WESTFORD SPECIAL SITUATIONS, MASTER FUND L.P.,
ADAMS, INTERNATIONAL TRADING, LTD., CARSTON SPIRES, LTD., WESTFORD
GLOBAL ASSET MANAGEMENT LTD., EPSILON GLOBAL MASTER FUND, LP,
EPSILON GLOBAL MASTER FUND II, LP, WESTFORD SPECIAL SITUATIONS
FUND, LTD., EPSILON DISTRESSED: STRATEGIES MASTER FUND, LP and
STEVE STEVANOVICH, Defendants, Adv. Proc. No. 10-5447 (Bankr.
S.D.N.Y.), the Westford defendants have moved for an order
requesting and requiring certain information to be filed under
seal. After the Court initially denied the motion, (Memo
Endorsed, dated January 15, 2013), Westford filed a narrower
motion limited to certain excerpts of the transcript of the
deposition of Steve G. Stevanovich, held June 15, 2012. The
plaintiff has not objected but the Official Committee of Unsecured
Creditors has. The Court has examined the relevant excerpts in
camera and considered the supporting declaration of Mr.
Stevanovich. Since there is no practical way to redact rather
than seal the information, the motion to seal is granted "to the
extent indicated and is otherwise denied," Bankruptcy Judge Stuart
M. Bernstein said in a Jan. 29, 2013 decision available at
http://is.gd/vjSyl6from Leagle.com.
About Marc Dreier and Dreier LLP
Marc Dreier founded New York-based law firm Dreier LLP --
http://www.dreierllp.com/-- in 1996. On Dec. 8, 2008, the U.S.
Securities and Exchange Commission filed a suit, alleging that Mr.
Dreier made fraudulent offers and sales of securities in several
cities, selling fake promissory notes to hedge and other private
investment funds. The SEC asserted that Mr. Dreier also
distributed phony financial statements and audit opinions, and
recruited accomplices in connection with that scheme. Mr. Dreier,
currently in prison, was charged by the U.S. government for
conspiracy, securities fraud and wire fraud (S.D.N.Y. Case No.
09-cr-00085).
Dreier LLP sought Chapter 11 protection (Bankr. S.D.N.Y. Case No.
08-15051) on Dec. 16, 2008. Stephen J. Shimshak, Esq., at Paul,
Weiss, Rifkind, Wharton & Garrison LLP, was tapped as counsel.
The Debtor estimated assets of $100 million to $500 million, and
debts between $10 million and $50 million in its Chapter 11
petition.
Sheila M. Gowan, a partner with Diamond McCarthy, was appointed
Chapter 11 trustee for the Dreier law firm. Ms. Gowan is
represented by Jason Porter, Esq., at Diamond McCarthy LLP.
Wachovia Bank National Association, the Dreier LLP Chapter 11
trustee, and Steven J. Reisman as post-confirmation representative
of the bankruptcy estate of 360networks (USA) Inc. signed a
petition that put Mr. Dreier into bankruptcy under Chapter 7 on
Jan. 26, 2009 (Bankr. S.D.N.Y. Case No. 09-10371). Mr. Dreier,
60, pleaded guilty to fraud and other charges in May 2009. The
scheme to sell $700 million in fake notes unraveled in late 2008.
Mr. Dreier is serving a 20-year sentence in a federal prison in
Minneapolis.
E-DEBIT GLOBAL: Appoints CDO, President and COO for Group-Link
--------------------------------------------------------------
E-Debit Global Corporation announced the appointment of Timothy D.
Frantz as Chief Development Officer of majority owned subsidiary
Group-Link Inc.
"We are more than pleased to announce that Timothy Frantz has
agreed to commence duties as the Chief Development Officer of
majority owned Group-Link Inc.," advised Douglas Mac Donald, E-
Debit's President and CEO.
"We will benefit greatly with Tim's IT experience with EFG
Solutions Inc. and Data Control and Management Solutions Ltd. as
we roll out the GROUP-LINK e-commerce and business social network
and payment gateway.
"Timothy has spent the last 23 years managing, developing and
teaching software development, network infrastructure, computer
hardware and software integration as well as Internet marketing.
He is a master systems analyst and designer. He knows data
management, Website programming and development, Web marketing,
and, most importantly, how to make them all work together to
achieve maximum effectiveness and benefit. Much more than an IT
Consultant; Timothy is a Business Systems and Communications
Expert. Tim's participation with Group-Link will allow us to move
our implementation time lines for roll-out to a projected date of
February 1, 2013."
"We are continuing to add to our team and Tim's participation is a
significant step forward," added Mr. Mac Donald.
In addition, E-Debit Global announced the appointment of Adam
Ursulak as President and Chief Operating Officer of Group Link
Inc.
"With the arrival of Adam as Group Link Inc.'s President and Chief
Operating Officer we have engaged a person with outstanding
talent, leadership and experience to lead the forward direction of
Group Link," advised Douglas Mac Donald, E-Debit's President and
CEO, Group Link Inc. majority shareholder.
"Adam has spent the last 25 years working with local and
international businesses to develop and implement adaptable
strategies targeting sales, advertising, marketing and process
refinement. He specializes in developing internet brand awareness
for clients utilizing online web stores with e-commerce
capabilities and a platform to communicate corporate information,
products and services. The integration of relevant social media
channels and the ability to work with all organizational levels is
a strength that gives Adam the ability to develop broad based
strategies that strengthen the entire organization and all
stakeholder participants.
"Adam's proven past experience and strength in market penetration
and growth over the past 5 years is fundamental to the success of
Group Link as we roll out our e-commerce and business social
network and payment gateway. With Adam leading our team I believe
we will be successful in meeting the implementation time lines for
the initial roll-out of Group Link projected for February 1, 2013.
"Group Link will continue timely announcements as to our progress
towards our initial roll-out," added Mr. Mac Donald.
About E-Debit Global Corporation
E-Debit Global Corporation (WSHE) is a financial holding company
in Canada at the forefront of debit, credit and online computer
banking. Currently, the Company has established a strong presence
in the privately owned Canadian banking sector including Automated
Banking Machines (ABM), Point of Sale Machines (POS), Online
Computer Banking (OCB) and E-Commerce Transaction security and
payment. E-Debit maintains and services a national ABM network
across Canada and is a full participating member of the Canadian
INTERAC Banking System.
Following the 2011 results, Schumacher & Associates, Inc., in
Littleton, Colorado, noted that the Company has incurred net
losses for the years ended Dec. 31, 2011, and 2010, and had a
working capital deficit and a stockholders' deficit at Dec. 31,
2011, and 2010, which raise substantial doubt about its ability to
continue as a going concern.
The Company reported a net loss of $1.09 million in 2011, compared
with a net loss of $1.15 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed
$1.82 million in total assets, $3.52 million in total liabilities,
and a $1.70 million total stockholders' deficit.
EMERGENCY MEDICAL: S&P Affirms 'B+' Corporate Credit Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its existing ratings
on Greenwood Village, Colo.-based Emergency Medical Services
Corp., including the 'B+' corporate credit rating. The rating
outlook is stable.
The 'B+' issue-level rating on the $1.316 billion (includes the
$150 million add-on) senior secured term loan is affirmed. The
recovery rating on this debt is '3'.
Emergency Medical Services Corp.'s proposed $150 incremental term
loan will repay revolver borrowings that were used to fund
acquisitions; the expected run rate of EBITDA from the
acquisitions is expected to be nearly $30 million. In addition,
the company expects to reprice the term loan, which will yield
interest savings slightly in excess of the additional interest
from the proposed incremental term loan; therefore S&P's cash flow
expectations and liquidity assessment are unchanged.
S&P's 'B+' rating on Emergency Medical reflects the company's
ongoing exposure to reimbursement risk in both its ambulance
transportation (American Medical Response; AMR) and physician
staffing (EmCare) businesses, and high levels of uncompensated
care that contribute to relatively thin operating margins.
Despite these risks, Standard & Poor's Ratings Services
characterizes the business risk as "fair," because of its relative
diversity of services and track record of growth and stable
margins. S&P considers the financial risk profile to be "highly
leveraged" given debt leverage above 5x and FFO to debt of less
than 12%, according to our criteria.
"Our base-case assumes mid-single-digit revenue growth, reflecting
new contracts, and to a smaller extent, same-store growth. Year
to date as of Sept. 30, 2012, EMSC's revenue increased about 3%,
reflecting new contracts and same contract growth. EBITDA margins
of approximately 12% are expected to improve slightly driven by
operational improvements. EmCare has been exiting unprofitable
contracts, usually from smaller hospitals that are unable to
increase subsidies to EMSC, contributing to higher margins at
EmCare. We also expect that electronic tablet implementation in
the ambulance business will contribute to improved margins.
Adjusted EBITDA margins were 12.2%, an improvement from 11.6% in
2011. The company has reported expected EBITDA in the range of
$400 million to $405 million for 2012, tracking to our
expectations. We expect the reimbursement environment to remain
stable in 2013. As of Sept. 30, 2012, free cash flow was
$125 million year to date. We expect that 2012 annual free cash
flow will exceed our expectations. We expect cash flow for 2013
will be about $100 million as interest expense will be higher this
year compared with 2012," S&P said.
FIRST DATA: Incurs $179 Million Net Loss in Fourth Quarter
----------------------------------------------------------
First Data Corporation reported a net loss attributable to the
Company of $179 million on $2.75 billion of revenue for the three
months ended Dec. 31, 2012, compared with a net loss attributable
to the Company of $69.3 million on $2.68 billion of revenue for
the same period during the previous year.
For the 12 months ended Dec. 31, 2012, the Company incurred a net
loss attributable to the Company of $700.9 million on $10.68
billion of revenue, compared with a net loss attributable to the
Company of $516.1 million on $10.71 billion of revenue during the
prior year.
The Company's balance sheet at Dec. 31, 2012, showed $37.89
billion in total assets, $35.20 billion in total liabilities,
$67.4 million in redeemable noncontrolling interest, and $2.62
billion in total equity.
"Despite a challenging economic environment, we grew adjusted
revenues by 3% and adjusted EBITDA by 8% for the full year 2012 on
growth in our global acquiring business and cost containment,"
said chief executive officer, Jonathan J. Judge. "We continue to
make investments in new product innovation around our merchant
base including next-generation tablet-based point-of-sale systems.
As the payments industry continues to evolve through the
convergence of offline, online and mobile payments First Data
intends to help lead the way in Universal Commerce."
A copy of the press release is available for free at:
http://is.gd/I3s2YF
Interim CEO Appointed
First Data's Board of Directors has named Ed Labry as interim CEO
while it conducts a selection process. On Jan. 11, 2013, the
company announced that Jon Judge planned to retire as CEO for
health reasons and would serve until a transition was effected.
"As evidenced by appointing Ed Labry president of our North
American business in 2011, I have great confidence in Ed's
leadership of First Data. Asking him to serve in this capacity
makes perfect sense for continuity and stability. Ed's experience
and knowledge of the company will maintain its position in a
dynamic electronic payments industry," said Judge. "I will give
Ed and the Board my continued support and assistance during this
interim period."
"Ed Labry has spent almost 30 years of his career in the payments
industry and most of that time at First Data or one of its
subsidiaries, Concord EFS. He is a natural fit for us as interim
CEO and will do an excellent job to ensure that the company
remains focused on driving its 2013 objectives," said Board
Chairman Joe Forehand. "This also allows Jon the time to focus on
his health and well-being."
"I'm grateful for the opportunity to lead First Data and want to
thank our Chairman and Board of Directors," said Labry. "First
Data is absolutely in the right place at the right time to
capitalize on the rapid evolution occurring within the payments
industry. We have made solid progress over the past two years
under Jon's leadership. We will continue to improve our business
practices and structures with a laser focus on serving our
customers."
Mr. Labry has served as Executive Vice President since February
2006 and President, First Data - North America since January 2011.
Mr. Labry was President, Retail and Alliance Services from
February 2009 until January 2011 and President, First Data USA
from September 2007 to February 2009. He served as the Company's
President of Commercial Services from January 2006 to September
2007. From May 2005 to January 2006 he was President of the
Company's Prepaid Services business and from February 2004 to May
2005 he was special assistant to the Company's Chairman. Mr.
Labry joined Concord EFS, Inc., in 1985 and served as President at
the time the Company acquired Concord EFS, Inc. He is a board
member of Dixon Gallery and Gardens, Hutchison School and
Cumberland University.
About First Data
Based in Atlanta, Georgia, First Data Corporation, with over
$10 billion of revenue for the 12 months ended June 30, 2010,
provides commerce and payment solutions for financial
institutions, merchants, and other organizations worldwide.
* * *
The Company's carries a 'B3' corporate family rating, with a
stable outlook, from Moody's Investors Service, a 'B' corporate
credit rating, with stable outlook, from Standard & Poor's, and
a 'B' long-term issuer default rating from Fitch Ratings.
GLOBAL NAPS: Judge OKs $36M Verizon Settlement
----------------------------------------------
Helen Christophi of BankruptcyLaw360 reported that a New York
federal judge on Monday approved a $36.2 million settlement
between Global NAPs Inc. and Verizon New England Inc. in a dispute
over unpaid fees, rejecting the former head of Global NAPs'
objection that the deal unfairly forfeited the bankrupt
telecommunications company's $45 million counterclaims.
Under the deal struck in August, Verizon will reduce a judgment it
won against Global NAPs by $21.5 million, from $57.7 million to
$36.2 million, the report said. Verizon also agreed to reduce its
judgment against Global NAPs, the report added.
In May 2010, a receiver, Carl F. Jenkins was appointed by the U.S.
District Court of Massachusetts for Global NAPs, Inc., and its
subsidiaries.
GO DADDY: Loan Repricing No Impact on Moody's 'Ba3' CFR
-------------------------------------------------------
Moody's Investors Service said Go Daddy Operating Company, LLC's
proposed amendment to reduce pricing on its existing senior
secured credit facilities is credit positive. If successful, the
company will realize approximately $9 million in annual interest
expense savings. However, Go Daddy's B1 corporate family rating
(CFR) and the Ba3 ratings for its senior secured credit facilities
are not affected at the present time as the re-pricing will only
modestly benefit cash flow from operations relative to the
company's sizeable debt of $1.04 billion.
Headquartered in Scottsdale, Arizona, Go Daddy is a leading
provider of domain name registration, website hosting and on-
demand services.
GRANITE DELLS: CMS's Stay Not Applicable in Prosecution of Plans
----------------------------------------------------------------
The Hon. Redfield T. Baum of the U.S. Bankruptcy Court for the
District of Arizona confirmed that the automatic stay in the
Cavan Management Services, LLC Bankruptcy Case does not apply to
the prosecution of Chapter 11 Plans in the Granite Dells
Ranch Holdings, LLC.
The Court also ordered that the automatic stay is modified to
authorize the prosecution of chapter 11 plans and all necessary
actions related thereto, including all actions taken by plan
proponents in furtherance of their respective plans prior to entry
of the order.
As reported in the TCR on Jan. 30, 2013, CMS entered into a
stipulation among Arizona Eco Development LLC, the Ad Hoc
Committee of Note Holders, the Plan Proponents, relating to the
clarification that the stay in the CMS does not apply to the
confirmation process in the GDRH case.
About Granite Dells Ranch Holdings
Scottsdale, Arizona-based Granite Dells Ranch Holdings LLC filed a
bare-bones Chapter 11 petition (Bankr. D. Ariz. Case No. 12-04962)
in Phoenix on March 13, 2012. Judge Redfield T. Baum PCT Sr.
oversees the case. The Debtor is represented by Alan A. Meda,
Esq., at Stinson Morrison Hecker LLP. The Debtor disclosed
$2.22 million in assets and $157 million in liabilities as of the
Chapter 11 filing.
Cavan Management Services, LLC is the Debtor's manager. David
Cavan, member of the firm, signed the Chapter 11 petition.
Arizona ECO Development LLC, which acquired a $83.2 million 2006
loan by the Debtor, is represented by Snell & Wilmer L.L.P. The
resolution authorizing the Debtor's bankruptcy filing says the
Company is commencing legal actions against Stuart Swanson, AED,
and related entities relating to the purchase by Mr. Swanson of a
promissory note payable by the Company to the parties that sold a
certain property to the Company. According to Law 360, AED sued
Granite Dells on March 6 asking the Arizona court to appoint a
receiver. Arizona ECO is foreclosing on a secured loan backed by
15,000 acres of Arizona land.
The United States Trustee said that an official committee has not
been appointed in the bankruptcy case of Granite Dells because an
insufficient number of unsecured creditors have expressed interest
in serving on a committee.
The Debtor's Plan provides for payment to unsecured creditors
(including any unsecured claim of AED) in quarterly installments
over eight years aggregating $5 million. However, the Plan
provides that a holder of an investment promissory note (estimated
to total $21 million) will be given the option of participating in
the funding of the Reorganized Debtor.
Tri-City Investment & Development, LLC, a 39.25% equity holder in
the Debtor, also filed a Consolidated Supplemental Disclosure in
support of Tri-City's Plan, as amended. Tri-City's consolidated
Disclosure Statement incorporates and restates all material terms
of the Tri-City's previous disclosure statements and incorporates
the terms of the agreement that was reached at the Aug. 20, 2012,
mediation.
GRANITE DELLS: March 6 Confirmation Hearing on Noteholders' Plan
----------------------------------------------------------------
The Hon. Redfield T. Baum of the U.S. Bankruptcy Court for the
District of Arizona will convene a hearing on March 6, 2013, at
11 a.m., to consider the confirmation of the Plan of
Reorganization for Granite Dells Ranch Holdings, LLC, et al.,
proposed by the Ad Hoc Committee of Note Holders and Arizona Eco
Development, LLC. Objections, if any, are due Feb. 27.
The Court has approved the Disclosure Statement as having adequate
information on the Plan, corrected as of Jan. 24, 2013.
Written ballots accepting or rejecting the Plan must be submitted
by Feb. 27, in these addresses:
SNELL & WILMER L.L.P.
Attn: Donald L. Gaffney
One Arizona Center
400 East Van Buren
Phoenix, AZ 85004-2202
Tel: (602) 382-6000
E-mail: dgaffney@swlaw.com
- and -
TIFFANY & BOSCO, P.A.
Attn: Christopher R. Kaup
Third Floor, Camelback Esplanade II
2525 East Camelback Road
Phoenix, AZ 85016-4237
Tel: (602) 255-6000
E-mail: crk@tblaw.com
The Amended Plan
According to the Amended Disclosure Statement, the Joint Plan
proposes that two parcels of real property, a 108-acre parcel and
a 17-acre parcel, along with all related rights and interests,
will be transferred free and clear of all liens, claims, and
encumbrances to a new entity, NH Co. LLC, which will be owned
entirely by the Note Holders, subject only to certain limitations.
Arizona Eco will be repaid the amount it advances to NH Co. LLC
for that purpose from the first proceeds from the sale of the Note
Holders' Parcels, plus interest at the rate of 8% per annum. NH
Co. LLC will have the right to (i) pay its allocated portion of
the Allowed Administrative Claims directly to the holder of any
Allowed Administrative Claim in order to avoid the 8% interest on
funds advanced by Arizona Eco to pay those Claims; and (ii) repay
any amount advanced by Arizona Eco to pay such Claims at any time
in order to stop the accrual of interest in favor of Arizona Eco.
All other property and property interests of the estate are to be
transferred or foreclosed upon by Arizona Eco or its designee,
except that suits and Claims held or owned by the estate against
any member of the Cavan Group will be transferred to and may be
pursued by Arizona Eco or its nominee, with any net recoveries to
be paid 80% to Arizona Eco and 20% to NH Co. LLC.
All other general Unsecured Claims will be paid 10% of their
principal amount if or when Allowed by a Final Order of the Court,
and Claims will be paid when finally Allowed; however, Arizona Eco
agrees as part of the proposed Joint Plan to not assert any
unsecured deficiency Claim in the General Unsecured Class, except
as a set-off against any Claim held by any member of the Cavan
Group.
The operating agreement of NH Co. LLC will contain a provision
stating that a majority of Note Holders not affiliated with
Arizona Eco, the Cavan Group, and the Debtor will be required to
approve the sale of land owned by NH Co. LLC.
The equity interests are terminated under the Joint Plan and do
not receive payment.
About Granite Dells Ranch Holdings
Scottsdale, Arizona-based Granite Dells Ranch Holdings LLC filed a
bare-bones Chapter 11 petition (Bankr. D. Ariz. Case No. 12-04962)
in Phoenix on March 13, 2012. Judge Redfield T. Baum PCT Sr.
oversees the case. The Debtor is represented by Alan A. Meda,
Esq., at Stinson Morrison Hecker LLP. The Debtor disclosed
$2.22 million in assets and $157 million in liabilities as of the
Chapter 11 filing.
Cavan Management Services, LLC is the Debtor's manager. David
Cavan, member of the firm, signed the Chapter 11 petition.
Arizona ECO Development LLC, which acquired a $83.2 million 2006
loan by the Debtor, is represented by Snell & Wilmer L.L.P. The
resolution authorizing the Debtor's bankruptcy filing says the
Company is commencing legal actions against Stuart Swanson, AED,
and related entities relating to the purchase by Mr. Swanson of a
promissory note payable by the Company to the parties that sold a
certain property to the Company. According to Law 360, AED sued
Granite Dells on March 6 asking the Arizona court to appoint a
receiver. Arizona ECO is foreclosing on a secured loan backed by
15,000 acres of Arizona land.
The United States Trustee said that an official committee has not
been appointed in the bankruptcy case of Granite Dells because an
insufficient number of unsecured creditors have expressed interest
in serving on a committee.
The Debtor's Plan provides for payment to unsecured creditors
(including any unsecured claim of AED) in quarterly installments
over eight years aggregating $5 million. However, the Plan
provides that a holder of an investment promissory note (estimated
to total $21 million) will be given the option of participating in
the funding of the Reorganized Debtor.
Tri-City Investment & Development, LLC, a 39.25% equity holder in
the Debtor, also filed a Consolidated Supplemental Disclosure in
support of Tri-City's Plan, as amended. Tri-City's consolidated
Disclosure Statement incorporates and restates all material terms
of the Tri-City's previous disclosure statements and incorporates
the terms of the agreement that was reached at the Aug. 20, 2012,
mediation.
GSC GROUP: Kaye Scholer Admits 'Mistakes Were Made' in Disclosures
------------------------------------------------------------------
Brian Mahoney of BankruptcyLaw360 reported that Kaye Scholer LLP
offered a mea culpa Monday to a New York bankruptcy judge over
allegations that the firm committed ethics violations in GSC Group
Inc.'s Chapter 11, saying it had unintentionally made inadequate
disclosures about a financial expert.
The firm told the court it had inaccurately described court
financial expert Robert J. Manzo as an executive director of
Capstone Advisory Group LLC when in fact he was an independent
contractor, meaning the firm failed to disclose the terms of
Manzo's compensation with Capstone, the report said.
About GSC Group
Florham Park, New Jersey-based GSC Group, Inc. --
http://www.gsc.com/-- was a private equity firm that specialized
in mezzanine and fund of fund investments. Originally named
Greenwich Street Capital Partners Inc. when it was a subsidiary of
Travelers Group Inc., GSC became independent in 1998 and at one
time had $28 billion of assets under management. Market reverses,
termination of some funds, and withdrawal of customers'
investments reduced funds under management at the time of
bankruptcy to $8.4 billion.
GSC Group, Inc., filed for Chapter 11 bankruptcy protection
(Bankr. S.D.N.Y. Case No. 10-14653) on Aug. 31, 2010. Michael B.
Solow, Esq., at Kaye Scholer LLP, served as the Debtor's
bankruptcy counsel. Epiq Bankruptcy Solutions, LLC, is the
Debtor's notice and claims agent. Capstone Advisory Group LLC
served as the Debtor's financial advisor. The Debtor estimated
its assets at $1 million to $10 million and debts at $100 million
to $500 million as of the Chapter 11 filing.
Since Jan. 7, 2011, the Debtors have been operated by James L.
Garrity Jr., as Chapter 11 trustee for the Debtors. The Chapter
11 trustee tapped Shearman & Sterling LLP as his counsel, and
Togut, Segal & Segal LLP as his conflicts counsel.
No committee of unsecured creditors has been appointed in the
case.
The Chapter 11 trustee completed the sale of business in July 2011
and filed a liquidating Chapter 11 plan and explanatory disclosure
statement in late August. The bankruptcy court authorized the
trustee to sell the business to Black Diamond Capital Finance LLC,
as agent for the secured lenders. Proceeds were used to pay
secured claims. The price paid by the lenders' agent was designed
for full payment on $256.8 million in secured claims, with
$18.6 million cash left over. Black Diamond bought most assets
with a $224 million credit bid, a $6.7 million note, $5 million
cash, and debt assumption. A minority group of secured lenders
filed an appeal from the order allowing the sale. Through a suit
in state court, the minority lenders failed to halt Black Diamond
from completing the sale.
The Chapter 11 Trustee and Black Diamond have filed rival
repayment plans for GSC Group. The Chapter 11 trustee reached a
handshake deal on Dec. 13, 2011, ending the dispute with Black
Diamond that delayed a $235 million asset sale.
Adam Goldberg, Esq., and Douglas Bacon, Esq., at Latham & Watkins,
represent Black Diamond Capital Management, LLC, as counsel.
Patrick J. Nash, Jr., Esq., and Paul Wierbicki, Esq. of Kirkland &
Ellis LLP serve as counsel to Black Diamond Capital Management,
LLC.
HD SUPPLY: Moody's Assigns 'Caa1' Rating to Sr. Unsecured Notes
---------------------------------------------------------------
Moody's Investors Service affirmed HD Supply, Inc.'s ("HDS") B3
corporate family rating and its B3-PD probability of default
rating. In a related rating action, Moody's assigned a Caa1 rating
to HDS' proposed senior unsecured notes due 2020. The proceeds of
the proposed offering, along with cash on hand, will be used to
redeem the company's existing $813 million senior unsecured PIK
notes due 2020 (unrated), to pay $460 million in accrued interest
and required make-whole premiums, and to cover other related fees
and expenses. All ratings on HDS' remaining outstanding debt
instruments, as well as the company's SGL-3 speculative grade
liquidity rating, were affirmed. The rating outlook is stable.
Moody's views the proposed transaction as a credit negative, since
the rating agency considers the proposed leveraging transaction is
in essence a debt-financed return to the company's owners,
especially considering HDS already maintains a highly leveraged
capital structure. The Carlyle Group, Bain Capital, and Clayton,
Dubilier & Rice, through their respective affiliates, each own an
equal proportion of the senior unsecured PIK notes being
refinanced, and will receive a total of $460 million in accrued
interest and make-whole premiums for early redemption. The
sizeable make-whole premium represents over 50% of the outstanding
balance of the notes being redeemed. Also, leverage will increase
moderately while cash interest payments will grow by nearly $90
million as the proposed notes are cash interest pay versus PIK.
However, despite a higher debt balance, total interest coverage
will improve modestly since the proposed notes are anticipated to
be financed at a considerably lower rate than the existing 14.875%
senior unsecured PIK notes due 2020.
The following ratings/assessments were affected by this action:
Corporate Family Rating affirmed at B3;
Probability of Default Rating affirmed at B3-PD;
1st Lien Term Loan B due 2017 affirmed at B1 (LGD2, 26%);
1st Lien Sr. Sec. Notes due 2019 affirmed at B1 (LGD2, 26%);
2nd Lien Sr. Sec. Notes due 2020 affirmed at B3 (LGD3, 49%);
Sr. Unsec. Notes due 2020 affirmed at Caa1 (LGD5, 73%);
Sr. Unsec. Notes due 2020 assigned Caa1 (LGD5, 73%);
Sr. Sub. Notes due 2015 affirmed at Caa2 (LGD6, 93%), but will
be withdrawn once redeemed;
Sr. Sub. Notes due 2021 affirmed at Caa2 (LGD6, 93%).
Speculative grade liquidity rating affirmed at SGL-3.
Ratings Rationale
The B3 corporate family rating reflects Moody's concern that HDS'
key credit metrics will remain weak over the near term despite
expectations for improved operating performance and a reduction in
total interest expense following the proposed refinancing. The
company maintains high debt leverage, and the proposed transaction
will further increase balance sheet debt by more than $425 million
in order to cover the make-whole premium associated with the
redemption of the $813 million 14.857% senior unsecured PIK notes
due 2020. As a result, pro forma debt-to-EBITDA will increase to
between 9.0x and 9.25x, compared with 8.6x as of October 28, 2012,
and Moody's does not project a meaningful decrease in leverage
over the near term. The company's debt-to-book capitalization will
also remain in excess of 100% due to its significant negative
tangible net worth. Although HDS' will be refinancing its highest
coupon debt at a substantially lower rate, pro forma interest
coverage -- defined as (EBITDA - Capex)-to-interest expense --
will only improve marginally and remain slightly below 1.0x for 12
months ended October 28, 2012 (all ratios incorporate Moody's
standard adjustments). Moody's recognizes that operating
performance is improving on a year-over-year basis, and sustained
improvement over the next 12 to 18 months should allow HDS to
maintain interest coverage above 1.0 times. However, Moody's
believes absolute levels of earnings will remain weak in
comparison with the company's large debt service requirement,
which Moody's estimates could amount to over $550 million per year
going forward.
The stable rating outlook reflects Moody's view that the company
will see gradual improvement in credit metrics over the next 12 to
18 months as its key end markets slowly recover.
The SGL-3 speculative grade liquidity rating reflects HDS'
adequate liquidity profile, characterized by cash on hand and
revolver availability totaling approximately $982 million in
aggregate at 3Q12, as well as a lack of significant debt
maturities until 2017. This provides an offset to weak leverage
metrics and will allow the company to contend with any potential
operating cash shortfalls over the intermediate term.
The Caa1 rating assigned to the proposed senior unsecured notes
due 2020, which will rank pari passu with the existing senior
unsecured notes due 2020, is one notch below the corporate family
rating. These notes are effectively subordinated to about $4.4
billion of more senior credit facilities.
The ratings could be upgraded if HDS demonstrates further
improvement in operating performance such that its interest
coverage defined as (EBITDA -- Capex)-to-interest expense trends
towards 2.0 times while debt-to-EBITDA nears 6.0 times (all ratios
incorporate Moody's standard adjustments). A better liquidity
profile would also support positive ratings momentum. A
sustainable recovery in the domestic economy should result in
stronger demand especially in the construction end market, a key
driver for HDS, which would likely translate into better earnings.
Developments that could lead to downward rating pressures include
any erosion in the company's financial performance due to a
downturn in its end markets or deterioration in HDS' liquidity
profile. Additional debt-financed transactions that weaken credit
metrics could also negatively impact the ratings.
The principal methodology used in this rating was the Global
Distribution & Supply Chain Services Industry Methodology
published in November 2011. Other methodologies used include Loss
Given Default for Speculative-Grade Non-Financial Companies in the
U.S., Canada and EMEA published in June 2009.
HD Supply, Inc. ("HDS") is one of the largest North American
industrial distributors supporting residential and non-residential
construction and, to a lesser extent, electrical consumption and
repair and remodeling. HDS also provides maintenance, repair and
operations ("MRO") services. Its businesses are organized around
three segments: Infrastructure and Energy; Maintenance, Repair &
Improvement; and, Specialty Construction. HDS operates throughout
the U.S. and Canada serving contractors, government entities,
maintenance professionals, home builders and professional
businesses. The Carlyle Group, Bain Capital, and Clayton, Dubilier
& Rice, through their respective affiliates (collectively the
"Sponsors"), are the primary owners of HDS. The Home Depot, Inc.
retains a 12.5% minority ownership in HDS. Revenues for the 12
months through October 28, 2012, excluding divested businesses,
totaled approximately $7.7 billion.
HD SUPPLY: S&P Rates $1.275-Bil. Senior Unsecured Notes 'CCC+'
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC+' unsecured
debt rating to HD Supply Inc.'s proposed offering of
$1.275 billion senior unsecured notes due 2020. The recovery
rating on the notes is '6', indicating S&P's expectation of
negligible (0% to 10%) recovery in the event of a payment default.
The 'B' corporate credit rating and stable outlook on Atlanta-
based HD Supply are unaffected. S&P expects the industrial
distribution company to use proceeds to pay down balances
outstanding on its existing 14.875% payment-in-kind (PIK) notes
due 2020, including make-whole provisions. The PIK notes are
owned by their sponsors. Because of the additional debt to fund
the make-whole provision, S&P expects debt leverage to increase
somewhat, but this will not affect its corporate credit rating.
The ratings on privately owned HD Supply reflect the company's
"satisfactory" business risk profile as a major industrial
distributor of infrastructure and energy, maintenance, repair and
improvement, and specialty construction products. The rating also
reflects the company's "highly leveraged" financial risk profile
and the impact on its operating performance arising from the
protracted weakness in U.S. construction activity. However, the
company's business-line diversity, leading market positions, and
operational scale to weather the construction downturn partly
offset these factors. Although Standard & Poor's remains cautious
about the potential recovery in the construction cycle, HD Supply
continues to expand its share of sales in the maintenance, repair,
and operations (MRO) and infrastructure markets and reduce the
effect of the weak construction markets on its near- to
intermediate-term operating performance. Pro forma, the capital
structure has more than $6 billion of funded debt.
RATINGS LIST
HD Supply Inc.
Corporate Credit Rating B/Stable/--
New Ratings
HD Supply Inc.
$1.275 bil sr unsec nts due 2020 CCC+
Recovery Rating 6
HOSTESS BRANDS: Private Equity Team Offers $400M for Twinkies
-------------------------------------------------------------
Maria Chutchian of BankruptcyLaw360 reported that Hostess Brands
Inc. has reached a deal that will allow private equity firms
Apollo Global Management LLC and C. Dean Metropoulos & Co. to make
the first bid for its iconic Twinkies and other snack cake brands
for $400 million, according to Tuesday news reports.
Hostess has not yet made an official statement about the sale, but
the team of Apollo and Metropoulos, which owns Pabst Blue Ribbon,
has been rumored to be in talks to make the stalking horse bid for
the bankrupt company's most desired asset, the report said.
About Hostess Brands
Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known
for iconic brands such as Butternut, Ding Dongs, Dolly Madison,
Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride,
Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution
centers and 570 outlets in 49 states.
Hostess filed for Chapter 11 bankruptcy protection early morning
on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through
12-22056) in White Plains, New York. DHostess Brands disclosed
assets of $982 million and liabilities of $1.43 billion as of the
Chapter 11 filing.
The bankruptcy filing was made two years after predecessors
Interstate Bakeries Corp. and its affiliates emerged from
bankruptcy (Bankr. W.D. Mo. Case No. 04-45814).
In the new Chapter 11 case, Hostess has hired Jones Day as
bankruptcy counsel; Stinson Morrison Hecker LLP as general
corporate counsel and conflicts counsel; Perella Weinberg Partners
LP as investment bankers, FTI Consulting, Inc. to provide an
interim treasurer and additional personnel for the Debtors, and
Kurtzman Carson Consultants LLC as administrative agent.
Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry
Wilson, the head of turnaround and restructuring firm MAEVA
Advisors, are representing the Teamsters union.
Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain
Millers International Union and Bakery & Confectionery Union &
Industry International Pension Fund are Jeffrey R. Freund, Esq.,
at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David
A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright &
Jaworski L.L.P.
The official committee of unsecured creditors selected New York
law firm Kramer Levin Naftalis & Frankel LLP as its counsel. Tom
Mayer and Ken Eckstein head the legal team for the committee.
Hostess Brands in mid-November opted to pursue the orderly wind
down of its business and sale of its assets after the Bakery,
Confectionery, Tobacco and Grain Millers Union (BCTGM) commenced a
nationwide strike. The Debtor failed to reach an agreement with
BCTGM on contract changes. Hostess Brands said it intends to
retain approximately 3,200 employees to assist with the initial
phase of the wind down. Employee headcount is expected to
decrease by 94% within the first 16 weeks of the wind down. The
entire process is expected to be completed in one year.
INTERFAITH MEDICAL: Files Schedules of Assets and Liabilities
-------------------------------------------------------------
Interfaith Medical Center, Inc., filed with the U.S. Bankruptcy
Court for the Eastern District of New York its schedules of assets
and liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $26,200,594
B. Personal Property $85,672,378
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $123,773,473
E. Creditors Holding
Unsecured Priority
Claims $7,317,816
F. Creditors Holding
Unsecured Non-priority
Claims $62,449,709
------------ -----------
TOTAL $111,872,972 $193,540,998
A copy of the schedules is available for free at
http://bankrupt.com/misc/INTERFAITH_MEDICAL_sal.pdf
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 disclosed
$111,872,972 in assets and $193,540,998 in liabilities as of the
Chapter 11 filing.
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. CohnReznick LLP serves
as financial advisor. Donlin, Recano & Company, Inc. serves as
claims and noticing agent, and administrative agent.
The Official Committee of Unsecured Creditors tapped Alston & Bird
LLP as its counsel, and CBIZ Accounting, Tax & Advisory of New
York, LLC as its financial advisor.
INTERFAITH MEDICAL: Hearing on Further Use of Cash on Feb. 11
-------------------------------------------------------------
The Hon. Carla E. Craig of the U.S. Bankruptcy Court for the
Eastern District of New York authorized, in a second interim
order, Interfaith Medical Center, Inc.'s continued use of cash
collateral which prepetition secured party assert an interest.
The Debtor would use the cash collateral to, among other things:
1) fund the operating expenses of the Debtor during the
Chapter 11 case; and
2) fund postpetition allowed fees and expenses incurred by (x)
the Debtor's retained professionals, (y) any statutory committee,
including any committee appointed and its Retained professionals,
and (z) any appointed ombudsman and its retained professionals.
As adequate protection from any diminution in value of the
lender's collateral, the Debtor will grant security interests,
liens, and superpriority claims to the prepetition lender, subject
to the carve out on certain expenses.
A hearing on Feb. 11, 2013, at 2 p.m., has been scheduled to
consider a further use of cash collateral. Objections, if any,
are due Feb. 4, 2013.
The Dormitory Authority of the State of New York is owed by the
Debtor $123.8 million on a long-term secured debt and $12.2
million on an unsecured loan.
The Debtor believes available cash collateral will be far more
than sufficient to provide IMC with the necessary liquidity to
fund operations and working capital expenditures during the
currently proposed approximately 45-day period.
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 disclosed
$111,872,972 in assets and $193,540,998 in liabilities as of the
Chapter 11 filing.
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. CohnReznick LLP serves
as financial advisor. Donlin, Recano & Company, Inc. serves as
administrative agent.
The Official Committee of Unsecured Creditors tapped Alston & Bird
LLP as its counsel, and CBIZ Accounting, Tax & Advisory of New
York, LLC as its financial advisor.
INTERFAITH MEDICAL: Nixon Peabody Approved as Corporate Counsel
---------------------------------------------------------------
The Hon. Carla E. Craig of the U.S. Bankruptcy Court for the
Eastern District of New York authorized Interfaith Medical Center,
Inc., to employ the firm of Nixon Peabody LLP as special corporate
and healthcare counsel.
On Feb. 18, 2011, Nixon Peabody was retained by the Debtor as
counsel to provide general advice and assistance with regard to
general healthcare matters.
During the Chapter 11 case, Nixon Peabody will, among other
things:
a) act as lead counsel in connection with any proposed
transaction between the Debtor and one or more other
hospitals regarding a future relationship;
b) act as health care regulatory counsel;
c) counsel the Debtor with respect to compliance matters,
including matters that implicate health care fraud and abuse
laws; and
d) perform all other necessary or requested legal services.
The hourly rates of Nixon Peabody's personnel range from $240 to
$965. The paralegals hourly rates range from range $140 to $480.
To the best of the Debtor's knowledge, Nixon Peabody does not have
an interest materially adverse to the Debtor's estate, or of any
class of creditors.
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 disclosed
$111,872,972 in assets and $193,540,998 in liabilities as of the
Chapter 11 filing.
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. CohnReznick LLP serves
as financial advisor. Donlin, Recano & Company, Inc. serves as
administrative agent.
The Official Committee of Unsecured Creditors tapped Alston & Bird
LLP as its counsel, and CBIZ Accounting, Tax & Advisory of New
York, LLC as its financial advisor.
ISC8 INC: Amends Fiscal 2012 Annual Report
------------------------------------------
ISC8 Inc. has amended its annual report for the fiscal year ended
Sept. 30, 2012, for the sole purpose of including information
previously omitted from Items 10, 11, 12, 13, and 14 of Part III
of the Original Filing, in reliance on General Instruction G(3) to
Form 10-K, which provides that registrants may incorporate by
reference certain information from a definitive proxy statement
filed with the SEC within 120 days after fiscal year end.
In addition, as required by Rule 12b-15 under the Securities and
Exchange Act of 1934, as amended, new certifications by the
Company's principal executive officer and principal financial
officer are filed as exhibits to this Amendment under Item 15 of
Part IV.
For purposes of the Amendment, and in accordance with Rule 12b-15
under the Exchange Act, Items 10 through 14 and the exhibit list
of the Original Filing have been amended and restated in their
entirety.
The Amendment does not reflect events occurring after the filing
of the Original Filing and no attempt has been made in the
Amendment to modify or update other disclosures as presented in
the Original Filing.
A copy of the Amended Annual Report is available at:
http://is.gd/MDLn2f
About ISC8 Inc.
Costa Mesa, California-based ISC8 Inc. is engaged in the design,
development, manufacture and sale of a family of security
products, consisting of cyber security solutions for commercial
and U.S. government applications, secure memory products, some of
which utilize technologies that the Company has pioneered for
three-dimensional ("3-D") stacking of semiconductors, systems in a
package ("Systems in a Package" or "SIP"), and anti-tamper
systems.
Squar, Milner, Peterson, Miranda & Williamson, LLP, in Newport
Beach, California, expressed substantial doubt about ISC8 Inc.'s
ability to continue as a going concern. The independent auditors
noted that as of Sept. 30, 2012. the Company has negative working
capital of $10.1 million and a stockholders? deficit of
$35.4 million.
The Company reported a net loss of $19.7 million on $4.2 million
of revenues in fiscal 2012, compared with a net loss of
$15.8 million on $5.2 million of revenues in fiscal 2011.
The Company's balance sheet at Sept. 30, 2012, showed $6.1 million
in total assets, $41.5 million in total liabilities, and a
stockholders' deficit of $35.4 million.
IVOICE INC: Appoints Norris Lipscomb as Chairman and CEO
--------------------------------------------------------
IVoice, Inc., appointed Norris Lipscomb of Wimberley, Texas, as
its new Chairman and CEO, with a stated goal of determining a
clear course of action to bring value to shareholders through
either commencing or acquiring operations. Mr. Lipscomb replaced
Mr. Frank Neukomm and Mr. Robert Farr, both of American Security
Resources Corporation, on the board of directors as of July 19,
2012.
"Due to not being current on its SEC disclosure, capital
structure, and debt load, iVoice, Inc., has been unable to
commence operations for the last year. Rhodes Holdings LLC
continues to be retained by Mr. Lipscomb to determine an
acquisition candidate that will provide shareholder value," stated
Robert C. Rhodes of Rhodes Holdings LLC, a consultant to iVoice
for the last eleven months.
About iVoice
Matawan, N.J.-based iVoice, Inc. -- http://www.ivoice.com/-- is
focused on the development and licensing of its proprietary
technologies. To date the Company has filed fifteen (15) patent
applications with the United States Patent and Trademark Office
for speech enabled applications that the Company has developed
internally. Of the patent applications the Company has filed,
four (4) patents have been awarded.
The Company reported a net loss of $826,318 on $171,527 of sales
for the nine months ended Sept. 30, 2011, compared with a net loss
of $719,745 on $142,996 of sales for the same period a year ago.
The Company's balance sheet at Sept. 30, 2011, showed
$1.36 million in total assets, $3.96 million in total liabilities,
and a $2.60 million total stockholders' deficit.
As reported by the TCR on April 25, 2011, Rosenberg Rich Baker
Berman & Co, in Somerset, New Jersey, expressed substantial doubt
about iVoice, Inc.'s ability to continue as a going concern. The
independent auditors noted that the Company has incurred
substantial accumulated deficits.
JACUZZI BRANDS: Moody's Cuts CFR to 'Ca'; Outlook Developing
------------------------------------------------------------
Moody's Investors Service downgraded Jacuzzi Brands Corp.'s
Corporate Family Rating ("CFR") to Ca from Caa2 and Probability of
Default Rating ("PDR") to Ca-PD from Caa2-PD. Concurrently,
Moody's downgraded the ratings on the $170 million senior secured
credit facility and $15 million synthetic letter of credit
facility to Ca from Caa2. The ratings outlook is developing.
These actions reflect Jacuzzi's approaching 2013 and 2014
maturities, and Moody's expectation that given leverage of over 10
times as of September 29, 2012, the company's refinancing will
necessitate a debt restructuring. While Moody's expects good
earnings growth in 2013 primarily driven by momentum in the US spa
business, credit metrics will remain stressed in the near term.
Rating actions:
Issuer: Jacuzzi Brands Corp.
Corporate Family Rating, downgraded to Ca from Caa2
Probability of Default Rating, downgraded to Ca-PD from Caa2-PD
$170 million senior secured term loan, downgraded to Ca (LGD3 -
48%) from Caa2 (LGD3 - 49%)
$15 million senior secured synthetic letter of credit facility,
downgraded to Ca (LGD3 - 48%) from Caa2 (LGD3 - 49%)
Outlook, revised to developing from stable
Ratings Rationale
The Ca CFR is driven by Moody's expectation that given Jacuzzi's
high leverage of over 10 times as of September 29, 2012, the
refinancing of its 2013 and 2014 maturities will necessitate a
debt restructuring, which will likely be considered a default
under Moody's definition. The rating also incorporates Moody's
expectation of an average overall family recovery rate for the
debt capitalization at default of about 50%. Liquidity is weak as
a result of near-term maturities and modest balance sheet cash and
ABL availability to support operational needs. Moody's believes
Jacuzzi would have meaningful enterprise value following a
restructuring transaction, supported by expected improvement in
operating performance following a prolonged cyclical trough, well-
recognized brand names and strong market position in its
geographic regions.
The developing outlook reflects Moody's expectation that the
company will restructure its debt in the next 12 months, which
will likely be considered a default under Moody's definition.
The ratings could be downgraded if Moody's estimate of recovery
value deteriorates.
A ratings upgrade is not likely prior to a debt restructuring that
reduces Jacuzzi's leverage and improves its maturity profile.
The principal methodology used in this rating was the Global
Manufacturing Industry 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.
Jacuzzi Brands Corp. is a leading global producer of premium
branded water therapy and water comfort products for the
residential remodeling and construction markets, with revenues of
$364 million as of September 29, 2012. The company was purchased
by Apollo Global Management, LLC in 2006, and is controlled by
affiliates of Apollo Global Management, LLC, Ares Capital
Management LLC and Clearlake Capital Group.
LAURENT GRUET: Files Bankruptcy to Ward of Seizure of Assets
------------------------------------------------------------
Walt Nett, writing for Lubbock Avalanche-Journal, reports that
Laurent Gruet, a winery owner in Albuquerque, N.M., filed for
Chapter 11 bankruptcy protection on Jan. 11 to head off the chance
that his piece of a family-owned New Mexico winemaking operation
would be seized and sold to satisfy a $4 million debt owed in the
bankruptcy case of Caprock Wine Co.
As reported by the Troubled Company Reporter on April 10, 2012,
French-born winemaker Laurent L. Gruet won a July 2010 auction of
Caprock with a bid of $6.5 million. The second-highest bid was
$6.25 million. Mr. Gruet never made the required 10% deposit
after winning the auction and later admitted he couldn't raise
funds to complete the sale. According to a Bloomberg News report,
after trial in bankruptcy court, a judge assessed damages of $4
million in an April 3, 2012 opinion, because the Chapter 11
trustee for Caprock was later able to mitigate the loss by
reselling the winery at a second auction for $2.5 million. The
bankruptcy judge ruled that Mr. Gruet didn't commit fraud even
though he lacked funds sufficient even to pay the $650,000
deposit.
Avalanche-Journal reports Mr. Gruet is a partner at Albuquerque-
based Devalmont Vineyards and Gruet Winery. He listed himself as
the company's winemaker and owner of a 28% stake in the business
in documents filed with the U.S. Bankruptcy Court in Albuquerque.
Mr. Gruet's three sisters hold the remaining shares of the
Albuquerque operation.
Avalanche-Journal, meanwhile, recounts that in a subsequent
auction, the Caprock winery was sold to San Antonio fast-food
investor Jim Bodenstedt. Trustee Max Tarbox sued Mr. Gruet for
the difference, and Bankruptcy Judge Robert L. Jones in Lubbock
awarded the Cap*Rock bankruptcy estate more than $3.9 million in
damages plus attorneys' fees.
Avalanche-Journal recounts Bankruptcy Judge Robert H. Jacobvitz in
Albuquerque ruled in October that Mr. Gruet's share of the New
Mexico winery business, and his ownership in the family's GFA
Gruet-Guerin champagne business in Bethon, France, could be
attached to help settle the Caprock judgment.
Judge Jacobvitz oversees Mr. Gruet's Chapter 11 case.
According to Avalanche-Journal, Mr. Tarbox said a French court has
approved conservatory seizures of Mr. Gruet's shares of Gruet-
Guein and the SAS Paul Laurent champagne business. The seizures,
similar to liens in American property law, prevent Mr. Gruet from
transferring the shares or proceeds of those assets until a French
court issues a final ruling on the claims.
Avalanche-Journal also relates two large creditors are still
waiting to be paid in the Cap*Rock bankruptcy. PlainsCapital
Bank, a one-time owner of the winery, is owed more than $4
million, while Lubbock Central Appraisal District is owed more
than $160,000 in property taxes.
Lubbock, Texas-based Caprock Wine Company, LLC, doing business as
Cap*Rock Winery and Cap Rock Winery, filed for Chapter 11
protection (Bankr. N.D. Tex. Case No. 09-50576) on Dec. 23, 2009.
Caprock Real Estate Holdings, L.L.C, filed a separate Chapter 11
petition (Bankr. N.D. Tex. Case No. 09-50577) on the same day.
Both petitions estimated assets and debts of $1 million to $10
million. Harold H. Pigg, Esq., in Lubbock, served as the Debtors'
counsel. The Court, at the behest of the United States Trustee,
ordered the appointment of a Chapter 11 trustee on February 5,
2010.
JETSTAR PARTNERS: Wins Confirmation of Chapter 11 Plan
------------------------------------------------------
Bankruptcy Judge Harlin DeWayne Hale approved Jetstar Partners
Ltd.'s Plan of Reorganization and explanatory Disclosure
Statement. No objections to confirmation of the Plan were filed.
Among others, the Plan provides that the holders of Tax Claims I
Class 3 will their liens until paid in full. Dallas County will
be paid $204,240.84 and Coppell ISD $206,416 on or before Jan. 31,
2013, in full satisfaction of their claims and liens for the 2012
and prior year taxes. They will retain their liens for the -- ad
valorem taxes on the property until the taxes are paid in full but
should the -- taxes become delinquent, they will be subject to
collection pursuant to applicable non-bankruptcy law.
The Confirmation Order defeated the motion filed by Madison
J-Star, Ltd., successor in interest to Symetra Life Insurance
Company, to convert the chapter 11 case to Chapter 7. (Troubled
Company Reporter, Jan. 28, 2013)
A copy of the Court's Jan. 29, 2013 FINDINGS OF FACT, CONCLUSIONS
OF LAW AND ORDER APPROVING DISCLOSURE STATEMENT AND CONFIRMING
DEBTOR'S PLAN OF REORGANIZATION is available at
http://is.gd/V3KTgSfrom Leagle.com.
About Jetstar Partners
Jetstar Partners, Ltd., was formed on Oct. 14, 1999, for the
purpose of owning and developing real property in Dallas County,
Texas. Jetstar owns and operates certain real property in Irving,
Dallas County. Collinternational IV, Inc., a Texas corporation,
is the sole general partner of Jetstar.
Jetstar Partners, Ltd., filed a bare-bones Chapter 11 petition
(Bankr. N.D. Tex. Case No. 12-31444) on March 5, 2012. In its
schedules, the Debtor disclosed $11,435,476 in total assets and
$7,860,399 in total liabilities. Judge Harlin DeWayne Hale
oversees the case.
LCI HOLDING: Court Directs Appointment of Patient Care Ombudsman
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware directed
the U.S. trustee for Region 3 to appoint a patient care ombudsman
in the Chapter 11 cases of LCI Holding Company, Inc., et al.
As reported in the TCR on Jan. 21, 2013, U.S. Trustee Roberta A.
DeAngelis said that a provision under the Bankruptcy Assistance
Consumer Protection Act of 2005 requires the court to appoint a
patient care ombudsman within 30 days of a petition being
commenced. The PCO will represent the interests of the patients
unless the court finds the appointment is not necessary based upon
the facts of the case.
The U.S. Trustee explained that the Debtors' patients are entirely
dependent upon the Debtors for their care and sustenance. Any
sudden reduction in staffing or equipment could result in death or
serious injury to a patient. The appointment of a PCO is not
intended to be remedial, but preventive. Cost must be relegated
to second place when lives are at risk.
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. Huron Management
Services LLC will provide the Debtors an interim chief financial
officer and certain additional personnel; and (ii) designate
Stuart Walker as interim chief financial officer.
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.
LEAR CORP: Moody's Corrects January 14 Rating Release
-----------------------------------------------------
Moody's Investors Service issued a correction to the January 14,
2013 rating release of Lear Corporation.
Moody's assigned a Ba2 rating to Lear's proposed $500 million
senior unsecured note offering. In a related action Moody's
affirmed Lear's Corporate Family Rating and Probability of Default
Rating at Ba2 and Ba2-PD, respectively and affirmed the rating on
Lear's existing senior unsecured notes at Ba2. The rating outlook
is stable. The Speculative Grade Liquidity Rating was raised to
SGL-1 from SGL-2.
Lear recently announced its intention to offer $500 million of
senior unsecured bonds. The net proceeds from the offering are
expected to be used, together with other sources of liquidity, for
general corporate purposes, including, without limitation, the
redemption of $70 million of the company's existing senior
unsecured notes during 2013, investments in additional component
capabilities and emerging markets and share repurchases under the
company's upsized common stock share repurchase program.
Rating assigned:
Ba2 (LGD4 60%) to the new $500 million of senior unsecured
notes due 2023
Rating raised:
Speculative Grade Liquidity Rating, to SGL-1 from SGL-2
Ratings affirmed:
Ba2, Corporate Family Rating;
Ba2-PD, Probability of Default Rating;
Ba2 (LGD4 60%), Senior unsecured notes due 2018;
Ba2 (LGD4 60%);Senior unsecured notes due 2020;
(P)Ba2, Senior unsecured shelf
Ratings Rationale
The affirmation of Lear's Ba2 Corporate Family Rating (CFR)
reflects the company's relatively strong pro forma credit metrics
following the proposed offering, with pro forma Debt/EBITDA
estimated at 2.1x (inclusive of Moody's standard adjustments) for
the LTM period ending September 29, 2012 and modest profit
margins. The ratings also reflect the risks around the company's
ability to maintain a prudent financial profile over the
intermediate-term. Following the proposed bond offering, Lear's
cash balances ($1.27 billion as of September 29, 2012) will be
bolstered by the net proceeds from the $500 million note offering.
These funds are expected to be available, along with free cash
flow generation, and availability under a proposed $1 billion
revolving credit facility to fund the company's announced $1.5
billion share repurchase program (of which there is $1 billion of
availability remaining), a potential optional call under the
existing senior unsecured notes in 2013, and other general
corporate purposes. A portion of the Lear's liquidity is likely to
support acquisition growth similar to the Guilford Mills
transaction executed in 2012. The company has indicated that it
would be comfortable retaining liquidity (inclusive of cash
balances and undrawn revolver availability) of about $1.0 billion.
Lear's LTM EBIT margin, at 4.8% for the LTM period ending
September 29, 2012 (inclusive of Moody's standard adjustments),
lags other similarly rated companies. As a result of the cyclical
nature of the automotive industry and exposure to commodity
prices, higher ratings require stronger margins that provide
greater cushion to withstand a downturn.
The SGL-1 Speculative Grade Liquidity Rating indicates the
expectation of a very good liquidity profile over the next twelve
months supported by cash balances, free cash flow generation, and
availability under the proposed revolving credit facility. As of
September 29, 2012, Lear maintained approximately $1.27 billion of
cash and cash equivalents. The proceeds from the proposed $500
million note offering will bolster this amount. Through 2012,
Lear's geographic diversity and platform mix has helped to
mitigate weakening demand in the company's European markets. This
competitive advantage is expected to continue to support positive
free cash flow generation over the near-term. While the company's
recently announced an upsized share repurchase program to $1.5
billion from $700 million (of which there is $1 billion of
availability remaining), Moody's expects the plan to be executed
on a measured pace consistent with historical trends. Liquidity is
also supported by a revolving credit facility which is in the
process of being increased to $1 billion from $500 million,
maturing in 2018. The revolving credit facility was unfunded as of
September 29, 2012. Financial covenants under the revolving credit
facility include a debt leverage test and an interest coverage
test both of which are expected to have ample headroom over the
next twelve months.
The stable rating outlook continues to reflects Moody's view that
Lear will maintain a business position and financial profile that
is consistent with its rating, which is among the strongest for
automotive parts suppliers globally. The outlook incorporates the
potential for acquisitions or increasing shareholder friendly
actions which may diminish certain of the company's credit
metrics.
Future events that have the potential to drive Lear's outlook or
rating higher include: increasing EBIT margins to the high single
digits while sustaining Debt/EBITDA under 2.0x and EBIT/Interest
coverage, inclusive of restructuring charges, over 4.5x. A higher
rating or outlook could also be supported by prudent financial
policies which include executing organic and acquisitive growth
initiatives and shareholder returns programs while sustaining the
above rating trigger thresholds.
Given the strong current financial profile and expectation of
continued growth in global automotive sales, a downward movement
in the rating is not expected in the near term. Downward risk
could occur if more aggressive acquisitions or shareholder return
initiatives are transacted than has been indicated by the company,
which Moody's considers to be an unlikely scenario. Lear's outlook
or rating could be lowered if EBIT/Interest falls below 3.0x, or
Debt/EBITDA increases to over 3.0x.
The principal methodology used in this rating was the Global
Automotive Supplier Industry published in January 2009. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Lear Corporation, headquartered in Southfield, MI, is one of the
world's leading suppliers of automotive seating and electrical
power management systems. The company had net sales of $14.4
billion for the LTM period ending September 29, 2012.
LEHMAN BROTHERS: Aussie Unit Appeals Ruling Favoring Charities
--------------------------------------------------------------
The liquidators for Lehman Brothers Holdings Inc.'s Australian
unit have filed an application to appeal a federal judge's
decision, which found the company liable for hundreds of millions
lost by councils, charities and church groups.
The liquidators, PPB Advisory, want to appeal a ruling by Justice
Steven Rares of the New South Wales Federal Court on a class
action brought by Wingecarribee Shire Council and Parkes Shire
Council in New South Wales and the City of Swan in Western
Australia, the Sydney Morning Herald reported.
Justice Rares found that Lehman's Australian unit, previously
called Grange Securities, was culpable for misleading investors
in breach of its fiduciary duties, according to the report.
The federal judge also ruled that there was no contributory
negligence on behalf of the councils and NGOs, which lost up to
$250 million when investments in complex financial products
called collateralized debt obligations went toxic, according to a
report by The Australian.
The September ruling opened the way for PPB to return about $200
million to councils, charities and church groups that bought the
financial products from Lehman Brothers Australia, the Sydney
Morning Herald reported.
John Walker, executive director of IMF which funded the class
action, said that if the court accepts the appeal, it could delay
disbursements by one to two years.
Mr. Walker said the court was not likely to decide whether to
hear the appeal until after Justice Rares delivered his final
decision in March, according to the report.
Meanwhile, PPB liquidator Marcus Ayres expressed hope that the
appeal would not need to proceed as millions more had recently
become available to creditors following a U.S. decision. He is
hopeful creditors would accept a renewed offer in the coming
months, The Australian reported.
PPB Advisory is the liquidator of Lehman's Australian unit that
succeeded in unlocking hundreds of millions of dollars investors
put into notes in a CDO called Dante from trusts held in the U.S.
and the United Kingdom by Bank of New York Mellon.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012 and a second payment of $10.2 billion on Oct. 1. A
third distribution is set for around March 30, 2013. The
brokerage is yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEHMAN BROTHERS: Class Certification for Suit vs. E&Y, UBS
----------------------------------------------------------
A New York federal judge approved most of a bid for certification
of an investor class action against former officials and auditors
of Lehman Brothers Holdings Inc. in multidistrict litigation over
the company's securities offerings, BankruptcyLaw360 reported.
U.S. District Judge Lewis Kaplan denied Ernst & Young LLP and UBS
Financial Services Inc.'s motion to dismiss the certification of
two classes pursuing claims against the accounting firm and the
investment bank. Judge Kaplan said both groups satisfied the
criteria for class status, according to the report.
The lawsuit, filed in 2010, accused E&Y of helping Lehman cover up
its declining health in the months prior when it approved so-
called "Repo 105" transactions and signing off on financial
reports that did not disclose them.
A repo transaction is an artificial sale and buy-back deal that
enabled Lehman to hide billions of debts from regulators and
allowed the company to look healthier and less risky when it
reported quarterly financial data.
The accounting maneuvers discussed in the attorney general's
complaint were first uncovered and discussed in a report by Anton
Valukas, the examiner who made an investigation into Lehman's
bankruptcy filing. The report criticized Ernst & Young for being
"professionally negligent in allowing" the financial reports to
go unchallenged.
Ernst & Young, however, said it acted properly and that Lehman's
accounting complied with national standards.
The case is People of the State of New York v. Ernst & Young, New
York State Supreme Court, New York County, No. 451586/2010.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012 and a second payment of $10.2 billion on Oct. 1. A
third distribution is set for around March 30, 2013. The
brokerage is yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEHMAN BROTHERS: Withdraws Bid for $200-Mil. Essex Reserve
----------------------------------------------------------
Lehman Brothers Holdings Inc. withdrew its request for court
approval of a $200 million reserve for Essex Equity Holdings USA
LLC's claim.
The request was filed on January 15 as part of the company's
effort to implement its $65 billion payout plan.
Lehman opposed Essex's $1.2 billion claim, saying it should not
be held liable for any claim that arises from deals involving
groups or companies that did not file for Chapter 11 protection.
The claim stems from the acquisition by Essex of securities that
were sold through former employees of Lehman's brokerage.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012 and a second payment of $10.2 billion on Oct. 1. A
third distribution is set for around March 30, 2013. The
brokerage is yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEHMAN BROTHERS: NLIC Opposes Stay of Distributed Action
--------------------------------------------------------
Nationwide Life Insurance Company and Nationwide Mutual Insurance
Company object to a fifth blanket stay of an avoidance action,
known as the Distributed Action, in which the Nationwide entities
are defendants, and brought by one of Lehman Brothers entities,
Lehman Brothers Special Financing, Inc. The Debtors' request to
extend the automatic stay for another six months is for more than
50 lawsuits involving Lehman Brothers Holdings Inc.
The Nationwide parties, however, would not object to an additional
limited stay, provided the order extending the stay carved out two
exceptions, James Haney, Esq., at Wong Fleming, in Princeton, New
Jersey -- jhaney@wongfleming.com -- tells the Court. The two
exceptions are:
(1) Allowing the noteholder defendants not named in the
original complaint to conduct limited discovery relating
to the narrow issue of LBSF's and LBHI's actual knowledge
of the identity of the New Noteholder Defendants prior to
the commencement of the Distributed Action; and
(2) Allowing the New Noteholder Defendants to file dispositive
motions on the single issue of whether claims against them
are time-barred.
The Nationwide parties request this carve out because there is a
significant issue as to whether the avoidance claims, as well as
the collateral claims built on the avoidance claims, are barred
by the applicable statute of limitations, Mr. Haney asserts. He
contends that both LBHI and LBSF knew the exact identities of the
Nationwide parties as noteholder participants in the transactions
at issue long before the commencement of bankruptcy proceedings
in 2008.
The delay in naming the Nationwide parties as noteholder
defendants in the Distributed Action was not the result of any
mistake in identity or lack of knowledge as to whether the
Nationwide parties were noteholders in the transactions at issue,
Mr. Haney says. Thus, he argues, as a matter of law, the
avoidance claims asserted against the Nationwide parties, as well
as the collateral claims dependent upon success of the avoidance
claims, are time barred.
Mr. Haney also contends that the Nationwide parties' proposed
limited discovery is fair because it is the other side to the
same coin of discovery that LBSF has been engaging in. He
asserts that to allow the Lehman parties to engage in discovery
without allowing the New Noteholder Defendants to challenge the
Lehman parties in that same area of discovery would be unfair and
prejudicial to the New Noteholder Defendants.
Lehman Responds
Lehman lawyer, Jacqueline Marcus, Esq., at Weil Gotshal & Manges
LLP, in New York, asked the bankruptcy court to overrule the
objection, saying the "discovery standstill effected by the stay
does not prejudice" the claimants.
Ms. Marcus argued the claimants will have the opportunity to
conduct discovery when the stay is lifted or expires if they do
not settle before that time.
Judge James Peck will hold a hearing on January 30 to consider
Lehman's request for another six-month stay.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012 and a second payment of $10.2 billion on Oct. 1. A
third distribution is set for around March 30, 2013. The
brokerage is yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEHMAN BROTHERS: More Subpoenas for Deutsche, 13 Companies
----------------------------------------------------------
Deutsche Bank AG and 13 other companies were served with
subpoenas to force them to turn over certain documents to Lehman
Brothers Holdings Inc.'s legal counsel Weil Gotshal & Manges LLP.
Subpoenas are also out against Brigade Leveraged Capital
Structures Fund Ltd., Providence Equity Partners VI LP,
Providence Equity Partners VI-A LP, and Providence TMT Special
Situations Fund LP. They are required to turn over documents to
New York-based law firm Curtis Mallet-Prevost Colt & Mosle LLP.
Lehman served the subpoenas during the period January 17 to 23 in
accordance with an earlier order issued by the U.S. Bankruptcy
Court in Manhattan.
The court order dated November 23, 2009, authorized the company
to investigate those who had been involved in various Lehman
transactions. Any document and information collected from the
investigation will be used for evaluating the company's financial
status.
Meanwhile, the company withdrew the subpoenas it issued against
Banc of America Credit Products, Inc. and 15 other companies last
year and early this month.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012 and a second payment of $10.2 billion on Oct. 1. A
third distribution is set for around March 30, 2013. The
brokerage is yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEHMAN BROTHERS: Committee Backs Traxis Bid for New Checks
----------------------------------------------------------
The Official Committee of Unsecured Creditors of Lehman Brothers
Holdings Inc. and its affiliated debtors filed a statement in
support of the request of Traxis Fund LP and Traxis Emerging
Market Opportunities Fund LP to compel Lehman to reissue
distribution checks to the funds.
The checks in the amount of $175,948 were allegedly issued to the
funds in early 2012 but they were neither received by the funds
nor returned to Epiq Systems as undeliverable. Epiq, Lehman's
claims agent, allegedly turned down an earlier request from the
funds to reissue the checks since it is not allowed under
Lehman's Chapter 11 plan.
Representing the Committee, Dennis F. Dunne, Esq., at Milbank,
Tweed, Hadley & McCloy LLP, in New York, tells the U.S.
Bankruptcy Court in Manhattan that the Committee agrees with
Traxis' assertion that the Debtors' refusal to honor its timely-
filed and admittedly allowed claims based on the 180-day deadline
imposed by Section 8.9 of the Plan for reissuing checks runs
counter to the clear intent of the Bankruptcy Code. He adds that
equity demands that Traxis receive the full plan distribution to
which it is entitled on account of its allowed claims.
The Committee also agrees with Traxis that the circumstances that
have led to its missing the 8.9 Deadline qualify as "excusable
neglect" under the standard of Pioneer Inv. Serv. Co. v.
Brunswick Assoc. L.P., 507 U.S. 380 (1993), and Rule 9006(b)(2)
of the Federal Rules of Bankruptcy Procedure. Mr. Dunne contends
that there should be little to no effect on the judicial
administration of the Debtors' estates because distributions
under the Plan are still ongoing.
In addition, he asserts, the reasons for the delay were beyond
Traxis' control: Traxis took all reasonable steps to ensure that
its mail would be forwarded by the United States Postal Service,
and was unaware of the fact that the Debtors had attempted
delivery of the Initial Distribution Checks, having learned about
it only after the 8.9 Deadline had already expired and
immediately taking appropriate action.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012 and a second payment of $10.2 billion on Oct. 1. A
third distribution is set for around March 30, 2013. The
brokerage is yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEHMAN BROTHERS: UK Watchdog Clears E&Y Over Client Funds Audit
---------------------------------------------------------------
Daniel Wilson of BankruptcyLaw360 reported that the U.K.'s
Financial Reporting Council on Tuesday said it wouldn't seek
sanctions against Ernst & Young LLP for its auditing of customer
fund segregation at Lehman Brothers Holdings Inc.'s European arm,
despite an administrator finding discrepancies in Lehman's
accounts following the investment firm's 2008 collapse.
According to the Financial Reporting Council, the body responsible
for enforcing accounting and auditing standards in the U.K., it
would not seek a disciplinary hearing for E&Y or any of its staff
for alleged Lehman audit discrepancies, the report said.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012 and a second payment of $10.2 billion on Oct. 1. A
third distribution is set for around March 30, 2013. The
brokerage is yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LKA INTERNATIONAL: Releases Vein Samples for Golden Wonder Mine
---------------------------------------------------------------
LKA International, Inc., disclosed in a regulatory filing with the
U.S. Securities and Exchange Commission a compilation of four
separate reports that were derived from vein samples taken by
LKA's mine operator in a new exploration zone located in the upper
levels of LKA's Golden Wonder mine. This new area had been
targeted for immediate exploration. A copy of the Report is
available for free at http://is.gd/ammhON
About LKA International
Gig Harbor, Washington-based LKA International, Inc., is currently
engaged in an intensive exploration program at the Golden Wonder
mine with the objective of returning the mine to a commercial
producing status.
MaloneBailey, LLP, in Houston, Texas, expressed substantial doubt
about LKA's ability to continue as a going concern, following
their audit of the Company's financial statements for the fiscal
year ended Dec. 31, 2011. The independent auditors noted that the
Company suffered losses from operations and has a working capital
deficit, which raises substantial doubt about its ability to
continue as a going concern.
The Company's balance sheet at Sept. 30, 2012, showed $1.1 million
in total assets, $2.1 million in total liabilities, and a
stockholders' deficit of $1.0 million.
LODGENET INTERACTIVE: Automatic Stay in Effect
----------------------------------------------
In a regulatory filing with the U.S. Securities and Exchange
Commission, LodgeNet Interactive Corporation disclosed that the
filing of its bankruptcy case constituted an event of default or
otherwise triggered the acceleration of repayment obligations
under a number of prepetition instruments and agreements relating
to the Company and its subsidiaries. As a result, all debt
outstanding under the Debt Documents became (or may become)
immediately due and payable, subject to the applicable provisions
of the Bankruptcy Code. Of the Debt Documents triggered, the
acceleration of the amounts due under the Prepetition Credit
Agreement is material to the Company. The outstanding amounts
accelerated under the Prepetition Credit Agreement are
approximately $346,400,000 in aggregate principal amount.
Any efforts by creditors to enforce the repayment obligations
under the Debt Documents, including the Prepetition Credit
Agreement, are stayed as a result of the Bankruptcy Case and are
subject to the applicable provisions of the Bankruptcy Code.
About LodgeNet
Sioux Falls, South Dakota-based LodgeNet Interactive Corporation
(Nasdaq: LNET) -- http://www.lodgenet.com/-- provides interactive
media and connectivity services to hospitality and healthcare
businesses and the consumers they serve. Recently named by
Advertising Age as one of the Leading 100 US Media Companies,
LodgeNet Interactive serves roughly 1.5 million hotel rooms
worldwide in addition to healthcare facilities throughout the
United States. The Company's services include: Interactive
Television, Broadband and Advertising Media Solutions along with
nationwide technical and professional support services. LodgeNet
Interactive owns and operates businesses under the industry
leading brands: LodgeNet, The Hotel Networks and LodgeNet
Healthcare.
The Company reported a net loss of $631,000 in 2011, a net loss of
$11.68 million in 2010, and a net loss of $10.15 million in 2009.
The Company's balance sheet at Sept. 30, 2012, showed $291.74
million in total assets, $448.72 million in total liabilities and
a $156.98 million total stockholders' deficiency.
LodgeNet Interactive filed a Chapter 11 petition (Bank. S.D.N.Y.
Case No. 13-10238) on Jan. 27, 2013. The prepackaged Chapter 11
filing was commenced in order to effect a recapitalization in
which a syndicate of investors led by Colony Capital will invest
$60 million in LodgeNet. The petition was signed by James G.
Naro, the Company's Co-Chief Executive Officer. The Hon. Shelley
C. Chapman presides over the case. Weil, Gotshal & Manges LLP
serves as the Debtors' counsel.
LON MORRIS: Has Final OK to Obtain $500,000 in Additional Loans
---------------------------------------------------------------
The Bankruptcy Court authorized, on a final basis, Lon Morris
College to obtain additional postpetition financing in the
aggregate amount of up to $500,000 of delayed draw term loans from
Amegy Bank National Association and other Lenders, to fund the
orderly liquidation of the Debtor's assets, make payroll, market
certain assets for sale and satisfy other short-term operational
needs.
The DIP Loans will have priority over any and all administrative
expenses of the kind specified in sections 105, 326, 328, 330,
331, 503(b), 506(c), 507(a), 507(b), 546(c), 1113, and 1114 of the
Bankruptcy Code. The Superpriority Claims will be pari passu with
the Superpriority Claims granted to Amegy in the Original DIP
Order.
The Loans will be secured by a perfected lien and security
interest upon five (5) parcels of real property more particularly
identified in the DIP Agreement, and a perfected junior security
interest in all of the Borrower's prepetition and postpetition
property.
The DIP Facility will mature and the DIP Obligations will be due
and payable, without notice or demand, on the earliest of (a)
March 31, 2013; (b) 30 calendar days after the Closing Date (as
such term is defined in the DIP Documents) if the Final Order has
not been entered in that period; (c) the effective date of a plan
of reorganization confirmed under an order of the Bankruptcy Court
in the Case; and (d) the acceleration of the DIP Loan in
accordance with the DIP Documents or the DIP Orders or both owing
to an Event of Default.
About Lon Morris College
Lon Morris College was founded in 1854 as a not-for-profit
religiously affiliated two-year degree granting institution. Over
the past 158 years, the College has impacted the lives of
countless members of the local Jacksonville community in Texas.
Lon Morris College filed a Chapter 11 petition (Bankr. E.D. Tex.
Case No. 12-60557) in Tyler, on July 2, 2012, after lacking enough
endowments to pay teachers, vendors and creditors. In May 2012,
the Debtor missed two payrolls and vendor payables, utilities, and
long term debt were also past due. From a headcount of 1,070 in
2010, enrolments have been down to 547 in 2012. The president of
the College has resigned, as have members of the board of
trustees.
Judge Bill Parker oversees the case. Bridgepoint Consulting LLC's
Dawn Ragan took over management of the College as chief
restructuring officer. Attorneys at Webb and Associates, and
McKool Smith P.C., serve as counsel to the Debtor. Capstone
Partners serves as financial advisor.
According to its books, on April 30, 2012, the College had roughly
$35 million in assets, including $11 million in endowments and
restricted funds, and $18 million in funded debt and $2 million in
trade and other liabilities. The Debtor disclosed $29,957,488 in
assets and $15,999,058 in liabilities as of the Chapter 11 filing.
Amegy Bank is represented in the case by James Matthew Vaughn,
Esq., at Porter Hedges LLP.
The college has a Chapter 11 plan on file to be funded by a sale
of the properties. The Bankruptcy Court has approved the Third
Amended Disclosure Statement describing the Plan. The Court fixed
Jan. 18, 2013, at 4:00 p.m., at the Voting Deadline. Written
objections to confirmation of the proposed Chapter 11 Plan were
also due Jan. 18. The confirmation hearing will be held Feb. 4,
2013, at 1:30 p.m.
A copy of the Third Amended Disclosure Statement is available at:
http://bankrupt.com/misc/lonmorris.doc230.pdf
MARINA BIOTECH: Amends 5 Million Common Shares Prospectus
---------------------------------------------------------
Marina Biotech, Inc., filed a post-effective amendment no. 2 to
the Form S-3 registration statement covering the sale of up to:
* 130,568 shares of common stock issuable from time to time
upon the exercise of warrants sold in the Company's April
2008 offering, which may be exercised at a price of $86.80
per share;
* 68,750 shares of common stock issuable from time to time upon
the exercise of warrants sold in the Company's June 2009
offering, which may be exercised at a price of $0.28 per
share;
* 26,882 shares of common stock issuable from time to time upon
the exercise of warrants sold in the Company's December 2009
offering, which may be exercised at a price of $18.40 per
share;
* 86,345 shares of common stock issuable from time to time
upon exercise of warrants sold in the Company's January 2010
offering, which may be exercised at a price of $37.60 per
share;
* 68,432 shares of common stock issuable from time to time
upon exercise of warrants issued in November 2010, which may
be exercised at a price of $10.60 per share;
* 111,308 shares of common stock issuable from time to time
upon exercise of warrants sold in the Company's February
2011 offering, which may be exercised at a price of $8.00
per share;
* 3,651,200 shares of common stock issuable from time to time
upon exercise of warrants sold in the Company's May 2011
offering, which may be exercised at a price of $0.28 per
share;
* 800,001 shares of common stock issuable from time to time
upon exercise of warrants sold in the Company's March 2012
offering, which may be exercised at a price of $0.75 per
share; and
* 80,000 shares of common stock issuable from time to time
upon exercise of warrants issued to the placement agent in
the Company's March 2012 offering, which may be exercised at
a price of $0.9375 per share.
The Company's common stock is traded on the OTC Pink tier of the
OTC Markets under the symbol "MRNA." On Jan. 25, 2013, the last
reported sale price for the Company's common stock as reported on
OTC Pink was $0.40 per share.
A copy of the filing is available at http://is.gd/fE9sHd
About Marina Biotech
Marina Biotech, Inc., headquartered in Bothell, Washington, is a
biotechnology company focused on the discovery, development and
commercialization of nucleic acid-based therapies utilizing gene
silencing approaches such as RNA interference ("RNAi") and
blocking messenger RNA ("mRNA") translation. The Company's goal
is to improve human health through the development, either through
its own efforts or those of its collaboration partners and
licensees, of these nucleic acid-based therapeutics as well as the
delivery technologies that together provide superior treatment
options for patients. The Company has multiple proprietary
technologies integrated into a broad nucleic acid-based drug
discovery platform, with the capability to deliver novel nucleic
acid-based therapeutics via systemic, local and oral
administration to target a wide range of human diseases, based on
the unique characteristics of the cells and organs involved in
each disease.
On June 1, 2012, the Company announced that, due to its financial
condition, it had implemented a furlough of approximately 90% of
its employees and ceased substantially all day-to-day operations.
Since that time substantially all of the furloughed employees have
been terminated. As of Sept. 30, 2012, the Company had
approximately 11 remaining employees, including all of its
executive officers, all of whom are either furloughed or working
on reduced salary. As a result, since June 1, 2012, its internal
research and development efforts have been minimal, pending
receipt of adequate funding.
KPMG LLP, in Seattle, expressed substantial doubt about Marina
Biotech's ability to continue as a going concern following the
2011 financial results. The independent auditors noted that the
Company has ceased substantially all day-to-day operations,
including most research and development activities, has incurred
recurring losses, has a working capital and accumulated deficit
and has had recurring negative cash flows from operations.
The Company reported a net loss of $29.42 million in 2011,
compared with a net loss of $27.75 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $8.01
million in total assets, $10.36 million in total liabilities and a
$2.35 million total stockholders' deficit.
"The market value and the volatility of our stock price, as well
as general market conditions and our current financial condition,
could make it difficult for us to complete a financing or
collaboration transaction on favorable terms, or at all. Any
financing we obtain may further dilute the ownership interest of
our current stockholders, which dilution could be substantial, or
provide new stockholders with superior rights than those possessed
by our current stockholders. If we are unable to obtain
additional capital when required, and in the amounts required, we
may be forced to modify, delay or abandon some or all of our
programs, or to discontinue operations altogether. Additionally,
any collaboration may require us to relinquish rights to our
technologies. These factors, among others, raise substantial
doubt about our ability to continue as a going concern."
"Although we have ceased substantially all of our day-to-day
operations and terminated substantially all of our employees, our
cash and other sources of liquidity may only be sufficient to fund
our limited operations until the end of 2012. We will require
substantial additional funding in the immediate future to continue
our operations. If additional capital is not available, we may
have to curtail or cease operations, or take other actions that
could adversely impact our shareholders," the Company said in its
quarterly report for the period ended Sept. 30, 2012.
MARINA BIOTECH: Sabby Volatility Discloses 2% Equity Stake
----------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Sabby Volatility Warrant Master Fund, Ltd.,
Sabby Management, LLC, and Hal Mintz disclosed that, as of
Dec. 31, 2012, they beneficially own 333,334 shares of common
stock of Marina Biotech, Inc., representing 2.04% of the shares
outstanding. A copy of the filing is available at:
http://is.gd/Gx7QIB
About Marina Biotech
Marina Biotech, Inc., headquartered in Bothell, Washington, is a
biotechnology company focused on the discovery, development and
commercialization of nucleic acid-based therapies utilizing gene
silencing approaches such as RNA interference ("RNAi") and
blocking messenger RNA ("mRNA") translation. The Company's goal
is to improve human health through the development, either through
its own efforts or those of its collaboration partners and
licensees, of these nucleic acid-based therapeutics as well as the
delivery technologies that together provide superior treatment
options for patients. The Company has multiple proprietary
technologies integrated into a broad nucleic acid-based drug
discovery platform, with the capability to deliver novel nucleic
acid-based therapeutics via systemic, local and oral
administration to target a wide range of human diseases, based on
the unique characteristics of the cells and organs involved in
each disease.
On June 1, 2012, the Company announced that, due to its financial
condition, it had implemented a furlough of approximately 90% of
its employees and ceased substantially all day-to-day operations.
Since that time substantially all of the furloughed employees have
been terminated. As of Sept. 30, 2012, the Company had
approximately 11 remaining employees, including all of its
executive officers, all of whom are either furloughed or working
on reduced salary. As a result, since June 1, 2012, its internal
research and development efforts have been minimal, pending
receipt of adequate funding.
KPMG LLP, in Seattle, expressed substantial doubt about Marina
Biotech's ability to continue as a going concern following the
2011 financial results. The independent auditors noted that the
Company has ceased substantially all day-to-day operations,
including most research and development activities, has incurred
recurring losses, has a working capital and accumulated deficit
and has had recurring negative cash flows from operations.
The Company reported a net loss of $29.42 million in 2011,
compared with a net loss of $27.75 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $8.01
million in total assets, $10.36 million in total liabilities and a
$2.35 million total stockholders' deficit.
"The market value and the volatility of our stock price, as well
as general market conditions and our current financial condition,
could make it difficult for us to complete a financing or
collaboration transaction on favorable terms, or at all. Any
financing we obtain may further dilute the ownership interest of
our current stockholders, which dilution could be substantial, or
provide new stockholders with superior rights than those possessed
by our current stockholders. If we are unable to obtain
additional capital when required, and in the amounts required, we
may be forced to modify, delay or abandon some or all of our
programs, or to discontinue operations altogether. Additionally,
any collaboration may require us to relinquish rights to our
technologies. These factors, among others, raise substantial
doubt about our ability to continue as a going concern."
"Although we have ceased substantially all of our day-to-day
operations and terminated substantially all of our employees, our
cash and other sources of liquidity may only be sufficient to fund
our limited operations until the end of 2012. We will require
substantial additional funding in the immediate future to continue
our operations. If additional capital is not available, we may
have to curtail or cease operations, or take other actions that
could adversely impact our shareholders," the Company said in its
quarterly report for the period ended Sept. 30, 2012.
METROPLAZA HOTEL: Hires Goldstein Lieberman as Accountant
---------------------------------------------------------
Metroplaza Hotel asks the U.S. Bankruptcy Court for permission to
employ Goldstein Lieberman & Company LLC as accountant.
The firm, will among other things, provide these services:
a. provide assistance with general accounting matters;
b. provide accounting services in connection with the preparation
of the Debtor's tax returns and monthly operating reports; and
c. provide testimony and offer services in connection with
formulating and presenting the Debtor's Plan for confirmation
by the Bankruptcy Court.
The Debtor attests that the firm is a "disinterested person" as
the term is defined in Section 101(14) of the Bankruptcy Code.
About Metroplaza Hotel
Inn at Woodbridge Inc. and Metroplaza Hotel LLC sought Chapter 11
protection (Bankr. D.N.J. Case Nos. 12-38603 and 12-38611) in
Trenton on Dec. 6, 2012.
Metroplaza Hotel disclosed assets of $36.2 million and liabilities
of $42.2 million, including $41.9 million owed to secured creditor
WBCMT 2006-C24 Wood Avenue, LLC. Metroplaza owns an 11-story
hotel and office building on a 9.95-acre site in Iselin, New
Jersey, which is valued at $35.5 million. The property serves as
collateral to the WBCMT debt.
The Debtors have hired Greenbaum, Rowe, Smith & Davis LLP as
Chapter 11 counsel.
MODERN PRECAST: Panel Hires Ciardi Ciardi & Astin as Counsel
------------------------------------------------------------
The Official Committee of Unsecured Creditors of Modern Precast
Concrete, Inc. asks the U.S. Bankruptcy Court for permission to
retain Ciardi Ciardi & Astin as counsel.
Albert A. Ciardi, III, Esq., attests that his firm is a
"disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code.
About Modern Precast
Modern Precast Concrete, Inc. filed a Chapter 11 petition
(Bankr. E.D. Penn. Case No. 12-21304) on Dec. 16, 2012, in
Reading, Pennsylvania. Aaron S. Applebaum, Esq. and Barry D.
Kleban, Esq., at McElroy Deutsch Mulvaney & Carpenter LLP, in
Philadelphia, serve as counsel to the Debtor. The Debtor
estimated up to $50 million in both assets and liabilities. West
Family Associates, LLC (Case No. 12-21306) and West North, LLC
(Case No. 12-21307) also sought Chapter 11 protection. The
petitions were signed by James P. Loew, chief financial officer.
Founded in 1946 as Woodrow W. Wehrung Excavating, Modern Precast
is a leading manufacturer and distributor of precast concrete
structures, pipes and related products. Modern also purchases and
resells related products. Modern operates from two facilities, a
91,010 square-foot facility in Easton, Pennsylvania and a 43,784
square-foot facility in Ottsville, Pennsylvania.
Modern is a single source supplier of virtually every precast
concrete product needed for residential, commercial/industrial,
Department of Transportation and municipality projects.
Modern, on a consolidated basis, generated revenues of
$23.4 million and $19.4 million and operating EBITDA of
$1.4 million and ($382,000) for years 2010 and 2011, respectively.
The Debtors have tapped Beane Associates, Inc. as financial
restructuring advisor and McElroy, Deutsch, Mulvaney & Carpenter,
LLP as attorneys.
MONITOR COMPANY: Can Use Cash Collateral to Fund Wind-Down Account
------------------------------------------------------------------
The Bankruptcy Court authorized Monitor Company Group Limited
Partnership, et al., to use cash collateral on an interim basis to
fund their wind-down account in connection with the sale of
substantially all of the Debtors' assets to Deloitte Consulting
LLP and DCSH Limited.
Any objections or other responses to the entry of an order
approving the motion on a final basis must be file no later than
Feb. 1, 2013, at 4:00 p.m. The final hearing on the motion will
be held on Feb. 8, 2013, at 11:00 a.m.
As reported in the TCR on Jan. 14, 2013, Deloitte has acquired
substantially all of the business of Monitor, one of the world's
leading strategy consulting firms. 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.
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: Court Appoints Warren H. Smith as Fee Auditor
--------------------------------------------------------------
The Bankruptcy Court appointed Warren H. Smith & Associates, P.C.,
as fee auditor, effective nunc pro tunc as of Jan. 15, 2013, to
act as special consultant to the Court for professional fee and
expense review and analysis in the jointly administered Chapter 11
cases of Monitor Group Limited Partnership, et. al.
The Auditor will review in detail all Interim Fee Applications and
final fee applications filed with the Court in the cases. The
Auditor will file with the Court a final report with respect to
each Interim Fee Application within the latter of: (i) thirty (30)
days after the date of the Initial Report or (ii) twenty (20) days
after receipt of a response to the Initial Report.
The fees and expenses of the Auditor will be subject to
application and review, and will be paid form the Debtors' estates
as an administrative expense. The fees paid to the Auditor will
be at the ordinary hourly rate of the Auditor for services of this
nature.
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.
MSR RESORT: Plan Confirmation Hearing on Adjourned to Feb. 4
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
has adjourned to Feb. 5, 2013, at 11 a.m., the hearing to consider
the confirmation of MSR Resort Golf Course LLC, et al.'s Second
Amended Joint Plan of Reorganization.
As reported in the TCR on Dec. 17, 2012, the Debtors are
soliciting votes for their Chapter 11 plan following a recent
agreement to sell off its five-resort portfolio for $1.5 billion.
The Plan calls for general unsecured creditors to receive full
recovery.
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.
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.
MUNIMAE TE: Moody's Assigns 'Ba1' Rating to Series A-5 Shares
-------------------------------------------------------------
Moody's Investors Service has assigned Ba1(sf) rating with a
stable outlook on MuniMae TE Bond Subsidiary, LLC's (TE Bond Sub)
Series A-5 Cumulative Mandatory Redeemable Preferred Shares. This
rating action affects approximately $74 million of debt. Moody's
currently maintains the following ratings on TE Bond Sub's
Preferred and Perpetual Preferred Shares - Ba1(sf) on Series A-2,
A-4; Ba2(sf) on Series B, B-2, B-3; Ba3(sf) on Series C-1, C-2, C-
3; B1(sf) on Series D, as well as Ba1(sf) TE Bond Sub's Issuer
Rating.
Issue: Series A-5 Cumulative Mandatory Redeemable Preferred
Shares (sf)
Rating: Ba1
Sale Amount: $74,000,000
Expected Sale Date: 01/29/2013
Rating Description: Housing Other
Summary Rating Rationale
This rating assignment on TE Bond Sub's Series A-5 shares is based
on the 9.5x coverage ratios of Class A preferred shares (based on
the unaudited September 30, 2012 financial statements), and the
composition of the multi-family bond portfolio supporting the
preferred shares. The rating outlook is stable, reflecting the
company's recent substitution of its expiring Freddie Mac credit
facility on its senior debt obligations with a $540 million
replacement facility, which eliminated remarketing risk of the
senior obligations in the near term.
Strengths
- Substitution of the Freddie Mac facility with a replacement
facility, which eliminates remarketing risk on the senior
obligations until 2016.
- Strong coverage on the Class A preferred shares. This can be
attributed to the steps taken by TE Bond Sub's management to
reduce debt on the outstanding preferred shares, which
increased the debt service distribution coverage as well as
the low interest rates on the senior obligations.
Challenges
- Continued credit weakness in the multi-family bond portfolio
supporting the preferred shares. While it has shown slight
improvement, the portfolio still has substantial number of
underperforming properties. This is currently offset by the
high coverage on the preferred shares.
- A rise in interest rate would result in lower coverage on the
preferred shares.
- Over the long term, the credit is still vulnerable to the
remarketing risk on senior obligations and the preferred
shares.
Outlook
Moody's outlook for the Series A-5 shares is stable. The stable
outlook is primarily based on the recent successful substitution
of the expiring Freddie Mac facility, which eliminated the near
term liquidity risk.
What Could Make The Rating Go Up
- Improvement in the performance of the multi-family assets.
- Reduction of remarketing risk on the senior obligations and
the preferred shares.
- Improved debt service coverage on the preferred shares under
various stress case scenarios.
What Could Make The Rating Go Down
- Weakening performance of the multi-family bond portfolio.
- Failed remarketing of the preferred shares which results in a
substantial increase in payments due on the shares.
- A substantial increase in SIFMA rates which would increase the
cost of the senior obligations.
Rating Methodology
The principal methodology used in this rating was Moody's Approach
to Analyzing Pools of Multifamily Properties published in October
2001.
NATIONAL HOLDINGS: Amends Fiscal 2012 Annual Report
---------------------------------------------------
National Holdings Corporation has filed an amendment to its annual
report on Form 10-K for the fiscal year ended Sept. 30, 2012, for
the purpose of:
(1) amending Item 10 of Part III to remove an incorporation by
reference to its 2013 Proxy Statement;
(2) amending Item 11 of Part III to remove an incorporation by
reference to its 2013 Proxy Statement;
(3) amending Item 12 of Part III to remove an incorporation by
reference to its 2013 Proxy Statement;
(4) amending Item 13 of Part III to remove an incorporation by
reference to its 2013 Proxy Statement;
(5) amending Item 14 of Part III to remove an incorporation by
reference to its 2013 Proxy Statement; and
(6) amending the cover page to account for a discrepancy in the
number of issued and outstanding shares.
No other changes are being made to the original Form 10-K filing
other than updating of the Exhibits to include updated
Certifications of the Chief Executive and Chief Financial Officers
in accordance with Rule 13a-14(a).
A copy of the Amended Annual Report is available for free at:
http://is.gd/ZcwgAb
About National Holdings
New York, N.Y.-based National Holdings Corporation is a financial
services organization, operating primarily through its wholly
owned subsidiaries, National Securities Corporation, Finance
Investments, Inc., and EquityStation, Inc. The Broker-Dealer
Subsidiaries conduct a national securities brokerage business
through their main offices in New York, New York, Boca Raton,
Florida, and Seattle, Washington.
National Holdings incurred a net loss of $1.93 million for the
year ended Sept. 30, 2012, compared with a net loss of $4.71
million during the prior year.
The Company's balance sheet at Sept. 30, 2012, showed $16.58
million in total assets, $19.48 million in total liabilities and a
$2.89 million total stockholders' deficit.
Sherb & Co., LLP, in Boca Raton, Florida, issued a "going concern"
qualification on the consolidated financial statements for the
year ended Sept. 30, 2012. The independent auditors noted that
the Company has incurred significant losses and has a working
capital deficit as of Sept. 30, 2012, that raise substantial doubt
about the Company's ability to continue as a going concern.
Bankruptcy Warning
"Our independent public accounting firm has issued an opinion on
our consolidated financial statements that states that the
consolidated financial statements were prepared assuming we will
continue as a going concern and further states that our recurring
losses from operations, stockholders' deficit and inability to
generate sufficient cash flow to meet our obligations and sustain
our operations raise substantial doubt about our ability to
continue as a going concern. Our future is dependent on our
ability to sustain profitability and obtain additional financing.
If we fail to do so for any reason, we would not be able to
continue as a going concern and could potentially be forced to
seek relief through a filing under the U.S. Bankruptcy Code," the
Company said in its Annual Report for the year ended Sept. 30,
2012.
NETFLIX INC: Moody's Assigns 'Ba3' Rating to Sr. Unsecured Notes
-------------------------------------------------------------
Moody's Investors Service assigned a Ba3 (LGD 4-69%) rating to
Netflix Inc.'s new $400 million 8-year senior unsecured notes.
Proceeds from the issuance will be used to refinance its existing
$200 million senior unsecured notes (rated Ba3, LGD 5-70%) and add
incremental cash to its balance sheet. Netflix's Ba3 Corporate
Family Rating, Ba2-PD Probability of Default Rating and SGL-1
Speculative Grade Liquidity rating remain unchanged. The outlook
remains stable.
Pro forma for the transaction, Netflix's gross domestic debt-to-
EBITDA leverage will increase from 1.0x to 1.3x (as of 12/31/12),
which remains within the bounds of its current rating.
Consolidated leverage will be more materially impacted since the
company's consolidated EBITDA is impacted by the losses incurred
for international expansion. However, Moody's expects that as the
company grows subscribers, expand margins by managing content
spend, and reduces losses from its international markets over the
next year, consolidated leverage will decline to under 5.0x.
Moody's believes the company has regained some positive momentum
in the past few quarters, adding over 2.0 million net domestic
streaming subscribers in the last quarter of 2012 and is on the
path to meeting or exceeding Moody's expectations of at least 4
million net additions per year along with growth in operating
margins in order to be well positioned within its rating. Moody's
expects it to remain focused on domestic and international growth
through the intermediate term, and do not expect it to do any
material dividends or share repurchases in that time.
While the increase in debt raises gross debt leverage, this is
mitigated by Netflix's significant cash balance ($748 million at
12/31/12 including short term investments), and Moody's does not
expect net debt leverage to be impacted by the debt issue. Moody's
expects the company to apply a portion of its cash towards
investments in original programming, which require more up-front
cash payments, but expect it to maintain cash balances that are
close to or exceed its funded debt levels. In addition, the
company's debt includes $200 million in convertible zero-coupon
notes which it may be able to convert to equity if it sustains its
momentum over the next few quarters. This would bring its debt
back to current levels.
Assignments:
Issuer: Netflix, Inc.
New Senior Unsecured Notes, Assigned Ba3 (LGD4-69%)
Ratings Rationale
Netflix's Ba3 Corporate Family Rating reflects the company's
position as the largest content streaming subscription service in
the U.S., with a sizeable subscriber base and a market leading
streaming product offering. It reflects the company's strong
balance sheet, with low gross domestic debt-to-EBITDA leverage of
under 1.5x and a significant level of cash and short term
investments relative to its debt. The above credit strengths only
partially mitigate key business risks, however, including the
company's relatively young history, business concentration, and
risks associated with low barriers to entry and the potential for
disintermediation from competitors in the distribution of content.
The company's past predisposition for share repurchases (having
repurchased almost $1 billion since 2007), significant subscriber
churn and relatively low EBITDA margins compared to traditional
media also weigh on its rating.
Although Netflix has successfully developed a digital business
model and has quickly evolved into the dominant online content
streaming company in the US from a pure physical DVD rental
subscription service, its business continues to be in transition,
with the next few years being crucial to its developing a
profitable streaming business that can fully offset the rapidly
declining profits from the high margin DVD business. Its Ba3 CFR
reflects the execution risk associated with this transition,
especially in the context of a broad range of emerging competitors
and the evolving digital content distribution models that may
hamper the subscriber growth it needs in order to successfully
build a profitable streaming business.
The rating reflects Moody's expectation that the company will
reinvest a majority of its domestic profits into international
expansion. Since it may have otherwise used these profits to do
share repurchases that would not benefit its creditors, Moody's
does not view these investments negatively, as long as it remains
measured in its pace of international market launches and does not
fund these via debt financing or consuming material amounts of its
cash balance. However, combined with its increasing investments in
original programming, the company may reduce the cushion that has
existed to support new and existing content contractual
commitments in the event of slower than expected subscriber growth
or subscriber losses. The company's Ba3 rating is limited by its
ability to demonstrate enough subscriber growth to meet (a) the
content commitments and expenditures to offer a streaming plan
that would enable it to maintain a significant lead ahead of
competitors and (b) its investments in international markets while
maintaining strong liquidity. Moody's believes that it would be
possible to do so if the company grows to around 40 million
subscribers in the US and is able to maintain at least break even
cash flow in international markets, with profitable launched
markets funding the launch of new markets.
The stable outlook reflects Moody's forecast that the company will
grow domestic streaming subscribers in the range of 4-5 million
per year over the next two years, and maintain its pace of
additions relative to competitors such that it remains at least
double the size of the next largest competitor, while managing
content costs so as to increase its streaming margin. The outlook
does not contemplate the company's international businesses to
contribute to profitability well into the intermediate term.
Ratings may be upgraded if the company can demonstrate a
successful transition to a profitable domestic streaming business,
with subscriber growth that allows it to reach and sustain 40
million streaming subscribers, manage content spend such that it
increases and sustains domestic operating margins at above 16% as
well as maintains a significant lead on its content offering
relative to competitors, and if its profitable international
markets can fund new market launches such that gross consolidated
leverage remains below 2.0x.
The company's rating may face downward pressure if it experiences
domestic streaming subscriber growth of under 4 million per year,
and is unable to maintain domestic operating margins above 12% by
growing streaming profits to offset declining DVD profits. Ratings
may also be downgraded if its domestic leverage is sustained over
2.0x or consolidated leverage is sustained over 5.0x as it
launches expands internationally, or its international investments
materially impact liquidity or require debt financing.
Netflix's ratings were assigned by evaluating factors that Moody's
considers relevant to the credit profile of the issuer, such as
the company's (i) business risk and competitive position compared
with others within the industry; (ii) capital structure and
financial risk; (iii) projected performance over the near to
intermediate term; and (iv) management's track record and
tolerance for risk. Moody's compared these attributes against
other issuers both within and outside Netflix's core industry and
believes Netflix's ratings are comparable to those of other
issuers with similar credit risk. Other methodologies used include
Loss Given Default for Speculative-Grade Non-Financial Companies
in the U.S., Canada and EMEA published in June 2009.
Netflix Inc., with its headquarters in Los Gatos, California, is
the largest subscription video-on-demand (SVOD) service in the
United States, providing access to movies and TV shows online and
via the delivery of DVD rentals, with annual revenues of over $3.5
billion.
NETFLIX INC: S&P Revises Outlook on 'BB-' CCR to Negative
---------------------------------------------------------
Standard & Poor's Ratings Services revised its 'BB-' rating
outlook on Los Gatos, Calif.-based Netflix Inc. to negative. The
'BB-' corporate credit rating on Netflix is affirmed.
At the same time, S&P assigned Netflix's proposed $400 million
senior notes due 2021 a 'BB-' issue-level rating (the same as the
corporate credit rating), with a recovery rating of '3',
indicating S&P's expectation for average (50% to 70%) recovery for
debtholders in the event of a default.
"We are revising the outlook to negative based on our expectation
for discretionary cash flow deficits in 2013 into early 2014,
increased debt leverage, and risks associated with its original
programming," said Standard & Poor's credit analyst Andy Liu.
Original programming is the primary cause of discretionary cash
flow deficits as it requires more upfront payments and the return
on investment can be highly uncertain. This strategy, concurrent
with rapidly growth library content commitment and international
expansion, raises business and financial risk, and will likely
consume liquidity at least over the near term.
The rating on Netflix Inc. reflects Standard & Poor's Ratings
Services' expectation that revenue and EBITDA will continue to
expand in 2013 and 2014, fueled by subscriber growth. The company
has exhibited rapid growth of programming commitments, which are
not included in its more moderate debt leverage as it expands into
international markets and invests in new technology and content to
grow market share. Its sizable commitments, together with
anticipated discretionary cash flow deficits in 2013 and early
2014, are key elements of S&P's "significant" financial risk
assessment and "adequate" liquidity. S&P views the company's
business risk profile as "fair," which reflects the following
characteristics:
-- Leading position in the increasingly competitive and rapidly
evolving video rental industry;
-- Large subscriber base;
-- Dependence on movie and TV studios for content;
-- Growing investments in original programming;
-- The technology and content risks associated with delivery of
video movies and streaming content to the home; and
-- Management's strategic missteps, which it is gradually
working to rectify.
S&P assess the management and governance of the company as "fair."
The negative outlook is based on the risks relating to
discretionary cash flow deficit in 2013 into 2014 as the company
increases its investment in original programming, third-party
programming, and international expansion. While sustained success
in original series could benefit Netflix' brand and drive
subscriber growth, S&P views original programming as more risky
than licensed content as the company embarks on this effort. At
the same time, Netflix is still investing in its nascent
international operations and a possible new market entry in late
2013 or 2014. If it becomes apparent that Netflix will be unable
to generate modest positive discretionary cash flow in 2014 or if
company is unable to force conversion of the convertible notes
into equity in May, S&P could lower the rating as they will
indicate a weakness in business operations. Additionally, S&P
could lower the rating if the company's original programming is
not successful and if Netflix cannot increase domestic and
international subscribers at a rate commensurate with its
escalating content commitments.
On the other hand, S&P could revise the outlook to stable if it
become convinced that the company will be able to generate and
maintain healthy discretionary cash flow in 2014, sustain
subscriber growth, achieve success with its original programming,
and expand its EBITDA margin.
NEXSTAR BROADCASTING: Initiates Cash Dividend of $0.12 Per Share
----------------------------------------------------------------
Nexstar Broadcasting Group, Inc.'s Board of Directors authorized
the initiation of a regular quarterly cash dividend of $0.12 per
share of its Class A and Class B common stock. The first dividend
is payable on Friday, March 1, 2013, to shareholders of record on
Friday, Feb. 15, 2013.
Perry A. Sook, Chairman, president and chief executive officer of
Nexstar commented, "The initiation of a quarterly cash dividend
reflects both the growing free cash flow generated by our
diversified media platform as well as our commitment to deliver
value to our shareholders. Importantly, the annual capital
allocated to dividend payments at this time relative to the total
free cash flow that Nexstar now generates, provides us with ample
liquidity to reduce leverage, consider additional accretive
station acquisitions and undertake other initiatives to enhance
long-term shareholder value."
While the Company intends to pay regular quarterly cash dividends
for the foreseeable future, all subsequent dividends will be
reviewed quarterly and declared by the Board of Directors at its
discretion.
About Nexstar Broadcasting Group
Irving, Texas-based Nexstar Broadcasting Group Inc. currently
owns, operates, programs or provides sales and other services to
62 television stations in 34 markets in the states of Illinois,
Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania,
Louisiana, Arkansas, Alabama, New York, Rhode Island, Utah and
Florida. Nexstar's television station group includes affiliates
of NBC, CBS, ABC, FOX, MyNetworkTV and The CW and reaches
approximately 13 million viewers or approximately 11.5% of all
U.S. television households.
The Company reported a net loss of $11.89 million in 2011, a net
loss of $1.81 million in 2010, and a net loss of $12.61 million in
2009.
The Company's balance sheet at Sept. 30, 2012, showed
$611.35 million in total assets, $771.63 million in total
liabilities and a $160.27 million total stockholders' deficit.
* * *
As reported by the TCR on Oct. 26, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Irving, Texas-based
Nexstar Broadcasting Group Inc. and on certain subsidiaries to
'B+' from 'B'. "The rating action reflects our view that the
stations that Nexstar will acquire from Newport will improve the
company's business risk profile and that trailing-eight-quarter
leverage will improve to 6x or less over the intermediate term,"
said Standard & Poor's credit analyst Daniel Haines.
In the Oct. 26, 2012, edition of the TCR, Moody's Investors
Service upgraded the corporate family and probability of default
ratings of Nexstar Broadcasting, Inc. (Nexstar) to B2 from B3.
The upgrade and positive outlook incorporate expectations for
continued improvement in the credit profile resulting from both
the transaction and Nexstar's operating performance.
NEXTWAVE WIRELESS: Suspending Filing of Reports with SEC
--------------------------------------------------------
Nextwave Wireless Inc. filed a Form 15 with the U.S. Securities
and Exchange Commission to voluntarily terminate the registration
of its common stock or suspend its duty to file reports with the
SEC under Sections 13 and 15(d) of te Securities Exchange Act of
1934. There were no holders of the common stock as of Jan. 25,
2013.
In separate filings with the SEC, the Company filed post-effective
amendments to the following registration statements:
* File No. 333-142542 registering 357,142 shares of the Company's
common stock, $0.007 par value per share
* File No. 333-144549 registering 2,500,000 shares of the
Company's common stock, $0.001 par value per share
* File No. 333-170845 registering 3,092,752 shares of the
Company's common stock, $0.007 par value per share
* File No. 333-139169 registering 3,928,571 shares of the
Company's common stock, $0.007 par value per share.
The Company has filed the Amendmenst to withdraw and remove from
registration the Company's unissued and unsold Securities issuable
pursuant to the Registration Statements.
On Jan. 24, 2013, pursuant to the Agreement and Plan of Merger,
dated as of Aug. 1, 2012, among the Company, AT&T Inc., a Delaware
corporation and Rodeo Acquisition Sub Inc., a wholly owned
subsidiary of AT&T, Merger Sub merged with and into the Company,
with the Company continuing as the surviving corporation and a
wholly-owned subsidiary of AT&T.
As a result of the Merger, the offerings of the Securities
pursuant to the Registration Statements have been terminated.
About Nextwave Wireless
NextWave Wireless Inc. (PINK: WAVE) is a holding company for
a significant wireless spectrum portfolio. Its continuing
operations are focused on the management of its wireless spectrum
interests. Total domestic spectrum holdings consist of
approximately 3.9 billion MHz POPs. Its international spectrum
included in continuing operations include 2.3 GHz licenses in
Canada with 15 million POPs covered by 30 MHz of spectrum.
In its report on the Company's consolidated financial statements
for the year ended Dec. 31, 2011, Ernst & Young, said, "The
Company has incurred recurring operating losses and has a working
capital deficiency, primarily comprised of the current portion of
long term obligations of $142.0 million at Dec. 31, 2011, that
is associated with the maturity dates of its debt. The Company
currently does not have the ability to repay this debt at
maturity. These conditions raise substantial doubt about the
Company's ability to continue as a going concern."
The Company reported a net loss of $131.87 million for the nine
months ended Sept. 29, 2012, compared with a net loss of
$195.84 million for the nine months ended Oct. 1, 2012.
The Company's balance sheet at Sept. 29, 2012, showed
$444.13 million in total assets, $1.25 billion in total
liabilities, and a $808.66 million total stockholders' deficit.
Bankruptcy Warning
As of Sept. 9, 2012, the aggregate principal amount of the
Company's secured indebtedness was $1,146 million. This amount
includes the Company's Senior Notes with an aggregate principal
amount of $153.4 million, the Company's Second Lien Notes with an
aggregate principal amount of $215.7 million and the Company's
NextWave and HoldCo Third Lien Notes with aggregate principal
amounts of $331.4 million and $445.5 million, respectively. The
Company's current cash reserves are not sufficient to meet its
payment obligations under its Senior Notes, Second Lien Notes,
NextWave Third Lien Notes and HoldCo Third Lien Notes at their
current maturity dates. Additionally, in the event of any
termination of the Merger Agreement, the Company will not be able
to consummate the sale of its wireless spectrum assets yielding
sufficient proceeds to retire this indebtedness at their currently
scheduled maturity dates.
"If we are unable to further extend the maturity of our Notes, or
identify and successfully implement alternative financing to repay
the Notes, the holders of our Notes could proceed against the
assets pledged to collateralize these obligations in the event the
Merger Agreement is terminated and our forbearance agreement
expires. These conditions raise substantial doubt about our
ability to continue as a going concern. Insufficient capital to
repay our debt at maturity would significantly restrict our
ability to operate and could cause us to seek relief through a
filing in the United States Bankruptcy Court," the Company said in
its quarterly report for the period ended Sept. 29, 2012.
NEXTWAVE WIRELESS: AT&T No Longer Owns Common Shares
----------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, AT&T Inc. disclosed that, as of Jan. 24,
2013, it does not beneficially own any common shares of
NextWave Wireless Inc.
Pursuant to the Agreement and Plan of Merger, dated as of Aug. 1,
2012, among the Company, AT&T Inc., a Delaware corporation and
Rodeo Acquisition Sub Inc., a wholly owned subsidiary of AT&T,
Merger Sub merged with and into the Company, with the Company
continuing as the surviving corporation and a wholly-owned
subsidiary of AT&T.
On Jan. 24, 2013, the parties to the Merger Agreement consummated
the Merger. Pursuant to the terms of the Merger Agreement, each
share of NextWave Common Stock issued and outstanding immediately
prior to the effective time of the Merger was automatically
converted into the right to receive (i) $1.00 per share in cash
and (ii) one CPR.
All shares of NextWave Common Stock issued and outstanding
immediately prior to the effective time of the Merger were
cancelled and ceased to be outstanding.
A copy of the filing is available at http://is.gd/SBfFcB
About Nextwave Wireless
NextWave Wireless Inc. (PINK: WAVE) is a holding company for
a significant wireless spectrum portfolio. Its continuing
operations are focused on the management of its wireless spectrum
interests. Total domestic spectrum holdings consist of
approximately 3.9 billion MHz POPs. Its international spectrum
included in continuing operations include 2.3 GHz licenses in
Canada with 15 million POPs covered by 30 MHz of spectrum.
In its report on the Company's consolidated financial statements
for the year ended Dec. 31, 2011, Ernst & Young, said, "The
Company has incurred recurring operating losses and has a working
capital deficiency, primarily comprised of the current portion of
long term obligations of $142.0 million at Dec. 31, 2011, that
is associated with the maturity dates of its debt. The Company
currently does not have the ability to repay this debt at
maturity. These conditions raise substantial doubt about the
Company's ability to continue as a going concern."
The Company reported a net loss of $131.87 million for the nine
months ended Sept. 29, 2012, compared with a net loss of
$195.84 million for the nine months ended Oct. 1, 2012.
The Company's balance sheet at Sept. 29, 2012, showed
$444.13 million in total assets, $1.25 billion in total
liabilities, and a $808.66 million total stockholders' deficit.
Bankruptcy Warning
As of Sept. 9, 2012, the aggregate principal amount of the
Company's secured indebtedness was $1,146 million. This amount
includes the Company's Senior Notes with an aggregate principal
amount of $153.4 million, the Company's Second Lien Notes with an
aggregate principal amount of $215.7 million and the Company's
NextWave and HoldCo Third Lien Notes with aggregate principal
amounts of $331.4 million and $445.5 million, respectively. The
Company's current cash reserves are not sufficient to meet its
payment obligations under its Senior Notes, Second Lien Notes,
NextWave Third Lien Notes and HoldCo Third Lien Notes at their
current maturity dates. Additionally, in the event of any
termination of the Merger Agreement, the Company will not be able
to consummate the sale of its wireless spectrum assets yielding
sufficient proceeds to retire this indebtedness at their currently
scheduled maturity dates.
"If we are unable to further extend the maturity of our Notes, or
identify and successfully implement alternative financing to repay
the Notes, the holders of our Notes could proceed against the
assets pledged to collateralize these obligations in the event the
Merger Agreement is terminated and our forbearance agreement
expires. These conditions raise substantial doubt about our
ability to continue as a going concern. Insufficient capital to
repay our debt at maturity would significantly restrict our
ability to operate and could cause us to seek relief through a
filing in the United States Bankruptcy Court," the Company said in
its quarterly report for the period ended Sept. 29, 2012.
NYTEX ENERGY: To Issue 20 Million Shares Under 2013 Equity Plan
---------------------------------------------------------------
The Board of Directors of NYTEX Energy Holdings, Inc., has adopted
the 2013 Equity Incentive Plan. This Plan is intended to
encourage ownership of NYTEX common stock by officers, employees,
consultants, and directors of the Company and its affiliates and
to provide additional incentive for them to promote the success of
the Company's business. The Plan allows for the grant of equity
based awards including non-statutory stock options, incentive
stock options, stock appreciation rights, performance shares,
performance units, restricted stock, restricted stock units, or
any other type of award permitted under the Plan. The Plan is
also intended to be an incentive stock option plan within the
meaning of Section 422 of the Internal Revenue Code of 1986 to the
extent incentive options are granted. No incentive stock options
can be granted under the Plan unless the Plan is approved by the
Company's stockholders within 12 months of the effective date of
approval of the Plan by the Board.
Unless the Plan is terminated earlier, the Plan will terminate on
the earlier of the date when all shares reserved for issuance have
been issued or the 10th anniversary of the effective date of
approval of the Plan by the Board. Awards granted pursuant to the
Plan within that period will not expire solely by reason of the
termination of the Plan.
An aggregate of 20,000,000 shares of NYTEX common stock have been
reserved for issuance under the Plan. Shares issued pursuant to
the Plan may be either authorized but unissued common shares or
common shares held by the Company in its treasury.
The Plan provides for administration by a Compensation Committee
of the Board of Directors, but, subject to the requirements of
Code Section 162(m), any of the powers and responsibilities
assigned to the Compensation Committee under the Plan can be
exercised by the Board. A copy of the Plan is available at:
http://is.gd/ANzcp4
About NYTEX Energy
Located in Dallas, Texas, Nytex Energy Holdings, Inc., is an
energy holding company with operations centralized in two
subsidiaries, Francis Drilling Fluids, Ltd. ("FDF") and NYTEX
Petroleum, Inc. ("NYTEX Petroleum"). FDF is a 35 year old full-
service provider of drilling, completion and specialized fluids
and specialty additives; technical and environmental support
services; industrial cleaning services; equipment rentals; and
transportation, handling and storage of fluids and dry products
for the oil and gas industry. NYTEX Petroleum, Inc., is an
exploration and production company focusing on early stage
development of minor oil and gas resource plays within the United
States.
In the auditors' report accompanying the financial statements for
year ended Dec. 31, 2011, Whitley Penn LLP, in Dallas, Texas,
expressed substantial doubt about Nytex Energy's ability to
continue as a going concern. The independent auditors noted that
the Company is not in compliance with certain loan covenants
related to two debt agreements.
The Company's balance sheet at Sept. 30, 2012, showed $11.59
million in total assets, $5.05 million in total liabilities and
$6.54 million in total equity.
NNN LENOX: Balks at Motion to Transfer Venue of Bankruptcy Case
---------------------------------------------------------------
NNN Lenox Park 9, LLC filed with the U.S. Bankruptcy Court a
its supplemental objection to U.S. Bank National Association's
motion to transfer venue of the Chapter 11 case.
NNN Lenox cites these reasons:
1) it has not been provided notice as is appropriate in the
circumstance to respond to the holder's motion to
transfer venue to the U.S. Bankruptcy Court for the Western
District of Tennessee;
2) it has not been given an opportunity to present testimony,
facts or documents properly admitted in a hearing on the motion
and objection; and
3) the list of creditors presented by the lender is not
accurate, is hearsay, is not properly admitted evidence and lacks
a foundation.
U.S. Bank, as trustee, as successor to Wells Fargo Bank, N.A., as
trustee, for the holders of Citigroup Commercial Mortgage Trust
2007-C6, Commercial Mortgage Pass-Through Certificates, Series
2007-C6, requested that the Court transfer the Debtor's case to
Tennessee or immediately dismiss the case.
About NNN Lenox
New Albany, Indiana-based NNN Lenox Park 9, LLC, owns the
undivided 2.795% tenant in common interest in two four-story
office buildings located at 3175 Lenox Park Drive & 6625 Lenox
Park Drive, Memphis, Shelby County, Tennessee. The Lenox Park
Buildings A & B contain 193,029 square footage of office space and
853 surface parking spaces in adjoining parking.
NNN Lenox filed a Chapter 11 petition (Bankr. S.D. Ind. Case No.
12-92686) in New Albany, Indiana, on Dec. 4, 2012, on the eve of a
non-judicial foreclosure of the Property in Memphis, Shelby
County, Tennessee. 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 Basil H. Lorch, III, presides
over the case.
Mubeen Aliniazee, president of Highpoint Management Solutions,
LLC, has been named the restructuring officer. Jeffrey M. Hester,
Esq., at Tucker Hester, LLC, in Indianapolis, serves as counsel to
the Debtor.
OMEGA NAVIGATION: Delos Is Stalking Horse Bidder
------------------------------------------------
BankruptcyData reported that Omega Navigation Enterprises filed
with the U.S. Bankruptcy Court a notice that it has received a
stalking horse bid from Delos Megacore with respect to the
Debtors' equity interests in Omega Investments (but not Omnicrom
or OMAN) for a purchase price of $1,250,000, which amount may
increase to $2,000,000 if the lenders to Omega Investments and/or
its subsidiaries do not impose any holdbacks.
According to the filing, "The Debtors have been advised that the
Committee supports the Delos Bid, as long as the Debtors
acknowledge (which they do) that Delos will still be entitled to
bid for Omnicrom and/or OMAN if it is so inclined," the report
said.
About Omega Navigation
Athens, Greece-based Omega Navigation Enterprises Inc. and
affiliates, owner and operator of tankers carrying refined
petroleum products, filed for Chapter 11 protection (Bankr. S.D.
Tex. Lead Case No. 11-35926) on July 8, 2011, in Houston, Texas
in the United States.
Omega is an international provider of marine transportation
services focusing on seaborne transportation of refined petroleum
products. The Debtors disclosed assets of US$527.6 million and
debt totaling US$359.5 million. Together, the Debtors wholly own
a fleet of eight high-specification product tankers, with each
vessel owned by a separate debtor entity.
HSH Nordbank AG, as the senior lenders' agent, has first liens on
vessels to secure a US$242.7 million loan. The lenders include
Bank of Scotland and Dresdner Bank AG. The ships are encumbered
with US$36.2 million in second mortgages with NIBC Bank NV as
agent. Before bankruptcy, Omega sued the senior bank lenders in
Greece contending they violated an agreement to grant a three
year extension on a loan that otherwise matured in April 2011.
An affiliate of Omega that manages the vessels didn't file, nor
did affiliates with partial ownership interests in other vessels.
Judge Karen K. Brown presides over the case. Bracewell &
Giuliani LLP serves as counsel to the Debtors. Jefferies &
Company, Inc., is the financial advisor and investment banker.
The Official Committee of Unsecured Creditors has tapped Winston
& Strawn as local counsel; Jager Smith as lead counsel; and First
International as financial advisor.
OSCAR BRAUN: Unused Retainer Belongs to Personal Bankruptcy Estate
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of California
on Nov. 5, 2012, held a hearing on the motion of the trustee in
the Brauns' individual case (In re OSCAR A. BRAUN and, Chapter 7,
ANDREA STOLL BRAUN, Debtors, Bankr. N.D. Calif. Case No. 11-31881)
to require the trustee in the Braun corporate case (In re ANDREA
S. BRAUN, DDS INC., Chapter 7, Debtor, Bankr. N.D. Calif. Case No.
11-31909) to turn over an unused retainer returned by the counsel
who attempted to represent both debtors. Daniel M. Linchey
appeared for Janina Hoskins, the trustee in the individual case.
John H. MacConaghy appeared for Randy Sugerman, the trustee in the
dental corporation case.
In a Jan. 28, 2013 Memorandum available at http://is.gd/WrpmIt
from Leagle.com, Bankruptcy Judge Thomas E. Carlson ruled that all
of the funds belong to the bankruptcy estate of the individual
debtors.
Each of the cases was commenced under chapter 11, and in each case
the debtor sought to retain The Abdallah Law Group as counsel for
the estate. Upon objections filed by the United States Trustee
and by Colonial Leasing Corporation, the court ordered on Jan. 27,
2012, that Abdallah's applications for compensation be deemed
withdrawn with prejudice because Abdallah's applications for
employment failed to disclose certain conflicts of interest.
It is undisputed that Andrea and Oscar Braun as individuals
transferred to Abdallah $20,300 as a retainer for legal services
in their individual bankruptcy case (Case No. 11-31881) and
$10,789 as a retainer for legal services in their related
corporate bankruptcy case (Case No. 11-31909). The Jan. 27, 2012
order deemed both applications for compensation filed by Abdallah
to be withdrawn with prejudice necessarily determined that
Abdallah could not be paid for post-petition legal services, and
that substantially all of the retainer payments should be
refunded.
OVERSEAS SHIPHOLDING: Can Hire Mullin Hoard as Litigation Counsel
-----------------------------------------------------------------
Overseas Shipholding Group, Inc., sought and obtained approval
from the U.S. Bankruptcy Court for the District of Delaware to
employ Mullin Hoard & Brown, L.L.P., as special litigation counsel
to the Debtors, nunc pro tunc to Jan. 2, 2013.
MHB will render these services to the Debtors:
a. perform all necessary services as the Debtors; special
litigation counsel, including, without limitation,
investigating possible professional liability and other
claims against various third parties who provided services
to OSG prior to the filing of its Chapter 11 bankruptcy
proceeding as instructed by the Debtors, advising the
Debtors regarding such possible claims and possible related
professional liability insurance coverage claims, and if
necessary, litigating such possible claims; and
b. perform all other necessary legal services as requested by
the Debtors.
None of MHB's partners, counsel, or associates hold or represent
any interest adverse to the Debtors' estates or their creditors,
and MHB is a "disinterested person," as defined in Section 101(14)
of the Bankruptcy Code.
As of Jan. 1, 2013, attorneys and paralegals principally
responsible for the representation of the Debtors and their
current hourly rates are:
John M. Brown, Esq. $425
Steven L. Hoard, Esq. $425
Brett Stecklein, Esq. $350
Greg Dimmick, Esq. $350
Sarah Pelley, Esq. $250
Richard Biggs, Esq. $225
Jorge E. Leal, Esq. $225
Alysia Cordova, Esq. $210
Flannery Hoard, Esq. $195
Erica Anderson, Esq. $150
Amy Cruz, Esq. $125
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: Court OKs Garden City as Information Agent
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Overseas
Shipholding Group, Inc. sought and obtained approval from the U.S.
Bankruptcy Court to employ Garden City Group as informative agent.
Emily S. Gottlieb, GCG's assistant vice president, attests that
the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The firm, will among other things, provide these services:
a. establish and maintain an internet-accessible Web site to
maintain by and through GCG,
b. establish and maintain a telephone number and electronic mail
address by and through GCG for creditors to submit questions
and comments; and
c. distribute updates by and through GCG regarding the Chapter 11
Cases via electronic mail for creditors that have registered
for such services on the Committee Web site.
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.
PEAK RESORTS: Committee Objects to Add'l Financing of $400,000
--------------------------------------------------------------
The Official Committee of Unsecured Creditors of Peak Resorts,
Inc., et al., asks the Bankruptcy Court to deny approval of the
Debtors' motion dated Dec. 13, 2012, for the entry of a second
final order authorizing the Debtors to obtain new funds of up to
$400,000, for a total DIP loan of $2,000,000, from the Federal
Deposit Insurance Corporation, in its capacity as Receiver for
Tennessee Commerce Bank.
A copy of the first DIP financing order is available at:
http://bankrupt.com/misc/peakresorts.doc113.pdf
On Dec. 18, 2012, the Court entered an interim order authorizing
the Debtors to immediately draw $204,454 for ordinary course
business expenses.
The interim order also: (i) required the Debtors to commence
discussions with BDO Capital Advisors to provide financial
advisory services to assist the Debtors in implementing a more
efficient budget process, (ii) conditioned the entry of a final
order on the retention of BDO; and (iii) authorized the Debtors to
request approval from the FDIC of a variance from the DIP Budget
to pay professional fees to Harris Beach, PLLC, and Cole, Schotz,
Meisel, Forman & Leonard, P.A., in accordance with the Interim
Compensation Procedures Order entered in the cases, if the Debtors
accumulated funds on hand from revenues prior to the final
hearing.
The Debtors have filed an application for authorization to employ
BDO Consulting as DIP Budget Developer on Jan. 3, 2013, to satisfy
the condition in the Interim Order.
The Committee put forth these arguments in support of its limited
objection to the entry of the Second Final DIP Order:
1. The Debtors have not filed the proposed Final Order with the
Court, and the FDIC has not provided a draft to the
Committee for review and comment. Without an extended
budget or forecast, the Committee is also unable to
determine if the FDIC intends to use this case to liquidate
its collateral, and then leave the estate administratively
insolvent, and with no possible way to wind down the case or
make a distribution to unsecured creditors.
2. On its face, the BDO Application may appear to satisfy the
requirement in the Interim Order, but it is not consistent
with the representations placed on the record at the interim
hearing, and arguably fails to satisfy the requirements of
Sec. 328 of the Bankruptcy Code.
3. With respect to the payment of Professional Fees, the
Debtors sought approval on Dec. 30, 2012, of a variance
request to distribute $60,000 to professionals. The request
was approved by the FDIC and its agents, and Harris Beach
and Cole Schotz each received $30,000 on Jan. 2, 2103. The
payments received by counsel comprise less than 50% of the
balances owed. Any Final Order should include a requirement
to pay Harris Beach and Cole Schotz the remaining amounts
currently due pursuant to unopposed monthly statements filed
in the cases, provided the Debtors have the necessary
liquidity.
About Peak Resorts
Peak Resorts, Inc., dba Greek Peak Mountain Resort, and four
affiliates filed for Chapter 11 bankruptcy (Bankr. N.D.N.Y. Case
Nos. 12-31471 to 12-31473, 12-31475 and 12-31476) in Syracuse on
Aug. 1, 2012. The affiliates are Hope Lake Investors LLC,
V.R.P.D. II L.P., REDI LLC, and A.R.K. Enterprises Inc.
Peak Resorts owns 888.5 acres of real estate, including the "Greek
Peak Mountain Resort", a four-season resort development located in
Virgil, New York. The 888.5-acre property is located 8 miles from
Cortland, New York and has the largest day trip area in Central
New York state. REDI LLC owns 402.7 acres of adjacent property.
Hope Lake Investors owns the Hope Lake Lodge & Cascades Indoor
Water Park, a 151-room hotel and resort facility in Virgil,
Cortland County. The Debtors have a total of 264 employees.
Chief Bankruptcy Judge Robert E. Littlefield Jr. presides over the
case. Lawyers at Harris Beach PLLC serve as the Debtors' counsel.
The Debtors scheduled these assets and debts:
Scheduled Assets Scheduled Liabilities
---------------- ---------------------
Hope Lake $27,180,635 $48,800,528
Peak Resorts $12,991,230 $26,558,438
REDI, LLC $1,298,401 $3,851,808
The petitions were signed by Allen R. Kryger, president.
REALOGY CORP: Names Former CBRE CEO to Board of Directors
---------------------------------------------------------
Brett White was appointed to the Board of Directors of Realogy
Holdings Corp. and the board of managers of its indirect wholly
owned subsidiary, Realogy Group LLC.
Mr. White, age 52, served as the chief executive officer of CBRE
Group, Inc., the world's largest commercial real estate services
firm, from June 2005 through November 2012, and as its President
from September 2001 to March 2010. CBRE Group is a Fortune 500
and S&P 500 company listed on the New York Stock Exchange (NYSE).
Previously, Mr. White was Chairman of the Americas of CBRE
Services, Inc., the predecessor of CBRE Group, Inc., from May 1999
to September 2001 and President of Brokerage Services from August
1997 to May 1999.
Mr. White has been determined to be an independent director for
purposes of the listing standards of the NYSE. The Realogy
Holdings Board has not yet determined the committee or committees
of the Board on which Mr. White will serve.
Mr. White will receive compensation for his service as a director
in accordance with the Realogy Holdings' director compensation
guidelines.
There have been no transactions and there are no currently
proposed transactions in which the Realogy Holdings or Realogy
Group was or is to be a participant and in which Mr. White had or
will have a direct or indirect material interest that requires
disclosure pursuant to Item 404(a) of Regulation S-K.
About Realogy Corp.
Realogy Corp. -- http://www.realogy.com/-- a global provider of
real estate and relocation services with a diversified business
model that includes real estate franchising, brokerage, relocation
and title services. Realogy's world-renowned brands and business
units include Better Homes and Gardens Real Estate, CENTURY 21,
Coldwell Banker, Coldwell Banker Commercial, The Corcoran Group,
ERA, Sotheby's International Realty, NRT LLC, Cartus and Title
Resource Group. Collectively, Realogy's franchise systems have
around 15,000 offices and 270,000 sales associates doing business
in 92 countries around the world.
Headquartered in Parsippany, N.J., Realogy is owned by affiliates
of Apollo Management, L.P., a leading private equity and capital
markets investor. Realogy fully supports the principles of the
Fair Housing Act.
The Company reported a net loss of $439 million in 2011, a net
loss of $97 million in 2010, and a net loss of $260 million in
2009.
The Company's balance sheet at Sept. 30, 2012, showed $7.35
billion in total assets, $9.09 billion in total liabilities and a
$1.74 billion total deficit.
* * *
In the Dec. 12, 2012, edition of the TCR, Moody's Investors
Service upgraded Realogy Group LLC's Corporate Family and
Probability of Default ratings to B3. The B3 Corporate Family
rating (CFR) incorporates Moody's view that Realogy's capital
structure has made meaningful progress towards being stabilized
following the issuance of primary equity, and is therefore more
sustainable although still highly leveraged.
As reported by the TCR on Oct. 15, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Realogy Corp. to
'B' from 'CCC' and removed it, along with all related issue-level
ratings, from CreditWatch, where it was placed with positive
implications Sept. 28, 2012.
"The action follows the completion of the company's IPO of its
common stock. Concurrent with and in addition to the IPO, Realogy
converted $1.9 billion in convertible debt to common stock," S&P
said.
RADIAN GROUP: To Hold Fourth Quarter Conference Call on Feb. 11
---------------------------------------------------------------
Radian Group Inc. on Jan. 29 announced that it will hold a
conference call on Monday, February 11, 2013, at 10:00 a.m.
Eastern time to discuss the company's fourth quarter and year-end
2012 results, which will be announced prior to the market open on
the same day.
The conference call will be broadcast live over the Internet at
http://www.radian.biz/page?name=Webcastor at
http://www.radian.biz
The call may also be accessed by dialing 800-230-1092 inside the
U.S., or 612-234-9960 for international callers, using passcode
280218 or by referencing Radian.
A replay of the webcast will be available on the Radian website
approximately two hours after the live broadcast ends for a period
of one year. A replay of the conference call will be available
approximately two and a half hours after the call ends for a
period of two weeks, using the following dial-in numbers and
passcode: 800-475-6701 inside the U.S., or 320-365-3844 for
international callers, passcode 280218.
In addition to the information provided in the company's earnings
news release, other statistical and financial information, which
is expected to be referred to during the conference call, will be
available on Radian's Web site under Investors >Quarterly Results,
or by clicking on http://www.radian.biz/page?name=QuarterlyResults
About Radian
Headquartered in Philadelphia, Radian Group Inc. --
http://www.radian.biz/-- provides private mortgage insurance and
related risk mitigation products and services to mortgage lenders
nationwide through its principal operating subsidiary, Radian
Guaranty Inc. These services help promote and preserve
homeownership opportunities for homebuyers, while protecting
lenders from default-related losses on residential first mortgages
and facilitating the sale of low-downpayment mortgages in the
secondary market.
* * *
As reported by the Troubled Company Reporter on Oct. 17, 2012,
Standard & Poor's Rating Services raised its long-term issuer
credit ratings on Radian Group Inc. (RDN) to 'CCC+' from 'CCC-'
and MGIC Investment Corp. (MTG) to 'CCC+' from 'CCC'. The
financial strength ratings for both RDN's and MTG's respective
operating companies are unchanged. The outlook on both companies
is negative.
RESIDENTIAL CAPITAL: CHFA Wants Stay Relief for Return of Docs
--------------------------------------------------------------
Connecticut Housing Finance Authority asks the Bankruptcy Court to
grant it interim relief whereunder Residential Capital LLC and its
affiliates would be directed to sequester CHFA's funds, documents,
data and rights related to a servicing agreement, and to provide
an appropriate accounting to facilitate the orderly transfer of
the portfolio. CHFA also asks the Court to direct the Debtors to
turn CHFA's portfolio and related rights over to CHFA or its
designee and direct the Debtors to segregate the documents, data
and funds associated with CHFA's portfolio, and to provide CHFA
with a final accounting of same.
In response, the Debtors tell the Court they do not object to the
Court granting relief from the automatic stay to permit the
termination of the servicing of the CFHA loan portfolio and the
transfer of such portfolio to a substitute servicer. The Debtors
relate that since prior to approval of the sale of the their
mortgage servicing platform to Ocwen Loan Servicing, LLC, the
Debtors have attempted to facilitate a resolution between CHFA and
Ocwen that would ensure the continued servicing of CHFA's mortgage
loan portfolio pursuant to terms mutually acceptable to CFHA and
Ocwen and that would allow for the assignment of such servicing
under the Ocwen APA. No resolution has been reached, however,
according to the Debtors.
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: Minor Amendment to Berkshire's APA
-------------------------------------------------------
At the behest of Residential Capital LLC and Berkshire Hathaway
Inc., the Court approved a stipulation amending the parties' asset
purchase agreement, specifically the terms and definition of
"Adjusted UPB," "Principal Reduction," "Principal Reduction
Adjustment Statement," "Purchase Price Adjustment," and "Reduced
Principal Mortgage Loan."
A full-text copy of Amendment No. 1 to the APA, dated Jan. 15,
2013, is available for free at:
http://bankrupt.com/misc/rescap_bhapa10115.pdf
As reported in the Oct. 30, 2012 edition of the TCR, Berkshire
Hathaway offered the highest and best bid for the purchase of
their loan portfolio, and accordingly, at the conclusion of the
auction held on Oct. 25, was declared as the successful bidder.
Berkshire Hathaway, controlled by Warren Buffet, placed a
$1.5 billion bid for the Whole Loan Assets, which comprises 47,000
loans. Andrew Johnson, writing for Dow Jones Newswires, citing a
person familiar with the auction, related that Berkshire's bid
beat a competing bid placed by a consortium of investors.
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: Resolves SBO Servicers' Sale Objections
------------------------------------------------------------
Residential Capital LLC and its affiliates ask the Court to
approve a stipulation they entered into with Branch Banking and
Trust Company, OceanFirst Bank and Columbia Home Loans, LLC, and
PNC Mortgage, a Division of PNC Bank, NA -- SBO Servicers --
resolving the SBO Servicers' objection to the sales of the
Debtors' mortgage loan servicing and origination platform and
whole loan portfolio.
Pursuant to the stipulation, following the effective date of each
of the sale of the Debtors' assets to Ocwen Loan Servicing, LLC,
and Berkshire Hathaway, Inc., the applicable Purchaser will
reimburse the SBO Servicers for claims for outstanding servicing
advances made prior to the effective date of the sale, but not yet
due and payable to the SBO Servicer as of the effective date of
the sale. The SBO Servicers are also permitted to continue to
reimburse themselves for servicing advances made out of available
collections received from borrowers as permitted pursuant to the
terms of the applicable SBO Servicing Agreements.
The SBO Servicers are owners or master servicers of certain
mortgage servicing rights with respect to certain mortgage or home
equity lines of credit which they subservice on behalf of the
Debtors.
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: To Close $3B Mortgage Biz Sale By Mid-Feb.
---------------------------------------------------------------
Maria Chutchian of BankruptcyLaw360 reported that Residential
Capital LLC on Tuesday told a New York bankruptcy judge that it
expects to close the $3 billion sale of its mortgage servicing and
origination business to Ocwen Financial Corp. by Feb. 15 after
weeks of smoothing out various protests to the deal.
ResCap attorney Todd Goren of Morrison & Foerster LLP told U.S.
Bankruptcy Judge Martin Glenn that the fallen mortgage company has
reached a tentative resolution to objections to the sale filed by
Freddie Mac and Wells Fargo Bank NA, the report related.
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).
REVSTONE INDUSTRIES: Pachulski Takes Over as Counsel
----------------------------------------------------
Pachulski Stang Ziehi & Jones LLP is taking over the
representation of Revstone Industries LLC.
In a notice filed with the Bankruptcy Court on Jan. 17, Revstone
said it seeks to substitute Pachulski for its existing counsel,
Mayer Brown LLP and Richards, Layton & Finger, P.A., in the case.
Mayer Brown and RLF will no longer represent the Debtor, and all
such representation will be undertaken by Pachulski.
Pachulski may be reached at:
PACHULSKI STANG ZIEHL & JONES LLP
Laura Davis Jones, Esq.
David M. Bertenthal, Esq.
Timothy P. Cairns, Esq.
919 North Market Street, 17th Floor
P.O. Box 8705
Wilmington, DE 19899-8705
Telephone: (302) 652-4100
Facsimile: (302) 652-4400
E-mail: ljones@pszjlaw.com
dbertenthal@pszjlaw.com
tcairns@pszjlaw.com
The Richards Layton lawyers who worked on the case were:
Christopher M. Samis, Esq.
Mark D. Collins, Esq.
Tyler D. Semmelman, Esq.
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
920 North King Street
Wilmington, Delaware 19801
Telephone: (302) 651-7700
Facsimile: (302) 651-7701
E-mail: collins@rlf.com
samis@rlf.com
semmelman@rlf.com
The Mayer Brown lawyers who worked on the case were:
Brian Trust, Esq.
Howard S. Beltzer, Esq.
Frederick D. Hyman, Esq.
MAYER BROWN LLP
1675 Broadway
New York, NY 10019-5820
Telephone: (212) 506-2500
Facsimile: (212) 262-1910
E-mail: btrust@mayerbrown.com
hbeltzer@mayerbrown.com
thyman@mayerbrown.com
About Revstone Industries, Greenwood Forgings,
& US Tool & Engineering
Lexington, Kentucky-based Revstone Industries LLC, a maker of
truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case
No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon
oversees the case. In its petition, Revstone estimated under
$50 million in assets and debts.
Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del.
Case No. 12-13263) on Dec. 3, 2012.
Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No.
13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No.
13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013.
Judge Shannon also oversees the cases.
A motion for joint administration of the cases has been filed.
Duane David Werb, Esq., at Werb & Sullivan, serves as bankruptcy
counsel to Greenwood and US Tool. Greenwood estimated $1 million
to $10 million in assets and $10 million to $50 million in debts.
US Tool & Engineering estimated under $1 million in assets and $1
million to $10 million in debts. The petitions were signed by
George S. Homeister, chairman.
REVSTONE INDUSTRIES: Creditors Committee Hiring Womble Carlyle
--------------------------------------------------------------
The official committee of unsecured creditors appointed in the
Chapter 11 case of Revstone Industries, LLC, is scheduled to
appear in Bankruptcy Court in Wilmington, Delaware, to seek
approval of Womble Carlyle Sandridge & Rice LLP as the Committee's
counsel.
The Committee was appointed by the U.S. Trustee on Dec. 17.
Following its formation, the Committee selected the firm to serve
as its counsel. Among others, the Committee will look to the firm
to assist it in investigating the acts, conduct, assets,
liabilities, and financial condition of the Debtor, and
participate in the formulation of a bankruptcy-exit plan.
Mark L. Desgrosseilliers, Esq., a partner of the firm, will lead
the engagement.
Womble Carlyle will charge at these hourly rates:
Partners $290 - $700
Of Counsel $290 - $685
Associates $190 - $440
Senior Counsel $260 - $390
Counsel $260 - $470
Paralegals $65 - $295
The members of the Committee are:
1. Boston Finance Group LLC
Attn: Jonathan Golden
4912 Creekside Dr.
Clearwater, FL 33760
Tel: 727-497-1661
Fax: 727-497-1666
2. Schoeller Arca Systems, Inc.
Attn: Rafael Sanchez
4320 Cotton Ln., Ste. 200
Goodyear, AZ 85338
Tel: 623-889-7981
3. Patrick J. O'Mara
1189 E. Tuttle Rd.
Ionia, MI 48846
4. Thule Holding, Inc.
Attn: Mark Schnitzler, Esq.
170 Mason St.
Greenwich, CT 06830
Tel: 203-661-6000
Fax: 203-661-9462
5. Pension Benefit Guaranty Corp.
Attn: Craig Yamaoka
1200 K St. NW
Washington DC 20005
Tel: 202-326-4070x3614
Fax: 202-842-2643
About Revstone Industries, Greenwood Forgings,
& US Tool & Engineering
Lexington, Kentucky-based Revstone Industries LLC, a maker of
truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case
No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon
oversees the case. In its petition, Revstone estimated under
$50 million in assets and debts.
Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del.
Case No. 12-13263) on Dec. 3, 2012.
Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No.
13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No.
13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013.
Judge Shannon also oversees the cases.
A motion for joint administration of the cases has been filed.
Duane David Werb, Esq., at Werb & Sullivan, serves as bankruptcy
counsel to Greenwood and US Tool. Greenwood estimated $1 million
to $10 million in assets and $10 million to $50 million in debts.
US Tool & Engineering estimated under $1 million in assets and $1
million to $10 million in debts. The petitions were signed by
George S. Homeister, chairman.
RYLAND GROUP: Reports $28.6 Million Net Income in Fourth Quarter
----------------------------------------------------------------
The Ryland Group, Inc., reported net income of $28.57 million on
$440.13 million of total revenues for the three months ended
Dec. 31, 2012, compared with net income of $812,000 on $261.44
million of total revenues for the same period during the prior
year.
For the 12 months ended Dec. 31, 2012, the Company reported net
income of $40.38 million on $1.31 billion of total revenues,
compared with a net loss of $50.75 million on $889.53 million of
total revenues during the prior year.
The Company's balance sheet at Dec. 31, 2012, showed $1.93 billion
in total assets, $1.40 billion in total liabilities and
$525.76 million in total equity.
A copy of the press release is available for free at:
http://is.gd/N8E0UX
About Ryland Group
Headquartered in Calabasas, California, The Ryland Group, Inc.
(NYSE: RYL) -- http://www.ryland.com/-- is one of the nation's
largest homebuilders and a leading mortgage-finance company.
Since its founding in 1967, Ryland has built more than 285,000
homes and financed more than 240,000 mortgages. The Company
currently operates in 15 states and 19 homebuilding divisions
across the country and is listed on the New York Stock Exchange
under the symbol "RYL."
Ryland Group carries 'B1' corporate family and probability of
default ratings, with stable outlook, from Moody's. It has 'BB-'
issuer credit ratings, with stable outlook, from Standard &
Poor's.
* * *
This concludes the Troubled Company Reporter's coverage of Ryland
Group until facts and circumstances, if any, emerge that
demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage.
SABINE PASS: Moody's Affirms 'Ba3' Rating on Sr. Secured Notes
--------------------------------------------------------------
Moody's Investors Service affirmed Sabine Pass Liquefaction's
(SPL) Ba3 rating on its upsized $1.5 billion of senior secured
notes due 2021. The senior secured note offering was previously
sized at $1 billion. Moody's also affirmed SPL's Ba3 on its $3.6
billion first lien bank term loan due 2019 and Sabine Pass LNG's
(SPLNG) B1 rating on its $2.1 billion in senior secured notes. The
rating outlooks for SPL and SPLNG are stable.
The $500 million incremental increase will effectively displace
SPL's bank commitment by an additional $430 million while funding
a portion of increased interest during construction and
transaction costs totaling approximately $97 million compared to
Moody's expectation in its January 22, 2013 press release. The
increased reliance on Train 1 cash flows is also expected to fund
the higher incremental transaction and interest costs during
construction.
Ratings Rationale
The rating affirmation incorporates Moody's view that SPL's main
credit drivers remain substantially unchanged. Moody's understands
that SPL's bond covenants will contain some minor improvements
though the rating agency views the overall bond covenants continue
to be weaker than the bank loan. Additionally, the net debt
increase totaling $176 million will reduce expected operating
period financial metrics though these metrics are still expected
to be in the 'Baa' rating category. Furthermore, SPL greater
reliance on Train 1 cash flow during the construction period
moderately increases construction period risk albeit not enough to
affect SPL's rating at this time.
The main credit factors supporting SPL's Ba3 senior secured rating
are its long term contract with investment grade off-takers,
likely 'Baa' metrics during operations, and an EPC contract with
Bechtel. Sizeable third party equity investment of $1.89 billion
and utilization of existing infrastructure are also considered
positive. Key credit risks include considerable construction
period risks, uncertainties on gas feedstock, and major debt
maturities from 2016 through 2021. Other key considerations
include uncertainties regarding the financing and construction of
Trains 3 & 4, the lack of up-front funding of the SPL debt service
reserve, and CQP's lack of ownership of the Creole Trail Pipeline
(CTPL).
The SPLNG's B1 rating reflects long term contracts with highly
rated third parties for approximately 50% of revenues, acceptable
operational performance since 2009, and some project finance
protections. Additional strengths include the October 2012
refinancing of SPLNG's November 2013 debt maturity resulting in a
net $130 million debt reduction and an affiliate contract with
SPL, which should provide greater cash flow certainty once SPL
achieves operations. The B1 rating also considers SPLNG's high
standalone leverage and likely continuation of low financial
metrics until SPL reaches commercial operations. Over the next
several years, Moody's expects SPLNG will achieve an interest
coverage ratio of around 1.4 to 1.5 times and FFO/Debt of around
3% to 4%.
SPL and SPLNG's stable rating outlooks reflect the expectation
that SPL's construction will be completed on time and on budget
and that SPL and SPLNG will meet their performance obligations
under their respective off-take contracts.
SPLNG and SPL's ratings are unlikely to be positively affected in
the near term given uncertainties on the construction and
financing plans for SPL Trains 3 & 4. Over the longer term,
positive trends that could lead to an upgrade include SPL's
successful construction completion, demonstrated good operational
performance at SPL and SPLNG and the two borrowers' ability to
address their upcoming debt maturities from 2016 to 2021.
SPLNG and SPL ratings could be downgraded if SPL incurs
significant construction cost overruns or delays, if SPLNG incurs
operating problems, or if Trains 3 & 4 add further material
financial and construction risk. SPLNG and SPL's ratings could
face negative rating action if SPL's fuel sourcing strategy
introduces significant imperfections, if equity contributions are
not made as expected or if any of SPL's governmental
authorizations are revoked or limited.
Sabine Pass Liquefaction LLC (SPL) is expected to build and
operate a nameplate 9 million ton per annum (mtpa) liquefied
natural gas (LNG) project located in Cameron Parish, Louisiana
next to the existing Sabine Pass LNG L.P.'s regasification plant
(SPLNG). SPL's output is contracted with BG Group and Gas Natural
SA under 20 year off-take contracts. SPLNG owns and operates a
liquefied natural gas receiving terminal with an aggregate
regasification capacity of four Bcf/d and five LNG storage tanks.
SPLNG has third party 20-year contracts for half of the capacity.
SPL expects to utilize SPLNG's existing infrastructure including
storage tanks and marine terminal under an affiliate contract.
Cheniere Energy Partners (CQP) owns SPL and SPLNG. CQP is owned by
private equity funds managed by Blackstone, Cheniere Energy, and
public investors.
The principal methodology used in this rating was Generic Project
Finance methodology published in December 2010.
SAGAMORE PARTNERS: Plan Declared Effective on Jan. 9
----------------------------------------------------
Sagamore Partners, Ltd., notified the U.S. Bankruptcy Court for
the Southern District of Florida that the Effective Date of the
Amended Plan of Reorganization, modified on Nov. 12, 2012, and on
Dec. 7, 2012, occurred on Jan. 9, 2013.
As reported in the Troubled Company Reporter on Jan. 29, 2013, the
Court entered an order confirming the Debtor's plan of
reorganization. The centerpiece of the confirmation order was the
adjudication of the objection of JPMCC, the lone objector to the
Plan.
In its confirmation order, the Court overruled the JPMCC objection
and ordered JPMCC to withdraw a foreclosure action, styled JPMCC
2006-LDP7 Miami Beach Lodging LLC v. Sagamore Partners, Ltd., et
al., Case No. 09-88077-CA-32, currently pending in the Circuit
Court for the 11th Judicial Circuit, Miami-Dade County Florida.
Under the parties' prepetition loan agreement, which was admitted
into evidence at the hearing on Nov. 15, 2012 and Dec. 7, 2012 to
consider confirmation of the Plan, the lender is entitled to its
attorneys' fees in connection with enforcing or preserving its
rights under the loan documents.
Under Section 57.105(7), Florida Statutes, "If a contract contains
a provision allowing attorney's fees to a party when he or she is
required to take any action to enforce the contract, the court may
also allow reasonable attorney's fees to the other party when that
party prevails in any action, whether as plaintiff or defendant,
with respect to the contract."
The Debtor points out that it is without question the "prevailing
party" in this case. The Court overruled the Objection in its
entirety, denied JPMCC's claim for default interest in excess of
$5.2 million and attorneys' fees in excess of $2.7 million,
rejected JPMCC's various alleged non-monetary defaults and
feasibility arguments, and confirmed the Debtor's Plan.
The Debtor incurred attorneys' fees and costs in the approximate
amount of $1.26 million in connection with this bankruptcy case,
which does not include certain post-confirmation fees.
The Chapter 11 effort was financed by the use of cash collateral.
The Bankruptcy Court on Dec. 21 entered a sixteenth interim order
authorizing the Debtor to continue using cash collateral until
Jan. 24, 2013. The interim orders gave the Debtor access to the
cash collateral of JPMCC.
About Sagamore Partners
Bay Harbor, Florida-based Sagamore Partners, Ltd., owns and
operates the oceanfront Sagamore Hotel, also known as The Art
Hotel due to its captivating art collection from recognized
artists and its contemporary design. The all-suite boutique hotel
is situated within Miami's Art Deco Historic District on South
Beach. Sagamore Partners is owned by Martin Taplin.
Sagamore Partners filed for Chapter 11 bankruptcy (Bankr. S.D.
Fla. Case No. 11-37867) on Oct. 6, 2011. Judge A. Jay Cristol
presides over the case. Joshua W. Dobin, Esq., and Peter D.
Russin, Esq., at Meland Russin & Budwick, P.A., in Miami, Fla.,
serve as the Debtor's counsel. The Debtor disclosed $71,099,556
in assets and $52,132,849 in liabilities as of the Chapter 11
filing. In its latest schedules, the Debtor disclosed $67,963,210
in assets and $52,060,862 in liabilities. The petition was signed
by Martin W. Taplin, president of Miami Beach Vacation Resorts,
Inc., manager of Sagamore GP, LLC, general partner.
In July 2012, Bankruptcy Judge A. Jay Cristol denied approval of
the disclosure statement explaining the Debtor's Plan of
Reorganization. Pursuant to the Plan, the Debtor proposes to
reinstate the maturity date of its loan with JPMCC 2006-LDP7 Miami
Beach Lodging, with interest from the Effective Date of the Plan
at the loan's non-default interest rate; and cure monetary
defaults under the Loan by paying the Secured Lender unpaid
interest which has accrued on the Loan at the Interest Rate, but
not interest which has accrued on the Loan at the Default Rate.
According to Judge Cristol, to cure the Loan, the Debtor must
provide for the payment of all amounts due the Secured Lender
under the Loan Documents, including default interest. Absent such
payment, the Debtor may not treat the Secured Lender's claim as
unimpaired under the Plan. Because, as presently structured, the
Plan does not provide for the payment of default interest to the
Secured Lender, the Plan is facially unconfirmable over the
objection of the Secured Lender and approval of the Disclosure
Statement is denied.
The U.S. Trustee has not appointed an official committee in the
case.
SCHAHIN OIL: Fitch Assigns 'BB-' Issuer Default Ratings
-------------------------------------------------------
Fitch Ratings expects to rate Schahin Oil and Gas Ltd.'s (Schahin
or Holdco) proposed USD685 million senior unsecured notes issuance
'BB-'. Fitch has also assigned foreign and local currency Issuer
Default ratings (IDRs) of 'BB-' to Schahin. The Rating Outlook is
Stable. The company expects to use the proceeds from the issuance
to refinance subordinated debt at some of its subsidiaries as well
as debt at the holding company level.
Schahin's ratings reflect the company's high consolidated leverage
and structural subordination to its operating subsidiaries'
project finance debt. Positively, consolidated leverage is
expected to decline over time as the project finance debt at the
operating companies amortizes. The OpCos assets have long-term
contracts in place that allow them to better match project debt
with the life of the assets, which results in low debt service
requirements and greater cash flow distributions to the holding
company. Upstream distributions from the four cash generating
assets are not expected to be disrupted, nevertheless they are
subject to various distribution tests.
Schahin's ratings also reflect the stable and predictable cash
flow generation of the company's OpCos' offshore drilling assets,
which are supported by long-term contracts with investment grade
rated Petroleo Brasileiro S.A. (Petrobras; IDR 'BBB'). The ratings
also incorporate the favorable demand prospects for oil and gas
services in Brazil driven by Petrobras's aggressive capital
expenditure program as well as new exploration and production
entrants to the market.
High Initial Leverage and Average Liquidity
The company's pro forma consolidated leverage is considered high
for the rating category and is expected to decrease over time as
the debt at the OpCos amortizes to levels more consistent with the
rating category. Fitch expects pro-forma leverage as measured by
total debt to EBITDA to range between 6.5x and 7.5x for 2013.
Fitch expects the company to lower its consolidated leverage ratio
to below 4.5x within the next three to five years, which is more
in line with the assigned ratings. Total debt on a pro forma basis
and considering the proposed issuance is expected to reach
approximately USD3.6 billion by year-end 2013, while EBITDA for
this year is expected to range between USD520 million and USD570
million. As of Sept. 30, 2012, debt at the OpCos level amounted to
USD3.1 billion, out of approximately USD3.9 billion of total
consolidated financial debt.
Schahin's liquidity is supported by a twelve months debt service
reserve account and dividend distributions from its subsidiaries.
As of Sept. 30, 2012, the company's unrestricted cash position was
low with only USD1.4 million of cash and cash equivalent while
consolidated short-term debt amounted to USD759 million
(consolidated restricted deposits amounted to approximately USD150
million). During 2013, the company's liquidity position is
expected to improve as a result of dividend distributions from the
OpCos. The company expects to use a portion of the proceeds from
the proposed debt issuance to refinance USD356 million of short-
term debt related to Vitoria subordinated debt.
Predictable Revenues and Strong Backlog
Schahin's consolidated revenues and cash flow from operations are
stable and predictable, reflective of its long-term contractual
structure with Petrobras. The company provides offshore oil and
gas drilling services through its different subsidiaries. The
average remaining contract life for its existing offshore drilling
assets is approximately eight years. The company currently
operates six offshore drilling units under long-term contracts
with Petrobras. The bulk of the HoldCo's expected cash flow will
come from dividends from its 100% owned OpCos as well as from cash
flow from operations from its leased asset, Victoria, and the
potential minority investments in three new FPSOs. Schahin has a
good operating track record in the drilling sector. During 2012,
the uptime for the four assets that will distribute dividends to
Holdco averaged 95.1%.
Schahin's current contract backlog, excluding contract renewal
options, of approximately USD6.8 billion bodes well for the
company's credit profile as it supports cash flow predictability.
Of the company's current backlog, USD5.4 billion relate to the
existing offshore drilling assets, where the company has majority
participation, all of which are contracted with Petrobras. The
balance of the backlog relates to three FPSOs for which the
company has acquired the option to purchase between 10% and 15%
equity participation upon construction completion.
Structural Subordination to Operating Companies' Debt
The potential retention of cash flows after debt service at the
OpCos level makes cash flow to the Holdco somewhat less stable and
predictable than the cash flow from operation of its subsidiaries.
Most of the project finance debt at the OpCos have cash sweep
provisions and minimum debt service coverage ratios (DSCR) (e.g.
1.2 or above) that must be met before cash flow distributions are
allowed to be made to the Holdco. Specific assets (S.S. Panatanal
and S.S. Amazonia) are not expected to distribute excess cash to
the holding company until all project finance debt and
subordinated debt is repaid.
Cash distributions to Schahin are sensitive to the operating
performance of the OpCos' (the rigs') uptime performance. For
example, in the case of the Cerrado and Sertao operating assets, a
decline in the uptime rate to 86% and 85% for three and six
months, respectively, will likely prevent these assets from
distributing cash to the Holdco. Under Fitch's base case
assumption of an average uptime rate of 95%, these two assets are
not expected to trap cash. Also, under Fitch's base case
assumptions, net cash flow distributions to Schahin from its
OpCos, after considering planned investments and holding company
operating expenses, is expected to range between approximately
USD40 million and USD280 million and to average approximately
USD125 million per year over the next five years. Total debt to
net dividend distributions at Holdco is expected to average
approximately 2.9x over the next five years. Net distributions to
Schahin are expected to increase starting 2017 as some project
finance debt is fully amortized and should increase if uptime
rates are higher than projected.
Strong Demand For Drilling Rigs in Brazil
Long-term demand prospects for oil and gas services in Brazil,
including demand for offshore drilling rigs and production
equipment, are strong. Driven by a government initiative to
increase the country's oil and gas production, Petrobras has
embarked on an aggressive capital investment program of up to
USD236 billion over the next four years. Further, the government
has implemented requirement that a high percentage of the work and
materials provided for these expenditures be from 'local' sources
in order to boost economic activity. The combination of higher
demand and the local content mandate for oil and gas related
services support long-term demand prospects for the company as
well as its ability to renew contracts at favorable rates.
Sensitivity/Rating Drivers
Factors that could lead to a negative rating action are: Failure
to lower leverage to 4.5x or below or an overly aggressive growth
strategy that could pressure credit metrics.
Key considerations for a positive rating action or outlook would
be a faster deleveraging process coupled with a reduction of the
holding company's structural subordination to its operating
assets.
SCHAHIN OIL: S&P Assigns 'BB+' Corporate Credit Rating
------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+'corporate
credit rating on Schahin Oil & Gas Ltd. (Schahin O&G). It also
assigned its 'BB+' rating on the company's proposed seven-year
note of up to $685 million. The rating will be subject to S&P's
review of final documentation. The outlook is stable.
Standard & Poor's Ratings Services' ratings on Schahin O&G reflect
its "satisfactory" business risk profile and "significant"
financial risk profile, as its criteria define these terms. This
assessment reflects the company's reliance on distributions from
its operating subsidiaries to service debt at the holding level,
its geographic and customer concentration in Brazil, as its
contracts are exclusively with Petroleo Brasileiro S.A. -
Petrobras (Petrobras; BBB/Stable/--) and the exposure to a highly
competitive and cyclical industry. The offsetting factors are its
strong contractual base, including the signed charter agreements
at fixed day rates, relatively long tenors that would provide a
predictable and stable stream of cash flow, no construction risk,
as all of its assets are already operating, and a very supportive
relationship with its main offtaker, Petrobras. In S&P's view the
company's liquidity is "adequate" and its management is "fair."
"We view Schahin O&G as a project developer and base our ratings
on its ability to meet financial obligations at the holding level
from dividend distributions from its operating subsidiaries," said
Standard & Poor's credit analyst Candela Macchi. The credit
rating reflects the total quality of the residual distributions
from the company's projects. We have made this analytical
judgment based on Schahin O&G's segregation of assets into special
purpose entities (SPEs) and its extensive use of nonrecourse
project financing in most of these. A key element of a project
developer's evaluation is the assignment of a quality of cash flow
(QCF) score to each dividend stream from its asset portfolio.
SCHOOL SPECIALTY: List of 40 Largest Unsecured Creditors
--------------------------------------------------------
School Specialty, Inc., and its debtor-affiliates filed with the
Bankruptcy Court a list of their 40 largest unsecured creditors,
disclosing:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bank of New York Mellon Trust Unsecured debt $157,500,000
Company N.A.
Attn: Corporate Trust
Administrator As Indenture Trustee
2 N. LaSalle Street, Suite 1020
Chicago, IL 60602
Tel: 312-827-8546
A T Clayton & Co., Inc. Supplier $4,303,534
Attn: Mark J. Vallely - CEO
300 Atlantic Street, 7th Fl
Stamford, CT 06901-3513
Tel: 203-658-1200
Fax: 203-658-1201
E-mail: mark.vallely@atclayton.com
Crayola LLC Supplier $4,262,086
Attn: Mike Perry - CEO
1100 Church Ln
Easton, PA 18044
Tel: 610-253-6271
Fax: 610-250-5768
Quad/Graphics Inc. Supplier $3,106,668
Attn: Director or Officer
N61 W23044 Harrys Way
Sussex, WI 53089
Tel: 888-782-3226
Fax: 414-566-4650
Pacon Corporation Supplier $1,293,512
Attn: Jim Schmitz - CEO
2525 N. Casaloma Drive
Appleton, WI 54913-8865
Tel: 800-333-2545
Fax: 800-332-5099
Dixon Ticonderoga Company Supplier $1,234,553
Attn: Tim Gomez - CEO
195 International Parkway
Heathrow, FL 32746
Tel: 800-824-9430
Fax: 800-232-9396
Sanford L.P. Supplier $992,835
Attn: Howard C. Heckes - CEO
2707 Butterfield Road #130
Oak Brook, IL 60523-1278
Tel: 630-481-2000
Fax: 630-481-2099
S.P. Richards Company Supplier $988,020
Attn: Wayne Beachman - CEO
6300 Highlands Pkway
Smyrna, GA 30082
Tel: 888-436-6881
Fax: 770-433-3590
Morning Sound Industries Co. Ltd Foreign Supplier $965,416
Attn: Director or Officer
423 Pao Tai Rd
Chien Chen Dist
Kaohsiung, 806
Taiwan
Tel: 886-7-7615196
Fax: 886-7-7717661
MooreCO, Inc. Supplier $774,688
Attn: Greg Moore - CEO
2885 Lorraine Avenue
Temple, TX 76501
Tel: 800-749-2258
Fax: 800-697-6258
3M Supplier $720,855
Attn: Inge G THulin - CEO
3M Corporate Headquarters
St. Paul, MN 55144-1000
Tel: 888-364-3577
Fax: 651-575-1187
American Art Clay Co., Inc. Supplier $713,162
Attn: Bill Berry - President
6060 Guion Road
Indianapolis, IN 46254
Tel: 317-244-6871
Fax: 317-248-9300
Fleetwood Group Inc. Supplier $642,367
Attn: Doug Ruch - CEO
11832 James Street
Holland, MI 49424
Tel: 616-396-1142
Fax: 616-820-8301
Copernicus Educational Products Supplier $636,996
Attn: Director or Officer
4210 Plain Center Ave NE
Canton, OH 44714
Tel: 330-649-9390
Fax: 330-6-9392
The Peabody Orlando Supplier $620,652
Attn: Director or Officer
9801 International Drive
Orlando, FL 3281
Tel: 407-352-4000
Fax: 407-352-4131
Elmers Products Inc. Supplier $579,790
Attn: Director or Officer -
1 Easton Oval
Columbus, OH 43219
Tel: 614-985-2600
Fax: 614-985-2605
UPS Freight Carrier $516,426
Attn: D. Scott Davis - CEO
55 Glenlake Parkway NE
Atlanta, GA 30328
Tel: 404-828-6000
Fax: 404-828-7666
Sargent Art Supplier $474,867
Attn: Tom Hudak - CEO
100 East Diamond Avenue
Hazleton, PA 18201
Tel: 800-424-3596
Fax: 570-459-1752
Learning Resources Inc. Supplier $389,408
Attn: Etienne Veber -
President & CEO
380 N Fairway Drive
Vernon Hills, IL 60061
Tel: 800-333-8281
Fax: 888-892-8731
Sandusky Lee Corp. Supplier $385,565
Attn: Director or Officer
75 Park Ave
Littlestown, PA 17340
Tel: 800-233-7076
Fax: 717-359-4414
Esselte Pendaflex Corp Supplier $384,522
Attn: Gary G. Brook -
President & CEO
225 Broadhollow Road, Ste 300
Melville, NY 11747
Roselle Paper Inc. Supplier $382,496
Attn: Samuel Lefkovits - President
615 E 1st Avenue
Roselle, NJ 07203-1562
Tel: 908-245-6758
Fax: 908-245-9434
Logicalis Inc. Information $380,382
Attn: Terry Flood - President Technology
34505 W Twelve Mile Rd
Farmington Hills, MI 48331-3259
Tel: 248-957-5600
Fax: 248-957-5601
CH Robinson Freight Carrier $372,896
Attn: John P. Wichoff -
President & CEO
14701 Charlson Road
Eden Prairie, MN 55347
Tel: 855-229-6128
Fax: 952-683-2800
National Public Seating Corp Supplier $357,372
Attn: Barry Stauber - President
149 Entin Road
Clifton, NJ 07014
Tel: 800-261-4112
Fax: 973-594-1500
Pan Pacific Sourcing LLC Supplier $335,935
Attn: Brian McKay - Officer
481 Great Plain Avenue
Needham, MA 02492-3728
Tel: 781-444-2180
Fax: 781-444-3668
E-mail: brianm@panpacificsourcing.com
KC Bin and Equipment Supplier $328,380
Attn: Director or Officer
Vaughn Storage Systems
6704 W 19th St
Lubbock, TX 79407
Tel: 806-792-3562
Fax: 806-792-0281
Interior Concepts Corp Supplier $311,953
Attn: Director or Officer -
18525 Trimble Court
Spring Lake, MI 49456
Tel: 800-678-5550
Fax: 616-842-7122
Daklin Electronics Co. Ltd. Foreign Supplier $304,059
Attn: Director or Officer
Unit D, 1/F, Valiant
Industrial Centre
2-12 Au Pui Wan Street
Fotan, Shatin
Hong Kong
Tel: 852-2697-7925
Fax: 852-2694-9391
WB Manufacturing Supplier $295,593
Bretford Mfg Supplier $258,422
Artco-Bell Corp Supplier $257,136
Carpets For Kids Inc. Supplier $255,135
Acco Brands USA LLC Supplier $253,101
Balls R Us Co. Ltd Supplier $241,329
Jack Richeson and Co Inc. Supplier $230,693
American Paper Converters Inc. Supplier $227,419
Lyve Media LLC Supplier $220,724
Texas Instruments Inc. Supplier $219,899
Melissa and Doug LLC Supplier $209,683
SCHOOL SPECIALTY: U.S. Trustee, Noteholders Balk at Roll-Up
-----------------------------------------------------------
School Specialty, Inc., and certain of its wholly-owned
subsidiaries filed motions seeking Bankruptcy Court approval of
the following documents:
(A) a Senior Secured Super Priority Debtor-in-Possession Credit
Agreement by and among the Company, certain of its
subsidiaries, Bayside Finance, LLC, and the lenders party to
the Bayside Credit Agreement;
(B) a Debtor-in-Possession Credit Agreement by and among Wells
Fargo Capital Finance, LLC, and GE Capital Markets, Inc.,
General Electric Capital Corporation (as Syndication Agent),
and the lenders that are party to the Asset-Based Credit
Agreement and the Company and certain of its subsidiaries;
and
(C) an Asset Purchase Agreement, dated as of Jan. 28, 2013, by
and among the Company, certain of its subsidiaries and
Bayside School Specialty, LLC, and affiliate of Bayside.
BankruptcyData reported that the U.S. Trustee assigned to the
School Specialty case filed with the U.S. Bankruptcy Court an
objection to the Debtors' motion to obtain DIP financing.
The U.S. Trustee said it does not object to relief that provides
for DIP funding to the extent actually necessary to stabilize the
Debtors' business pending a final hearing and the ability of a
Committee to respond to the Motion. However, it does object to
the Interim Order as proposed, especially where it attempts to
provide the lenders with a vehicle to convert pre-petition secured
debt to post-petition secured debt with additional 'superpriority'
administrative expense status (i.e., a 'Roll-up').
The Steering Committee of Convertible Noteholders also filed an
objection to the motion, stating, "The Steering Committee objects
to the proposed debtor-in-possession financing facility from
Bayside Finance LLC because the Debtors cannot satisfy their
burden of proving the terms of the Bayside DIP Facility are fair
and reasonable and that no better financing alternatives are
available. Because alternative, superior financing is available
on non-priming basis from the Steering Committee, the Bayside DIP
Facility fails to satisfy the requirements of section 364(d)(1)(A)
and must be rejected," the report said, citing court documents.
Jamie Santo of BankruptcyLaw360 reports that, Noteholders claim
that the DIP package's roll-up provision, excessive interest and
unreasonable milestones are designed for the sole benefit of the
private equity firm.
According to the Noteholders, the terms attached to DIP financing
would force the Wisconsin-based provider of school supplies into
an unnecessarily expedited sales process that would end with
Bayside rolling up $95 million in prepetition debt ahead of other
creditors and acquiring the company at a fire-sale price,
according to an objection filed in court.
Asset-Based Credit Agreement
The Asset-Based Credit Agreement provides a revolving senior
secured asset-based credit facility in an aggregate principal
amount of $175 million. The amount of revolving loans made during
any one week will be based on certain conditions, including the
budget supplied by the Company. Outstanding amounts under the ABL
Facility will bear interest at a rate per annum equal to either:
(1) a base rate (equal to the greatest of (a) the prime lending
rate, (b) the federal funds rate plus 0.50%, and (c) the 30-day
LIBOR rate plus 1.00% per annum) plus 2.75%, or (2) a LIBOR rate
plus 3.75%. The default interest rate will be three percentage
points above the otherwise applicable rate. Interest on loans
under the ABL Facility bearing interest based upon the Base Rate
will be due monthly in arrears, and interest on loans bearing
interest based upon the LIBOR Rate will be due on the last day of
each relevant interest period.
The ABL Facility will mature on June 30, 2013. To the extent
authorized by the financing orders, the Debtors are required to
repay 100% of the existing secured obligations under the Credit
Agreement dated as of May 22, 2012, by and among the Company,
Wells Fargo Capital Finance, LLC, and GE Capital, and the lenders
that are party to the Existing ABL Credit Agreement.
Asset Purchase Agreement
The Asset Purchase Agreement provides for the purchase of
substantially all of the assets and the assumption of certain of
the liabilities of the Company by Bayside School Specialty, LLC,
an affiliate of Bayside Finance, LLC, pursuant to sections 105,
363 and 365 of the Bankruptcy Code. The purchase price under the
Asset Purchase Agreement is $95 million, plus an amount in cash
equal to the outstanding obligations under the Asset-Based Credit
Agreement and the assumption of certain assumed liabilities.
A copy of the Form 8-K as filed with the SEC is available at:
http://is.gd/AOUKlU
About School Specialty
School Specialty is a leading education company that provides
innovative and proprietary products, programs and services to help
educators engage and inspire students of all ages and abilities to
learn. The company designs, develops, and provides preK-12
educators with the latest and very best curriculum, supplemental
learning resources, and school supplies. Working in collaboration
with educators, School Specialty reaches beyond the scope of
textbooks to help teachers, guidance counselors and school
administrators ensure that every student reaches his or her full
potential.
School Specialty's balance sheet at Oct. 27, 2012, showed $494.52
million in total assets, $394.58 million in total liabilities and
$99.93 million in total shareholders' equity.
School Specialty and its subsidiaries entered into two forbearance
agreements with their lenders following events of default. Under
both Forbearance Agreements, the lenders agreed to forbear from
exercising their rights and remedies under the credit agreements
until Feb. 1, 2013.
SOUTHERN AIR: Wants Until May 28 to Propose Chapter 11 Plan
-----------------------------------------------------------
Southern Air Holdings, Inc., et al., ask the U.S. Bankruptcy Court
for the District of Delaware to extend their exclusive periods to
propose a chapter 11 plan until May 28, 2013, and to solicit
acceptances of that plan until July 25, respectively.
Prior to the Petition Date, the Debtors engaged in extensive arms'
length and good faith negotiations with the consenting lenders and
the Oak Hill Entities regarding a comprehensive financial
restructuring that would, among other things, bridge the Debtors'
short-term lack of liquidity. The result of these negotiations
was the Plan Support Agreement, dated September 27, 2012.
Although the Debtors have made significant progress in these
chapter 11 cases, recent events forced the Debtors to readdress
the economics of the Amended Plan and further negotiate related
matters with the consenting lenders, the Oak Hill Entities and the
Creditors' Committee. Specifically, following approval of the
Prior Disclosure Statement and
A hearing on Feb. 25, at 10 a.m., has been set. Objections, if
any, are due Feb. 7, at 4 p.m.
About Southern Air
Based in Norwalk, Connecticut, military cargo airline Southern
Air Inc. -- http://www.southernair.com/-- its parent Southern Air
Holdings Inc. and their affiliated entities filed for Chapter 11
bankruptcy protection (Bankr. D. Del. Case Nos. 12-12690 to
12-12707) in Wilmington on Sept. 28, 2012, blaming the decline in
business from the U.S. Department of Defense, which reduced its
troop count in Afghanistan and hired Southern Air less frequently.
Bankruptcy Judge Christopher S. Sontchi presides over the case.
Brian S. Rosen, Esq., Candace Arthur, Esq., and Gabriel Morgan,
Esq., at Weil, Gotshal & Manges LLP; and M. Blake Cleary, Esq.,
and Maris J. Kandestin, Esq., at Young, Conaway, Stargatt &
Taylor, serve as the Debtor's counsel. Zolfo Cooper LLC serves as
the Debtors' bankruptcy consultant and special financial advisor.
Kurtzman Carson Consultants, LLC, serves as claims and notice
agent.
CF6-50, LLC, debtor-affiliate, disclosed $338,925,282 in assets
and $288,000,000 in liabilities as of the Chapter 11 filing. The
petition was signed by Jon E. Olin, senior vice president.
Canadian Imperial Bank of Commerce, New York Agency, the DIP agent
and prepetition agent, is represented by Matthew S. Barr, Esq.,
and Samuel Khalil, Esq., at Milbank Tweed Hadley & McCloy LLP; and
Mark D. Collins, Esq., and Katherine L. Good, Esq., at Richards
Layton & Finger PA.
Stephen J. Shimshak, Esq., and Kelley A. Cornish, Esq., at Paul
Weiss Rifkind Wharton & Garrison LLP; and Mark E. Felger, Esq., at
Cozen O'Connor, represent Oak Hill Capital Partners II, LP, OH
Aircraft Acquisition LLC, and Oak Hill Cargo 360 LLC.
The Debtors' Plan provides that lenders agreed to accept ownership
of the company as payment for their $288 million loan.
On Nov. 21, 2012, Roberta DeAngelis, U.S. Trustee for Region 3,
appointed the statutory committee of unsecured creditors.
Lowenstein Sandler PC and Pachulski, Stang, Ziehl & Jones LLP
serves as its co-counsels, and Mesirow Financial Consulting LLC
serves as its financial advisor.
SOUTHERN AIR: Court OKs PricewaterhouseCoopers as Tax Consultant
----------------------------------------------------------------
Southern Air Holdings, Inc., et al., sought and obtained approval
from the U.S. Bankruptcy Court for the District of Delaware to
employ PricewaterhouseCoopers LLP as tax consultant, nunc pro tunc
to the Petition Date.
PwC will, among other things:
a) analyze the material tax consequences of the proposed
reorganization;
b) review the Debtors' intercompany debt position and consider
the tax implications of maintaining or eliminating the debt;
c) assist the Debtors in determining the tax basis in their
assets, including the stock of relevant subsidiaries; and
d) prepare a spreadsheet that illustrates the relevant tax
consequences of proposed alternative restructuring plans,
including the effects of available tax elections.
The hourly rates of PwC's personnel are:
Partner $695
Director $565
Manager $460
Senior Associate $395
Associate $265
The Debtors owe PwC $17,500 for services rendered prepetition.
PwC has informed the Debtors that it will waive any rights to the
prepetition amount upon entry of an order approving the
application.
To the best of the Debtors' knowledge, PwC is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About Southern Air
Based in Norwalk, Connecticut, military cargo airline Southern
Air Inc. -- http://www.southernair.com/-- its parent Southern Air
Holdings Inc. and their affiliated entities filed for Chapter 11
bankruptcy protection (Bankr. D. Del. Case Nos. 12-12690 to
12-12707) in Wilmington on Sept. 28, 2012, blaming the decline in
business from the U.S. Department of Defense, which reduced its
troop count in Afghanistan and hired Southern Air less frequently.
Bankruptcy Judge Christopher S. Sontchi presides over the case.
Brian S. Rosen, Esq., Candace Arthur, Esq., and Gabriel Morgan,
Esq., at Weil, Gotshal & Manges LLP; and M. Blake Cleary, Esq.,
and Maris J. Kandestin, Esq., at Young, Conaway, Stargatt &
Taylor, serve as the Debtor's counsel. Zolfo Cooper LLC serves as
the Debtors' bankruptcy consultant and special financial advisor.
Kurtzman Carson Consultants, LLC, serves as claims and notice
agent.
CF6-50, LLC, debtor-affiliate, disclosed $338,925,282 in assets
and $288,000,000 in liabilities as of the Chapter 11 filing. The
petition was signed by Jon E. Olin, senior vice president.
Canadian Imperial Bank of Commerce, New York Agency, the DIP agent
and prepetition agent, is represented by Matthew S. Barr, Esq.,
and Samuel Khalil, Esq., at Milbank Tweed Hadley & McCloy LLP; and
Mark D. Collins, Esq., and Katherine L. Good, Esq., at Richards
Layton & Finger PA.
Stephen J. Shimshak, Esq., and Kelley A. Cornish, Esq., at Paul
Weiss Rifkind Wharton & Garrison LLP; and Mark E. Felger, Esq., at
Cozen O'Connor, represent Oak Hill Capital Partners II, LP, OH
Aircraft Acquisition LLC, and Oak Hill Cargo 360 LLC.
The Debtors' Plan provides that lenders agreed to accept ownership
of the company as payment for their $288 million loan.
On Nov. 21, 2012, Roberta DeAngelis, U.S. Trustee for Region 3,
appointed the statutory committee of unsecured creditors.
Lowenstein Sandler PC and Pachulski, Stang, Ziehl & Jones LLP
serves as its co-counsels, and Mesirow Financial Consulting LLC
serves as its financial advisor.
SOUTHERN AIR: Lowenstein Sandler Approved as Committee's Counsel
----------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of Southern Air Holdings, Inc., et al., sought and obtained
approval from the U.S. Bankruptcy Court for the District of
Delaware to retain Lowenstein Sandler PC as counsel.
The hourly rates of Lowenstein Sandler's personnel are:
Members (principals of the firm) $475 - $945
Counsel (generally 6 or more years
experience) $385 - $685
Associates (generally less than
6 years experience) $250 - $495
Paralegals and Assistants $155 - $260
To the best of the Committee's knowledge, Lowenstein Sandler is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About Southern Air
Based in Norwalk, Connecticut, military cargo airline Southern
Air Inc. -- http://www.southernair.com/-- its parent Southern Air
Holdings Inc. and their affiliated entities filed for Chapter 11
bankruptcy protection (Bankr. D. Del. Case Nos. 12-12690 to
12-12707) in Wilmington on Sept. 28, 2012, blaming the decline in
business from the U.S. Department of Defense, which reduced its
troop count in Afghanistan and hired Southern Air less frequently.
Bankruptcy Judge Christopher S. Sontchi presides over the case.
Brian S. Rosen, Esq., Candace Arthur, Esq., and Gabriel Morgan,
Esq., at Weil, Gotshal & Manges LLP; and M. Blake Cleary, Esq.,
and Maris J. Kandestin, Esq., at Young, Conaway, Stargatt &
Taylor, serve as the Debtor's counsel. Zolfo Cooper LLC serves as
the Debtors' bankruptcy consultant and special financial advisor.
Kurtzman Carson Consultants, LLC, serves as claims and notice
agent.
CF6-50, LLC, debtor-affiliate, disclosed $338,925,282 in assets
and $288,000,000 in liabilities as of the Chapter 11 filing. The
petition was signed by Jon E. Olin, senior vice president.
Canadian Imperial Bank of Commerce, New York Agency, the DIP agent
and prepetition agent, is represented by Matthew S. Barr, Esq.,
and Samuel Khalil, Esq., at Milbank Tweed Hadley & McCloy LLP; and
Mark D. Collins, Esq., and Katherine L. Good, Esq., at Richards
Layton & Finger PA.
Stephen J. Shimshak, Esq., and Kelley A. Cornish, Esq., at Paul
Weiss Rifkind Wharton & Garrison LLP; and Mark E. Felger, Esq., at
Cozen O'Connor, represent Oak Hill Capital Partners II, LP, OH
Aircraft Acquisition LLC, and Oak Hill Cargo 360 LLC.
The Debtors' Plan provides that lenders agreed to accept ownership
of the company as payment for their $288 million loan.
On Nov. 21, 2012, Roberta DeAngelis, U.S. Trustee for Region 3,
appointed the statutory committee of unsecured creditors.
Lowenstein Sandler PC and Pachulski, Stang, Ziehl & Jones LLP
serves as its co-counsels, and Mesirow Financial Consulting LLC
serves as its financial advisor.
SOUTHERN AIR: Court OKs Pachulski as Committee's Co-Counsel
-----------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of Southern Air Holdings, Inc., et al., sought and obtained
approval from the U.S. Bankruptcy Court for the District of
Delaware to retain Pachulski Stang Ziehl & Jones LLP as its co-
counsel.
Bradford J. Sandler, a partner at PSZJ, tells the Court that the
hourly rates of the firm's personnel are:
Partners $525 - $955
Of Counsel $495 - $745
Associates $345 - $495
Paralegals $210 - $275
Laura Davis Jones $955
Bradford J. Sandler $695
James E. O'Neill $675
Monica A. Molitor $275
To the best of the Committee's knowledge, PSZJ is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About Southern Air
Based in Norwalk, Connecticut, military cargo airline Southern
Air Inc. -- http://www.southernair.com/-- its parent Southern Air
Holdings Inc. and their affiliated entities filed for Chapter 11
bankruptcy protection (Bankr. D. Del. Case Nos. 12-12690 to
12-12707) in Wilmington on Sept. 28, 2012, blaming the decline in
business from the U.S. Department of Defense, which reduced its
troop count in Afghanistan and hired Southern Air less frequently.
Bankruptcy Judge Christopher S. Sontchi presides over the case.
Brian S. Rosen, Esq., Candace Arthur, Esq., and Gabriel Morgan,
Esq., at Weil, Gotshal & Manges LLP; and M. Blake Cleary, Esq.,
and Maris J. Kandestin, Esq., at Young, Conaway, Stargatt &
Taylor, serve as the Debtor's counsel. Zolfo Cooper LLC serves as
the Debtors' bankruptcy consultant and special financial advisor.
Kurtzman Carson Consultants, LLC, serves as claims and notice
agent.
CF6-50, LLC, debtor-affiliate, disclosed $338,925,282 in assets
and $288,000,000 in liabilities as of the Chapter 11 filing. The
petition was signed by Jon E. Olin, senior vice president.
Canadian Imperial Bank of Commerce, New York Agency, the DIP agent
and prepetition agent, is represented by Matthew S. Barr, Esq.,
and Samuel Khalil, Esq., at Milbank Tweed Hadley & McCloy LLP; and
Mark D. Collins, Esq., and Katherine L. Good, Esq., at Richards
Layton & Finger PA.
Stephen J. Shimshak, Esq., and Kelley A. Cornish, Esq., at Paul
Weiss Rifkind Wharton & Garrison LLP; and Mark E. Felger, Esq., at
Cozen O'Connor, represent Oak Hill Capital Partners II, LP, OH
Aircraft Acquisition LLC, and Oak Hill Cargo 360 LLC.
The Debtors' Plan provides that lenders agreed to accept ownership
of the company as payment for their $288 million loan.
On Nov. 21, 2012, Roberta DeAngelis, U.S. Trustee for Region 3,
appointed the statutory committee of unsecured creditors.
Lowenstein Sandler PC and Pachulski, Stang, Ziehl & Jones LLP
serves as its co-counsels, and Mesirow Financial Consulting LLC
serves as its financial advisor.
SUPERVALU INC: S&P Puts 'B' CCR on CreditWatch Positive
-------------------------------------------------------
Standard & Poor's Ratings Services said that the 'B' corporate
credit rating, and all other ratings, on SUPERVALU Inc. remain on
CreditWatch with positive implications. The ratings were placed
on CreditWatch on Jan. 14, 2013.
S&P expects to assign a 'B+' issue rating and '3' recovery rating
to the proposed $1.5 billion senior secured term loan due 2019,
indicating S&P's expectations for meaningful recovery (50% to 70%)
in the event of a payment default.
Upon the completion of the asset sale transaction, S&P expects to
raise its corporate credit rating on SUPERVALU to 'B+' and assign
a stable outlook.
"This CreditWatch update follows the announcement that SUPERVALU
is seeking to refinance the bulk of its debt as part of the asset
sale transaction, including the issuance of a $1.5 billion senior
secured term loan due 2019," said Standard & Poor's credit analyst
Ana Lai. The company will use proceeds from the term loan to
refinance its existing $850 million term loan due 2019 and its
$490 million 7.5% unsecured notes due 2014.
S&P placed the ratings on CreditWatch with positive implications
on Jan. 14, 2013, after SUPERVALU announced that it had reached a
definitive agreement to sell a significant portion of its food
retailing assets (877 stores under five banners: Albertson's,
Acme, Jewel-Osco, Shaw's, and Star Market stores) to AB
Acquisition LLC, an investor consortium led by an affiliate of a
Cerburus Capital Management L.P. in a transaction valued at
$3.3 billion.
In addition, Symphony Investors LLC (a newly formed entity owned
by a Cerburus-led investor consortium), will conduct a tender
offer for up to 30% of SUPERVALU's outstanding common stock.
Symphony will effectively become SUPERVALU's largest shareholder
and has the ability to name three members to its new board of
directors.
This transaction is expected to close by March 31, 2013, and does
not require a shareholder vote. In addition, this transaction
does not trigger a change in control on the SUPERVALU,
Albertson's, or American Store bonds.
The ratings on the existing Albertson's and American Stores issue-
level debt were not placed on CreditWatch. S&P could reassess
these ratings when more details about the acquiring entity become
available.
Pro forma for the asset sale transaction, SUPERVALU will generate
about 47% of its revenue from its Independent Business (food
wholesale) division, 25% from Save-A-Lot, and 28% from the 5
regional food retailing banners: Cub, Farm Fresh, Shoppers, Shop
n' Save, and Hornbacher's.
Following the completion of the asset sale, S&P expects
SUPERVALU's business risk profile to remain "weak" based on the
intensely competitive nature of the food wholesaling and retailing
businesses, and a history of underperformance. These factors are
partially mitigated by a more manageable mix of remaining
businesses and the greater potential to stabilize sales and
improve profitability. S&P believes the food wholesaling business
is relatively more stable; the regional banners are better
positioned, while Save-A-Lot, a value banner, has growth
potential. Still, the remaining food retailing banners and Save-
A-Lot have experienced negative identical sales and SUPERVALU
needs to make significant, though more modest, price investment
and improve its merchandising to narrow negative ID sales in
fiscal 2014.
Although S&P expects modest debt leverage reduction, SUPERVALU's
financial risk profile will remain "aggressive". The transaction
will not only lessen SUPERVALU's balance sheet debt, but also
could substantially lower its operating lease commitments and
multiemployer pension plan (MEPP) liabilities. The transaction
removes $3.2 billion of funded debt and about two-thirds of its
operating leases and MEPP liabilities related to the Albertson's
and American Stores subsidiaries. If the asset sales are
completed as proposed, this is expected to result in a modest
decline in debt leverage for SUPERVALU, with pro forma total debt
to EBITDA reaching mid-4.5x in fiscal 2013 (or 4.8x including MEPP
liabilities) compared with our expectations of 5.3x in fiscal
2013.
"We expect SUPERVALU to have "adequate" liquidity supported by the
new $900 million asset-based revolving credit facility and cash
flow from operations. The expected stable outlook reflects our
view that a more focused SUPERVALU has the potential to stabilize
its performance and achieve modest sales growth and improve its
profitability following the asset sale of the underperforming food
retailing assets. We believe SUPERVALU will maintain debt
leverage in the mid-4x area from slow improvement in sales and
modest debt reduction," S&P added.
S&P expects to resolve the Credit Watch listing after the
completion of SUPERVALU's asset sale transaction. If the
transaction is completed as proposed, S&P expects to raise
SUPERVALU's corporate credit rating to 'B+' and assign a stable
outlook based on the potential to stabilize sales and improve
profitability while achieving modest debt leverage reduction.
SWIFT SERVICES: S&P Retains 'B+' Rating on Second-Lien Notes
------------------------------------------------------------
Standard & Poor's Ratings Services revised its recovery rating on
the senior secured second-lien notes of Swift Services Holdings
Inc. to '3' from '4' to reflect S&P's greater recovery
expectations in a simulated payment default. The '3' recovery
rating indicates that it now expect noteholders would receive
meaningful (50%-70%) recovery. The issue rating is unchanged at
'B+'. Swift Services Holdings Inc. is a subsidiary of Phoenix,
Ariz.-based trucking company Swift Transportation Co.
S&P revised its second-lien recovery expectations following the
actual and projected reduction of first-lien claims relating to
Swift Transportation Co. LLC's first-lien term loan.
"Our simulated default scenario involves the loss of a major
customer (or two) in 2015 amid higher fuel prices, rising interest
rates, and lower economic activity. This would result in lower
revenue in 2014 and 2015, and rising costs would strain margins,
leading to bankruptcy in 2015. We believe that lenders would
achieve greatest recovery value through reorganization of the
company rather than liquidation," S&P said.
RATINGS LIST
Swift Transportation Co.
Corporate Credit Rating B+/Stable/--
Rating Remains Unchanged; Recovery Rating Revised
To From
Swift Services Holdings Inc.
Senior secured second-lien notes B+ B+
Recovery Rating 3 4
TALOS ENERGY: S&P Assigns 'B-' CCR, Rates $300MM Notes 'CCC+'
-------------------------------------------------------------
Standard & Poor's Ratings Services said it assigned its 'B-'
corporate credit rating to Houston-based Talos Energy LLC. The
outlook is stable.
S&P also assigned its issue-level and recovery ratings to
subsidiaries Talos Production LLC and Talos Production Finance
Inc.'s planned $300 million senior unsecured notes due 2018. The
issue rating is'CCC+' (one notch lower than the corporate credit
rating). The recovery rating is '5', indicating S&P's expectation
of modest (10% to 30%) recovery in the event of a payment default.
Talos is using proceeds from the proposed offering to acquire
exploration and production (E&P) assets in the Gulf of Mexico from
Helix Energy Solutions Group Inc. (Helix), which it is purchasing
for approximately $620 million. Talos is owned by Apollo Global
Management LLC and Riverstone Holdings.
"The ratings on Talos are based on our view of Talos' 'vulnerable'
business risk and 'highly levered' financial risk," said Standard
& Poor's credit analyst Marc D. Bromberg. "The ratings also
reflect the company's very small proven reserve and production
base, its poor reserve replacement measures, geographic
concentration in the mature Gulf of Mexico, very short reserve
life, private equity ownership, and participation in the cyclical
and capital intensive exploration and production industry." The
company's current high percentage of oil production (79% of its
total) and its adequate liquidity profile also influence our view.
"The outlook is stable because we consider an upgrade or downgrade
unlikely over the next 12 months. However, we could lower the
rating if liquidity inclusive of FFO declines to below
$100 million, a level that we think is necessary for Talos to
support its capital spending program and other cash obligations
over the next year. We could foresee this scenario if Talos makes
a debt financed acquisition. We could also lower the rating if
the company's development spending program fails to add to
production and reserves in line with our current expectations,"
S&P added.
A positive outlook will depend upon management's ability to
demonstrate that it can grow reserves in a manner that does not
add meaningfully to current leverage.
TELETOUCH COMMUNICATIONS: Stratford Put Option Extended to March
----------------------------------------------------------------
TLL Partners, L.L.C., Stratford Capital Partners, L.P., and Retail
& Restaurant Growth Capital, L.P., on Aug. 18, 2011, entered into
a Put and Call and Transfer Restriction Agreement whereby, among
other things, TLL Partners granted Stratford and RRGC the
Stratford/RRGC Put Option during the Stratford/RRGC Put Option
Period. Also as previously disclosed, on Dec. 7, 2012, TLL
Partners, Stratford and RRGC entered into the Amendment No. 1 to
Put and Call and Transfer Restriction Agreement whereby the
parties amended the Put Agreement in order to extend the
Stratford/RRGC Put Option Period to 11:59 p.m. Dallas, Texas time
on Jan. 18, 2013.
On Jan. 16, 2013, TLL Partners, Stratford and RRGC entered into
the Amendment No. 2 to Put and Call and Transfer Restriction
Agreement whereby the parties amended the Put Agreement in order
to extend the Stratford/RRGC Put Option Period to 11:59 p.m.
Dallas, Texas time on March 1, 2013.
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Stratford Capital Partners, L.P., and its
affiliates disclosed that, as of Jan. 16, 2013, they beneficially
own 17,610,000 shares of common stock of Teletouch Communications,
Inc., representing 36.1% of the shares outstanding.
A copy of the filing is available for free at:
http://is.gd/JsQ2Oz
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.
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.
The Company's balance sheet at Nov. 30, 2012, showed $11.35
million in total assets, $18.11 million in total liabilities and a
$6.75 million total shareholders' deficit.
TERVITA CORP: Moody's Assigns 'B2' Ratings to Term Loan & Notes
---------------------------------------------------------------
Moody's Investors Service assigned B2 ratings to Tervita
Corporation's proposed US$500 million senior secured term loan
(due 2018), and $1.1 billion (USD equivalent) of first lien notes
(due 2018). Moody's also assigned a Ba3 rating to Tervita's
proposed $300 million first-out senior secured revolver (due
2018). Tervita's B3 corporate family (CFR), B3-PD probability of
default, Caa2 senior unsecured, Caa2 senior subordinate and SGL-3
speculative grade liquidity ratings were affirmed. Tervita's
rating outlook remains negative.
Proceeds from the rated debt issues will be used to refinance
Tervita's existing revolver and term loans (due 2014), for which
the associated B1 ratings are also affirmed but will be withdrawn
once the proposed transactions close. The ratings anticipate that
Tervita will concurrently extend the maturity of its senior
subordinated notes to at least 2018 (from 2015 currently).
Ratings Rationale
"The refinancing will improve Tervita's debt maturity profile but
is leverage neutral and does not impact its liquidity over the
next 12 months. Consequently, there is no change to the company's
B3 CFR, SGL-3 liquidity rating or negative outlook", said Darren
Kirk, Vice President and Senior Credit Officer with Moody's.
Tervita's B3 CFR primarily reflects the company's very high
leverage (7.5x adjusted Debt/ EBITDA) which Moody's expects will
increase towards 8x through 2013 as stable industry demand
inhibits meaningful earnings growth and the company funds up to
$100 million in negative free cash flow with revolver drawings.
The ratings also incorporate Moody's view that Tervita's execution
has been weak as its earnings growth has been limited over the
past couple of years despite generally favorable market conditions
and after a significant amount of debt-funded growth capital has
been spent. Moody's views Tervita's business profile as a positive
to the rating. The company is one of the largest providers of
waste management services to the Canadian oil & gas sector, long-
term industry fundamentals are favorable, barriers to entry are
high, and Tervita has a diverse list of blue chip customers.
Tervita nevertheless is exposed to the cyclical land drilling
business with a concentration in western Canada.
The SGL-3 reflects adequate liquidity through 2013. Pro-forma for
the January 2013 refinancing, Tervita will have minimal cash and
C$180 million of committed revolver availability (after C$120
million in letters of credits), which is adequate to fund the
expected negative free cash flow. Moody's expects Tervita will
remain in compliance with the sole financial covenant (senior
secured debt to EBITDA of less than 5.75x) under its revolver and
term loan through 2013. Alternate liquidity is limited by the
significant security interest in the company's assets and the weak
asset coverage of debt.
The negative outlook reflects Moody's expectation that Tervita's
leverage will remain elevated for its B3 rating through 2013 and
that the company's rating will be lowered if this metric fails to
improve. The rating could be upgraded if debt to EBITDA trends
towards 5.5x and the company generates sustainable positive free
cash flow. The rating could be downgraded if it appears likely
debt to EBITDA will remain above 7x or if the company's liquidity
becomes strained.
Tervita, based in Calgary, Alberta, is a privately-owned oilfield
services company providing waste management, maintenance/workover
and reclamation services.
The principal methodology used in rating Tervita was the Global
Oilfield 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.
TERVITA CORP: S&P Gives 'B-' Rating on Proposed 1st Lien Notes
--------------------------------------------------------------
Standard & Poor's Ratings Services said it assigned its 'B-'
issue-level rating and '3' recovery rating to Calgary, Alta.-based
Tervita Corp.'s proposed term loan B and 2 series of first-lien
notes. The '3' recovery rating indicates S&P's expectation of
meaningful (50%-70%) recovery in a default scenario.
The company will use proceeds to refinance its existing senior
secured term loan, delayed draw term loan, and incremental term
loan.
"The ratings on Tervita reflect our view of the company's 'fair'
business risk profile and 'highly leveraged' financial risk
profile," said Standard & Poor's credit analyst Aniki Saha-
Yannopoulos.
"Our ratings take into account Tervita's high debt leverage due to
management's aggressive financial policy, participation in the
competitive and cyclical oilfield services market, and lack of
long-term contracts. The ratings also incorporate our positive
assessment of the company's relatively stable operating margins
and integrated strategy that provides cross-selling opportunities.
In our opinion, the highly leveraged financial risk profile
constrains the ratings," S&P said.
For the complete corporate credit rating rationale, see the
research report published Jan. 23, 2012, on RatingsDirect on the
Global Credit Portal.
RATINGS LIST
Tervita Corp.
Corporate credit rating B-/Stable/--
Ratings Assigned
US$500 mil. sr. sec. term loan B
due May 2018 B-
Recovery rating 3
US$750 mil. 1st lien sr. sec.
notes due Nov. 2018 B-
Recovery rating 3
C$300 mil. 1st lien sr. sec.
notes due Nov. 2018 B-
Recovery rating 3
TRIAD GUARANTY: Voluntarily Deregisters Common Stock With SEC
-------------------------------------------------------------
Triad Guaranty Inc. filed a Form 15 with the U.S. Securities and
Exchange Commission to voluntarily deregister its common stock
under the Securities Exchange Act of 1934.
The Company is eligible to deregister its common stock because it
had fewer than 300 holders of record of its common stock at the
beginning of its current fiscal year. As a result of the filing,
the Company's obligation to file certain reports with the SEC,
including Forms 10-K, 10-Q and 8-K, will be automatically
suspended. Other filing requirements will terminate upon the
effective date of the deregistration, which is expected to occur
90 days after the filing of the Form 15.
The Company's Board of Directors believes that the anticipated
accounting, legal and administrative cost savings from
deregistration substantially outweigh any benefits of continued
registration and are in the best interests of both the Company and
the holders of its common stock. As previously reported by the
Company on Dec. 11, 2012, the Company's mortgage insurer
subsidiary, Triad Guaranty Insurance Corporation, has been placed
into rehabilitation, whereby the Illinois Department of Insurance
has been vested with possession and control over all of TGIC's
assets and operations, and the Company no longer has any oversight
or authority over TGIC and its business affairs. As a result, the
Company has no significant operating activities and limited
remaining cash and other assets on hand. Going forward, the
Company expects to explore various strategic alternatives, and in
the absence of an acceptable option, anticipates seeking to
dissolve the corporation either through Chapter 11, Chapter 7 or
otherwise.
The Company expects that its common stock will continue to be
quoted on the OTC Pink tier operated by OTC Markets Group, a
centralized electronic quotation service for over-the-counter
securities, following its deregistration, so long as market makers
demonstrate an interest in trading in the Company's common stock.
However, there is no assurance that trading in the Company's
common stock will continue on the OTC Pink tier or on any other
securities exchange or quotation medium. Following
deregistration, the Company does not expect to publish periodic
financial information or furnish such information to its
stockholders except as may be required by applicable laws.
Additionally, the Company announced that, effective immediately,
the Company's principal business office has moved. The Company's
new principal business address is:
Triad Guaranty Inc.
P.O. Box 100503
Birmingham, Alabama 35210
For more information, Company stockholders may access the
Company's new Web site, www.triadguarantyinc.com, which is
expected to be functioning by Feb. 1, 2013.
Termination of Offerings
The Company has terminated all offerings of its securities
pursuant to the following registration statements:
* Registration Statement No. 333- 134884, registering 1,091,400
shares of the Company's common stock, $0.01 par value, under
the 2006 Long-Term Stock Incentive Plan;
* Registration Statement No. 333- 69967, registering 60,000
shares of the Company's common stock, $0.01 par value, under
the Triad Guaranty Inc. Employee Stock Purchase Plan;
* Registration Statement No. 333- 73548, registering 500,000
shares of the Company's common stock, $0.01 par value, under
the 1993 Long-Term Stock Incentive Plan;
* Registration Statement No. 333- 16613, registering 450,000
shares of the Company's common stock, $0.01 par value, under
the 1993 Long-Term Stock Incentive Plan; and
* Registration No. 33-75668, registering shares of the Company's
common stock, $0.01 par value, under the 1993 Long-Term Stock
Incentive Plan
The Registration Statements will remain in effect with respect to
reserved but unissued shares of the Company's common stock to
cover the potential issuance of shares subject to outstanding
awards.
About Triad Guaranty
Winston-Salem, N.C-based Triad Guaranty Inc. (OTC BB: TGIC)
-- http://www.triadguaranty.com/-- is a holding company that
historically provided private mortgage insurance coverage in the
United States through its wholly-owned subsidiary, Triad Guaranty
Insurance Corporation. TGIC is a nationwide mortgage insurer
pursuing a run-off of its existing in-force book of business.
Going Concern/Bankruptcy Warning
"The Company has prepared its financial statements on a going
concern basis under GAAP, which contemplates the realization of
assets and the satisfaction of liabilities and commitments in the
normal course of business. However, there is substantial doubt as
to the Company's ability to continue as a going concern. This
uncertainty is based on, among other things, Triad's current non-
compliance with a provision of the second Corrective Order, the
possible failure of Triad to comply with other provisions of the
Corrective Orders, and the Company's ability to generate enough
income over the term of the remaining run-off to overcome its
$802.8 million deficit in assets at September 30, 2012."
The positive impact on statutory surplus resulting from the second
Corrective Order has resulted in Triad reporting a policyholders'
surplus in its SAP financial statements of $224.1 million at
Sept. 30, 2012, as opposed to a deficiency in policyholders'
surplus of $834.5 million on the same date had the second
Corrective Order not been implemented. While the implementation
of the second Corrective Order has deferred the institution of an
involuntary receivership proceeding, no assurance can be given
that the Department will not seek receivership of Triad in the
future and there continues to be substantial doubt about the
Company's ability to continue as a going concern.
The Department may seek receivership of Triad based on Triad's
current non-compliance with a provision of the second Corrective
Order or for any other violation of the Illinois Insurance Code.
Moreover, if the Department determines that Triad is insolvent
under applicable law, it would be required to institute a
receivership proceeding over Triad. In addition, the Department
retains the inherent authority to institute such proceedings
against Triad for any reason and Triad has previously agreed not
to contest the taking of any such actions.
As of Nov. 14, 2012, the Department has not issued any final
decision or order as a result of the public hearing and Triad's
request to amend the second Corrective Order. Because the subject
matter of the hearing specifically included an assessment of
whether the Department should implement a different regulatory
approach with respect to Triad, including institution of
receivership proceedings for the conservation, rehabilitation or
liquidation of Triad, the Company believes institution of such a
proceeding could be imminent. If this should occur, among other
things, TGI could lose control of Triad and could be forced to
deconsolidate its financial statements. Any such actions would
likely lead TGI to institute a proceeding seeking relief from
creditors under U.S. bankruptcy laws, or take other steps to wind
up its business and liquidate. See Item 1A, "Risk Factors" in the
Company's Annual Report on Form 10-K for the year ended December
31, 2011 for more information.
As reported by the TCR on Dec. 12, 2012, the Illinois Department
of Insurance has issued an Administrative Order recommending that
Triad Guaranty Insurance Corporation be placed in rehabilitation.
Upon entry of the Order of Rehabilitation by the Court, the
Director of the Illinois Department of Insurance will be vested
with possession and control over all of the assets and liabilities
of Triad and Triad Guaranty Inc. will cease to have any oversight
or management authority over Triad or its business and affairs.
VIGGLE INC: 176MM TV Hours Checked in with Viggle in One Year
-------------------------------------------------------------
Viggle, founded by media entrepreneur Robert F.X. Sillerman, the
brain power behind successful television, radio and live
entertainment businesses, recently celebrated its first birthday
on January 26.
To date, more than 1.8 million Vigglers have registered for the
service, and Vigglers have checked into TV shows 151 million
times. In turn, over the last 12 months Viggle has given away
over 1.3 million individual rewards, including rewards from major
retailers such as Amazon, The Gap, Best Buy and Sephora. During
this time, Viggle has conducted 28 sweepstakes, giving away 41
million Viggle points, a trip to Hollywood, a 3D HDTV package and
an all expense paid trip to Sunday's big game in New Orleans.
In just over six short months from launch through July 2012,
Viggle hit its first major milestone with more than one million
Vigglers registering for the service. It has been an
extraordinary first year for the start-up company with accelerated
growth, more than doubling the number of monthly active users from
233,607 in October 2012 to 493,475 thus far in January 2013. To
be a monthly active user, a Viggler must earn or use a point in
the month, beyond just registering.
And now Vigglers are getting a unique chance to "meet the man."
To continue the celebration, starting this week Viggle is asking
loyal fans to send a video message wishing a Happy Birthday to
Viggle in the most clever and untraditional way. Viggle will
select a winner who will get a rare chance to spend the working
day with Sillerman on his 65th birthday in April. The winner will
join him in any internal and external meetings and in any of his
dealings with both celebrities and high power industry executives
scheduled on his birthday. Want more? The winner will get
"exclusive" time with him. He or she will also be allowed to film
the day and share the footage with their family and friends.
YouTube it? Maybe. Add it to their Facebook or Twitter accounts?
Sure. It is the winner's choice. One thing this won't be is a
retirement party as Sillerman and Viggle have only just begun.
"During this past year, we continued to add new product features -
- helping transition Viggle's social and real-time engagement
experience," said Greg Consiglio, President and COO. "Adding to
our popular features we have recently provided our members with an
even more enhanced television viewing experience by being able to
check-in, chat and play along, in addition to getting rewarded for
watching their favorite shows."
Vigglers earn real rewards by checking into their favorite TV
shows using the free Viggle app, available for download in the App
Store or Google Play. The Viggle app listens to what is on TV and
Viggle points accumulate for every minute watched; members can
accumulate even more points for engaging in real-time experiences
while watching their favorite shows and sporting events.
Throughout its first year, Viggle has worked with over 40 leading
brands such as Mercedes-Benz, JetBlue, CapitalOne, Pepsi, Verizon,
DIRECTV, Burger King and Unilever.
Alex Kaplan, Vice President of Marketing at DIRECTV added, "More
and more of our customers are becoming habitual Vigglers because
they receive exclusive benefits when using the Viggle platform.
We're excited to celebrate this first year with them as we
continue to provide our customers with the best Viggle
experience."
Other key milestones include:
* March 20, 2012: Recognized by MediaPost as the best app in
the "Entertainment: Professional Content" and
"Television/Video App" categories at the 2012 Appy Awards.
* Sept. 5, 2012: Launches MyGuy, a mobile fantasy football game
for both professional and college sports fans
* Jan. 4, 2013: Former Miami Dolphins Hall of Fame Quarterback
Dan Marino joins as Honorary Commissioner of the MyGuy real-
time fantasy football game through the end of the 2014
season.
* Jan. 13, 2013: Viggle announces its biggest single day with
nearly 870,000 verified audio check-ins.
Managing Partner of award-winning Media and Marketing Agency,
Media Storm, Craig Woerz adds, "We have had tremendous success
with what we have done with Viggle and are intrigued by what
Viggle is innovating with second screen. We have partnered with
them for many of our clients to help drive tune-in and live show
engagement for programs. We see Viggle as a leader in the
expanding space and look forward to continuing to work with them
in 2013". Media Storm works with clients like FOX, WE TV, Food
Network and many other networks, programmers and studios.
To kick-off its birthday week, on January 20, the company launched
a Viggle Streak Week promotion that offered bonuses for Viggling
any five days, at any time, between January 20 and January 26.
The Viggle Birthday Quest promotion rewarded loyal TV viewers
checking into 5 out of 6 Birthday Quest shows from January 24 to
January 27. And as of January 24, Vigglers can redeem their
points for Viggle branded merchandise.
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.
VIVARO CORP: Sues Distributor for $1.1M Over Missed Payments
------------------------------------------------------------
Lisa Uhlman of BankruptcyLaw360 reported that international
calling card maker Vivaro Corp. and related debtors filed an
adversary proceeding in New York bankruptcy court Nov. 5, arguing
that distributor Raza Communication Inc. and its principal owe
them $1.1 million for failing to pay outstanding accounts
receivable.
Vivaro, along with STi Prepaid LLC, Kare Distribution Inc., STi
Telecom Inc., TNW Corp., STi CC I LLC and STi CC 2 LLC, sued Raza
and Salim Hemani, alleging they failed to pay Kare $1.01 million
and STi Prepaid $87,000, and seeking to enforce their rights, the
report said.
About Vivaro Corp.
Vivaro Corp., which specializes in the sale of international
calling cards in the U.S., filed a Chapter 11 petition (Bankr.
S.D.N.Y. Case No. 12-13810) on Sept. 5, 2012, together with six
other related companies, including Kare Distribution Inc. The
Debtor is represented by Frederick E. Schmidt, Esq., at Hanh V.
Huynh, Esq., at Herrick, Feinstein LLP. Garden City Group Inc. is
the claims and notice agent.
The Debtor will put its assets on the auction block next month.
Tracy Hope Davis, the U.S. Trustee for Region 2, appointed five
members to the official committee of unsecured creditors.
VENTANA 20/20: Pima County Says Plan Understates Claims by $115K
----------------------------------------------------------------
Pima County objects to Ventana 20/20 L.P.'s Plan of Reorganization
and Disclosure Statement describing the Plan. Pima County is a
creditor holding secured claims for both real and personal
property taxes totaling approximately $385,000 as of the Petition
Datefor tax years 2011 and 2012.
In papers filed with the Court, Pima County says the Debtor's Plan
understates the value of its prepetition real property tax claims
by $114,677. Additionally, Pima says that the Debtor has provided
for payment of its claims "without penalties." Also, the Debtor
provides for a monthly payment of $4,000 to be applied pro rata to
over 100 tax parcels. "Unfortunately, this would require the
Treasurer's Office to manually enter and apply partial payments of
approximately $35 to over 100 tax parcels each month, which is
impracticable," the County related.
Furthermore, the Debtor provides for payment of the taxes due in
full upon sale of each unit but makes no provision for payment in
the event all of the units are not sold. "The proposed payment at
$4,000 per month may not eradicate the debt to Pima County within
60 months from the date of the petition if a sufficient number of
units are not sold before Aug. 3, 2017," the County added.
Finally, according to the County, the Debtor's Plan of
Reorganization neglects to provide for payment of its personal
property tax claims.
With respect to the disclosure statement describing the Debtor's
Plan, the County said it should be amended to list the total pre-
petition amounts of Pima County's real and personal property tax
claims.
The Chapter 11 Plan
As reported in the TCR on Dec. 28, 2012, the goal of the Plan is
to continue the Debtor's operation as a business entity, including
the marketing of properties, which will allow the Debtor to repay
creditors. The secured debt needs to be reasonably restructured
so payment obligations do not outstrip the income from the sale
and rental of the project.
The Plan will be funded by future operations of the Debtor's
business, including the rental, sale, re-financing, joint
venturing, re-capitalization, and/or development of properties
owned by the Debtor. The Plan also provides estimated time
periods during which the property will generate rental income and
Net Sales Proceeds, so as to pay creditors under the Plan. In
light of market turbulence, making projections as to disposition
or development dates is difficult, however, based upon the
expertise and experience of the Debtor and its principals, the
projections are as accurate an estimate as can be made. With a
reasonable restructure of the secured indebtedness, the Debtor
will be able to repay all creditors, as set forth in this Plan.
The existing management for the Debtor will remain in place. John
P. Murphy, the existing Managing Member of Ventana 20/20 GP, LLC,
which is the General Partner of Ventana 20/20 LP, will continue in
place, bringing his extensive and successful experience to the
reorganized Debtor.
A copy of the disclosure statement is available for free at:
http://bankrupt.com/misc/VENTANA_2020_ds.pdf
About Ventana 20/20 LP
Ventana 20/20 LP filed bare-bones Chapter 11 petition (Bankr. D.
Ariz. Case No. 12-17493) in Tucson on Aug. 3, 2012. The Debtor
disclosed $14,542,797 in assets and $10,938,012 in liabilities.
John Murphy, as manager of the Debtor, signed the Chapter 11
petition. Mr. Murphy is the founder, chairman and CEO of the
20/20 Group of companies. As a value investor, he has led or
participated in over $1 billion of multi-family acquisitions
across North America.
Bankruptcy Judge Eileen W. Hollowell oversees the case. Frederick
J. Petersen, Esq., at Mesch, Clark & Rothschild, P.C., serves as
the Debtor's counsel. Donald L. Schaefer, court appointed
receiver for the Debtors, is represented by Warren J. Stapleton,
Esq., at Osborn Maledon, P.A.
In September, the United States Trustee said that an official
committee under 11 U.S.C. Sec. 1102 has not been appointed in the
bankruptcy case of Ventana 20/20 LP. The U.S. Trustee said it
attempted to solicit creditors interested in serving on the
Unsecured Creditors' Committee from the 20 largest unsecured
creditors. After excluding governmental units, secured creditors
and insiders, the U.S. Trustee has been unable to solicit
sufficient interest in serving on the Committee, to appoint a
proper Committee. The U.S. Trustee reserves the right to appoint
such a committee should interest developed among the creditors.
WILLIAM JOHNSON: Creditor Says Bankruptcy 'Collusive'
-----------------------------------------------------
Nelsy Rodriguez, writing for The Press-Enterprise, reports that
Cambridge Financial of California LLC alleges in a Jan. 22
objection filed in U.S. Bankruptcy Court that Bill Johnson, owner
of Vail Lake, violated a Riverside County Superior Court ruling
denying him the right to file for bankruptcy protection.
"The involuntary (bankruptcy) petition is a collusive and bad
faith filing orchestrated by (Johnson) and (Johnson's) counsel to
attempt to avoid the effect of an injunction issued by the state
court in the (Cambridge lawsuit)," court documents state,
according to the report. "The state court injunction specifically
prohibited (Johnson) and its constituent members from filing a
bankruptcy proceeding for or on behalf of (Johnson)."
According to Press-Enterprise, Mr. Johnson was denied voluntary
bankruptcy in November 2012 because he did not have consent from a
third party investor in Vail Lake Rancho California, one of three
companies Mr. Johnson operates in association with the lake
resort. On Dec. 26, three creditors who are owed roughly
$450,000 combined asked the court to force Mr. Johnson into
bankruptcy proceedings.
The report notes Cambridge Financial in September 2011 sued Mr.
Johnson in an effort to reclaim -- through foreclosure -- nearly
$33 million in loans granted over a six month period in 2003. A
follow-up hearing regarding the Cambridge lawsuit is scheduled to
be heard in Riverside on Feb. 13.
* Fitch Says Hess Sale Shows Pressure on Smaller Models
-------------------------------------------------------
The oil and gas industry's integrated business model remains under
pressure for smaller and medium sized names in the energy space,
with Hess' announcement it would close its last remaining refinery
in Port Reading, NJ and sell off a network of terminals the latest
example of that pressure. Hess' announcement comes as activist
investor Elliot Management Corporation announced it has taken a
stake in the company to further increase shareholder value. Hess'
terminal network comprises 19 terminals with 28 million barrels of
storage capacity and served as the outlet for the HOVENSA
refinery, which closed last year.
Hess' move follows heightened spinoff and separation activity from
a number of entities in the energy space over the last few years,
including ConocoPhillips, Phillips 66, Marathon Oil Corporation,
Marathon Petroleum Corporation, Tesoro, Murphy, Valero, and Delek,
among others.
The main drivers of the wave of spinoffs, separations, and other
shareholder friendly activity in the energy space include the
desire to capture the higher multiples associated with stand-alone
retail, midstream, and downstream businesses, especially when spun
off into tax-advantaged master limited partnerships, a preference
for pure play exploration and production models, and the low
growth and limited reinvestment prospects within the U.S.
downstream industry. From a credit perspective, the impact of
spinoffs is typically a modest credit negative but varies on a
case-by-case basis and depends on a number of factors, including
the size of a spun business relative to the parent company, the
lost diversification benefit from the spinoff, any offsetting debt
reductions made at the parent company post-spin, and the existence
of headroom within the parent rating prior to the spinoff.
* ABL Facilities Show Full Recovery in Bankruptcy, Fitch Says
-------------------------------------------------------------
U.S. asset-based lending (ABL) facilities present in a defaulted
issuer's capital structure demonstrated complete recoveries in a
bankruptcy scenario, according to a new Fitch Ratings report.
Fitch reviewed 12 recent U.S. bankruptcies - five liquidations and
seven reorganizations - where the debtors' pre-petition capital
structure included ABL facilities. The outcomes validate full
recovery prospects for ABL facilities regardless of whether
resolution occurred via a liquidation or going-concern route.
Fitch attributes these recovery outcomes to a mix of three key
factors: 1) the over-collateralized status of pre-petition ABLs;
2) a security interest in liquid collateral that was much sought-
after by debtor-in-possession (DIP) lenders as well; and 3) lender
dominion over cash which helped reduce the ABL balances (or claim
size).
The report also delves into related themes such as the role of
liquidators that submit equity-bids in bankruptcies and the unique
advantages bestowed by the cash dominion feature both before and
following a bankruptcy event.
In addition to the bankruptcy analysis, the report explains how
these empirical observations are integrated into Fitch's recovery
methodology for ABL-inclusive capital structures using worked
examples. The objective of Fitch's methodology is to assign
recovery ratings to debt based on recovery prospects in a
potential bankruptcy scenario. The appendix of the report provides
a general overview of the basic concepts and the unique structural
features of an ABL.
The full report 'Rating Asset-Based Lending (ABL) Facilities' is
available at 'www.fitchratings.com.'
* Fitch Says Index Fund, ETF Price Competition Rising for US Banks
------------------------------------------------------------------
Price competition among providers of mutual funds and exchange-
traded funds (ETFs) is likely to put pressure on investment
management fee growth for U.S. trust and custodial banks,
according to Fitch Ratings. Recent moves by Fidelity, Vanguard,
Schwab, Blackrock, and other fund managers to reduce index fund
and ETF fees paid by increasingly cost-conscious investors will
make it difficult for trust banks, such as State Street, Northern
Trust, and Bank of New York Mellon, to push through meaningful fee
growth on individual and institutional customer accounts.
While the major U.S. trust banks all reported investment
management and servicing fee growth in 4Q12 as a result of
stronger equity markets and some new business, they have been
forced to adjust pricing strategies in ways that may erode
profitability of this core business that touches multiple revenue
streams, particularly if trading volumes and investment inflows
remain weak.
This price competition is particularly relevant in the plain
vanilla index space, which serves to replicate investment returns
of bellwether indices such as the S&P 500 and Dow Jones Industrial
Average, among others. As a result, some of the larger asset
managers and trust banks are launching more niche ETF and index
products in areas such as commodities and emerging markets.
These newer products have the benefit of capturing the strong
demand in the marketplace for more index-like products, providing
clients with exposure to less developed and higher growth sectors.
They also carry higher management fees than the more traditional
products noted above.
Since the financial crisis, net outflows from actively managed
funds into index products and ETFs have made it more difficult for
managers of higher cost products to compete. The growth of ETFs,
with low expenses and no restrictions on trading throughout the
day, is posing a threat to actively managed funds in both the
retail and institutional channels.
Furthermore, we think that a race to the bottom in fees for index
funds and ETFs likely signals the growing importance of scale in
the asset management business, with slow fee growth and lower
margins discouraging market entry by competitors. In a more mature
industry, with consolidation largely complete, smaller competitors
in the index fund and ETF space will find it increasingly
difficult to challenge incumbents, while future price competition
from the existing large incumbents is likely.
* U.S. Student Loan Delinquency Rate Increases, FICO Labs Says
--------------------------------------------------------------
Research by FICO Labs into the growing student lending crisis in
the U.S. has found that, as a group, individuals taking out
student loans today pose a significantly greater risk of default
than those who took out student loans just a few years ago. The
situation is compounded by significant growth in the amount of
debt that new graduates are carrying.
The delinquency rate today on student loans that were originated
from 2005-2007 is 12.4 percent. The comparable figure for student
loans that were originated from 2010-2012 is 15.1 percent,
representing an increase in the delinquency rate by nearly 22
percent.
While the delinquency rate is climbing, the average amount of
student loan debt is increasing even faster. In 2005, the average
U.S. student loan debt was $17,233. By 2012, it had ballooned to
more than $27,253 -- an increase of 58 percent in seven years. By
contrast, the average credit card balance and the average balance
on car loans owed by U.S. consumers actually decreased during the
same period.
In a related finding, FICO's quarterly survey of bank risk
managers conducted in December 2012 found that nearly 60 percent
of respondents expected delinquencies on student loans to increase
over the next six months. The same respondents expected
delinquencies on all other types of consumer loans to decrease,
putting the pessimism around student loans in sharp relief.
"This situation is simply unsustainable and we're already
suffering the consequences," said Dr. Andrew Jennings, FICO's
chief analytics officer and head of FICO Labs. "When wage growth
is slow and jobs are not as plentiful as they once were, it is
impossible for individuals to continue taking out ever-larger
student loans without greatly increasing the risk of default.
There is no way around that harsh reality."
Mr. Jennings continued, "As more people default on their student
loans, their credit ratings will drop, making it harder for them
to access new credit and help grow the economy. Even people who
stay current on their student loans are dealing with very large
debts, which reduces the money they have available to spend
elsewhere. The stakeholders in the student lending industry have
to take a hard look at the terms and repayment rules for student
loans, and the industry may have to develop a new lending model to
prevent a bad situation from getting completely out of hand."
A report of the research by FICO Labs is available at
http://www.fico.com/insights(registration is required). The
research was based on an examination of 10 million consumer credit
files in 2012.
About FICO
FICO -- http://www.fico.com-- delivers superior predictive
analytics solutions that drive smarter decisions. The company's
groundbreaking use of mathematics to predict consumer behavior has
transformed entire industries and revolutionized the way risk is
managed and products are marketed. FICO's innovative solutions
include the FICO(R)Score -- the standard measure of consumer
credit risk in the United States -- along with industry-leading
solutions for managing credit accounts, identifying and minimizing
the impact of fraud, and customizing consumer offers with pinpoint
accuracy. Most of the world's top banks, as well as leading
insurers, retailers, pharmaceutical companies and government
agencies, rely on FICO solutions to accelerate growth, control
risk, boost profits and meet regulatory and competitive demands.
FICO also helps millions of individuals manage their personal
credit health through http://www.myFICO.com
* U.S. Movie Theater Operators Grapple with Declining Audiences
---------------------------------------------------------------
US and Canadian movie theater operators continue to grapple with
declining audiences, Moody's Investors Service says in a new
report, "Movie Theaters' Next Act: Dealing With Weak Attendance
Trends." With annual attendance currently at late 1990s levels,
operators are closing underperforming theaters, consolidating and
looking for ways to squeeze more from their patrons.
"Despite an increase of about 6% in movie theater admissions last
year, the overall trend is negative," says analyst and author of
the report, Karen Berckmann. "Attendance peaked at nearly 1.6
billion in 2002, helped by Spider-Man, the year's top-grossing
film, but given the competition for consumers' screen time, from
texting to Netflix to web surfing, we do not expect a rebound to
that level."
Nevertheless, operators have been able to increase box-office
revenue and EBITDA per customer through concession sales,
rationalizing their theater circuits, switching to digital
projection and managing their costs, Berckmann says. Among
companies, Regal Entertainment Group currently has the highest
EBITDA per patron, while Cinemark USA, Inc. continues to
differentiate itself with its international assets in growing
markets.
Declining attendance in the US and Canada and the transition to
digital projection are helping to spur consolidation in the
industry. "Companies that use existing cash balances for
incremental acquisitions can improve their credit metrics by
increasing cash flow without taking on more debt," Berckmann says,
"but even debt-funded acquisitions are unlikely to impair buyers'
credit metrics much, given the modest scale of the deals and
favorable purchase prices for smaller operators." Moody's expects
Hollywood Theaters, Inc. to find a buyer prior to its June 2013
bond maturity at a price that will cover the face value of the
bonds.
And the bump in attendance in 2012 shows that movies haven't
entirely lost their appeal, and underscores the viability of the
industry, Mr. Berckmann says. Even so, as opportunities to
increase per-patron cash flow diminish, movie theater operators
will have to reconsider their longstanding acceptance of high
leverage, or they could face downward rating actions.
* Debtwire Survey Shows Investors Keen on the Americas
------------------------------------------------------
Debtwire, in association with Bingham McCutchen LLLP and Macquarie
Capital, on Jan. 30 unveiled the findings of the eighth annual
North American Distressed Debt Market Outlook survey. The
survey's findings show that investors have become accustomed to
operating in an environment with low rates of default. This is
also expected to be the status quo for 2013.
Money managers have been forced to reassess strategy and
expectation. The lack of opportunity over the past months for
distressed-focused funds and those likely to take on event-driven,
high risk/high reward positions has positioned money managers at a
crossroad.
"The term 'Total Return' truly defines today's investment
climate," said David Miller, Managing Director at Macquarie
Capital. "Fed intervention requires asset managers to maintain
flexible mandates and the ability to shift between asset classes
to find above-average returns and/or yields."
Key findings include:
-- 61% of investors prefer to allocate their distressed debt
investments in the real estate sector.
-- For 2013, a majority of survey participants expect returns
from their distressed holdings to come via a sale of the corporate
borrower to a private equity house.
-- 75% of respondents said that the US economic outlook will
greatly impact their decision-making over the next 12 months.
The report provides an in-depth review of emerging trends in the
distressed debt markets, based on the predictions of 100
experienced distressed debt investors throughout North America.
Consensus of contradiction
While respondents unanimously expect the default rate to linger
below 4% in 2013 (46% say it will decrease to less than 3%),
expectations for distressed returns in 2013 are elevated.
"With the Fed keeping interest rates at historical lows, it is no
surprise that default rates are expected to remain low in 2013,"
commented Michael Reilly, co-head of Bingham's global Financial
Restructuring Group. "With the ability to borrow or refinance
cheaply, the low default rates should continue to hold steady in
2013."
In many respects, a fragmented view of the distressed market in
2013 is not surprising and given the recent underperformance of
hedge funds and the limited opportunity that 2012 had in store.
The pressure is on for 2013. Respondents expect to find these
returns from asset-backed securities and convertible bonds which
they identified as the most lucrative opportunities for the next
year.
Regional breakdown
Despite the ever-present risk of a European economic collapse,
respondents anticipate the abundance of liquid distressed
investment opportunities to come from North America. Meanwhile,
Latin America took the second spot as restructurings of sovereign
debt backing both Belize and Argentina heated up.
"Confidence is returning to distressed investors in the Americas,"
said Bingham partner Tim DeSieno. "The issues in Belize and
Argentina may be just the tip of that iceberg, as deep stresses
have appeared and played out in large economies like Brazil and
Mexico. There is even renewed energy focusing on potential US
situations with some of the recent larger chapter 11 filings
perhaps leading the charge."
Methodology
Bingham McCutchen LLP and Macquarie Capital commissioned Debtwire
to interview 100 distressed debt investors, including hedge fund
managers, sell-side trading desks and other asset managers on
their expectations for the North American distressed debt market
in 2013. Interviews were conducted over the telephone in November
and December of 2012. Responses were collated by Debtwire, and
presented to the commissioning firms in aggregate. This is the
eighth year Debtwire has released the study.
Contact:
Chrissy Carney
PR Manager -- Americas
Thee Mergermarket Group
E-mail: chrissy.carney@mergermarket.com
Claire Papanastasiou
Senior Public Relations Manager
Bingham McCutchen LLP
E-mail: claire.p@bingham.com
Paula Chirhart
Senior VP, Corporate Communications
Macquarie Group
E-mail: Paula.Chirhart@macquarie.com
* Recent Small-Dollar & Individual Chapter 11 Filings
-----------------------------------------------------
In re Mark Tronziger
Bankr. D. Ariz. Case No. 13-00899
Chapter 11 Petition filed January 22, 2013
In re El Torero Licores
dba El Toreo Liqor Store
Bankr. C.D. Calif. Case No. 13-10578
Chapter 11 Petition filed January 22, 2013
See http://bankrupt.com/misc/cacb13-10578.pdf
represented by: Matthew E. Faler, Esq.
LAW OFFICES OF MATTHEW E. FALER
E-mail: mfaler@faler-law.com
In re Shariar Nakhaee
Bankr. C.D. Calif. Case No. 13-11158
Chapter 11 Petition filed January 22, 2013
In re Melvin Shimada
Bankr. E.D. Calif. Case No. 13-20823
Chapter 11 Petition filed January 22, 2013
In re Booker Wade
Bankr. N.D. Calif. Case No. 13-50376
Chapter 11 Petition filed January 22, 2013
In re Janet's Sweeping and Property Care, LLC
Bankr. D. Conn. Case No. 13-30132
Chapter 11 Petition filed January 22, 2013
See http://bankrupt.com/misc/ctb13-30132.pdf
represented by: Peter L. Ressler, Esq.
GROOB RESSLER & MULQUEEN, P.C.
E-mail: ressmul@yahoo.com
In re Guy Winkleman
Bankr. M.D. Fla. Case No. 13-00343
Chapter 11 Petition filed January 22, 2013
In re AAA Kyle's Kwik Bail Bonding, Inc.
Bankr. M.D. Fla. Case No. 13-00712
Chapter 11 Petition filed January 22, 2013
See http://bankrupt.com/misc/flmb13-00712p.pdf
See http://bankrupt.com/misc/flmb13-00712c.pdf
represented by: Buddy D. Ford, Esq.
BUDDY D. FORD, P.A.
E-mail: Buddy@tampaesq.com
In re James Copas
Bankr. M.D. Fla. Case No. 13-00717
Chapter 11 Petition filed January 22, 2013
In re John Esobio
Bankr. M.D. Fla. Case No. 13-00721
Chapter 11 Petition filed January 22, 2013
In re Il Bacio, Inc.
Bankr. S.D. Fla. Case No. 13-11401
Chapter 11 Petition filed January 22, 2013
See http://bankrupt.com/misc/flsb13-11401.pdf
represented by: Angelo A. Gasparri, Esq.
LAW OFFICES OF ANGELO A. GASPARRI, P.A.
E-mail: angelo@drlclaw.com
In re Hee Kim
Bankr. N.D. Ga. Case No. 13-20190
Chapter 11 Petition filed January 22, 2013
In re Edward Rizzi
Bankr. N.D. Ill. Case No. 13-02405
Chapter 11 Petition filed January 22, 2013
In re GME Oakview, L.L.C.
Bankr. D. Nebr. Case No. 13-40117
Chapter 11 Petition filed January 22, 2013
See http://bankrupt.com/misc/neb13-40117.pdf
represented by: David Grant Hicks, Esq.
POLLAK & HICKS, P.C.
E-mail: dhickslaw@aol.com
In re Patrick Mazzucca
Bankr. D.N.J. Case No. 13-11217
Chapter 11 Petition filed January 22, 2013
In re Moustafa Malas
Bankr. D.N.J. Case No. 13-11225
Chapter 11 Petition filed January 22, 2013
In re Consolidated Distributors, Inc.
Bankr. E.D.N.Y. Case No. 13-40350
Chapter 11 Petition filed January 22, 2013
See http://bankrupt.com/misc/nyeb13-40350.pdf
represented by: Noson A. Kopel, Esq.
E-mail: nkopel@covad.net
In re Biomed Drugs and Surgical Supply Company, Inc.
Bankr. E.D.N.Y. Case No. 13-40353
Chapter 11 Petition filed January 22, 2013
See http://bankrupt.com/misc/nyeb13-40353.pdf
represented by: Lawrence Morrison, Esq.
THE MORRISON LAW OFFICES, P.C.
E-mail: morrlaw@aol.com
In re 700 Sunrise LLC
Bankr. E.D.N.Y. Case No. 13-70306
Chapter 11 Petition filed January 22, 2013
See http://bankrupt.com/misc/nyeb13-70306.pdf
represented by: Roy J. Lester, Esq.
LESTER & ASSOCIATES
E-mail: rlester@rlesterlaw.com
In re Crystal Jno-Baptiste
aka Crystal Baptiste
Bankr. E.D.N.C. Case No. 13-00414
Chapter 11 Petition filed January 22, 2013
See http://bankrupt.com/misc/nceb13-00414.pdf
represented by: J.M. Cook, Esq.
J.M. COOK, P.A.
E-mail: J.M.Cook@jmcookesq.com
In re Maricarmen Marquez Colon
Bankr. D.P.R. Case No. 13-00385
Chapter 11 Petition filed January 22, 2013
See http://bankrupt.com/misc/prb13-00385.pdf
represented by: Fausto David Godreau Zayas, Esq.
LATIMER, BIAGGI, RACHID & GODREAU
E-mail: dgodreau@LBRGlaw.com
In re Miguel Santos Ruiz
Bankr. D.P.R. Case No. 13-00395
Chapter 11 Petition filed January 22, 2013
In re Timothy Dalton
Bankr. N.D. Tex. Case No. 13-40237
Chapter 11 Petition filed January 22, 2013
In re Basharat Mahmood
Bankr. D. Ariz. Case No. 13-00990
Chapter 11 Petition filed January 23, 2013
In re John Vogel
Bankr. D. Ariz. Case No. 13-00960
Chapter 11 Petition filed January 23, 2013
In re Daniel Shierts
Bankr. C.D. Calif. Case No. 13-10474
Chapter 11 Petition filed January 23, 2013
In re Robert Stehlik
Bankr. C.D. Calif. Case No. 13-10626
Chapter 11 Petition filed January 23, 2013
In re Douglas Tumlinson
Bankr. S.D. Calif. Case No. 13-00640
Chapter 11 Petition filed January 23, 2013
In re Roger Parker
Bankr. D. Colo. Case No. 13-10897
Chapter 11 Petition filed January 23, 2013
In re KNB Properties, LLC
Bankr. D. Conn. Case No. 13-50091
Chapter 11 Petition filed January 23, 2013
See http://bankrupt.com/misc/ctb13-50091.pdf
represented by: Craig I. Lifland, Esq.
Zeisler and Zeisler
E-mail: clifland@zeislaw.com
In re Leslie Holdsworth
Bankr. M.D. Fla. Case No. 13-00745
Chapter 11 Petition filed January 23, 2013
In re Global Financial Enterprises, LLC
Bankr. S.D. Fla. Case No. 13-11478
Chapter 11 Petition filed January 23, 2013
See http://bankrupt.com/misc/flsb13-11478.pdf
represented by: Bradley S Shraiberg, Esq.
Shraiberg, Ferrara, & Landau P.A.
E-mail: bshraiberg@sfl-pa.com
In re Michael Brown
Bankr. S.D. Fla. Case No. 13-11484
Chapter 11 Petition filed January 23, 2013
In re Richard Edwards
Bankr. N.D. Ill. Case No. 13-02557
Chapter 11 Petition filed January 23, 2013
In re Bradford Blair
Bankr. E.D. Mich. Case No. 13-41244
Chapter 11 Petition filed January 23, 2013
In re Trina Donovan
Bankr. D. Nev. Case No. 13-10527
Chapter 11 Petition filed January 23, 2013
In re 1220 University Blvd., LLC
Bankr. S.D.N.Y. Case No. 13-10195
Chapter 11 Petition filed January 23, 2013
See http://bankrupt.com/misc/nysb13-10195.pdf
represented by: Heidi J. Sorvino, Esq.
Hodgson Russ LLP
E-mail: hsorvino@hodgsonruss.com
In re Italsport, Inc.
Bankr. S.D.N.Y. Case No. 13-22081
Chapter 11 Petition filed January 23, 2013
See http://bankrupt.com/misc/nysb13-22081.pdf
represented by: Gabriel Del Virginia, Esq.
Law Offices of Gabriel Del Virginia
E-mail: gabriel.delvirginia@verizon.net
In re John Adams
Bankr. M.D. Tenn. Case No. 13-00543
Chapter 11 Petition filed January 23, 2013
In re Wesley Whitaker
Bankr. M.D. Tenn. Case No. 13-00523
Chapter 11 Petition filed January 23, 2013
In re Russiet Limited Partnership
Bankr. W.D. Tex. Case No. 13-30093
Chapter 11 Petition filed January 23, 2013
See http://bankrupt.com/misc/txwb13-30093.pdf
represented by: Corey W. Haugland, Esq.
James & Haughland, P.C.
E-mail: chaugland@jghpc.com
In re Sujana Reddy
Bankr. W.D. Tex. Case No. 13-10096
Chapter 11 Petition filed January 23, 2013
In re Suresh Reddy
Bankr. W.D. Tex. Case No. 13-10096
Chapter 11 Petition filed January 23, 2013
In re Casa International, Inc.
Bankr. D. Ariz. Case No. 13-01043
Chapter 11 Petition filed January 24, 2013
Filed as Pro Se
In re Kathleen Cooper
Bankr. N.D. Calif. Case No. 13-30157
Chapter 11 Petition filed January 24, 2013
In re Asdrubal Martinez
Bankr. M.D. Fla. Case No. 13-00412
Chapter 11 Petition filed January 24, 2013
In re Michael William & Associates, Inc.
Bankr. M.D. Fla. Case No. 13-00809
Chapter 11 Petition filed January 24, 2013
See http://bankrupt.com/misc/flmb13-00809.pdf
Filed as Pro Se
In re Martin Lee
Bankr. S.D. Ind. Case No. 13-00618
Chapter 11 Petition filed January 24, 2013
In re Kathy Myszkowski
Bankr. D. Nev. Case No. 13-10543
Chapter 11 Petition filed January 24, 2013
In re Integrated Beverage Group, LTD
Bankr. E.D.N.Y. Case No. 13-70369
Chapter 11 Petition filed January 24, 2013
See http://bankrupt.com/misc/nyeb13-70369.pdf
represented by: Robert N. Michaelson, Esq.
THE MICHAELSON LAW FIRM
E-mail: rnm@michaelsonlawfirm.com
In re Stuart Kanter
Bankr. S.D. Ohio Case No. 13-50486
Chapter 11 Petition filed January 24, 2013
In re A & C Propane
Bankr. M.D. Tenn. Case No. 13-00544
Chapter 11 Petition filed January 24, 2013
Filed as Pro Se
In re Paul Stout
Bankr. W.D. Tenn. Case No. 13-20849
Chapter 11 Petition filed January 24, 2013
In re Christine Caldwell-Blow
Bankr. E.D. Tex. Case No. 13-40180
Chapter 11 Petition filed January 24, 2013
In re DAL/Evergreen Group, L.L.C.
Bankr. W.D. Wash. Case No. 13-10609
Chapter 11 Petition filed January 24, 2013
See http://bankrupt.com/misc/wawb13-10609.pdf
represented by: Robert J. Penfield, Esq.
PENFIELD LEGAL SERVICES, PLLC
E-mail: robert@penfieldlegal.com
In re Gregory Rapp
Bankr. C.D. Calif. Case No. 13-11377
Chapter 11 Petition filed January 25, 2013
In re Todd Odum
Bankr. C.D. Calif. Case No. 13-12139
Chapter 11 Petition filed January 25, 2013
In re Okon Uboh
Bankr. N.D. Calif. Case No. 13-50435
Chapter 11 Petition filed January 25, 2013
In re Horace Ferguson
Bankr. M.D. Fla. Case No. 13-00440
Chapter 11 Petition filed January 25, 2013
In re Jared Guy
Bankr. M.D. Fla. Case No. 13-00439
Chapter 11 Petition filed January 25, 2013
In re Laurie Burcaw
Bankr. M.D. Fla. Case No. 13-00898
Chapter 11 Petition filed January 25, 2013
In re Buckhead Pizza Co. of Galleria, LLC
Bankr. N.D. Ga. Case No. 13-51482
Chapter 11 Petition filed January 25, 2013
See http://bankrupt.com/misc/ganb13-51482.pdf
represented by: Justin Lee Oliverio, Esq.
Thomasson Law Firm, LLC
E-mail: justin@thomassonlawfirm.com
In re Zoll Enterprises, Inc.
Bankr. S.D. Ind. Case No. 13-00635
Chapter 11 Petition filed January 25, 2013
See http://bankrupt.com/misc/insb13-00635.pdf
represented by: Steven P. Taylor, Esq.
Law Office of Steven P. Taylor, P.C.
E-mail: sptaylor@bankruptcyoffice.net
In re Jose Sanchez
Bankr. D. Mass. Case No. 13-10365
Chapter 11 Petition filed January 25, 2013
In re James White
Bankr. N.D. Miss. Case No. 13-10278
Chapter 11 Petition filed January 25, 2013
In re William May
Bankr. S.D. Miss. Case No. 13-50157
Chapter 11 Petition filed January 25, 2013
In re Law Office of Jacob Hafter, PC
Bankr. D. Nev. Case No. 13-10573
Chapter 11 Petition filed January 25, 2013
See http://bankrupt.com/misc/nvb13-10573.pdf
represented by: Jacob L. Hafter, Esq.
Law Offices of Jacob Hafter & Associates
E-mail: jhafter@hafterlaw.com
In re L & M New York Inc.
Bankr. E.D.N.Y. Case No. 13-40415
Chapter 11 Petition filed January 25, 2013
See http://bankrupt.com/misc/nyeb13-40415.pdf
represented by: Franklyn Rouse, Esq.
In re Michiel Schuitemaker
Bankr. S.D. Ohio Case No. 13-10336
Chapter 11 Petition filed January 25, 2013
In re Angel Vargas Montalvo
Bankr. D.P.R. Case No. 13-00484
Chapter 11 Petition filed January 25, 2013
In re Hector Baez Claudio
Bankr. D.P.R. Case No. 13-00505
Chapter 11 Petition filed January 25, 2013
In re MKM Enterprizes Inc.
Bankr. W.D. Wash. Case No. 13-10631
Chapter 11 Petition filed January 25, 2013
See http://bankrupt.com/misc/wawb13-10631.pdf
represented by: Stephen J. Plowman, Esq.
Stephen J. Plowman, Inc., P.S.
E-mail: sjplowmanlaw@gmail.com
In re White Mountain Lodging, Inc.
Bankr. D. Ariz. Case No. 13-01121
Chapter 11 Petition filed January 26, 2013
See http://bankrupt.com/misc/azb13-01121.pdf
represented by: William R. Richardson, Esq.
Richardson & Richardson, P.C.
E-mail: wrichlaw@aol.com
In re Stephen Wood
Bankr. C.D. Calif. Case No. 13-10759
Chapter 11 Petition filed January 26, 2013
In re Beauty and the Best, Inc.
Bankr. S.D. Tex. Case No. 13-50010
Chapter 11 Petition filed January 26, 2013
See http://bankrupt.com/misc/txsb13-50010.pdf
represented by: Carl Michael Barto, Esq.
Law Office of Carl M. Barto
E-mail: cmblaw@netscorp.net
In re Michael Bagby
Bankr. D. Md. Case No. 13-11344
Chapter 11 Petition filed January 27, 2013
In re Elizabeth Property Holdings, LLC
Bankr. D.N.J. Case No. 13-11519
Chapter 11 Petition filed January 27, 2013
See http://bankrupt.com/misc/njb13-11519.pdf
represented by: Timothy P. Neumann, Esq.
Broege, Neumann, Fischer & Shaver
E-mail: tneumann@bnfsbankruptcy.com
In re Boss Laundromat Services Corp.
Bankr. E.D.N.Y. Case No. 13-70422
Chapter 11 Petition filed January 27, 2013
See http://bankrupt.com/misc/nyeb13-70422.pdf
represented by: Daniel W Nieroda, Jr., Esq.
Nieroda & Nieroda, P.C.
E-mail: nycounsl@optonline.net
In re Robert Bliss
Bankr. D. Utah Case No. 13-20772
Chapter 11 Petition filed January 27, 2013
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers"
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors" Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Carmel
Paderog, Meriam Fernandez, Ronald C. Sy, Joel Anthony G. Lopez,
Cecil R. Villacampa, Sheryl Joy P. Olano, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman,
Editors.
Copyright 2013. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
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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 ***