/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/130201.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, February 1, 2013, Vol. 17, No. 31 Headlines 1701 COMMERCE: John P. Lewis Withdraws as Counsel 1701 COMMERCE: Signs Alternate Asset Purchase Agreement 250 AZ: Lender Opposes Cash Use, Building Control 250 AZ: Taps Hammel Beal as Tax Accountant 250 AZ: Proposes Breen Olson as Chapter 11 Counsel A123 SYSTEMS: Navitas Closes Purchase of Government Business ABB CONCISE: Term Loan Upsizing No Impact on Moody's 'B2' CFR ADVANCED MICRO: Fitch Downgrades IDR & Debt Rating to CCC' ALL YEAR COOLING: Case Summary & 20 Largest Unsecured Creditors ALLIANCE GRAIN: S&P Assigns 'B' CCR, Rates 2nd Lien Notes 'B' ALLIED SYSTEMS: Yucaipa Makes Offer to Try to Avoid Court Fight ANTERO RESOURCES: Moody's Assigns 'B2' Rating to USD150MM Notes ANTERO RESOURCES: S&P Retains 'B+' Rating on 6.0% Sr. Unsec. Notes ATP OIL: Shallow-Water Auction Scheduled for Feb. 26 BEAZER HOMES: Prices Offering of $200 Million Senior Notes at Par BERNARD L. MADOFF: Lautenberg Seems to Convince Judges in Appeal BERNARD L. MADOFF: Attorney General Lays Out Case Against Trustee BERRY PLASTICS: Moody's Raises Corp. Family Rating to 'B2' BERRY PLASTICS: Plans to Secure $1 Billion of Incremental Loan BRIGHT HORIZONS: S&P Raises Corporate Credit Rating to 'B+' CARVILLE NATIONAL: Case Summary & 20 Largest Unsecured Creditors CB BRIELLE: Case Summary & 3 Largest Unsecured Creditors CENTRAL EUROPEAN: Defends Revised Deal, Blasts Kaufman Suit CHAMPION INDUSTRIES: Incurs $22.9 Million Net Loss in Fiscal 2012 CHOCTAW GENERATION: Moody's Withdraws 'Caa1' Rating on Certs. CIVIC PARTNERS: Court Keeps Ruling on Main Street Lease CLINICA INTERDISCIPLINARIA: Case Summary & Creditors List COMMONWEALTH GROUP: Has Final OK to Use PNC Bank Cash Collateral COMMONWEALTH GROUP: Can Employ Gentry Tipton as Counsel COMMUNITY FINANCIAL: To Issue 3-Mil. Shares Subscription Rights COMMUNITY WEST: Earns $2.3 Million in Fourth Quarter CONVERGEX HOLDINGS: Moody's Maintains 'B2' CFR, Negative Outlook COPANO ENERGY: Moody's Reviews 'Ba3' CFR After KMP Purchase Offer COPYTELE INC: Incurs $4.3 Million Net Loss in Fiscal 2012 CORNERSTONE BANCSHARES: Posts $371,000 Net Income in 4th Quarter CRESCENT RESOURCES: Moody's Hikes CFR & Sec. Notes Rating to Caa1 CRESCENT HOLDINGS: S&P Lowers Corporate Credit Rating to 'B-' CUBIC ENERGY: Receives NYSE MKT Delisting Notice D'ARCY ACQUISITION: Case Summary & 20 Largest Unsecured Creditors D.R. HORTON: Fitch Assigns 'BB' Rating to New $400MM Senior Notes D.R. HORTON: Moody's Rates New $300MM Sr. Unsecured Notes 'Ba2' D.R. HORTON: S&P Assigns 'BB-' Rating to $300MM & $400MM Sr. Notes DAMES POINT: Involuntary Chapter 11 Case Summary DUNLAP OIL: Committee Can Hire Nussbaum Gillis as Counsel DUNLAP OIL: Feb. 8, 2013 Set as Claims Bar Date ENERGY FUTURE: Fitch Hikes IDRs to 'CCC' on Debt Exchange ENGLOBAL CORP: Huntsman Awards Reconstruction Project EGPI FIRECREEK: Deborah Alexander Named Secretary EPICEPT CORP: Sabby Healthcare Discloses 9.9% Equity Stake FAIRPOINT COMMUNICATIONS: Moody's Rates $300MM Senior Notes 'B2' FIRST DATA: Fitch Rates $785-Mil. Senior Unsecured Notes 'CCC+' FIRST DATA: Moody's Rates USD785MM Sr. Unsecured Notes 'Caa1' FIRST DATA: S&P Assigns 'B-' Rating to Sr. Unsec. Notes Due 2021 GENTA INC: Sabby Healthcare Discloses 9.9% Equity Stake GRAND RIVER: Court Confirms Plan of Liquidation H&E EQUIPMENT: USD100MM Note Add-On No Impact on Moody's 'B1' CFR H&E EQUIPMENT: S&P Assigns 'B+' Rating on Proposed $100MM Add-On HAWKER BEECHCRAFT: PBGC will Pay Retirement Benefits HAWKER BEECHCRAFT: Judge Approves IAM Pension Benefit Settlement HD SUPPLY: Plans to Offer $1.3 Billion of Senior Notes HELENA CHRISTIAN: Voluntary Chapter 11 Case Summary HILL CONSTRUCTION: Case Summary & 20 Largest Unsecured Creditors HOSTESS BRANDS: Apollo, Metropoulos Strike $410-Mil. Deal HOSTESS BRANDS: 2 Buyers Offer $56.35MM for Drakes, Bread Plants HRM LLC: Case Summary & 10 Largest Unsecured Creditors INTERFAITH MEDICAL: CohnReznick Approved as Financial Advisor INTERFAITH MEDICAL: Committee Taps CBIZ as Financial Advisor INTERFAITH MEDICAL: Kurron to Provide Senior Management Personnel IVOICE INC: Acquires American Security Capital JARRETT ELECTRIC: Case Summary & 20 Largest Unsecured Creditors JG WENTWORTH: Growing Debt Prompts Moody's to Cut CFR to 'Caa1' JOURNAL REGISTER: Revolver Lender's Lien Mostly Valid K-V PHARMACEUTICAL: Gynazole-1(R) Now Available for Prescribing KINDER MORGAN: S&P Puts 'B+' CCR on CreditWatch Positive LABORATORY SKIN: Case Summary & 20 Largest Unsecured Creditors LAGUNA BRISAS: Has Access to Cash Collateral Until Feb. 28 LAND SECURITIES: Files for Chapter 11 in Denver LAND SECURITIES: Case Summary & 20 Largest Unsecured Creditors LENNAR CORP: Fitch Assigns 'BB+' Rating to Proposed Senior Notes LENNAR CORP: Moody's Rates New Senior Unsecured Notes 'Ba3' LENNAR CORP: S&P Assigns 'BB-' Rating on Senior Notes Due 2018 LIBERACE FOUNDATION: Can Access US Bank Cash on Interim Basis LIGHTHOUSE IMPORTS: Can Employ Joseph Luzinski as CRO LIGHTHOUSE IMPORTS: Can Employ Latham Shuker as Counsel LODGENET INTERACTIVE: Gets Interim OK to Tap $5MM in Financing LODGENET INTERACTIVE: Proposes PwC as Independent Accountant LODGENET INTERACTIVE: Bankruptcy Prompts Moody's Rating Pullout METRO FUEL: Creditor Pushes for Chapter 7 Liquidation MF GLOBAL: Trustee Raises Estimates for Foreign Customers MICHAELS STORES: To Redeem $137MM Senior Notes on Feb. 27 MOUNTAIN PROVINCE: Names Vice President Finance and CFO-Designate MTL PUBLISHING: S&P Revises 'B+' Rating Outlook to Stable NEWLEAD HOLDINGS: Regains Compliance with NASDAQ Min. Bid Price NEXSTAR BROADCATING: Amends Articles of Incorporation NEXTWAVE WIRELESS: Avenue Capital No Longer Owns Shares NEXTWAVE WIRELESS: Polygon Management No Longer Owns Shares NORTEL NETWORKS: Aborted Settlement Freezes Up Claims Market OVERSEAS SHIPHOLDING: Recognized as Main Proceeding in U.K. PACIFIC CARGO: Case Summary & 20 Largest Unsecured Creditors PAR PHARMA: Term Loan Repricing No Impact on Moody's B2 CFR PARK AVENUE COMMONS: Case Summary & 8 Largest Unsecured Creditors PERMIAN HOLDINGS: Moody's Rates USD175MM Sr. Unsec. Notes 'B3' PLAY BEVERAGES: Obtains Favorable Ruling in Trademark Lawsuit PLAYBOY ENTERPRISES: S&P Puts 'B-' CCR on CreditWatch Negative PREFERRED PROPPANTS: S&P Affirms 'B+' Corporate Credit Rating QUAIL HOLLOW: Hires McEvoy Firm to Litigate Best Western Rift RAYMOND KELLEY: 8th Cir. BAP Upholds Accord Requiring Turnover RESIDENTIAL CAPITAL: Completes Sale of Fannie MSRs to Walter RESIDENTIAL CAPITAL: 2012 Bonus Program Approved by Judge REVSTONE INDUSTRIES: Committee Hiring FTI as Financial Advisors REVSTONE INDUSTRIES: Files Schedules of Assets and Liabilities REVSTONE INDUSTRIES: 341 Creditors' Meeting Continued to Feb. 14 RITE AID: Commences Debt Refinancing Transactions ROBLEX AVIATION: Fails in Second Attempt to Reinstate Chapter 11 ROCMEC MINING: AMF Grants Management Cease Trade Order SAMSON RESOURCES: S&P Cuts 2nd Lien Secured Debt Rating to 'B' SCHOOL SPECIALTY: Has $50 Million Funding From Bayside SCHOOL SPECIALTY: Proposes KCC as Claims & Notice Agent SCHOOL SPECIALTY: Robert Robotti Ceases to Hold Common Shares SCHOOL SPECIALTY: MSD Capital Disposes of 2.8MM Common Shares SINO-FOREST CORP: Implements Plan of Compromise & Reorganization ST TROPEZ: Case Summary & 10 Largest Unsecured Creditors STOCKTON, CA: Can Enter Creditor Deals Without OK, Judge Says TERRY SCHWINDT: US Trustee Fails to Block Kutner Miller Hiring THQ INC: Court Grants Motion to Approve Sale of Assets UNIFRAX I: Mood's Affirms 'Caa1' Rating on New Sr. Unsec. Notes UNIFRAX HOLDING: S&P Cuts Rating on New Sr. Secured Debt to 'B+' UTSTARCOM HOLDINGS: General Shareholders Meeting Set for March 21 VECTOR GROUP: Moody's Affirms B2 CFR, Rates USD375MM Notes Ba3 VECTOR GROUP: S&P Assigns 'B+' Rating to Senior Notes Due 2021 VELATEL GLOBAL: Ironridge to Resell 32-Mil. of Series A Shares WARNER SPRINGS: Wants Plan Exclusivity Until May 31 WELCH ENTERPRISES: Section 341(a) Meeting Scheduled for Feb. 19 XINERGY CORP: S&P Cuts CCR to CCC, Secured Notes Rating to CCC- * S&P Revises Ratings on 3 Exploration & Production Companies * Fitch Says U.S. Non-bank Financial Retail Bond Volumes to Rise * Moody's Sees Strong Global ACBP Performance in 2013 * Moody's Notes Improvement in Non-Financial Corporate Sectors * Record-Low Interest on Junk Debt Very Dangerous * Canadian Personal Bankruptcy Filings Continue to Decline * Consumers Union Renews Call for Debt Collection Reforms * Debtwire Releases Distressed Debt Market Outlook Survey * Optimism Slightly Receding in Office Markets, Survey Shows * Solyndra-Style Problems Seen in $8.33-Bil. Loan Guarantee * 2012 Foreclosure Activity Up in 57% of U.S. Metros * Ontario's Debt Loan Larger Than California, Report Says * Bryan Cave's H. Mark Mersel Earns AV Preeminent(R) Rating * Dan McElhinney Joins National DRC Business Development Team * BOOK REVIEW: The Health Care Marketplace ********* 1701 COMMERCE: John P. Lewis Withdraws as Counsel ------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas authorized John P. Lewis, Jr., to withdraw as counsel for 1701 Commerce, LLC, formerly known as Presidio Ft. Worth Hotel, LLC. The Court, in its order, stated that neither the Debtor nor any creditor or other party-in-interest will be prejudiced since the Debtor has employed a new counsel to represent its interest in the case. As reported in the TCR on Jan. 11, 2013, the Court has authorized the employment of Cole, Schotz, Meisel, Forman & Leonard, P.A. as substitute bankruptcy counsel. 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. 1701 COMMERCE: Signs Alternate Asset Purchase Agreement ------------------------------------------------------- 1701 Commerce, LLC, and the proposed buyers -- Presidio Hotel Fort Worth, LP, PHM Services, Inc., Edward Delorme, and Sushil Patel, and 1701 Commerce Acquisition, LLC, creditors and parties-in- interest in the Chapter 11 case -- asked the U.S. Bankruptcy Court for the Northern District of Texas to: i) approve an Alternate Asset Purchase Agreement, which is needed to ensure the funding of the proposed buyer's bank financing and equity investment; and ii) approve a reasonable breakup fee and cost reimbursement in the event that the proposed buyer is ready, willing, and able to close, and the Debtor fails to close the Alternate APA. On Nov. 5, 2012, the Court granted the Debtor's request to sell Sheraton Fort Worth Hotel and Spa to PHC Management, LLC (the Prism Buyer), pursuant to an asset purchase agreement. In entering the sale order, the Court specifically held open the potential that any other interested buyer could substitute in as the "buyer" under the sale order. The new buyers are prepared to purchase the hotel for funds which would pay all creditors in full and leave a substantial amount for equity. They have now advanced their due diligence and have obtained their conditional funding to the point that it is necessary for them to obtain their own sale order and asset purchase agreement, in order to take the transaction to the next and final stage. For the avoidance of doubt, the Debtors and the new buyers are not asking that the sale order be vacated, or that the Debtor cease moving towards a potential sale with the Prism Buyer. The key terms of the Alternate APA are: 1) the purchase price is $48,200,000 in cash, less pro-rated ad valorem property taxes; 2) the Debtor retains causes of action, and collected accounts receivable, thereby increasing the effective purchase price by the value of the assets (believed to be well in excess of $1 million); 3) the movants waive claims that they have filed against the Debtor in excess of $500,000 which, although not in the Alternate APA, is hereby unconditionally offered if the Alternate APA is approved and closes; and 4) the TOT Agreement would be assigned to the proposed buyer, and the proposed buyer would have to negotiate a franchise agreement with the franchisor. 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: Lender Opposes Cash Use, Building Control ------------------------------------------------- U.S Bank, N.A., objects to 250 AZ, LLC's request to use cash collateral, terminate Daymark Realty Advisors Inc. as asset manager, and hire CBRE Inc. as the new asset manager. U.S. Bank notes that the Debtor is simply a passive investor with no possessory interest in the office building or right to manage the Property. At best, the Debtor is entitled to receive its pro rata share of excess cash, if any, after the payment of debt service and operating expenses, only if the loan is not in default. U.S. Bank, National Association, as trustee for holders of commercial mortgage pass-through trust certificates, through CW Capital Asset Management, as special servicer, is owed $64.4 million, secured by the Debtor's interest in the Cincinnati office. U.S. Bank notes that according to the Debtor, the Trust is undersecured by nearly $40 million and the Property is operating at a $500,000 per month shortfall. Despite these facts, the Debtor has filed the cash collateral motion, seeking to obtain control of the Property and Rents in order to, among other things, pay itself and the other non-debtor TIC Entities $25,000 per month in the form of an "asset management fee" and in the form of a distribution from an investment that is not making any profit. According to U.S. Bank, the Debtor has no right to manage the Property and no right to any of the Rents. The Rents do not constitute the Debtor's cash collateral because the Debtor does not have any legal or equitable interest in the Rents. U.S. Bank is represented by: Keith C. Owens, Esq. Jennifer L. Nassiri, Esq. VENABLE LLP 2049 Century Park East, Suite 2100 Los Angeles, CA 90067 Telephone: (310) 229-9900 Facsimile: (310) 229-9901 - and - QUARLES & BRADY LLP One Renaissance Square Two North Central Avenue Phoenix, AZ 85004-2391 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: Taps Hammel Beal as Tax Accountant ------------------------------------------ 250 AZ, LLC, seeks to employ John P Lauer, CPA, at Hammel, Beal & Lauer, PC, as accountant to prepare its State and Federal Tax returns. In its application filed with the Bankruptcy Court, the Debtor said Lauer will advise the Debtor on accounting and tax matters and to prepare the Debtors State and Federal tax returns or other reports that may be required by the United States Trustee. The proposed accountant represents no interest adverse to the Debtor, or to the estate. Lauer will be charging the Debtor for his time at the rates for applicable staff from $80 to $260 per hour. An estimate of the anticipated compensation proposed to be paid to the accountant is as follows: a. Estimate $4,000 to prepare the Debtor's Federal, and State tax returns. b. Estimate $2,500 per month to prepare the Debtor's monthly reports. c. Estimate $4,500 per month for all accounting services. 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 Breen Olson as Chapter 11 Counsel -------------------------------------------------- 250 AZ, LLC, seeks to employ Breen, Olson & Trenton, LLP, as attorneys. The Debtor has selected BO&T because BO&T has substantial experience in matters relating to insolvency, reorganization and bankruptcy law. The compensation to be paid to BO&T for services to be rendered on behalf of the Debtor includes reimbursement of all costs incurred, advanced and payment for services provided at the hourly rates in effect when work was performed by the attorneys with BO&T. The current hourly rates are: Attorneys $350 Paralegals $150 Law Clerk/Bookkeeper $50 to $150 Prepetition, BO&T did extensive work for the Debtor to identify potential capital sources for the multiple LLC's that were owners of the 250 East Fifth Street Building an in "rolling up" those interests into 250 AZ LLC. The firm was paid $342,927 for legal services incurred for the various members of the Debtor. BO&T says it has no connection with any other parties in interest or their respective attorneys in this proceeding, which would create a disqualification or conflict of interest. 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. A123 SYSTEMS: Navitas Closes Purchase of Government Business ------------------------------------------------------------ Navitas Systems LLC, a provider of energy-enabled system solutions and energy storage products for commercial, industrial and government agency customers, on Jan. 30 disclosed that it has finalized its acquisition of substantially all of the assets of A123 Systems' former Ann Arbor, Michigan-based government business, including U.S. military contracts. Navitas Systems' bid won the defense-related assets of A123 and was approved by the US Bankruptcy Court on December 11, 2012. Navitas' acquisition represents the final milestone in this transaction. Earlier on Jan. 30, Wanxiang America Corporation announced that it has acquired substantially all of the non-government business assets of A123 Systems, Inc. through a transaction that has been approved by the Committee on Foreign Investment in the United States (CFIUS). Alan ElShafei, Chairman and Founder of Navitas Systems, said, "Beyond the laboratory, intellectual property assets and government contracts we formally gained today, we're delighted that all of our offers to the eligible employees of the Ann Arbor, Michigan R&D facility were accepted. This enables Navitas to keep intact all of the world-class scientists and engineers necessary to develop and commercialize Nanophosphate lithium ion battery chemistry and other advanced battery technologies being developed for critical military and government applications." In addition to keeping the Ann Arbor R&D team intact, Navitas has also hired several key engineers from A123's Livonia Automotive Group who were working on the productization of several government battery projects. Nancie ElShafei, CEO of Navitas Systems said, "Part of the excitement of the Ann Arbor team is because their research and development work now has a direct outlet to exciting military and other governmental applications which the Navitas team in Woodridge Illinois is cultivating. The second part of their excitement in accepting the Navitas offers stems from the leadership of Les Alexander, who will assume the role as General Manager of the newly titled organization, 'Navitas Advanced Solutions Group (ASG).'" Les Alexander has deep experience in the lithium battery industry, and has been an integral part of the Ann Arbor R&D team since the days of T/J Technologies, a lithium battery technology firm which A123 Systems acquired in 2006. "First off I would like to thank Alan and Nancie ElShafei and the Navitas team for the vision of acquiring the A123 Government business. There's no question that the last six months have been tough. But we begin 2013 with a new company, a clear and well-funded path forward, and the enthusiasm and support of our employees and customers to get on with the business of creating and implementing advanced battery solutions which will have dual-use in both government and commercial applications. We are literally 're-charged!'" Lithium battery safety has been in the news of late, with the recent incidents involving new Boeing jet aircraft. Alan ElShafei added, "Our scientists and engineers know that high performance can't come at the expense of safety. We have some exciting new initiatives on our technology roadmap in this area. Navitas Systems will continue to commit and dedicate the resources needed in working with industry leaders to reinforce safety as the top priority." About A123 Systems Based in Waltham, Massachusetts, A123 Systems Inc. designs, develops, manufactures and sells advanced rechargeable lithium-ion batteries and battery systems and provides research and development services to government agencies and commercial customers. A123 is the recipient of a $249 million federal grant from the Obama administration. Pre-bankruptcy, A123 had an agreement to sell an 80% stake to Chinese auto-parts maker Wanxiang Group Corp. U.S. lawmakers opposed the deal over concerns on the transfer of American taxpayer dollars and technology to China. A123 didn't make a $2.7 million payment due Oct. 15 on $143.75 million in 3.75% convertible subordinated notes due 2016. A123 and U.S. affiliates, A123 Securities Corporation and Grid Storage Holdings LLC, sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 12-12859 to 12-12861) on Oct. 16, 2012. A123 disclosed assets of $459.8 million and liabilities totaling $376 million. Debt includes $143.8 million on 3.75% convertible subordinated notes. Other liabilities include $22.5 million on a bridge loan owing to Wanziang. About $33 million is owed to trade suppliers. The Hon. Kevin J. Carey presides over the case. Lawyers at Richards, Layton & Finger, P.A., and Latham & Watkins LLP serve as the Debtors' counsel. Lazard Freres & Co. LLC acts as the Debtors' financial advisors, while Alvarez & Marsal serves as restructuring advisors. Logan & Company Inc. serves as the Debtors' claims and noticing agent. Wanxiang America Corporation and Wanxiang Clean Energy USA Corp. are represented in the case by lawyers at Young Conaway Stargatt & Taylor, LLP, and Sidley Austin LLP. JCI is represented in the case by Josh Feltman, Esq., at Wachtell Lipton Rosen & Katz LLP. An official committee of unsecured creditors has been appointed in the case. The Committee is represented by lawyers at Brown Rudnick LLP and Saul Ewing LLP. A123 sought bankruptcy protection with a deal to sell its auto- business assets to Johnson Controls Inc. The deal with JCI is valued at $125 million, and subject to higher offers at a bankruptcy auction. At an auction early in December, JCI's bid was topped by Wanxiang America's $256.6 million offer. The Bankruptcy Court approved the sale on Dec. 11. Wanxiang is buying most of A123, except for its government business. Navitas Systems, a Chicago-area company spun off from Sun MicroSystems, is buying A123's government business for $2.25 million. The sale is expected to close come Feb. 1. JCI has filed an appeal from the sale approval ABB CONCISE: Term Loan Upsizing No Impact on Moody's 'B2' CFR ------------------------------------------------------------- Moody's Investors Service said that although the upsizing of ABB Concise's Term Loan B facility is credit negative, it does not currently impact the B2 Corporate Family Rating, or stable outlook. The principal methodology used in rating ABB/Concise Optical Group LLC was the Global Distribution and Supply Chain Services Industry Methodology. ABB Concise's grid-indicated rating, based on Moody's 12-18 month forward view is "B2", at the same level as the Corporate Family Rating. Headquartered in Coral Springs, Florida, ABB/Con-Cise Optical Group LLC distributes soft contact lenses in the United States. On December 28, 2012, ABB Concise completed a merger with Optical Distributor Group LLC, the second largest U.S. distributor of contact lenses. Together, ABB Concise and ODG supply more than 30,000 eye care professionals across the United States, primarily comprised of independent ECPs, as well as other ECPs including national retail chains and franchisees. ABB Concise also designs and manufactures customized contact lenses, and operates facilities in Florida, Massachusetts, and California. ODG maintains a facility in New York, which also manufactures digital ophthalmic lenses. The company is privately owned by financial sponsor, New Mountain Capital. The combined company will have a pro forma revenue base of approximately USD850 million. ADVANCED MICRO: Fitch Downgrades IDR & Debt Rating to CCC' ---------------------------------------------------------- Fitch Ratings has downgraded the following ratings for Advanced Micro Devices Inc.'s (NYSE: AMD): --Long-term IDR to 'CCC' from 'B'; --Senior unsecured debt to 'CCC/RR4' from 'B/RR4'. Fitch's actions affect approximately $2.1 billion of total debt. The ratings reflect Fitch's expectations that negative free cash flow (FCF) in 2013 will drive cash below AMD's target level and potentially approach the company's minimum operating level. Beyond the near-term, Fitch believes a strong end market recovery and adoption of AMD's new products will be required to preserve cash during the company's multi-year transformation. Fitch expects negative revenue growth in the mid- to high-teens for 2013, driven by weak consumer spending, robust tablet penetration and lingering excess channel inventory anticipated for the first half of the year. Revenue growth could turn positive in the back half of 2013, assuming strong sales of AMD's new products. Negative revenue growth will drive profitability lower in 2013, despite restructuring actions expected to reduce quarterly operating expenses to $450 million by the September 2013 quarter. Fitch expects negative FCF of $250 million to $450 million in 2013 from lower profitability levels and inventory builds related to new product ramps. AMD's cash usage will be amplified by cash payments to GLOBALFOUNDRIES (GF) for amendments to the wafer supply agreement (WSA), including $215 million in fiscal 2013 and $200 million at the beginning of fiscal 2014. These cash outflows could be partially offset by proceeds from AMD's proposed office building sale-and-leaseback transaction. AMD is planning first half of 2013 launches of system-on-a-chip (SoC) accelerated processors for ultra-low power mobility and tablet products and solid revenue growth in the second of 2013 from ramps of a broad set of design wins. Delays to these launches, the expected market recovery, or product sales ramps would exacerbate Fitch forecasts. Credit protection measures will remain volatile, due to variations in profitability. Fitch estimates total leverage was 4.2x for 2012 but may approach 10x in 2013. Fitch estimates interest coverage was 2.8x for 2012 but could fall to 1x in 2013. AMD's transformation targets higher-growth markets, including ultra-low-power mobility, high-density servers and semi-custom embedded products. Given AMD's traditional PC markets represent the vast majority of sales, achieving the company's target of 40%- 50% of sales from higher-growth markets will require a number of years. Fitch believes liquidity was sufficient as of Dec. 29, 2012, and consisted of $1.18 billion of cash and cash equivalents, including $181 million of long-term marketable securities. Fitch expects negative FCF of $250 million to $450 million for the current year, pressuring liquidity by the end 2013. The company has a stated target cash level of $1.1 billion and minimum operating cash level of $700 million. Total debt was $2.1 billion at Dec. 29, 2012 and consisted of: - $580 million of 6% senior unsecured convertible notes due 2015; - $500 million of 8.125% senior unsecured notes due 2017; - $500 million of 7.75% senior unsecured notes due 2020; - $500 million of 7.5% senior unsecured notes due 2022; - Approximately $25 million of capital leases. AMD's ratings continue to be supported by: -- Low capital intensity as a fabless semiconductor maker, resulting in a stronger FCF profile; -- Reduced revenue breakeven profitability, pro forma for the completion of current restructuring initiatives; -- The company's role as the only current viable alternative microprocessor supplier to Intel, although Fitch expects new entrants in certain markets over the intermediate term. Fitch's concerns center on: -- Limited financial flexibility, given cash usage trends; -- AMD's modest share of the overall PC market and limited share in rapidly growing small-form factor mobility products; -- High R&D intensity as a fabless semiconductor maker. Further negative rating actions could be taken if the penetration of new APU products is lackluster, resulting in revenue declines and cash usage beyond 2013. Positive rating actions could occur if: -- FCF exceeds the upper end of Fitch's base case range; -- Strong adoption of new products, portending solid revenue growth and positive FCF in 2014. AMD's Recovery Ratings (RRs) reflect Fitch's belief that the company would be reorganized rather than liquidated in a bankruptcy scenario. This is given Fitch's estimates that AMD's reorganization value of approximately $1 billion exceeds a projected liquidation value of $682 million. To arrive at a reorganization value, Fitch assumes a 4x reorganization multiple and applies it to its estimate of distressed operating EBITDA of $260 million, which covers estimated annual fixed charges, resulting in an adjusted reorganization value of $939 million after subtracting administrative claims. Fitch estimates the approximately $2.1 billion of unsecured claims recover approximately 45%, resulting in an RR of 'RR4'. ALL YEAR COOLING: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: All Year Cooling and Heating, Inc. 1345 NE 4th Avenue Fort Lauderdale, FL 33304 Bankruptcy Case No.: 13-11811 Chapter 11 Petition Date: January 28, 2013 Court: United States Bankruptcy Court Southern District of Florida (Fort Lauderdale) Judge: Raymond B. Ray Debtor's Counsel: Bradley S. Shraiberg, Esq. 2385 NW Executive Center Dr. #300 Boca Raton, FL 33431 Tel: (561) 443-0801 Fax: (561) 998-0047 E-mail: bshraiberg@sfl-pa.com Scheduled Assets: $3,129,575 Scheduled Liabilities: $9,270,020 A copy of the Company's list of its 20 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/flsb13-11811.pdf The petition was signed by Thomas Smith. ALLIANCE GRAIN: S&P Assigns 'B' CCR, Rates 2nd Lien Notes 'B' ------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'B' long- term corporate credit rating to Regina, Sask.-based Alliance Grain Traders Inc. (AGT). The outlook is stable. At the same time, Standard & Poor's assigned its 'B' issue-level rating and '4' recovery rating to AGT's proposed C$125 million senior secured second-lien notes. The '4' recovery rating indicates S&P's expectation of average recovery (30%-50%) in the event of default. Proceeds from the notes issuance will be used to refinance a portion of the company's existing debt and for general corporate purposes. "The ratings on AGT reflect what we view as the company's weak business risk profile, characterized by its narrow diversity in the sourcing, processing, and distribution of pulses; the high degree of fragmentation in the global market for pulses; and its weak and volatile earnings owing to inherent weather-related risks and unpredictable supplies for its key commodities," said Standard & Poor's credit analyst Donald Marleau. "We believe these weaknesses are mitigated somewhat by the company's increasing business diversity and its leading position in global pulse processing," Mr. Marleau added. S&P views AGT's financial risk profile as aggressive, demonstrated by high debt leverage of more than 6x, as elevated debt levels from acquisitions and other investments coincided with lower earnings in 2012 caused by weakened demand in some of its key markets. AGT's high leverage is counterbalanced by stable, albeit low, EBITDA margins that should support steady cash flow protection and adequate liquidity. "The stable outlook reflects our expectation that improved demand in AGT's key markets and the company's expanded footprint should support stronger profitability and lower leverage in 2013. Notwithstanding good EBITDA interest coverage, working capital and growth capital expenditures could contribute to a free and discretionary cash burn in the absence of improved working capital efficiency, potentially constraining a meaningful improvement in leverage amid better business conditions. We could lower the rating if AGT's credit measures deteriorated and were more consistent with the highly leveraged financial risk profile, characterized by debt to EBITDA sustained above 6.5x, EBITDA interest coverage of less than 2.5x, and single-digit funds from operations to debt, which we believe could occur if gross margins remained below 9% indicating persistently weak demand in its core markets. On the other hand, we could raise the rating if AGT's leverage declined to below 4x on a sustainable basis, which would be more consistent with a significant financial risk profile. We believe that such a scenario could occur if gross margins rebounded to the 10.5%-11.0% AGT generated in 2011, indicating more steady market conditions, improved returns from AGT's recent investments, and a potentially stronger business risk profile," S&P noted. ALLIED SYSTEMS: Yucaipa Makes Offer to Try to Avoid Court Fight --------------------------------------------------------------- Peg Brickley at Dow Jones' DBR Small Cap reports that Ron Burkle's Yucaipa Cos. has made an offer to bail out trucker Allied Systems Holdings Inc. from its third trip to bankruptcy, but lenders Black Diamond Capital Management LLC and Spectrum Investments Partners LP are pushing ahead to fight out the company's fate in court. About Allied Systems BDCM Opportunity Fund II, LP, Spectrum Investment Partners LP, and Black Diamond CLO 2005-1 Adviser L.L.C., filed involuntary petitions for Allied Systems Holdings Inc. and Allied Systems Ltd. (Bankr. D. Del. Case Nos. 12-11564 and 12-11565) on May 17, 2012. The signatories of the involuntary petitions assert claims of at least $52.8 million for loan defaults by the two companies. Allied Systems, through its subsidiaries, provides logistics, distribution, and transportation services for the automotive industry in North America. Allied Holdings Inc. previously filed for chapter 11 protection (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537) on July 31, 2005. Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represented the Debtors in the 2005 case. Allied won confirmation of a reorganization plan and emerged from bankruptcy in May 2007 with $265 million in first-lien debt and $50 million in second- lien debt. The petitioning creditors said Allied has defaulted on payments of $57.4 million on the first lien debt and $9.6 million on the second. They hold $47.9 million, or about 20% of the first-lien debt, and about $5 million, or 17%, of the second-lien obligation. They are represented by Adam G. Landis, Esq., and Kerri K. Mumford, Esq., at Landis Rath & Cobb LLP; and Adam C. Harris, Esq., and Robert J. Ward, Esq., at Schulte Roth & Zabel LLP. Allied Systems Holdings Inc. formally put itself and 18 subsidiaries into bankruptcy reorganization June 10, 2012, following the filing of the involuntary Chapter 11 petition. The Company is being advised by the law firms of Troutman Sanders, Gowling Lafleur Henderson, and Richards Layton & Finger. The bankruptcy court process does not include captive insurance company Haul Insurance Limited or any of the Company's Mexican or Bermudan subsidiaries. The Company also announced that it intends to seek foreign recognition of its Chapter 11 cases in Canada. An official committee of unsecured creditors has been appointed in the case. The Committee consists of Pension Benefit Guaranty Corporation, Central States Pension Fund, Teamsters National Automobile Transporters Industry Negotiating Committee, and General Motors LLC. The Committee is represented by Sidley Austin LLP. ANTERO RESOURCES: Moody's Assigns 'B2' Rating to USD150MM Notes --------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Antero Resources Finance Corporation's proposed USD150 million senior notes due 2020. The notes are being offered as an add-on under the indenture to the existing USD300 million senior notes due 2020. Net proceeds from the notes offering will be used to repay borrowings under its senior secured revolving credit facility and to pre-fund the company's USD1.65 billion capital budget. The rating outlook was changed to stable from positive. "Antero's repositioning of its asset portfolio into the liquids- rich Marcellus and Utica Shale plays provide for proved developed reserve, production and cash flow growth potential," stated Michael Somogyi, Moody's Vice President -- Senior Analyst. "However, the company's plan to significantly out-spend internally generated cash flow through 2013 is expected to elevate its leverage profile and constrains the ratings at this time." Issuer: Antero Resources Finance Corporation Corporate Family Rating, Affirmed B1 Probability of Default rating, Affirmed B1-PD Speculative Grade Liquidity Rating, Affirmed SGL-3 USUSD525 million Senior Unsecured Regular Bond/Debenture, Affirmed B2 USUSD400 million Senior Unsecured Regular Bond/Debenture, Affirmed B2 USUSD300 million Senior Unsecured Regular Bond/Debenture, Affirmed B2 USUSD150 million Senior Unsecured Regular Bond/Debenture, Assigned B2 USUSD150 million Senior Unsecured Regular Bond/Debenture, Assigned LGD4-66% Rating outlook changed to stable from positive Ratings Rationale The B1 CFR reflects Antero's small ratio of proved developed (21%) to total proved reserve base, natural gas weighted production profile (93%) and high reliance on external funding sources to finance its growth plans. The B1 CFR is supported by the size of the company's proved reserves, expectations for low F&D costs based on its large inventory of low-risk drilling locations and its robust commodity hedging program to protect future cash flow. The B2 rating on the proposed USD150 million add-on senior notes reflects both Antero's overall probability of default, to which Moody's assigns a PDR of B1-PD, and a loss given default of LGD 4 (66%). Antero also has USD525 million of senior notes due 2017, USD400 million of senior notes due 2019 and USD300 million of senior notes due 2020. Both the new and existing senior notes are unsecured and are, therefore, subordinated to the senior secured credit facility's potential priority claim to the company's assets. The size of the potential senior secured claims relative to the unsecured notes outstanding results in the senior notes being notched one rating below the B1 CFR under Moody's Loss Given Default Methodology. Pro forma for the note offering, Antero will have full availability to the USD700 million lender commitment under its USD1.24 billion senior secured revolving credit facility. Based on the company's growth plans, this availability is not expected to be sufficient to fund its capital budget through 2013, at which time additional outside capital will be required. Therefore, Moody's expects the company to increase its debt balance and leverage profile to rise to over USD27,000 per barrels of oil equivalent (BOE) on an average daily production basis and over USD10.50 per BOE on a proved developed reserve basis. The revolving credit facility matures in May 2016. It requires that Antero maintain a minimum current ratio of 1.0x and a minimum interest coverage ratio of 2.5x -- the company is expected to remain in compliance with both ratios. The liquidity rating of SGL-3 reflects the expectation that internally generated cash flow will not be sufficient to fund the planned capital budget, and therefore there is a high degree of reliance on external sources of capital. Antero has narrowed its operating focus by repositioning its asset base into the liquids-rich Marcellus and Utica Shale plays. The company closed the sale of its properties in the Arkoma Basin in June 2012 for USD445 million and closed the sale of its assets in the Piceance Basin in December 2012 for USD325 million. The company's remaining properties are now focused in the Utica, Marcellus, and Upper Devonian Shale plays within the Appalachian Basin. Adjusted for the Arkoma asset sale, Antero ended the calendar year 2012 with a proved reserve base of approximately 822 million barrels of oil equivalent (MMboe), of which 75% was natural gas and only 21% was classified as proved developed. The principal methodology used in rating Antero Resources Finance Corporation was the Global Independent Exploration and Production Industry Methodology published in December 2011. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Antero Resources, LLC is a private, independent exploration and production company headquartered in Denver, Colorado. ANTERO RESOURCES: S&P Retains 'B+' Rating on 6.0% Sr. Unsec. Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services said its 'B+' issue rating on Antero Resources Finance Corp.'s 6.0% senior unsecured notes due 2020 is unchanged after the company announced it will seek to add a proposed $150 million to the existing $300 million notes outstanding, bringing the total issue amount to $450 million. The recovery rating on the notes is '4', indicating S&P's expectation of average (30% to 50%) recovery in the event of a payment default. The issue and recovery ratings are based on S&P's rating on exploration and production company Antero Resources LLC (B+/Stable/--), which guarantees the proposed notes on a senior unsecured basis. The exploration and production company intends to use proceeds to repay a portion of the outstanding borrowings under its senior secured revolving credit facility. The ratings on Denver-based Antero Resources LLC (Antero) reflect S&P's assessment of the company's "weak" business risk and "aggressive" financial risk. The ratings on Antero incorporate the company's participation in the competitive and highly cyclical oil and gas industry, the high percentage of proved undeveloped reserves, significant costs associated with the company's development of its proved reserve base, and its high concentration of natural gas reserves. S&P's ratings also reflect the company's good cash operating costs, solid reserve replacement, and Antero's favorable hedges. RATINGS LIST Antero Resources LLC Corporate credit rating B+/Stable/-- Antero Resources Finance Corp. $450 mil 6.0% sr unsecd nts due 2020* B+ Recovery rating 4 *$150 million added to existing $300 million notes ATP OIL: Shallow-Water Auction Scheduled for Feb. 26 ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that ATP Oil & Gas Corp. will hold an auction for its shallow-water properties on Feb. 26 under sale procedures approved by the U.S. Bankruptcy Court in Houston. The company is required to sell the assets under provisions in the loan financing the Chapter 11 effort. According to the report, preliminary bids are due Feb. 5, followed by a Feb. 19 final bid deadline, the Feb. 26 auction, and a hearing on Feb. 28 for approval of the sale. No buyers are yet under contract. The bankruptcy court will hold a hearing Feb. 14 for approval of auction procedures for ATP's deep-water properties. The report relates that the shallow-water properties have proved reserves of 2.5 million barrels of crude oil equivalent. There is an additional 544,000 in probable and possible barrels of crude equivalent, according to a court filing. Buyers will be permitted to bid block-by-block or for the entire package. ATP is required to sell the assets because a geologist's report came in below a specified threshold in the loan agreement financing the bankruptcy. About ATP Oil Houston, Tex.-based ATP Oil & Gas Corporation is an international offshore oil and gas development and production company focused in the Gulf of Mexico, Mediterranean Sea and North Sea. ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP, serve as bankruptcy counsel. Munsch Hardt Kopf & Harr, P.C., is the conflicts counsel. Opportune LLP is the financial advisor and Jefferies & Company is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. Filings with the Bankruptcy Court and claims information are available at http://www.kccllc.net/atpog ATP disclosed assets of $3.6 billion and $3.5 billion of liabilities as of March 31, 2012. Debt includes $365 million on a first-lien loan where Credit Suisse AG serves as agent. There is $1.5 billion on second-lien notes with Bank of New York Mellon Trust Co. as agent. ATP's other debt includes $35 million on convertible notes and $23.4 million owing to third parties for their shares of production revenue. Trade suppliers have claims for $147 million, ATP said in a court filing. An official committee of unsecured creditors has been appointed in the case. Evan R. Fleck, Esq., at Milbank, Tweed, Hadley & McCloy, in New York, represents the Creditors Committee as counsel. BEAZER HOMES: Prices Offering of $200 Million Senior Notes at Par ----------------------------------------------------------------- Beazer Homes USA, Inc., priced its previously-announced offering of $200 million aggregate principal amount of 7.25% Senior Notes due 2023 at par. The Notes are being offered in a private offering that is exempt from the registration requirements of the Securities Act of 1933. The Company is offering the Notes within the United States to qualified institutional buyers in accordance with Rule 144A and outside the United States in accordance with Regulation S under the Securities Act. The Company intends to use the net proceeds from the offering to fund or replenish cash that is expected to be used to fund the redemption of its 6.875% senior notes due 2015 and for general corporate purposes. About Beazer Homes Beazer Homes USA, Inc. (NYSE: BZH) -- http://www.beazer.com/-- headquartered in Atlanta, is one of the country's 10 largest single-family homebuilders with continuing operations in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, New Jersey, New Mexico, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia. Beazer Homes is listed on the New York Stock Exchange under the ticker symbol "BZH." The Company's balance sheet at Dec. 31, 2012, showed $1.92 billion in total assets, $1.67 billion in total liabilities and $242.61 million in total stockholders' equity. Beazer Homes incurred a net loss of $145.32 million for the fiscal year ended Sept. 30, 2012, a net loss of $204.85 million for the fiscal year ended Sept. 30, 2011, and a net loss of $34.04 million for the fiscal year ended Sept. 30, 2010. * * * Beazer carries a 'B-' issuer credit rating, with "negative" outlook, from Standard & Poor's. In the Jan. 30, 2013, edition of the TCR, Moody's Investors Service raised Beazer Homes USA, Inc.'s corporate family rating to Caa1 from Caa2 and probability of default rating to Caa1-PD from Caa2-PD. The ratings upgrade reflects Moody's increasing confidence that Beazer's credit metrics, buoyed by a stregthening housing market, will gradually improve for at least the next two years and that the company may be able to return to a modestly profitable position as early as fiscal 2014. As reported by the TCR on Sept. 10, 2012, Fitch Ratings has upgraded the Issuer Default Rating (IDR) of Beazer Homes USA, Inc. (NYSE: BZH) to 'B-' from 'CCC'. The upgrade and the Stable Outlook reflect Beazer's operating performance so far this year, its robust cash position, and moderately better prospects for the housing sector during the remainder of this year and in 2013. The rating is also supported by the company's execution of its business model, land policies, and geographic diversity. BERNARD L. MADOFF: Lautenberg Seems to Convince Judges in Appeal ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that lawyers for U.S. Senator Frank Lautenberg seemed on the way to convincing the U.S. Court of Appeals in Manhattan that customers defrauded by Bernard L. Madoff Investment Securities LLC eventually will be able to sue members of Madoff's family. According to the report, through a family foundation, Sen. Lautenberg, a New Jersey Democrat, was among those appealing a decision from December 2011 by a district judge in New York, who upheld the bankruptcy court and barred individual customers from suing Madoff's family members. The report relates that in the appeal argued Jan. 25 in the U.S. Appeals Court in Manhattan, at least two of the three judges on the appeals court panel seemed inclined to agree that customers can sue Madoff family members after trustee Irving Picard makes all the recoveries he ever will realize from suits against insiders. The report discloses even the lawyer for Picard, David Sheehan from Baker & Hostetler LLP, told the judges he wouldn't object if customers were to sue once he's collected all of his judgments against the Madoff family. Mr. Sheehan argued that the trustee alone is entitled to sue. Every dollar the family received from the Madoff firm was the product of a fraudulent transfer because it was stolen from customers, Mr. Sheehan said. Circuit Judge Reena Raggi posed a hypothetical where Bernard Madoff's brother received an inheritance from a third party not tainted with fraud. She said it "strikes me as odd" if the Madoff trustee were to argue that customers couldn't sue to recover money that came from another source. The appellate judges didn't say when they will rule. In the opinion the Lautenberg Foundation is appealing, U.S. District Judge Alvin K. Hellerstein said the trustee is suing the Madoff family for $200 million. The creditors' suits are based on "alleged misrepresentations and lies that every creditor of the estate suffered," the judge said. As a result, Judge Hellerstein ruled that the lawsuit belongs to Mr. Picard, in accord with prior decisions from the U.S. Court of Appeals in Manhattan. The Lautenberg appeal in the Court of Appeals is Lautenberg Foundation v. Picard (In re Bernard L. Madoff Investment Securities LLC), 11-5421, U.S. Court of Appeals for the Second Circuit (Manhattan). The injunction appeal in district court is Lautenberg Foundation v. Picard (In re Bernard L. Madoff), 11-02135, U.S. District Court, Southern District of New York (Manhattan). About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.) The SIPA Trustee has said that as of March 31, 2012, through prepetition litigation and other settlements, he has successfully recovered, or reached agreements to recover, more than $9 billion -- over 50% of the principal lost in the Ponzi scheme by those who filed claims -- for the benefit of all customers of BLMIS. The liquidation has so far has cost the Securities Investor Protection Corp. $1.3 billion, including $791 million to pay a portion of customers' claims. Mr. Picard has so far made only one distribution in October of $325 million for 1,232 customer accounts. Uncertainty created by various appeals has limited Mr. Picard's ability to distribute recovered funds. BERNARD L. MADOFF: Attorney General Lays Out Case Against Trustee ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that New York Attorney General Eric Schneiderman laid out his argument why the bankruptcy of Bernard L. Madoff Investment Securities LLC is no bar to a settlement under which principals of one of Madoff's main feeder funds will pay $410 million to the funds' investors. According to the report, after Mr. Schneiderman announced the settlement, Madoff trustee Irving Picard started a lawsuit in bankruptcy court contending that the settlement is an interference with property of the bankrupt estate and is therefore automatically void. Mr. Schneiderman persuaded U.S. District Judge Jed Rakoff to remove the dispute from bankruptcy court. In briefs filed, Mr. Schneiderman and representatives of the feeder funds affiliated with J. Ezra Merkin explained why they are entitled to complete the settlement. On a technical point, they say there is no property of the Madoff estate involved and thus no automatic prohibition against settlement of the suit brought by the state attorney general for violation of New York's Martin Act. According to the report, Mr. Schneiderman said proceeds from his settlement will go to investors in the feeder funds, who aren't Madoff customers and have no claims to be paid with money from the Securities Investor Protection Corp. The attorney general contends that his settlement is much larger than whatever suit Mr. Picard could bring successfully against the feeder funds and their managers since the feeder funds took out less than they invested with Madoff. Mr. Picard has argued previously that the feeder funds and their managers won't have enough money left after the settlement to pay judgments he expects to obtain. Mr. Schneiderman also contends there is no power in bankruptcy law to stop a state attorney general's lawsuit enforcing police and regulatory powers. The decision ultimately to be rendered by Rakoff will decide who receives the $410 million. If Mr. Picard wins, halts the attorney general's lawsuit, and recovers $410 million or some other amount from Merkin, Picard will distribute the funds to Madoff customers, probably not including Merkin's own investors. Mr. Schneiderman, on the other hand, will turn over most of the $410 million to the Merkin customers. The dispute with Schneiderman in district Court is Picard v. Schneiderman, 12-cv-06733, U.S. District Court, Southern District New York (Manhattan). The lawsuit with Schneiderman in bankruptcy court is Picard v. Schneiderman, 12-01778, U.S. Bankruptcy Court, Southern District of New York (Manhattan). About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.) The SIPA Trustee has said that as of March 31, 2012, through prepetition litigation and other settlements, he has successfully recovered, or reached agreements to recover, more than $9 billion -- over 50% of the principal lost in the Ponzi scheme by those who filed claims -- for the benefit of all customers of BLMIS. The liquidation has so far has cost the Securities Investor Protection Corp. $1.3 billion, including $791 million to pay a portion of customers' claims. Mr. Picard has so far made only one distribution in October of $325 million for 1,232 customer accounts. Uncertainty created by various appeals has limited Mr. Picard's ability to distribute recovered funds. BERRY PLASTICS: Moody's Raises Corp. Family Rating to 'B2' ---------------------------------------------------------- Moody's Investors Service upgraded the corporate family rating of Berry Plastics to B2 from B3 and the probability of default rating to B2-PD from B3-PD. The speculative grade liquidity rating was also upgraded to SGL-2 from SGL-3. Moody's also assigned a B1 rating to the incremental USD1.03 billion term loan B. Additional instrument ratings are detailed below. The ratings outlook remains stable. The proceeds of the incremental term loan will be used to repay USD681 million first lien notes due 2015, USD210 million second lien senior secured notes due 2014 and USD127 million of senior subordinated notes due 2016. Simultaneously with the upgrade, Moody's moved the corporate family, probability of default and speculative grade liquidity ratings to the parent Berry Plastics Group Inc from Berry Plastics Corp. The change is due to the fact that Berry Plastics Group Inc. is now the entity that files financials with the SEC following an IPO in October 2012. Moody's took the following rating actions: Berry Plastics Group Inc. Assigned B2 corporate family rating Assigned B2-PD probability of default rating Assigned SGL-2 speculative grade liquidity rating Upgraded USD500 million unsecured Term Loan due 6/5/2014 (USD39 million outstanding), Caa1/LGD 6-96% from Caa2/LGD 6-96% Berry Plastics Corporation Withdrew B3 corporate family rating Withdrew B3-PD probability of default rating Withdrew SGL-3 speculative grade liquidity rating Assigned USD1,030 million Gtd. 1st Lien Sr. Sec. Term Loan B, B1/LGD 3-41% Affirmed USD1,200 million Gtd. 1st Lien Sr. Sec. Term Loan due 4/3/2015 (USD1134M outstanding), B1/LGD 3-41% from LGD 3-32% Affirmed USD680 million Gtd. 1st Lien Sr. Sec. Flt. Rt. Global Notes due 2/15/2015, B1/LGD 3-32% (To be withdrawn after the transaction closes) Affirmed USD370 million Gtd. 1st Lien Sr. Sec. 8.25% Global Notes due 11/15/2015, B1/LGD 3-41% from LGD 3-32% Affirmed USD225 million Gtd. 2nd Lien Sr. Sec. Flt. Rt. Notes due 9/15/2014, Caa1/ LGD 5-74% (USD210 million outstanding) (To be withdrawn after transaction closes) Affirmed USD500 million Gtd. 2nd Lien Sr. Sec. 9.5% Notes due 5/15/2018, Caa1/LGD 5-85% from LGD 5-74% Affirmed USD800 million Gtd. 2nd Lien Sr. Sec. 9.75% Global Notes due 1/15/2021, Caa1/LGD 5-85% from LGD 5-74% Affirmed USD265 million Gtd. Sr. Sub. 10.25% Global Notes due 3/01/2016 (USD127 million outstanding), Caa2/LGD 6-93% (To be withdrawn after transaction closes) Ratings Rationale The upgrade of the corporate family rating to B2 from B3 reflects the improvement in pro-forma credit metrics and management's publicly stated goal to pursue a less aggressive, more balanced financial profile. Berry has significantly reduced debt and decreased interest expense with the proceeds from the recent IPO and the proposed refinancing will decrease interest expense further. The company has also benefited from accretive acquisitions, exiting low-margin business and focusing on cost- cutting and productivity initiatives. The lack of an upgrade in the instrument ratings reflects the large reduction in unsecured debt which previously supported the secured debt ratings. The instrument ratings are sensitive to the amount of second lien debt outstanding. The upgrade of the speculative grade liquidity rating to SGL-2 from SGL-3 reflects a good liquidity profile characterized by expected modest free cash flow over the next year, depending upon resin prices, and adequate liquidity under the revolving credit facility. Berry's B2 Corporate Family Rating reflects the company's exposure to more cyclical end markets, relatively fair contract position with customers and high percentage of commodity products. The rating also reflects the fragmented and competitive industry structure and the company's historical financial aggressiveness and acquisitiveness. Strengths in Berry's competitive profile include its scale, concentration of sales in food and beverage packaging, and good liquidity. The company's strengths also include a strong competitive position in rigid plastic containers and a history of producing innovative products despite the large percentage of commodity products. The ratings outlook is stable. The stable outlook is predicated continued good operating performance, the maintenance of adequate liquidity, and no further deterioration in the operating and competitive environment. The stable outlook is also predicated upon the company's adherence to its pledge to maintain a more balanced financial profile and direct free cash flow to debt reduction or bolt-on, accretive acquisitions. The rating could be downgraded if there is deterioration in the credit metrics, liquidity or the operating and competitive environment. Additional debt financed acquisitions, excessive acquisitions (regardless of financing) and/or a move to a more aggressive financial profile could also prompt a downgrade. Specifically, the rating could be downgraded if total adjusted debt to EBITDA rises above 6.0 times, EBITA to gross interest coverage declines below 1.5 time, the EBITA margin declines below the high single digits, and/or free cash flow to debt declines below the mid-single digits. The ratings could be upgraded if the company sustainably improves credit metrics within the context of a stable operating and competitive environment while maintaining good liquidity. An upgrade would also be dependent upon maintenance of good liquidity and less aggressive financial and acquisition policies. The ratings could be upgraded if adjusted total debt to EBITDA moves below 5.0 times, free cash flow to debt moves up to the high single digit range, the EBITA margin improves to the double digit range, and EBITA to gross interest coverage moves above 1.8 times. The principal methodology used in this rating was the Global Packaging Manufacturers: Metal, Glass, and Plastic Containers Industry Methodology published in June 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. BERRY PLASTICS: Plans to Secure $1 Billion of Incremental Loan -------------------------------------------------------------- Berry Plastics Group, Inc.'s subsidiary, Berry Plastics Corporation, intends to obtain commitments for $1 billion of first lien senior secured term loans, to be structured as an incremental facility under Berry's existing term loan credit agreement. Berry intends to use the net proceeds from the borrowing of the New Loans to redeem its Second Priority Senior Secured Floating Rate Notes due 2014, First Priority Senior Secured Floating Rate Notes due 2015 and 10 1/4% Senior Subordinated Notes due 2016. Berry is in discussion with lenders regarding the New Loans; however, there can be no assurance that Berry will obtain the commitments in the time frame or on the terms it expects, or at all or that the Redemption will occur. About Berry Plastics Berry Plastics Corporation manufactures and markets plastic packaging products, plastic film products, specialty adhesives and coated products. At Jan. 2, 2010, the Company had more than 80 production and manufacturing facilities, primarily located in the United States. Berry is a wholly-owned subsidiary of Berry Plastics Group, Inc. Berry Group is primarily owned by affiliates of Apollo Management, L.P. and Graham Partners. Berry, through its wholly owned subsidiaries operates five reporting segments: Rigid Open Top, Rigid Closed Top, Flexible Films, Tapes/Coatings and Specialty Films. The Company's customers are located principally throughout the United States, without significant concentration in any one region or with any one customer. On Dec. 3, 2009, Berry Plastics obtained control of 100% of the capital stock of Pliant upon Pliant's emergence from reorganization pursuant to a proceeding under Chapter 11 for a purchase price of $602.7 million. Pliant is a leading manufacturer of value-added films and flexible packaging for food, personal care, medical, agricultural and industrial applications. The acquired business is primarily operated in Berry's Specialty Films reporting segment. The Company's balance sheet at Sept. 29, 2012, showed $5.10 billion in total assets, $5.55 billion in total liabilities, $23 million in redeemable shares, and a $475 million total stockholders' deficit. * * * Berry Plastics has a 'B3' corporate family rating, with stable outlook, from Moody's Investors Service. Moody's said in April 2010 that Berry's B3 CFR reflects weakness in certain credit metrics, financial aggressiveness and acquisitiveness and a continued difficult operating and competitive environment especially in the flexible plastics and tapes segments. The rating also reflects the Company's exposure to more cyclical end markets, relatively weak contracts with customers and a high percentage of commodity products. In November 2011, Standard & Poor's Ratings Services affirmed the 'B-' corporate credit rating on Berry and its holding company parent, Berry Plastics Group Inc. "The ratings on Berry reflect the risks associated with the company's highly leveraged financial profile and acquisition- driven growth strategy as well as its fair business risk profile," said Standard & Poor's credit analyst Cynthia Werneth. BRIGHT HORIZONS: S&P Raises Corporate Credit Rating to 'B+' ----------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Watertown, Mass.-based childcare center operator Bright Horizons Capital Corp. to 'B+' from 'B'. S&P subsequently withdrew this rating as the company has repaid all of its debt and S&P do not expect further financings at this entity. At the same time, S&P assigned Bright Horizons Family Solutions LLC a 'B+' corporate credit rating. S&P has removed all ratings from CreditWatch, where they were placed with positive implications on Jan. 14, 2013. The outlook is stable. In addition, S&P assigned Bright Horizons Family Solutions LLC's $890 million senior secured credit facilities (consisting of a $790 million term loan due 2020 and a $100 million revolving credit facility due 2018) a 'B+' issue-level rating (at same level with the corporate credit rating), with a recovery rating of '3', indicating S&P's expectation for meaningful recovery (50% to 70%) in the event of a payment default. Proceeds of the credit facility have been utilized to refinance Bright Horizons Family Solutions' higher-cost $430 million in term loans, $300 million 11.5% senior subordinated notes due 2018, and $75 million undrawn revolving credit facility due 2014. IPO proceeds of $222 million have been used to repay Bright Horizons Capital Corp.'s $198 million 13% pay-in-kind notes due 2018. "The upgrade of Bright Horizons Capital Corp. is based on the recent completion of the refinancing and IPO transactions that improve the company's credit profile," said Standard & Poor's credit analyst Hal Diamond. Pro forma lease-adjusted debt leverage at Sept. 30, 2012, improves to 5.2x from 5.9x, while EBITDA coverage of interest expense increases to 3.6x from 1.9x, reflecting lower debt levels and a sharp reduction in the average cost of debt. "Our 'B+' rating on Bright Horizons Family Solutions LLC reflects our expectation that leverage, albeit high, will gradually decline over the intermediate term, despite the company's acquisition orientation and high capital investment needs for new center openings, based on relatively steady growth in demand for its services. These factors underpin our assessment of financial risk profile as "aggressive." We view Bright Horizons' business risk profile as "fair" because of its good position in employer- sponsored centers, some sensitivity of capacity utilization rates to high unemployment, and highly competitive conditions in the fragmented child care business. We assess the company's management and governance as fair, S&P added Despite being a small to midsize company, Bright Horizons is the largest U.S. provider of employer-sponsored, workplace-based childcare, five times larger than its nearest competitor. Bright Horizons is also the third largest operator of childcare centers, allowing for clustering and economies of scale in marketing and management. Childcare services are provided by clients to their employees to enhance employee retention. Employer-sponsored centers, which account for two-thirds of the total, have been less volatile than retail-based competition. Fixed costs are relatively high, because of significant lease costs and the company's commitment to maintaining high center staffing levels to provide superior customer service. Bright Horizons serves clients across a diverse group of industries in 42 states, and also has a growing presence in the U.K., which accounts for about 15% of EBITDA. The stable rating outlook reflects S&P's view that the company will be able to maintain credit measures and adequate liquidity, despite its aggressive financial policies. S&P currently view both an upgrade and downgrade as equally unlikely. The company is still majority-owned by a private equity sponsor; accordingly, S&P could lower the rating if the company pursues debt-financed special dividends or sizeable debt-financed acquisitions (which S&P currently do not believe are likely). More specifically, a downgrade could occur if shareholder-favoring actions result in lease-adjusted leverage above 6x on a sustained basis or covenant headroom of less than 20% and prospects for further deterioration, likely restricting the company's ability to draw under its revolver. S&P could also lower the rating if enrollment and occupancy rates significantly decline, resulting from a still-high unemployment rate. More specifically, if revenue declines at a mid-single-digit percentage rate and the EBITDA margin contracts by 100 basis points from the current level, leverage would also increase to more than 6.0x. S&P could raise the rating if Bright Horizons articulates a less aggressive financial policy and S&P concludes that the company will be able to maintain lease-adjusted debt leverage around 4x, while continuing to improve its EBITDA margin. CARVILLE NATIONAL: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Carville National Leather Corp. P.O. Box 40 Johnstown, NY 12095 Bankruptcy Case No.: 13-60101 Chapter 11 Petition Date: January 28, 2013 Court: United States Bankruptcy Court Northern District of New York (Utica) Debtor's Counsel: Richard L. Weisz, Esq. HODGSON RUSS LLP 677 Broadway Albany, NY 12207 Tel: (518) 465-2333 E-mail: Rweisz@hodgsonruss.com Scheduled Assets: $1,128,790 Scheduled Liabilities: $1,392,535 A copy of the Company's list of its 20 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/nynb13-60101.pdf The petition was signed by Robert Carville, president. CB BRIELLE: Case Summary & 3 Largest Unsecured Creditors -------------------------------------------------------- Debtor: CB Brielle, LLC 1101 W. Waterloo Road Edmond, OK 73025 Bankruptcy Case No.: 13-10282 Chapter 11 Petition Date: January 28, 2013 Court: United States Bankruptcy Court Western District of Oklahoma (Oklahoma City) Judge: Niles L. Jackson Debtor's Counsel: Stephen J. Moriarty, Esq. FELLERS SNIDER 100 N. Broadway Ave., Suite 1700 Oklahoma City, OK 73102-8820 Tel: (405) 232-0621 Fax: (405) 232-9659 E-mail: smoriarty@fellerssnider.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $10,000,001 to $50,000,000 A copy of the Company's list of its three largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/okwb13-10282.pdf The petition was signed by Bradley L. Grow, president. CENTRAL EUROPEAN: Defends Revised Deal, Blasts Kaufman Suit ----------------------------------------------------------- The Board of Directors of Central European Distribution Corporation sent a letter to Mark Kaufman in response to his letters to the CEDC Board of Directors and other investors in CEDC dated Jan. 16, 2013, and Jan. 25, 2013. Mr. Kaufman and W & L Enterprises Ltd. together beneficially own 7,417,549 shares of the Company's common stock, representing approximately 9.4% of the Company's common shares. In the Jan. 16, 2013 Letter, Mr. Kaufman indicated his withdrawal of support from CEDC's revised deal with Roust Trading Ltd. saying that the terms of the amended transaction no longer deliver a clear and definitive path to resolving CEDC's immediate liquidity crisis. In a subsequent message, Mr. Kaufman stated his intention to file a complaint with the Delaware Court of Chancery to compel CEDC to hold an Annual General Meeting at the earliest possible date, which complaint was formally filed on January 28. In its January 29 letter, the Board defended the Revised Deal with RTL stating that the "deal enables CEDC to carry on its operations during the critical Winter months while, at the same time, providing CEDC with an opportunity to work with its advisors and RTL to identify an appropriate restructuring path to address CEDC's critical financial challenges." "The December deal is aimed at ensuring that shareholder democracy prevails," the letter adds. "The agreement with RTL is simply that shareholders be given a choice between a Board that continues to be led by non-RTL directors and a Board led by directors nominated by RTL. The choice is entirely for the shareholders to make, which is evidence that the directors are not entrenched at all, but simply recognize their duty to see the successful restructuring of CEDC through." CEDC and Russian Standard are currently preparing to call an Annual Meeting of CEDC shareholders as soon as practicable and expect to do so in the coming weeks. "The Board is disappointed that you feel it necessary to force CEDC to incur the unnecessary additional expense of responding to a suit to force the calling of an Annual Meeting that will ultimately prove unnecessary," the Board concludes. A copy of the letter is available at http://is.gd/RBf60V About CEDC Mt. Laurel, New Jersey-based Central European Distribution Corporation is one of the world's largest vodka producers and Central and Eastern Europe's largest integrated spirit beverages business with its primary operations in Poland, Russia and Hungary. Ernst & Young Audit sp. z.o.o., in Warsaw, Poland, expressed substantial doubt about Central European's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that certain of the Company's credit and factoring facilities are coming due in 2012 and will need to be renewed to manage its working capital needs. The Company's balance sheet at Sept. 30, 2012, showed $1.98 billion in total assets, $1.73 billion in total liabilities, $29.44 million in temporary equity, and $210.78 million in total stockholders' equity. Liquidity The Company's Convertible Senior Notes are due on March 15, 2013. The Company has said its current cash on hand, estimated cash from operations and available credit facilities will not be sufficient to make the repayment of principal on the Convertible Notes and, unless the transaction with Russian Standard Corporation is completed the Company may default on them. The Company's cash flow forecasts include the assumption that certain credit and factoring facilities coming due in 2012 would be renewed to manage working capital needs. Moreover, the Company had a net loss and significant impairment charges in 2011 and current liabilities exceed current assets at June 30, 2012. These conditions, the Company said, raise substantial doubt about its ability to continue as a going concern. * * * As reported by the TCR on Aug. 10, 2012, Standard & Poor's Ratings Services kept on CreditWatch with negative implications its 'CCC+' long-term corporate credit rating on U.S.-based Central European Distribution Corp. (CEDC), the parent company of Poland-based vodka manufacturer CEDC International sp. z o.o. "The CreditWatch status reflects our view that uncertainties remain related to CEDC's ongoing accounting review and that CEDC's liquidity could further and substantially weaken if there was a breach of covenants which could lead to the acceleration of the payment of the 2016 notes, upon receipt of a written notice of 25% or more of the noteholders," S&P said. As reported by the TCR on Jan. 16, 2013, Moody's Investors Service has downgraded the corporate family rating (CFR) and probability of default rating (PDR) of Central European Distribution Corporation (CEDC) to Caa3 from Caa2. "The downgrade follows CEDC announcement on the 28 of December that it had agreed with Russian Standard a revised transaction to repay its $310 million of convertible notes due March 2013 which, in Moody's view, has increased the risk of potential loss for existing bondholders", says Paolo Leschiutta, a Moody's Vice President - Senior Credit Officer and lead analyst for CEDC. CHAMPION INDUSTRIES: Incurs $22.9 Million Net Loss in Fiscal 2012 ----------------------------------------------------------------- Champion Industries, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $22.91 million on $104.41 million of total revenues for the year ended Oct. 31, 2012, compared with a net loss of $3.97 million on $104.51 million of total revenues during the prior fiscal year. The Company reported a net loss from continuing operations of $1.4 million for the quarter ended Oct. 31, 2012, compared to a net loss from continuing operations of $5.5 million for the quarter ended Oct 31, 2011. The Company's balance sheet at Oct. 31, 2012, showed $47.96 million in total assets, $49.34 million in total liabilities, and a $1.37 million total shareholders' deficit. Arnett Foster Toothman PLLC, in Charleston, West Virginia, issued a "going concern" qualification on the consolidated financial statements for the year ended Oct. 31, 2012. The independent auditors noted that the Company has suffered recurring losses from operations and has been unable to obtain a longer term financing solution with its lenders, which raises substantial doubt about its ability to continue as a going concern. 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." 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." A copy of the Form 10-K is available for free at: http://is.gd/WdiTQ3 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. CHOCTAW GENERATION: Moody's Withdraws 'Caa1' Rating on Certs. ------------------------------------------------------------- Moody's Investors Service has withdrawn the ratings of Choctaw Generation Limited Partnership's approximately USD288 million of outstanding Pass-Through Trust Certificates because it believes it has insufficient or otherwise inadequate information to support the maintenance of the ratings. Ratings Rationale Moody's understands the Trust Certificate holders have entered into a forbearance agreement with the project thereby allowing it to retain cash that would otherwise have been utilized to make a December 2012 rent payment. Moody's also understands that discussions among the parties pertaining to a potential sale and debt restructuring are ongoing. Although Moody's continues to believe recovery prospects for the Trust Certificate holders are strong and fully incorporated into the prior Caa1 rating, Moody's no longer has sufficient visibility into the process to maintain a rating. On January 28, 2013, Choctaw received approval from the Federal Energy Regulatory Commission for the proposed sale of IPR-GDF SUEZ Generation North America's interests in the project to PurEnergy, a limited liability company owned by three individuals. Operation and maintenance of the facility will be provided by Red Hills Operations, an indirect subsidiary of Southern Company, if the restructuring is successful. Financial terms for the transaction have not been disclosed. Choctaw operates the 440 MW lignite-fired Red Hills Energy Facility located in Choctaw County, Mississippi. The circulating fluidized bed generation facility began operations in 2002. The project sells all its power output pursuant to the terms of a long-term power purchase and operating agreement with Tennessee Valley Authority (TVA: Aaa senior unsecured, stable). CIVIC PARTNERS: Court Keeps Ruling on Main Street Lease ------------------------------------------------------- Bankruptcy Judge Thad J. Collins in Sioux City, Iowa, denied the Motion of Civic Partners Sioux City, LLC, to Reconsider the Court's (1) Order Denying Motion to Establish that the Main Street Lease is Revoked, Not "Unexpired" and (2) Order Granting Motion for Order Regarding Status of Amended and Restated Lease filed by Main Street Theaters. Main Street resisted the Motion to Reconsider. The Debtor asked the Court to reconsider an oral, expedited ruling in July 2012 wherein the Court determined which lease of two leases -- an original lease or an amended lease -- governed the relationship of the parties for purposes of the bankruptcy case. Main Street operates a multiscreen movie theater at the Debtor's business complex. The Debtor argued it terminated the amended lease before bankruptcy, and that the termination properly reinstated the original lease. Main Street argued the Debtor failed to properly terminate the amended lease or did not have authority to do so. Main Street asserted the amended lease remains in effect. The Court heard this issue -- which would otherwise be a confirmation issue -- out of order on an expedited basis at the request of the parties. The Court ruled that the amended lease governed because the Debtor did not properly terminate the lease. The Court ruled the termination paragraph of the amended lease was for all intents and purposes a provision allowing rescission, and the Debtor did not properly rescind. In particular, the Court held the Debtor did not refund a $200,000 payment Main Street made to get the amended lease agreement. The Court also made an alternative ruling that the Debtor did not have proper authority to terminate the lease without its lender's consent -- which it did not have. The Debtor moved for reconsideration, arguing the Court misapplied Iowa law on rescission by not allowing the Debtor a credit or offset against the $200,000 for the benefits it provided to Main Street under the amended lease. The Debtor also argued it discovered new facts indicating there was no need for an expedited resolution of this issue and that the Court should vacate its ruling and set the matter over for confirmation. The Debtor also asserts that the Court failed to address several of the Debtor's alternative arguments including reformation, equitable estoppel, and equitable fraud. Main Street resisted and argued the Court correctly determined the matter in its ruling and there is no basis for reconsideration. Judge Collins reiterated the Court did not misapply Iowa law on rescission, the newly discovered facts are irrelevant, and the alternative arguments are inapplicable to this issue and/or are reserved for the confirmation hearing. A copy of the Court's Jan. 29, 2013 Amended Ruling is available at http://is.gd/eLjqnVfrom Leagle.com. Civic Partners Sioux City, LLC, based in Huntington Beach, California, filed for Chapter 11 bankruptcy (Bankr. N.D. Iowa Case No. 11-00829) on April 14, 2011. A. Frank Baron, Esq., at Baron, Sar, Goodwin, Gill & Lohr, serves as the Debtor's counsel. In its petition, the Debtor estimated $1 million to $10 million in assets and debts. The petition was signed by Steven P. Semingson, managing member. CLINICA INTERDISCIPLINARIA: Case Summary & Creditors List --------------------------------------------------------- Debtor: Clinica Interdisciplinaria De Psiquiatria Avanzada Inc. aka CIPA Inc. 650 Lloveras Edif Centro Plaza, Suite 101 San Juan, PR 00909-2113 Bankruptcy Case No.: 13-00561 Chapter 11 Petition Date: January 29, 2013 Court: U.S. Bankruptcy Court District of Puerto Rico (Old San Juan) Debtor's Counsel: Carlos Rodriguez Quesada, Esq. LAW OFFICE OF CARLOS RODRIGUEZ QUES P.O. BOX 9023115 San Juan, PR 00902-3115 Tel: (787) 724-2867 E-mail: cerqlaw@coqui.net Scheduled Assets: $1,813,991 Scheduled Liabilities: $1,738,882 A copy of the Company's list of its three largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/prb13-00561.pdf The petition was signed by Carlos Augusto Caban Pacheco, president. COMMONWEALTH GROUP: Has Final OK to Use PNC Bank Cash Collateral ---------------------------------------------------------------- The Bankruptcy Court granted, on a final basis, Commonwealth Group-Mocksville Partners, LP, authorization to use cash collateral of PNC Bank. As adequate protection, PNC Bank is granted replacement liens in and to all property of the estate of the kind presently securing the indebtedness owing to PNC Bank. Quarterly fees owed to the U.S. Trustee and professional fees will be carved out. As reported in the TCR on Dec. 7, 2012, prior to the Petition Date, the Debtor issued to National City Bank of Kentucky a Promissory Note dated Sept. 9, 2004, for $6,630,138, and a second Promissory Note, also dated Sept. 9, 2004, for $5,100,000. To secure payment of the obligations owing to National City, the Debtor granted its Deed of Trust and Security Agreement encumbering real property in Davie County, North Carolina, and fixtures and personal property. The Notes are held by PNC Bank. As of Oct. 25, 2012, the total debt owing by Mocksville Partners to PNC Bank on the Development Note was $2,493,724, including interest, and the amount owing on the Construction Loan Note was $4,597,293, including interest. About Commonwealth Group Commonwealth Group-Mocksville Partners, LP, filed a Chapter 11 petition (Bankr. E.D. Tenn. Case No. 12-34319) on Oct. 25, 2012, in Knoxville, Tennessee. The Debtor disclosed $11,391,578 in assets and $22,668,998 in liabilities in its amended schedules. Commonwealth Group owns a retail center and adjacent undeveloped land in Davie County, North Carolina. Judge Richard Stair Jr. presides over the case. Maurice K. Guinn, Esq., at Gentry, Tipton & McLemore P.C., serves as counsel. The petition was signed by Milton Turner, chief manager and general partner. COMMONWEALTH GROUP: Can Employ Gentry Tipton as Counsel ------------------------------------------------------- The Bankruptcy Court authorized Commonwealth Group-Mocksville Partners, LP, to employ Gentry, Tipton & McLemore, P.C., as counsel for the Debtor. Gentry Tipton received a $25,000 retainer, which the firm has agreed to hold in its trust account, plus $1,046 to pay the Chapter 11 filing fee. Mocksville Partners has agreed to compensate the law firm based on its customary hourly rates and to reimburse the firm for expenses. Those rates range from $75 for law clerks and $125 to $350 for attorney services. About Commonwealth Group Commonwealth Group-Mocksville Partners, LP, filed a Chapter 11 petition (Bankr. E.D. Tenn. Case No. 12-34319) on Oct. 25, 2012, in Knoxville, Tennessee. The Debtor disclosed $11,391,578 in assets and $22,668,998 in liabilities in its amended schedules. Commonwealth Group owns a retail center and adjacent undeveloped land in Davie County, North Carolina. Judge Richard Stair Jr. presides over the case. Maurice K. Guinn, Esq., at Gentry, Tipton & McLemore P.C., serves as counsel. The petition was signed by Milton Turner, chief manager and general partner. COMMUNITY FINANCIAL: To Issue 3-Mil. Shares Subscription Rights --------------------------------------------------------------- Community Financial Shares, Inc., filed a Form S-1 registration statement, as amended, with the U.S. Securities and Exchange Commission relating to the distribution, at no charge to the Company's shareholders, non-transferable subscription rights to purchase up to 3,000,000 shares of the Company's common stock, no par value per share. Subscription rights will be distributed to persons who owned shares of the Company's common stock as of 5:00 p.m. Eastern Time, on Dec. 20, 2012, the record date of the rights offering. Each subscription right will entitle shareholders to purchase 2.4091 shares of the Company's common stock at the subscription price of $1.00 per share. The subscription rights will expire if they are not exercised by 5:00 p.m., Eastern Time, on [EXPIRATION DATE]. The Company reserves the right to extend the expiration date one or more times, but in no event will we extend the rights offering beyond [EXPIRATION DATE #2]. The Company's common stock is quoted on the "pink sheets" by OTC Markets Group, Inc., under the trading symbol "CFIS." A copy of the Form S-1 prospectus is available at: http://is.gd/nxeHMw About Community Financial Glen Ellyn, Illinois-based Community Financial Shares, Inc., is a registered bank holding company. The operations of the Company and its banking subsidiary consist primarily of those financial activities common to the commercial banking industry. All of the operating income of the Company is attributable to its wholly- owned banking subsidiary, Community Bank-Wheaton/Glen Ellyn. BKD, LLP, in Indianapolis, Indiana, issued a going concern qualification on the consolidated financial statements for the year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations and is undercapitalized. The Company reported a net loss of $11.01 million on net interest income (before provision for loan losses) of $10.77 million in 2011, compared with a net loss of $4.57 million on net interest income (before provision for loan losses) of $10.40 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $334.17 million in total assets, $328.69 million in total liabilities and $5.48 million in total shareholders' equity. COMMUNITY WEST: Earns $2.3 Million in Fourth Quarter ---------------------------------------------------- Community West Bancshares reported net income of $2.33 million on $7.44 million of total interest income for the three months ended Dec. 31, 2012, compared with a net loss of $8.55 million on $9.27 million of total interest income for the same period a year ago. For the 12 months ended Dec. 31, 2012, the Company reported net income of $3.17 million on $31.31 million of total interest income, compared with a net loss of $10.48 million on $36.51 million of total interest income during the previous year. The Company's balance sheet at Dec. 31, 2012, showed $532.10 million in total assets, $479.05 million in total liabilities and $53.05 million in stockholders' equity. "Our team's success in executing our Strategic Plan on schedule allowed us to end a highly successful year with three quarters of profitability behind us and restore the Bank to stable footing," stated Martin E. Plourd, president and chief executive officer. "Our 2013 focus is on addressing growth in a responsible manner that supports lending in the communities we serve and to continue to work diligently to improve asset quality and reduce problem assets." A copy of the press release is available for free at: http://is.gd/TPtakU About Community West Goleta, Calif.-based Community West Bancshares ("CWBC") was incorporated in the State of California on Nov. 26, 1996, for the purpose of forming a bank holding company. On Dec. 31, 1997, CWBC acquired a 100% interest in Community West Bank, National Association. Effective that date, shareholders of CWB became shareholders of CWBC in a one-for-one exchange. The acquisition was accounted at historical cost in a manner similar to pooling- of-interests. Community West Bancshares is a bank holding company. CWB is the sole bank subsidiary of CWBC. CWBC provides management and shareholder services to CWB. Consent Agreement According to the regulatory filing for the quarter ended June 30, 2012, the Bank entered into a consent agreement with the Comptroller of the Currency ("OCC"), the Bank's primary banking regulator, which requires the Bank to take certain corrective actions to address certain deficiencies in the operations of the Bank, as identified by the OCC (the "OCC Agreement"). "Article III of the OCC Agreement requires a capital plan and requires that the Bank achieve and maintain a Tier 1 Leverage Capital ratio of 9% and Total Risk-Based Capital ratio of 12% on or before May 25, 2012. The Bank's Board of Directors has incorporated a three-year capital plan into the Bank's strategic plan. The Bank successfully met the minimum capital requirements as of May 25, 2012. Notwithstanding that the Bank has achieved the required minimum capital ratios required by the OCC Agreement, the existence of a requirement to maintain a specific capital level in the OCC Agreement means that the Bank may not be deemed "well capitalized" under applicable banking regulations." "While the Bank believes that it is in substantial compliance with the OCC Agreement, no assurance can be given that the OCC will concur with the Bank's assessment. Failure to comply with the provisions of the OCC Agreement may subject the Bank to further regulatory action, including but not limited to, being deemed undercapitalized for purposes of the OCC Agreement, and the imposition by the OCC of prompt corrective action measures or civil money penalties," the Company said in its quarterly report for the period ended Sept. 30, 2012. CONVERGEX HOLDINGS: Moody's Maintains 'B2' CFR, Negative Outlook ---------------------------------------------------------------- Moody's Investors Service reports that ConvergEx Holdings, LLC's announcement that it has signed a definitive agreement to sell its software platform businesses to an affiliate of TPG Capital would not result in any immediate change to the company's B2 Corporate Family Rating or the negative outlook. Moody's commented that while the sale of EZE Castle and RealTick software businesses would allow ConvergEx to pay down a substantial amount of debt, ConvergEx would lose significant recurring revenues. The company's remaining businesses are less diverse, have experienced declining revenue and operating profits, and will continue to be sensitive to market volume fluctuations. Moody's will evaluate the size and strength of their cash flows relative to the company's remaining debt load as this becomes clearer. Moody's said that ConvergEx's current negative outlook reflects these concerns as well as the residual litigation risk from the ongoing DOJ/SEC inquiry pertaining to the company's investment services segment -- the segment that will remain post-sale. The principal methodology used in this rating/analysis was the Global Securities Industry Methodology published in December 2006. COPANO ENERGY: Moody's Reviews 'Ba3' CFR After KMP Purchase Offer ----------------------------------------------------------------- Moody's Investors Service placed Copano Energy, LLC's ratings on review for upgrade, including its Ba3 Corporate Family Rating, Ba3-PD Probability of Default Rating, and B1 senior unsecured rating. The outlook was previously negative. This review was prompted by Copano's announcement on January 29, 2013 that it has agreed to be acquired by Kinder Morgan Energy Partners, L.P. (KMP, Baa2 stable) for roughly USD5 billion, including the assumption of Copano's debt. "By becoming a part of one of the largest, most diversified and highly rated midstream MLPs in the US, Copano's credit profile will get an immediate lift," said Sajjad Alam, Moody's Analyst. "In addition to gaining access to KMP's wide network of pipeline transportation and storage facilities and customer relationships, this acquisition will allow Copano to raise capital at the KMP level reducing its cost of funds and pursue various organic growth opportunities." Issuer: Copano Energy, LLC On Review for Possible Upgrade: Corporate Family Rating, Placed on Review for Possible Upgrade, currently Ba3 Probability of Default Rating, Placed on Review for Possible Upgrade, currently Ba3-PD USUSD255.225M 7.75% Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently B1 USUSD510M 7.125% Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently B1 Multiple Seniority Shelf, Placed on Review for Possible Upgrade, currently (P)B1 Multiple Seniority Shelf, Placed on Review for Possible Upgrade, currently (P)Ba3 Outlook Actions: Outlook, Changed To Rating Under Review From Negative Ratings Rationale In the absence of a guarantee from KMP, Copano notes will most likely be rated higher than the B1 level, but will not equalize with KMP's Baa2 rating. Moody's review of Copano will focus on : 1) how Copano gets absorbed within KMP's complex corporate structure, 2) whether KMP will pay off all or a portion of Copano's debt, 3) the implied support and ratings uplift attributable to KMP, 4) the strategic direction of Copano post- closing, and 5) whether competing bids for Copano emerge. Moody's will also consider the level of financial disclosure available in order to maintain a rating on Copano following the acquisition. The transaction is expected to close in the third quarter of 2013, subject to regulatory approval, a vote of the Copano shareholders and customary closing conditions. The Boards of Directors of both companies have approved the transaction. KMP has indicated that it will retain most of Copano's employees and maintain Copano's principal offices in Houston and Tulsa. Copano's Ba3 CFR rating reflects the company's high leverage and aggressive distribution policy. The high leverage is a result of the largely debt financed capital expenditure program underway in the Eagle Ford shale play in Texas. The rating incorporates Moody's expectation that prior years' capital spending will lead to significant EBITDA growth in 2013 that will better support the company's debt position. In addition, CPNO's recent investments have been directed to projects that generate fee-based income which should build a more stable cash flow going forward while reducing exposure to commodity price risk. By the end of 2013, the company projects that roughly two-thirds of its operating income will be fee-based. The principal methodology used in this rating was the Global Midstream Energy Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Copano Energy, L.L.C., headquartered in Houston, Texas, is a midstream company engaged in gathering processing, transportation fractionation and related activities in Texas, Oklahoma and Wyoming. COPYTELE INC: Incurs $4.3 Million Net Loss in Fiscal 2012 --------------------------------------------------------- Copytele, Inc, filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $4.25 million on $947,085 of total net revenue for the year ended Oct. 31, 2012, compared with a net loss of $7.37 million on $1 million of total net revenue during the prior fiscal year. The Company's balance sheet at Oct. 31, 2012, showed $5.66 million in total assets, $6.85 million in total liabilities and a $1.19 million total shareholders' deficiency. KPMG LLP, in Melville, New York, issued a "going concern" qualification on the consolidated financial statements for the fiscal year ended Oct. 31, 2012. The independent auditors noted that the Company has suffered recurring losses from operations, has negative working capital, and has a shareholders' deficiency that raise substantial doubt about its ability to continue as a going concern. A copy of the Form 10-K is available for free at: http://is.gd/U2UBtV 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. CORNERSTONE BANCSHARES: Posts $371,000 Net Income in 4th Quarter ---------------------------------------------------------------- Cornerstone Bancshares, Inc., reported net income of $370,715 on $5.17 million of total interest income for the three months ended Dec. 31, 2012, compared with net income of $112,822 on $5 million of total interest income for the same period during the prior year. For the 12 months ended Dec. 31, 2012, the Company reported net income of $1.40 million on $19.35 million of total interest income, compared with net income of $1.03 million on $20.49 million of total interest income during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $440.46 million in total assets, $399.57 million in total liabilities and $40.88 million in total stockholders' equity. "We've definitely turned a corner and are extremely pleased with our continued improvement," said Cornerstone's President and CEO Frank Hughes. "Our goal is to continue strengthening Cornerstone's foundation, so that we can build for the future and continue serving our Chattanooga market." A copy of the press release is available at http://is.gd/7D4168 About Cornerstone Bancshares Chattanooga, Tenn.-based Cornerstone Bancshares, Inc., is a bank holding company. Its wholly-owned subsidiary, Cornerstone Community Bank, is a Tennessee-chartered commercial bank with five full-service banking offices located in Hamilton County, Tennessee. * * * This concludes the Troubled Company Reporter's coverage of Cornerstone Bancshares until facts and circumstances, if any, emerge that demonstrate financial or operational strain or difficulty at a level sufficient to warrant renewed coverage. CRESCENT RESOURCES: Moody's Hikes CFR & Sec. Notes Rating to Caa1 ----------------------------------------------------------------- Moody's Investors Service upgraded Crescent Resources, LLC's corporate family rating to Caa1 from Caa2, probability of default rating to Caa1-PD from Caa2-PD, the rating on USD350 million of senior secured notes due 2017 to Caa1 from Caa2, and assigned a Caa1 rating to the proposed USD50 million add-on notes due 2017. The rating outlook is stable. The following rating actions were taken: US$50 million 10.25% add-on second-lien senior secured notes due 2017, assigned Caa1, LGD4-57%; Corporate family rating, upgraded to Caa1 from Caa2; Probability of default rating, upgraded to Caa1-PD from Caa2-PD; US$350 million 10.25% second-lien senior secured notes due 2017, upgraded to Caa1, LGD4-57% from Caa2 LGD4-59%; The rating outlook is stable. Ratings Rationale The rating action reflects the improving homebuilding industry conditions, which are resulting in better than previously expected performance of the company, and Moody's expectation that 2013 will be another favorable year for Crescent's land development businesses, especially residential. The company will benefit from its inventory of finished lots, which are currently in great demand by the homebuilders. As a result, Crescent's metrics should begin improving over the intermediate horizon. However, it should be noted that some of the improvement expected in fiscal 2013 has been pulled forward into fiscal 2012, and, as a result, fiscal 2013 will probably end up below fiscal 2012. Viewing the two years as one, however, indicates an improvement over fiscal 2011. The proposed transaction includes the offering of USD50 million add-on senior secured notes due 2017 and the infusion of USD30 million of equity by the sponsors, with proceeds designated for growth capital. The Caa1 CFR reflects Crescent's small size in an industry that is extremely volatile and cyclical, negative GAAP interest coverage and GAAP cash flow generation, elevated adjusted debt leverage that is further rising to 61%, pro forma for this transaction, the fact that none of the cash generated by land and property sales is likely to be devoted to debt repayment, as well as the generally volatile nature of the land development business. The homebuilding industry, and even more so the land development industry (which encompasses Crescent), is volatile, highly cyclical, and requires substantial capital to support expansion in either a steady state or growth environment or to permit survival in a prolonged and extensive downturn such as the one felt up until last year. At the same time, the rating reflects the company's manageable debt load with no mandatory principal repayments for four years, an adequate liquidity profile supported by cash on the balance sheet and revolving credit facility, a long land position (including a low cost legacy land base) that could permit the company to harvest cash flow if it limits its property and project investments, and healthy gross margins. In addition, the USD100 million equity subscription agreement with Crescent's sponsors (USD50 million invested, USD30 million to be invested as a part of this transaction, and the remaining USD20 million to be invested later in 2013) will help the company complete projects currently in development and invest in new ones. The company has an additional USD50 million of equity committed by the sponsors that will be added to the subscription agreement. The secured notes were rated the same as the company's corporate family rating because they constitute the preponderance of debt within a capital structure that also includes a USD50 million first lien senior secured revolving credit facility (unrated by Moody's). The senior secured notes have a second lien on the same assets as the revolver. The stable outlook reflects the strengthening of the housing market and the company's opportunity to capitalize on inventory liquidation for several years to generate cash. Crescent would need to begin generating steady revenue growth, greater than 1x EBIT coverage of interest, and more than modestly positive GAAP cash flow, while maintaining Moody's-adjusted debt leverage below 60% on a sustained basis, and improving its liquidity position to be considered for a B3 CFR. In addition, Moody's outlook on the homebuilding industry would need to remain positive. The need for covenant relief, continued negative GAAP interest coverage and GAAP cash flow generation, Moody's-adjusted debt leverage above 70%, reduced liquidity, and/or a change in Moody's outlook on the homebuilding industry to stable or negative could prompt a rating reduction. The principal methodology used in this rating was the Global Homebuilding Industry Methodology published in March 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Crescent Resources, LLC, founded in 1969 and headquartered in Charlotte, North Carolina, develops residential, commercial and multifamily real estate properties, and manages land. The company has a presence in North Carolina, South Carolina, Georgia, Florida, Tennessee, Texas and Arizona. Crescent is majority-owned by equity sponsors Anchorage Capital and Mattlin Patterson. In the trailing 12-month period ending September 30, 2012, Crescent's revenues and net loss were USD50 million and USD82 million, respectively. CRESCENT HOLDINGS: S&P Lowers Corporate Credit Rating to 'B-' ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating and issue-level ratings on Crescent Holdings LLC and its subsidiaries and coissuers, Crescent Resources LLC and Crescent Ventures Inc., to 'B-' from 'B'. The recovery rating is unchanged at '3', which indicates S&P's expectation for a meaningful (50%- 70%) recovery in the event of default. The outlook is stable. "Our rating on Crescent reflects a "weak" business risk profile based on our view of the company's transaction-dependent business, with a significant portion of revenues tied to speculative development of residential/multifamily projects," said credit analyst George Skoufis. "In our view, Crescent's business is very cyclical and seasonal, and the timing of sales can be unpredictable. However, we acknowledge that growth is occurring in the improving single-family housing market and the more stable multifamily housing sector. We view the company's financial risk profile as "highly leveraged" due to its higher debt load and a cash flow stream that is more volatile, but we expect liquidity will be adequate to meet the company's capital needs over the near term." "The stable outlook reflects our view that fundamentals in Crescent's single-family housing markets are rebounding and our expectation that multifamily fundamentals will remain favorable over the next one to two years. We do not expect to raise our rating on Crescent over the next year due to our expectation that the company will remain highly leveraged and liquidity will decline, but remain adequate. Longer term we would consider positive ratings momentum as the company grows its single-family residential lot business, which is less uneven and more predictable based on housing trends than the sale of other assets (multifamily projects, land management) and it becomes a larger proportion of Crescent's income. We would also consider an upgrade if the company experiences stronger sales than we expect in 2013 and 2014, resulting in a better liquidity cushion and higher EBITDA, which would begin to address Crescent's high leverage. We would lower our rating on Crescent if liquidity becomes constrained due to weaker than expected asset sales and/or aggressive capital spending," S&P added. CUBIC ENERGY: Receives NYSE MKT Delisting Notice ------------------------------------------------ Cubic Energy, Inc. on Jan. 31 disclosed that it has received a letter from the NYSE MKT LLC indicating that, based upon the Company's continued non-compliance with the stockholders' equity requirements for continued listing as set forth in Sections 1003(a)(i-iii) of the Exchange's Company Guide and the Exchange's concerns regarding the Company's financial viability with respect to maturing obligations, as set forth in Section 1003(a)(iv) of the Exchange's Company Guide, the Company's common stock is subject to delisting from the Exchange. The Company plans to file an appeal of the determination by requesting an oral hearing before the Listing Qualifications Panel of the Exchange's Committee on Securities, which request will stay the delisting determination until at least such time as the Panel renders a determination following the hearing. The Company is taking steps to address the deficiencies raised by the Exchange; however, there can be no assurance that the Company's appeal will ultimately be successful. The Company continues to work with Donohoe Advisory Associates LLC, along with its securities counsel, to advise and assist it in the preparation and presentation of information to and arguments before the Exchange. Cubic Energy, Inc. -- http://www.cubicenergyinc.com-- is an independent company engaged in the development and production of, and exploration for, crude oil and natural gas. The Company's oil and gas assets and activity are concentrated primarily in the Haynesville Shale Play located in Northwest Louisiana. D'ARCY ACQUISITION: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: D'Arcy Acquisition, LLC dba D'Arcy Laboratories, LLC 2015 SW 2nd Street Pompano Beach, FL 33069 Bankruptcy Case No.: 13-12018 Chapter 11 Petition Date: January 29, 2013 Court: U.S. Bankruptcy Court Southern District of Florida (Fort Lauderdale) Judge: Raymond B. Ray Debtor's Counsel: Philip J. Landau, Esq. SHRALBERG, FERRARA & LANDAU, P.A. 2385 N.W. Executive Center Drive, #300 Boca Raton, FL 33431 Tel: (561) 443-0800 E-mail: plandau@sfl-pa.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/flsb13-12018.pdf The petition was signed by RJ Sandbach, president. D.R. HORTON: Fitch Assigns 'BB' Rating to New $400MM Senior Notes ----------------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to D.R. Horton, Inc.'s (NYSE: DHI) proposed offering of $400 million principal amount of senior notes due 2025 and $300 million of senior notes due 2020. These issues will be rated on a pari passu basis with all other senior unsecured debt. Net proceeds from the notes offerings will be used for general corporate purposes. The Rating Outlook is Positive. Sensitivity/Rating Drivers The ratings for DHI reflect the company's strong liquidity position, the successful execution of its business model, geographic and product line diversity and steady capital structure. Fitch expects further gains in industry housing metrics this year as the housing cycle continues to evolve. That being the case, there are still challenges facing the housing market that are likely to moderate the early stages of this recovery. Nevertheless, DHI has the financial flexibility to navigate through the sometimes challenging market conditions and continue to invest in land opportunities. The Positive Outlook takes into account the improving industry outlook for 2013 and 2014 and also the company's above average performance relative to its peers in certain financial, credit and operational categories during the past year. The Industry Fitch's housing forecasts for 2012 were raised a number of times during the course of the year but still reflected 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. Financials DHI successfully managed its balance sheet during the housing downturn and generated significant operating cash flow. DHI had been aggressively reducing its debt during much of the past six years. Homebuilding debt declined from roughly $5.5 billion at June 30, 2006 to $1.58 billion as of Dec. 31, 2011, a 71% reduction. More recently, DHI has been responding to the stronger housing market, expanding inventories and moderately increasing leverage. Homebuilding debt at the end of the fiscal 2013 first quarter was $2.42 billion. As of Dec. 31, 2012 debt/capitalization was 40.2%. (Debt/capitalization was 37.4% as of Dec. 31, 2011.) Net debt-capitalization was 33% at the end of the fiscal 2013 first quarter. DHI's earlier debt reduction was accomplished through debt repurchases, maturities and early redemptions. DHI has $172 million of senior notes maturing in May 2013. In 2014, $283.1 million of senior notes mature. Fitch expects that the company's $500 million of 2% senior convertible notes will likely convert into common stock in 2014. DHI has solid liquidity with unrestricted homebuilding cash of $546.4 million and marketable securities of $96.7 million as of Dec. 31, 2012. On Sept. 7, 2012, DHI entered into a new $125 million five-year unsecured revolving credit facility. In early November, the company announced that it had received additional lending commitments, increasing the capacity of the facility to $600 million. The facility has also been amended to include an uncommitted accordion feature which could increase the facility to $1 billion, subject to certain conditions and availability of additional bank commitments. The facility's letter of credit sublimit is 50% of the revolving credit agreement, or $300 million. In early December 2012, DHI declared a cash dividend of $0.15 per share. This dividend was in lieu of and accelerated the payment of all quarterly dividends that the company would have otherwise paid in calendar 2013. Real Estate DHI maintains an 8.9-year supply of lots (based on last 12 months deliveries), 66.5% of which are owned and the balance controlled through options. The options share of total lots controlled is down sharply over the past six years as the company has written off substantial numbers of options. Fitch expects DHI to continue rebuilding its land position and increase its community count. The primary focus will be optioning (or in some cases, purchasing for cash) or developing in small phases finished lots, wherein DHI can get a faster return of its capital. DHI's cash flow from operations during fiscal 2012 (ending Sept. 30, 2012) was a negative $298.1 million. For all of fiscal 2013, Fitch expects DHI to be cash flow negative by more than $1 billion as the company almost doubles its land and development spending. The ratings also reflect DHI's relatively heavy speculative building activity (at times averaging 50-60% of total inventory and about 48% at Dec. 31, 2012). DHI has historically built a significant number of its homes on a speculative basis (i.e. begun construction before an order was in hand). A key focus is on selling these homes either before construction is completed or certainly before a completed spec has aged more than a few months. This has resulted in consistently attractive margins. DHI successfully executed this strategy in the past, including during the severe housing downturn. Nevertheless, Fitch is generally more comfortable with the more moderate spec targets of 2004 and 2005, wherein spec inventory accounted for roughly 35- 40% of homes under construction. 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; --Free cash flow trends and uses; and --DHI's cash position. Fitch would consider taking positive rating actions if the recovery in housing persists, or accelerates and DHI shows steady improvement in credit metrics following the debt offerings (such as debt leverage below 5x by FY end 2014), while maintaining a healthy liquidity position (in excess of $1 billion at FY end 2013 and 2014). Conversely, negative rating actions could occur if the recovery in housing dissipates and DHI maintains an overly aggressive land and development spending program. This could lead to consistent and significant negative quarterly cash flow from operations and meaningfully diminished liquidity position (below $500 million). Fitch currently rates DHI as: --Long-term IDR at 'BB'; --Senior unsecured debt at 'BB'. The Outlook is Positive. D.R. HORTON: Moody's Rates New $300MM Sr. Unsecured Notes 'Ba2' --------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to Horton's proposed USD300 million of senior unsecured notes due 2020 and USD400 million senior unsecured notes due 2025, proceeds of which will be used for general corporate purposes, including growth capital. At the same time, Moody's affirmed the company's Ba2 corporate family rating, Ba2-PD probability of default rating, the Ba2 ratings on the existing senior unsecured notes and convertible senior notes, and the SGL-2 speculative grade liquidity rating. The rating outlook remains positive. The following rating actions were taken: Proposed USD300 million senior unsecured notes due 2020, assigned Ba2 (LGD4, 53%); Proposed USD400 million senior unsecured notes due 2025, assigned Ba2 (LGD4, 53%); Corporate family rating, affirmed at Ba2; Probability of default rating, affirmed at Ba2-PD; Existing senior unsecured notes, affirmed at Ba2 (LGD4, 53%); Existing convertible senior notes, affirmed at Ba2 (LGD4, 53%); Speculative grade liquidity rating, affirmed at SGL-2; The rating outlook is positive. Ratings Rationale The Ba2 rating reflects the company's cash generating prowess, which permitted it to repay over USD4 billion of homebuilding debt out of internally generated funds during the downturn; its conservative capital structure, as reflected in one of the lowest homebuilding debt leverage ratios in the industry; its relatively clean and transparent balance sheet; and its strong earnings metrics, including healthy gross margins and positive net income generation. In addition, the Ba2 rating considers Horton's solid liquidity, supported by approximately USD643 billion of unrestricted cash and investments as of December 31, 2012, which will rise to USD1.3 billion as per the note offerings, and a recently established and subsequently increased USD600 million senior unsecured revolving credit facility due 2017. The rating also reflects the company's size and scale as one of the largest and most geographically diversified homebuilders in the U.S. In the third fiscal quarter of 2012, ended June 30, 2012, approximately USD717 million of the company's deferred tax asset valuation allowance was reversed, which resulted in net worth increasing to USD3.5 billion from USD2.7 billion. Additionally, the company was able to improve its gross margins by 160 basis points in fiscal 2012 versus fiscal 2011 mainly due to rising sales prices. In Moody's view, the increase in Horton's adjusted homebuilding debt to capitalization ratio, pro forma for the proposed USD700 million of notes, to 47% from 41% at December 31, 2012, is temporary and will decline over the next 12 to 18 months as the company continues to build its tangible net worth with growing net income. At the same time, Horton's rating recognizes that while the industry is demonstrating positive momentum, the conditions still remain weak compared to historical norms, which may constrain the degree of improvement Horton and the other homebuilders will be able to realize in the near term. Moody's expects Horton to generate negative cash flow from operations over the next 12 to 18 months as it replenishes and adds to its land position. The company's large speculative build percentage of 45% and moderately long land supply of about six years leave it exposed in the event of a sharp or sudden downturn. Horton's good liquidity profile is reflected in its SGL-2 speculative-grade liquidity assessment, which balances the company's strong cash position and the availability under the USD600 million senior unsecured revolver with the expectation for negative cash flow generation, the need to maintain covenant compliance, and somewhat limited opportunities to monetize excess assets quickly. The positive outlook reflects the company's ability to generate rapid growth while maintaining solid liquidity and financial flexibility and one of the lowest debt leverage profiles in the industry. Additionally, the positive outlook reflects Moody's expectation that the company will expand profitability, grow its earnings and equity base, and reduce its homebuilding debt leverage over the next 12 to 18 months. The ratings could improve if the company continues to expand its net income generation and maintains its homebuilding debt leverage close to 40% while sustaining strong liquidity. The outlook could be changed to negative if the economic backdrop suddenly and significantly takes a turn for the worse. The ratings could be lowered if impairment charges were again to reach high levels, cash flow generation were to turn sharply negative without an offsetting increase in earnings, and/or the company were to increase its adjusted gross homebuilding debt leverage above 50% on a sustained basis. D.R. Horton, Inc., headquartered in Fort Worth, Texas, is one of the largest and most geographically diversified homebuilders in the United States. The company has a presence in 26 states and 77 regions and generates approximately 98% of its revenues from homebuilding operations, focusing on the construction and sale of single-family detached homes. In its fiscal 2012 year ending September 30, 2012, the company generated total revenues and pretax income of USD4.4 billion and USD243 million, respectively. The principal methodology used in this rating was the Global Homebuilding Industry Methodology published in March 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. D.R. HORTON: S&P Assigns 'BB-' Rating to $300MM & $400MM Sr. Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned 'BB-' issue-level ratings and '3' recovery ratings to D.R. Horton Inc.'s proposed public note offerings consisting of $300 million of senior notes due 2020 and $400 million of senior notes due 2025. S&P's '3' recovery ratings indicate its expectation for a meaningful (50%- 70%) recovery in the event of a default. The company plans to use proceeds from the offerings for general corporate purposes. Standard & Poor's expects the offerings to immediately bolster the company's holdings of unrestricted cash and marketable securities (which totaled approximately $643 million at Dec. 31, 2012), providing additional funds for investment in land and inventory. The offering proceeds may also facilitate the repayment of the company's 2013 and 2014 debt maturities, which currently total $171.7 million and $783.8 million (including a $500 million convertible note), respectively. The notes will be guaranteed by substantially all of D.R. Horton's homebuilding subsidiaries and will rank equally with the company's other senior unsecured obligations. S&P's ratings on Ft. Worth, Texas-based D.R Horton reflect the company's "fair" business risk profile. D.R. Horton is the nation's largest homebuilder by volume, having delivered 19,954 homes during the 12 months ended Dec. 31, 2012, primarily to first-time homebuyers. Home deliveries for D.R Horton's fiscal first quarter of 2013 rose 26% compared with the prior year, and the average selling price (ASP) rose 10% year-over-year to approximately $236,100. New home orders for the first quarter were also up 39% year-over-year, with each of the company's six operating regions reporting dollar volume gains. While D.R. Horton does not provide public guidance regarding anticipated home closings, S&P's current forecast assumes a 24% to 26% increase in home deliveries (23,400 to 24,200) in 2013, followed by similar growth in 2014. S&P also assumes that ASPs increase, rising roughly 7% in 2013 and 3% in 2014. S&P expects higher sales volumes and ASP and a continued focus on leveraging selling, general, and administrative expense will enable the company to expand its EBITDA margin about 200 basis points in 2013 to roughly 11%. Under this scenario, S&P expects adjusted debt-to-EBITDA to improve to about 5x by the end of fiscal 2013 (Sept. 30) despite the proposed issuance of $700 million of additional debt. Pro forma for the proposed debt offerings, funded debt totaled about $3.2 billion at Dec. 31, 2013, up from $1.7 billion at March 31, 2012. "Our positive outlook on the company acknowledges our expectation that credit metrics will improve over the balance of fiscal 2013, and the company will end the year with debt-to-EBITDA of about 5x, debt to total capital in the low 40% area, and funds from operations to debt of roughly 15%. Given our expectation that sales volumes and ASP will continue to post strong year-on- year growth in 2014, we expect these metrics to improve further, reaching thresholds that are consistent with a "signficant" financial risk profile. We could raise our corporate credit rating to 'BB' if we think D.R. Horton is poised to achieve 25% to 30% revenue growth in 2013 and EBITDA margins (excluding impairments and interest in cost of sales) improve to about 11%, and we expect performance will continue to strengthen in 2014," S&P said. "However, we could revise the outlook back to stable if sales growth is more moderate than we currently expect (i.e., it falls below 20%) and EBITDA margins (excluding impairments and interest in cost of sales) decline to the 7% area. Under this scenario, we would not expect debt-to-EBITDA (pro forma for the proposed debt issuance) to improve materially from the current high 6x area. We could also revise the outlook back to stable if growth in debt levels outpaces expected revenue and EBITDA gains, and credit metrics appear unlikely to improve materially from the current range," S&P added. Ratings List New Rating D.R. Horton Inc. Senior Unsecured BB- New Rating D.R. Horton Inc. Senior Unsecured US$400 mil sr nts due 2025 BB- Recovery Rating 3 US$300 mil sr nts due 2020 BB- Recovery Rating 3 DAMES POINT: Involuntary Chapter 11 Case Summary ------------------------------------------------ Alleged Debtor: Dames Point Holdings, LLC 4542 Irving Road Jacksonville, FL 32226 Bankruptcy Case No.: 13-00501 Involuntary Chapter 11 Petition Date: January 29, 2013 Court: U.S. Bankruptcy Court Middle District of Florida (Jacksonville) Debtor's Counsel: Pro Se Petitioners' Counsel: Scott A. Underwood, Esq. FOWLER WHITE BOGGS, P.A. P.O. Box 1438 Tampa, FL 33601 Tel: (813) 228-7411 Fax: (813) 229-8313 E-mail: Scott.Underwood@fowlerwhite.com Creditors who signed the Chapter 11 petition: Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ P & B Marina Development, LLC Money Loaned $70,000 6853 Sunrise Court Coral Gables, FL 33131 DUNLAP OIL: Committee Can Hire Nussbaum Gillis as Counsel --------------------------------------------------------- Bankruptcy Judge James M. Marlar authorized the Official Committee of Unsecured Creditors in the case of Dunlap Oil Company, Inc., to retain Nussbaum Gillis & Dinner, P.C. as its counsel. The Court held that any and all requests for compensation of fees and expenses by Nussbaum from the estate will be strictly limited to no more than $17,500. Any request by Nussbaum for compensation from the estate in excess of $17,500 will be approved only upon subsequent application, supported by a specific showing of what work is required to be performed and the benefit to the estate from the proposed work to be completed. Any amounts in excess of $17,500 will require a signed Court order prior to incurrence by Nussbaum. The firm's engagement is led by Randy Nussbaum, Esq. -- rnussbaum@ngdlaw.com -- and Dean M. Dinner, Esq. -- ddinner@ngdlaw.com The Committee was appointed on Nov. 28. Nussbaum rendered services to the Committee beginning Dec. 14. The firm's hourly rates are: Partners $275 - $450 Associates $175 - $300 Paralegals $125 - $160 Nussbaum attests it has no interest adverse to the unsecured creditors with respect to the matters upon which it is being engaged. About Dunlap Oil and Quail Hollow Inn Dunlap Oil Company, Inc., and Quail Hollow Inn, LLC, sought Chapter 11 protection (Bankr. D. Ariz. Case No. 12-23252 and 12-23256) on Oct. 24, 2012. Founded in 1958, Dunlap Oil is a Willcox, Arizona-based operator of 14 gasoline services stations. QOH owns the 89-room outside corridor Best Western Plus Quail Hollow hotel in Willcox. The two companies are owned and operated by the Dunlap family. Judge James M. Marlar presides over the case. John R. Clemency, Esq., and Lindsi M. Weber, Esq., at Gallagher & Kennedy, P.A., serve as the Debtors' counsel. Peritus Commercial Finance LLC serves as financial advisor. QOH declared assets of at least $1 million and debts exceeding $10 million. DOC estimated assets and debts of $10 million to $50 million. The petitions were signed by Theodore Dunlap, president. Ilene J. Lashinsky, the U.S. Trustee for Region 14, has appointed three creditors to serve on an Official Committee of Unsecured Creditor for the Chapter 11 bankruptcy case of Dunlap Oil Company. Pineda Grantor Trust II, successor-in-interest to Compass Bank, is represented by Steven N. Berger, Esq., and Bradley D. Pack, Esq., at Engelman Berger, P.C. Counsel to Canyon Community Bank NA are Jeffrey G. Baxter, Esq., Pat P. Lopez III, Esq., and Rebecca K. O'Brien, Esq., at Rusing Lopez & Lizardi PLLC. DUNLAP OIL: Feb. 8, 2013 Set as Claims Bar Date ----------------------------------------------- Creditors have until Feb. 8, 2013, to file proofs of claim in the bankruptcy estates of Dunlap Oil Company, Inc., and Quail Hollow Inn LLC. Dunlap Oil Company, Inc., and Quail Hollow Inn, LLC, sought Chapter 11 protection (Bankr. D. Ariz. Case No. 12-23252 and 12-23256) on Oct. 24, 2012. Founded in 1958, Dunlap Oil is a Willcox, Arizona-based operator of 14 gasoline services stations. QOH owns the 89-room outside corridor Best Western Plus Quail Hollow hotel in Willcox. The two companies are owned and operated by the Dunlap family. Judge James M. Marlar presides over the case. John R. Clemency, Esq., and Lindsi M. Weber, Esq., at Gallagher & Kennedy, P.A., serve as the Debtors' counsel. Peritus Commercial Finance LLC serves as financial advisor. QOH declared assets of at least $1 million and debts exceeding $10 million. DOC estimated assets and debts of $10 million to $50 million. The petitions were signed by Theodore Dunlap, president. Ilene J. Lashinsky, the U.S. Trustee for Region 14, has appointed three creditors to serve on an Official Committee of Unsecured Creditor for the Chapter 11 bankruptcy case of Dunlap Oil Company. Pineda Grantor Trust II, successor-in-interest to Compass Bank, is represented by Steven N. Berger, Esq., and Bradley D. Pack, Esq., at Engelman Berger, P.C. Counsel to Canyon Community Bank NA are Jeffrey G. Baxter, Esq., Pat P. Lopez III, Esq., and Rebecca K. O'Brien, Esq., at Rusing Lopez & Lizardi PLLC. ENERGY FUTURE: Fitch Hikes IDRs to 'CCC' on Debt Exchange --------------------------------------------------------- Fitch Ratings has lowered the Issuer Default Ratings (IDR) of Energy Future Holdings Corp (EFH) and Energy Future Intermediate Holding Company LLC (EFIH) to 'Restricted Default' (RD) from 'CCC' on the conclusion of the debt exchange and removed the Rating Watch Negative. On Dec. 21, 2012, EFIH had launched an offer to exchange up to approximately $1.3 billion of new 10.000% senior secured notes due 2020 for any and all outstanding EFH's $115 million 9.75% senior secured notes due 2019, EFH's $1,061 million 10.000% senior secured notes due 2020, and EFIH's $141 million 9.75% senior secured notes due 2019. The exchange offer concluded yesterday with approximately 99% of bondholders tendering their notes in the exchange. Fitch had deemed the exchange offer to be a distressed debt exchange (DDE) since the exchange offer would be accepted only if the tendering bondholders also consent to indenture amendments that materially impair the position of holders that do not tender. EFH has received the requisite consents to adopt the proposed indenture amendments. Fitch has downgraded the rating for the notes subject to DDE to 'CCC/RR1' from 'B/RR1' and removed the Rating Watch Negative. A second exchange offer has also concluded, whereby EFIH had offered to exchange up to approximately $124 million of its 11.25%/12.5% senior toggle notes due 2018 notes for the outstanding EFH's cash pay/toggle notes due 2017. Approximately $64 million of bondholders tendered their notes in the exchange. Fitch has simultaneously taken various rating actions based on the post-exchange capital structure and the fundamental outlook for EFH and EFIH. Fitch has upgraded the IDRs of EFH and EFIH to 'CCC' from 'RD', which is the same as the pre-exchange IDR. The first lien notes exchange, being a par exchange, has not changed the probability of default for the two companies. The unsecured notes exchange results in a small benefit to the combined liquidity given the three-year payment-in-kind feature on the newly issued notes. Fitch has simultaneously downgraded the ratings for the EFH's 9.75% notes due 2019 and 10.000% notes due 2020 that were not tendered in the exchange to 'CC/RR6' from 'CCC/RR1' due to a loss in both collateral coverage and upstream guarantee arrangements as a result of the indenture amendments. These notes are now pari passu with EFH's legacy notes. Fitch has also simultaneously upgraded the ratings of EFIH's 9.75% notes due 2019 that were not tendered in the exchange to 'CCC+/RR3' from 'CCC/RR1'. These notes are now pari passu with EFIH's senior toggle notes due 2018. SENSITIVITY/RATING DRIVERS The 'CCC' IDRs for EFH and EFIH reflect the highly leveraged capital structure, sufficient but declining liquidity, and currently constrained, but growing distributions and tax payments from Oncor Electric Delivery Company LLC (Oncor). Fitch expects dividend distributions and corporate tax payments as the only principal source of cash flows for EFH/EFIH going forward. Fitch expects EFH/EFIH's FFO to consolidated debt to be in a 4%-6% range and FFO to interest ratio to be 0.7x-0.8x over 2013 - 2018, which is indicative of a 'CCC' IDR. Fitch's financial forecasts assume no tax implications for EFH due to any potential restructuring activities at Texas Competitive Electric Holdings Company LLC (TCEH). Combined liquidity at EFH/EFIH stood at $1.41 billion as of Dec. 31, 2012, which includes the $680 million held in escrow to repay the remaining inter-company loans to TCEH. Looking forward, Fitch expects combined liquidity to be affected by reduced upstream dividend and cash tax payments from Oncor during 2013 - 2014 as a result of elevated capex and bonus depreciation benefits. Fitch expects liquidity to be adequate until 2016 given EFIH has capacity to issue an incremental $250 million in second lien debt and $400 million of unsecured debt based on current debt incurrence restrictions. Further liability management, refinancing of the current high cost debt, and/or equity infusion will be needed to right size the capital structure and support liquidity at EFH/EFIH, in Fitch's view. Fitch's assessment of the collateral valuation at EFH/ EFIH continues to depend solely on the value of Oncor Electric Delivery Holdings Company LLC's (Oncor Holdings) 80% ownership interest in Oncor. The recovery valuation for all classes of debt pursuant to the first lien debt exchange and unsecured notes exchange did not change, except for the untendered notes. Fitch's recovery analysis yields a 100% recovery for both the first lien and second lien debt. As a result, Fitch has notched up the ratings for the first and second lien debt by three notches to 'B/RR1'. Since the new notes issued in the unsecured notes exchange are pari passu to the notes being exchanged, there is no change in recovery ratings at that class of debt. There is also no change in recovery for EFH's legacy notes. What Could Trigger A Rating Action Change in Leverage at EFH/EFIH: A reduction in debt at EFH/EFIH will be positive for their credit profile. Any reduction in leverage through liability management activities will be evaluated by Fitch based on the terms of the transaction and could lead to changes in the recovery analysis. Lower Than Expected Cash Flows: A material shortfall in cash flows at EFH/EFIH versus Fitch's current expectations due to factors such as reduced dividends and/or corporate tax payments from Oncor, federal tax obligations triggered by a potential restructuring at TCEH among other factors could lead to a downgrade in the ratings of these entities. Change in Oncor's Valuation: Any change in Fitch's assessment of the valuation of Oncor due to reasons such as change in regulatory environment, any restriction placed on upstream dividend distribution, a change in electric sales outlook etc. could lead to a change in recovery ratings for EFH/EFIH's debt instruments. Fitch has taken the following rating actions: EFH -- IDR downgraded to 'RD' from 'CCC' and simultaneously upgraded to 'CCC'; -- 9.75% notes due 2019 downgraded to 'CCC/RR1' from 'B/RR1' and simultaneously downgraded to 'CC/RR6'; -- 10.000% notes due 2020 downgraded to 'CCC/RR1' from 'B/RR1' and simultaneously downgraded to 'CC/RR6'; -- Senior unsecured guaranteed notes affirmed at 'CCC+/RR3'; -- Senior unsecured non-guaranteed notes affirmed at 'CC/RR6'. EFIH -- IDR downgraded to 'RD' from 'CCC' and simultaneously upgraded to 'CCC'; -- 9.75% notes due 2019 downgraded to 'CCC/RR1' from 'B/RR1' and simultaneously upgraded to 'CCC+/RR3; -- Senior secured first lien debt not subject to DDE affirmed at 'B/RR1'; -- Senior secured second lien debt affirmed at 'B/RR1'; -- Senior toggle notes affirmed at 'CCC+/RR3'. ENGLOBAL CORP: Huntsman Awards Reconstruction Project ----------------------------------------------------- ENGlobal Corporation on Jan. 31 disclosed that it has been awarded a project from Huntsman Performance Products, a division of Huntsman Corporation, to provide engineering and project management services at Huntsman's manufacturing plant in Port Neches, Texas. In April 2012, Huntsman announced its intent to add 250 million pounds per year of EO capacity to its existing one billion pounds annual capacity at the same plant. ENGlobal expects to perform the engineering, design and project management of the reconstruction of an Ethylene Oxide (EO) Unit. The Company will begin work on the project immediately with engineering scheduled to be completed in the second quarter of 2013. Stu Monteith, President of Huntsman Performance Products, said, "The expansion of our ethylene oxide capacity enables Huntsman to leverage the favorable North American ethane cost position, which will benefit our intermediate chemicals and has an attractive projected return on investment. We are excited to join with ENGlobal to work on this expansion." "We are pleased to receive this award from Huntsman, who is a long standing and valued client," said William A. Coskey, P.E., ENGlobal's President and Chief Executive Officer. "The award clearly affirms our industry expertise and capability in delivering a safe, quality project in all respects. We are deeply committed to addressing our clients' unique project needs and production objectives." Waiver As reported by the Troubled Company Reporter on Dec. 27, 2012, ENGlobal entered into a Second Amendment to Revolving Credit and Security Agreement, Waiver and Forbearance Extension with PNC Bank, National Association, as administrative agent for the lenders. The extension will be in place through April 30, 2013, and requires ENGlobal's compliance with certain terms and conditions. This extended period is expected to allow ENGlobal's management sufficient time to see the results of the implementation of its business improvement plan. ENGlobal has hired a management consultant and subsequently developed a plan to restore the Company's compliance with the revolving credit facility. About Huntsman Huntsman -- http://www.huntsman.com-- is a global manufacturer and marketer of differentiated chemicals. Its operating companies manufacture products for a variety of global industries, including chemicals, plastics, automotive, aviation, textiles, footwear, paints and coatings, construction, technology, agriculture, health care, detergent, personal care, furniture, appliances and packaging. Originally known for pioneering innovations in packaging and, later, for rapid and integrated growth in petrochemicals, Huntsman has approximately 12,000 employees and operates from multiple locations worldwide. The Company had 2011 revenues of over $11 billion. About ENGlobal ENGlobal ENG -- http://www.ENGlobal.com/-- founded in 1985, is a provider of engineering and related project services principally to the energy sector throughout the United States and internationally. ENGlobal operates through three business segments: Automation, Engineering & Construction, and Field Solutions. ENGlobal's Automation segment provides services related to the design, fabrication & implementation of process distributed control and analyzer systems, advanced automation, and related information technology. EGPI FIRECREEK: Deborah Alexander Named Secretary ------------------------------------------------- Deborah L. Alexander has been elected as Secretary to EGPI Firecreeek, Inc., effective Jan. 24, 2013, by majority consent of the Company's directors. Mrs. Alexander will hold office along with the Company's present Officers and Board of Directors until the Company's Annual Meeting of Shareholders and Directors in 2013 or until their successors are duly elected and qualified. From 2004 to the present, Mrs. Alexander has been involved in research and development related to authoring the development of a historical multi volume book series for public release. Prior to January 2007, Mrs. Alexander's career includes 18 years working in the film and video industry as a producer, photographer, and editor for NBC (WPXI, KPNX) and ABC (KTVK) affiliates. Over the years she built her own production business in Phoenix, Arizona; with clientele including Arizona Corporation Commission; a 10 part gas safety series that was approved by Congress for national distribution, "Operation Lifesaver," produced for the Arizona Railroad Association and took second place in the JVC Pro Awards (Walt Disney took 1st place). This production has been used by every driver education class in the state of Arizona, and historically was adopted by railroads across the country later seen on display as part of an exhibit at the Chicago Museum of Science and Industry. In 1987, she merged the video and film business into a recording, production and entertainment related business, adding additional services including, advertising and public relations becoming a small cap NASDAQ listed company. The business added a second facility in Tucson, Arizona that included full analog and digital pre and post production and duplication and entered into the Home Video market, later adding distribution services. By 1990, the company was listed as the 6th largest film and video company in the Valley whose clients included; Oprah Winfrey, Henry Winkler, Geraldo, Blues Brothers Review, Andre Cole, "Good Morning America", "20/20", Subway, Weiser Lock, Ford Cars and the Malcolm Baldridge Awards just to name a few. Reverse Stock Split On Jan. 24, 2013, the Company's Majority Board of Directors and Shareholders effectively being the beneficial owners of approximately 54.29% of the issued and outstanding voting shares of the Company's $0.001 par value common and preferred voting stock have voted affirmatively for a reverse stock split. The Company has received their executed Written Consents, effective on Jan. 24, 2013, to effect a One (1) for Four Thousand (4,000) reverse stock split (1:4000), whereby, as of a date to be not less than 10 days following the Company's submission to FINRA of which its submission to FINRA is expected to be no later than Jan. 31, 2013, for every four thousand shares of Common Stock then owned, each stockholder will receive one share of Common Stock. The Company currently has 20,000,000,000 shares of Common Stock, and 60,002,500 shares of Preferred Stock authorized. Approximately 19,042,939,184 shares of Common Stock are issued and outstanding, along with 2,000,000,000 shares of Common Stock additionally subscribed for issuance, 1,087,142 shares of Series C Voting Only Preferred Stock are issued and outstanding, and 2,484 shares of its Series D Preferred Stock are issued and outstanding as of, respectively. The Board of Directors believes that the price of the Common Stock is too low to attract investors to buy the stock. In order to proportionally raise the per share price of the Common Stock by reducing the number of shares of the Common Stock outstanding, the Board of Directors believes that it is in the best interests of the Company's stockholders to implement a reverse stock split. In addition, the Board of Directors believes that the share price of the Common Stock is a factor in whether the Common Stock meets investing guidelines for certain institutional investors and investment funds. Finally, the Board of Directors believes that the Company's stockholders will benefit from relatively lower trading costs for a higher priced stock. A copy of the Form 8-K is available at http://is.gd/sdrYV5 About EGPI Firecreek Scottsdale, Ariz.-based EGPI Firecreek, Inc. (OTC BB: EFIR) was formerly known as Energy Producers, Inc., an oil and gas production company focusing on the recovery and development of oil and natural gas. The Company has been focused on oil and gas activities for development of interests held that were acquired in Texas and Wyoming for the production of oil and natural gas through Dec. 2, 2008. Historically in its 2005 fiscal year, the Company initiated a program to review domestic oil and gas prospects and targets. As a result, EGPI acquired non-operating oil and gas interests in a project titled Ten Mile Draw located in Sweetwater County, Wyoming for the development and production of natural gas. In July 2007, the Company acquired and began production of oil at the 2,000 plus acre Fant Ranch Unit in Knox County, Texas. This was followed by the acquisition and commencement in March 2008 of oil and gas production at the J.B. Tubb Leasehold Estate located in the Amoco Crawar Field in Ward County, Texas. The Company reported a net loss of $4.97 million in 2011, compared with a net loss of $4.48 million in 2010. In its audit report for the 2011 results, M&K CPAS, PLLC, in Houston, Texas, noted that the Company has suffered recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. The Company's balance sheet at Sept. 30, 2012, showed $2.35 million in total assets, $6.49 million in total liabilities, all current, $1.86 million in series D preferred stock, and a $6.01 million total shareholders' deficit. EPICEPT CORP: Sabby Healthcare Discloses 9.9% Equity Stake ---------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Sabby Healthcare Volatility Master Fund, Ltd., and its affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 9,129,817 shares of common stock of EpiCept Corporation representing 9.9% of the shares outstanding. Sabby Healthcare previously reported beneficial ownership of 8,324,714 common shares as of Sept. 24, 2012. A copy of the amended filing is available at http://is.gd/y6ns6q About EpiCept Corporation Tarrytown, N.Y.-based EpiCept Corporation (Nasdaq and Nasdaq OMX Stockholm Exchange: EPCT) -- http://www.epicept.com/-- is focused on the development and commercialization of pharmaceutical products for the treatment of cancer and pain. The Company's lead product is Ceplene(R), approved in the European Union for the remission maintenance and prevention of relapse in adult patients with Acute Myeloid Leukemia (AML) in first remission. In the United States, a pivotal trial is scheduled to commence in 2011. The Company has two other oncology drug candidates currently in clinical development that were discovered using in-house technology and have been shown to act as vascular disruption agents in a variety of solid tumors. The Company's pain portfolio includes EpiCept(TM) NP-1, a prescription topical analgesic cream in late-stage clinical development designed to provide effective long-term relief of pain associated with peripheral neuropathies. In the auditors' report accompanying the financial statements for year ended Dec. 31, 2011, Deloitte & Touche LLP, in Parsippany, New Jersey, noted that the Company's recurring losses from operations and stockholders' deficit raise substantial doubt about its ability to continue as a going concern. Epicept reported a net loss of $15.65 million in 2011, a net loss of $15.53 million in 2010, and a net loss of $38.81 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $2.86 million in total assets, $16.03 million in total liabilities and a $13.16 million in total stockholders' deficit. FAIRPOINT COMMUNICATIONS: Moody's Rates $300MM Senior Notes 'B2' ---------------------------------------------------------------- Moody's Investors Service has assigned B2 (LGD 4-57%) ratings to FairPoint Communications Inc.'s proposed USD300 million senior secured notes due 2020 and USD725 million senior secured credit facility which consists of a USD650 million senior secured term loan due 2019 and a USD75 million senior secured revolver due 2018. The proceeds will be used to repay the company's existing credit facility, the ratings of which will be withdrawn by Moody's upon a successful refinancing. The transaction is not expected to result in lower interest expense for the company but will allow it to extend its debt maturity into later years. Moody's has also upgraded FairPoint's probability of default rating (PDR) to B2-PD from B3-PD to reflect the lower probability of default resulting from a mixture of bank debt and bonds in the capital structure upon the refinancing. The rating outlook is stable. Assignments: US$650M Senior Secured Term Loan due 2019, Assigned B2 (LGD4, 57%) US$75M Senior Secured Revolver due 2018, Assigned B2 (LGD4, 57%) US$300M Senior Secured Notes due 2020, Assigned B2 (LGD4, 57%) Ratings changes: Probability of Default Rating (PDR) upgraded to B2-PD from B3-PD Ratings Rationale FairPoint's B2 corporate family rating reflects the company's high leverage and continued revenue erosion. Moody's forecasts low single digit revenue decline over the next two to three years as the decline in voice and access line revenue outpaces growth in data and internet services revenue. Despite the recent accelerated job cuts and other cost saving measures, the company's EBITDA margin is well below its peer incumbent telecom operators' average. Opportunities to reduce costs remain, but leverage will stay high as the company is unlikely to grow EBITDA. On the other hand, the ratings are supported by the company's strong footprint in its primary New England markets, its large base of recurring revenues and expected modest free cash flow generation. The ratings for the debt instruments reflect both the overall probability of default of FairPoint, to which Moody's assigns a probability of default rating (PDR) of B2-PD, the average family loss given default assessment and the composition of the debt instruments in the capital structure. Moody's assumes a 50% family recovery rate due to the new capital structure of bank debt and bonds. The senior secured credit facilities, which consist of the USD650 million term loan and USD75 million revolver are ranked pari passu with the new USD300 million senior secured notes at B2 (LGD4, 57%). Moody's ranks the pension liabilities ahead of the senior secured bank facilities and the senior secured notes as the pension liabilities mostly reside at the non-guarantor operating telecom subsidiaries while the guarantors for the senior secured debt only hold an equity claim to these assets. Moody's believes that FairPoint will maintain good liquidity over the next twelve months with an undrawn USD75 million revolver and USD22 million cash on hand as of September 30, 2012. The company is expected to have ample amount of cushion under its minimum coverage and maximum leverage financial covenants with the refinancing. The stable outlook incorporates Moody's view that FairPoint will be able to improve operating performance over the next 12-18 months, and increase EBITDA margins, primarily through cost containment and slower revenue erosion. While unlikely, positive rating momentum could develop if FairPoint returns to sustainable revenue growth and its financial profile strengthens, such that its adjusted EBITDA margins exceed 30% and its leverage (total adjusted debt-to-EBITDA) could be sustained under 4x. Negative rating pressure could develop if revenue declines in traditional voice services are not offset by cost containment or other top line initiatives, or if liquidity becomes strained. Additionally, the ratings could be lowered if free cash flow were to turn negative or if Moody's adjusted leverage were to approach 6x, both on a sustained basis. The principal methodology used in rating FairPoint was the Global Telecommunications Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. FIRST DATA: Fitch Rates $785-Mil. Senior Unsecured Notes 'CCC+' --------------------------------------------------------------- Fitch Ratings has assigned a 'CCC+/RR6' rating to First Data Corp.'s proposed offering of $785 million in senior unsecured notes due 2021. Proceeds from the offering will be used to finance the company's tender offer for its 10.55% senior unsecured notes due 2015. In addition, FDC is seeking an addition to its 2018 senior secured term loan, rated 'BB-/RR2', to refinance its remaining $255 million in senior secured term loans due 2014. Upon successful completion of these transactions, FDC will have only its $784 million in senior unsecured notes due 2015 maturing within the next three years-plus. Fitch continues to rate FDC's Issuer Default Rating (IDR) at 'B' with a Stable Outlook. Fitch revised FDC's Outlook to Stable from Negative earlier in January based on improved operating results during 2012 as well as the extension and refinancing of a significant majority of the company's previously forthcoming term loan maturities in 2014. For a more detailed rationale behind the rating action, please see the press release dated Jan. 8, 2013. Liquidity as of Dec. 31, 2012 was solid with cash of $608 million ($324 million of which was available to the company in the U.S.) and approximately $1.5 billion available under a $1.52 billion senior unsecured revolving credit facility, approximately $500 million of which expires September 2014 and the rest expiring September 2016. Fitch estimates that FDC generated approximately $136 million in free cash flow over the latest 12 month period which further adds to liquidity. Total debt as of Dec. 31, 2012 was $23 billion, which includes approximately $15.6 billion in secured debt, $4.5 billion in unsecured debt and $2.5 billion in subordinated debt (all figures approximate). In addition, a subsidiary of New Omaha Holdings L.P. (the direct parent company of First Data Corp.) has outstanding $1.75 billion senior unsecured PIK notes due 2016. These notes are not obligations of FDC and are not consolidated. For an in-depth review of Fitch's credit analysis and outlook for FDC, please see the report published June 6, 2012. Fitch currently rates FDC as: -- Long-term IDR at 'B'; -- $499 million senior secured revolving credit facility expiring September 2013 at 'BB-/RR2'; -- $1 billion senior secured revolving credit facility expiring September 2016 at 'BB-/RR2'; -- $255 million senior secured term loan B due 2014 at 'BB-/RR2'; -- $2.7 billion senior secured term loan B due 2017 at 'BB-/RR2'; -- $4.7 billion senior secured term loan B due 2018 at 'BB-/RR2'; -- $750 million senior secured term loan B due 2018 at 'BB-/RR2'; -- $1.6 billion 7.375% senior secured notes due 2019 at 'BB- /RR2'; -- $510 million 8.875% senior secured notes due 2020 at 'BB- /RR2'; -- $2.2 billion 6.75% senior secured notes due 2020 at 'BB-/RR2'; -- $2 billion 8.25% junior secured notes due 2021 at 'CCC+/RR6'; -- $1 billion 8.75%/10% PIK Toggle junior secured notes due 2022 at 'CCC+/RR6'; -- $784 million 9.875% senior unsecured notes due 2015 at 'CCC+/RR6'; -- $748 million 10.55% senior unsecured notes due 2015 at 'CCC+/RR6'; -- $3 billion 12.625% senior unsecured notes due 2021 at 'CCC+/RR6'; -- $2.5 billion 11.25% senior subordinated notes due 2016 at 'CCC/RR6'. The Rating Outlook is Stable. The Recovery Ratings (RRs) for FDC reflect Fitch's recovery expectations under a distressed scenario, as well as Fitch's expectation that the enterprise value of FDC, and hence recovery rates for its creditors, will be maximized in a restructuring scenario (as a going concern) rather than a liquidation scenario. In deriving a distressed enterprise value, Fitch applies a 15% discount to FDC's estimated operating EBITDA (adjusted for equity earnings in affiliates) of approximately $2.4 billion for the LTM ended Sept. 31, 2012, which is equivalent to Fitch's estimate of FDC's total interest expense and maintenance capital spending. Fitch then applies a 6x distressed EBITDA multiple, which considers FDC's prior public trading multiple and that a stress event would likely lead to multiple contraction. As is standard with Fitch's recovery analysis, the revolver is fully drawn and cash balances fully depleted to reflect a stress event. The 'RR2' for FDC's secured bank facility and senior secured notes reflects Fitch's belief that 71%-90% recovery is realistic. The 'RR6' for FDC's second lien, senior and subordinated notes reflects Fitch's belief that 0%-10% recovery is realistic. The 'CCC/RR6' rating for the subordinated notes reflects the minimal recovery prospects and inherent subordination in a recovery scenario. FIRST DATA: Moody's Rates USD785MM Sr. Unsecured Notes 'Caa1' ------------------------------------------------------------- Moody's Investors Service assigned a Caa1 rating to First Data Corporation's proposed USD785 million senior unsecured notes due 2021. All other ratings, including the B3 corporate family rating, and the stable outlook remain unchanged. The proceeds will be used to repay all of its outstanding 10.55% PIK senior unsecured notes due 2015. The current rating on the existing 10.55% PIK notes will be withdrawn at close. Ratings Rationale The B3 CFR and stable outlook reflect Moody's expectation that First Data will generate mid-single digit percentage revenue and mid-to-high single digit EBITDA growth during 2013, as the economy grows slowly and the shift of payment method to electronic cards from cash and checks continues globally. However, the resulting cash flow is expected to remain relatively light in relation to the very large debt total. Moody's expects First Data will improve its credit metrics modestly (e.g., Debt to EBITDA of about 9 times), yet these metrics will remain within the range of those of other companies also rated at the B3 level. The principal methodology used in this rating was the Global Business and Consumer Service Industry Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Based in Atlanta, Georgia, First Data Corporation, with about USD11 billion of projected annual revenues, provides commerce and payment solutions for financial institutions, merchants, and other organizations worldwide. FIRST DATA: S&P Assigns 'B-' Rating to Sr. Unsec. Notes Due 2021 ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' issue-level rating to U.S. payment processing service provider First Data Corp.'s proposed senior unsecured notes due 2021. The recovery rating is '5', reflecting S&P's expectation of modest (10% to 30%) recovery for senior unsecured debt holders in the event of default. The corporate credit rating on the company is 'B' with a stable outlook. The proposed notes will rank equally with all of First Data's existing and future senior unsecured debt. The company intends to use the proceeds from this offering to redeem all of its outstanding 10.55% senior unsecured paid-in-kind (PIK) toggle notes due 2015. The ratings reflect First Data's capital structure and weak credit protection measures, which S&P characterizes as a "highly leveraged" financial risk profile as a result of the company's 2007 leveraged buyout. The ratings also reflect the company's leading market presence as a provider of payment processing services for merchants and financial institutions, with high barriers to entry, significant recurring revenues, and a broad customer base, which S&P characterizes as a "strong" business risk profile. First Data reported 3% business segment revenue growth for 2012, with growth primarily provided by its domestic merchant transaction volumes, partly offset by ongoing client loss and price pressure in its U.S. financial institution services business, by weak economic conditions affecting its international businesses, and by pricing pressure within its domestic merchant processing business. Over the coming year, S&P expects First Data to offset highly competitive industry conditions, weak European macro conditions, and pricing pressure through merchant transaction processing volume growth, such that its segment revenues, which amounted to $6.7 billion for 2012, continue to grow organically in the low single digits. S&P also expects EBITDA margins to continue to represent about 40% of revenues over the coming year, supported by merchant processing transaction growth. The company's highly leveraged financial profile reflects a debt to EBITDA ratio (adjusted for operating leases and including holding company PIK notes) that remains very high for the rating -- in excess of 10x as of Dec. 31, 2012. As a result, the rating outcome exceeds the typical one-notch deviation from the rating indicated by Standard & Poor's business and financial risk matrix. EBITDA interest coverage is less than 1.5x and free cash flow to total debt is in the low- to mid-single digits. Given S&P's expectations for revenue and EBITDA growth, it do not expect material improvement in credit metrics through 2013. Refinancing and debt exchange actions taken over the past two years represent significant and positive steps taken by First Data to smooth and extend its debt maturity profile. However, the transactions have not materially altered the total amount of debt outstanding, and the company's financial profile remains highly leveraged. First Data has adequate liquidity, with sources of cash that are likely to exceed uses for the next 12 to 24 months. Cash sources include available cash and short-term investment balances of $324 million as of Dec. 31, 2012 (excluding amounts included in settlement assets and amounts held outside of the U.S. that cannot be used in the near term for general corporate purposes) and expected positive annual discretionary cash flow. Relevant aspects of First Data's liquidity, in S&P's view, are as follows: -- S&P see coverage of uses to be in excess of 1.5x for the next 12 months, in part reflecting modest near-term debt maturities. -- S&P expects that net sources would be positive in the near term even with a 15% decline in EBITDA from December 2012 last-12-months (LTM) levels. -- In addition to cash balances, as of Dec. 31, 2012, First Data had access to a $1.5 billion revolving credit facility (of which about $50 million was utilized for letters of credit). -- Additionally, financial flexibility is enhanced by a single debt maintenance covenant in the first-lien credit agreement that at present provides a significant (more than 30% as of Dec. 31, 2012) cushion. -- Material acquisitions are not expected or incorporated in the current rating. The stable outlook reflects First Data's strong business profile and relatively stable historical operating performance. Ratings improvement is constrained by very high debt leverage for the rating, and the company's limited capacity to reduce debt from cash flow. The outlook could be revised to negative if revenue weakness and/or cost pressures result in reported annual EBITDA growth below 5% in 2013. RATINGS LIST First Data Corp. Corporate Credit Rating B/Stable/-- Ratings Assigned First Data Corp. Senior Unsecured Notes Due 2021 B- Recovery Rating 5 GENTA INC: Sabby Healthcare Discloses 9.9% Equity Stake ------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Sabby Healthcare Volatility Master Fund, Ltd., and its affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 245,069,504 shares of common stock of Genta Incorporated representing 9.99% of the shares outstanding. A copy of the filing is available at http://is.gd/DNlaaJ About Genta Incorporated Berkeley Heights, New Jersey-based Genta Incorporated (OTC BB: GNTA) -- http://www.genta.com/-- is a biopharmaceutical company engaged in pharmaceutical (drug) research and development. The Company is dedicated to the identification, development and commercialization of novel drugs for the treatment of cancer and related diseases. In its report on the financial statements for 2011, EisnerAmper LLP, in Edison, New Jersey, noted that the Company's recurring losses from operations and negative cash flows from operations and current maturities of convertible notes payable raise substantial doubt about its ability to continue as a going concern. The Company reported a net loss of $69.42 million in 2011, compared with a net loss of $167.30 million during the prior year. The Company's balance sheet at March 31, 2012, showed $4.56 million in total assets, $34.74 million in total liabilities and a $30.17 million total stockholders' deficit. Genta Inc. filed for Chapter 7 bankruptcy petition (Bankr. D. Del. Case No. 12-12269) to liquidate its assets. GRAND RIVER: Court Confirms Plan of Liquidation ----------------------------------------------- The Bankruptcy Court has confirmed Grand River Infrastructure, Inc.'s First Amended Combined Chapter 11 Plan of Liquidation. According to the Court-approved Disclosure Statement dated Sept. 7, 2012, the Plan provides that a liquidation trust will be established for the purpose of liquidating the remaining assets and distributing the proceeds to creditors. The Debtor will be using funds: (i) received pursuant to multiple sales of its assets, including a sale of substantially all its assets to Northern Concrete Pipe, Inc. ("NCP") approved by the Court on July 16, 2012, and (ii) funds from the collection of accounts receivable and other sources. The sale to NCP closed on July 17, 2012. At the closing, Premarc Corp. (the sole owner of the voting shares of the Debtor's stock, the owner of the Durand facility and a debtor in a related case before the Court) and the Debtor received $6,848,981 after inventory, property, tax and other adjustments. Under the Plan, payment to the Class 5 priority unsecured claim of the Michigan Department of Licensing & Regulatory Affairs, Unemployment Insurance Agency ("UIA") in the amount of $59,373 will be paid from the proceeds of the sales of the Debtor's assets on or prior to the Confirmation Date. Payment to the UIA of any additional amount ultimately determined by the claims resolution process will be made within 14 days of that determination. General unsecured claims under Class 6 will be paid on a pro rata basis after Classes 1 through 5 are paid in full and the Class 7 unsecured claim of Carrie Oostydyke, which holds an unsecured claim arising from the sale of shares in the Debtor, is paid. The source of payments will be the liquidation of the Debtor's assets and returns from post-confirmation litigation. Carrie Oostdyke will receive payment of $115,000 in full satisfaction of any and interest in and claims against the Debtor and will receive no other consideration. Equity Secured Interests in the Debtor in Class 8 will receive no distribution under the Plan. The equity holders are deemed to have rejected the Plan. About Grand River Infrastructure Grand River Infrastructure, Inc., based in Durand, Michigan, manufactures concrete products for the construction industry. Grand River filed for Chapter 11 bankruptcy (Bankr. E.D. Mich. Case No. 11-35206) on Nov. 14, 2011. Judge Daniel S. Opperman presides over the case. Lawyers at Lambert, Leser, Isackson, Cook & Giunta, P.C., serve as the Debtor's counsel. The Debtor disclosed $21,750,635 in assets and $9,289,690 in liabilities as of the Chapter 11 filing. The petition was signed by David C. Marsh, vice president. Daniel M. Mcdermott, the U.S. Trustee for Region 9, appointed five unsecured creditors to serve on the Official Committee of Unsecured Creditors. The Committee is represented by Erman, Teicher, Miller, Zucker & Freedman, P.C. H&E EQUIPMENT: USD100MM Note Add-On No Impact on Moody's 'B1' CFR ----------------------------------------------------------------- Moody's Investors Service said that H&E Equipment Services, Inc.'s B1 Corporate Family Rating and the B3 rating on the 7% senior unsecured notes due 2022 are not affected by the USD100 million add-on to the notes issue. The principal methodology used in rating H&E was the Global Equipment and Automobile Rental Industry Methodology, published December 2010. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published June 2009. H&E is a multi-regional equipment rental company with over 60 locations throughout the West Coast, Intermountain, Southwest, Gulf Coast, Mid-Atlantic, and Southeast regions of the United States. H&E is also a distributor for JLG, Gehl, Genie Industries (Terex), Komatsu, Doosan/Bobcat and Manitowoc, among others. Revenues for the last twelve months ended September 30, 2012 totaled USD804 million. H&E EQUIPMENT: S&P Assigns 'B+' Rating on Proposed $100MM Add-On ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B+' issue-level rating to H&E Equipment Services Inc.'s proposed add- on of $100 million to its senior unsecured notes due 2022. The recovery rating on the notes is '5', indicating S&P's expectation of modest (10% to 30%) recovery in the event of a payment default. The company announced that it would use the proceeds to reduce drawings under its $403 million asset-based revolving credit facility. The 'BB-' corporate credit rating and stable outlook on Baton Rouge, La.-based H&E, a provider of construction equipment rental services, are unaffected. The ratings on H&E reflect the company's "weak" business risk profile because of its presence in the cyclical, highly competitive, and fragmented equipment rental sector. The rating also reflects the company's "aggressive" financial risk profile. In August 2012, the company used part of the proceeds from its original $530 million in senior unsecured notes due 2022 to fund a $246 million dividend to shareholders. S&P expects the company to reduce leverage from its current level of about 3.7x as the equipment rental sector continues to stabilize in 2013. RATINGS LIST H&E Equipment Services Inc. Corporate Credit Rating BB-/Stable/-- Ratings Unchanged H&E Equipment Services Inc. Senior Unsecured $630 mil notes due 2022 B+ Recovery Rating 5 HAWKER BEECHCRAFT: PBGC will Pay Retirement Benefits ---------------------------------------------------- Under a court agreement announced Jan. 31, the Pension Benefit Guaranty Corporation will assume benefit payments for more than 9,500 workers and retirees from two of Hawker Beechcraft, Inc.'s pension plans. The settlement also includes $2.5 million to those salaried retirees whose benefits exceed those paid by PBGC under rules set by Congress. "Today's outcome is good," J. Jioni Palmer, Senior Advisor and Director of Communication and Public Affairs, said in a statement Thursday. "When we started this process three plans were on the chopping block, and by working with the company we were able to save one. This is what happens when people are willing to work together." Mr. Palmer said PBGC helped the salaried retirees achieve a $2.5 million award through its support of their lawsuit against the company. Also under the settlement, PBGC received a $450 million unsecured claim against Hawker Beechcraft in the bankruptcy case. On Thursday, the bankruptcy court approved a settlement between Hawker Beechcraft and PBGC in which two plans covering salaried employees would be assumed by the agency. The third plan, with 8,300 participants, will be frozen and remain with the company. "At PBGC we always want to preserve retirement income, we want companies to successfully reorganize, and we want jobs to continue," said Sandy Rich, PBGC's Chief of Negotiations and Restructuring. "This settlement makes those things happen." PBGC will pay all pension benefits earned by Hawker Beechcraft retirees up to the legal maximum of about $56,000 a year for a 65- year-old. Most retirees who receive benefits from PBGC, 85%, receive the full amount of the promised benefit. When PBGC takes responsibility for the pension plans it will send notification letters to their members. Until then, the plans will continue under company sponsorship. PBGC -- http://www.PBGC.gov/-- protects the pension benefits of more than 40 million Americans in private-sector pension plans. The agency is directly responsible for paying the benefits of more than 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars and never has. Its operations are financed by insurance premiums and with assets and recoveries from failed plans. About Hawker Beechcraft Hawker Beechcraft Acquisition Company, LLC, headquartered in Wichita, Kansas, manufactures business jets, turboprops and piston aircraft for corporations, governments and individuals worldwide. Hawker Beechcraft reported a net loss of $631.90 million on $2.43 billion of sales in 2011, compared with a net loss of $304.30 million on $2.80 billion of sales in 2010. Hawker Beechcraft Inc. and 17 affiliates filed for Chapter 11 reorganization (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan will give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit. Other claims include pensions underfunded by $493 million. Hawker's legal representative is Kirkland & Ellis LLP, its financial advisor is Perella Weinberg Partners LP and its restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Sidley Austin LLP serves as legal counsel and Houlihan Lokey Howard & Zukin Capital Inc. serves as financial advisor to the DIP Agent and the Prepetition Agent. Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of senior secured prepetition lenders holding 70% of the loans. Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee of holders of the 8.500% Senior Fixed Rate Notes due 2015 and 8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company. The members of the Ad Hoc Committee -- GSO Capital Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims or manage accounts that hold claims against the Debtors' estates arising from the purchase of the Senior Notes. Deutsche Bank National Trust Company, the indenture trustee for senior fixed rate notes and the senior PIK-election notes, is represented by Foley & Lardner LLP. An Official Committee of Unsecured Creditors appointed in the case has selected Daniel H. Golden, Esq., and the law firm of Akin Gump Strauss Hauer & Feld LLP as legal counsel. The Committee's financial advisor is FTI Consulting, Inc. On June 30, 2012, Hawker filed its Plan, which proposed to eliminate $2.5 billion in debt and $125 million of annual cash interest expense. The plan would give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. In July 2012, Hawker disclosed it was in exclusive talks with China's Superior Aviation Beijing Co. for the purchase of Hawker's corporate jet and propeller plane operations out of bankruptcy for $1.79 billion. In October 2012, Hawker unveiled that those talks have collapsed amid concerns a deal with Superior wouldn't pass muster with a U.S. government panel and other cross-cultural complications. Sources told The Wall Street Journal that Superior encountered difficulties separating Hawker's defense business from those units in a way that would make both sides comfortable the deal would get U.S. government clearance. The sources told WJS the defense operations were integrated in various ways with Hawker's civilian businesses, especially the propeller plane unit, in ways that proved difficult to untangle. Thereafter, Hawker said it intends to emerge from bankruptcy as an independent company. On Oct. 29, 2012, Hawker filed a modified reorganization plan and disclosure materials. Hawker said the plan was supported by the official creditors' committee and by a "substantial majority" of holders of the senior credit and a majority of holders of senior notes. Hawker said it will either sell or close the jet-manufacturing business. The revised plan still offers 81.9% of the new stock in return for $921 million of the $1.83 billion owing on the senior credit. Unsecured creditors are to receive the remaining 18.9% of the new stock. Holders of the senior credit will receive 86% of the new stock. The senior credit holders are projected to have a 43.1% recovery from the plan. General unsecured creditors' recovery is a projected 5.7% to 6.3%. The recovery by holders of $510 million in senior notes is predicted to be 9.2% to 10%. HAWKER BEECHCRAFT: Judge Approves IAM Pension Benefit Settlement ---------------------------------------------------------------- Far exceeding the customary expectations of workers at a bankrupt company, a federal bankruptcy judge in New York on Jan. 31 approved a settlement that preserves pension benefits for more than 3,000 members of the International Association of Machinists and Aerospace Workers (IAM) at Hawker Beechcraft Corp. (HBC) in Wichita, KS. In addition to preserving pension benefits for current IAM members at HBC, the union also negotiated a new defined contribution pension plan while guaranteeing the continuation of an existing 401(k) savings plan and maintaining pension benefits for retired IAM members. "Preventing the termination of a defined benefit pension for thousands of active and retired workers at a bankrupt company is a remarkable, but all too infrequent outcome," said IAM President Tom Buffenbarger. "It is a credit to both sides of the bargaining table that workers' interests at Hawker were given the respect they deserve." The IAM -- http://www.goiam.org-- represents more than 3,000 active and laid off workers at Hawker Beechcraft and is one of the largest industrial trade unions in North America, representing nearly 100,000 aerospace workers among 700,000 active and retired members in dozens of industries. About Hawker Beechcraft Hawker Beechcraft Acquisition Company, LLC, headquartered in Wichita, Kansas, manufactures business jets, turboprops and piston aircraft for corporations, governments and individuals worldwide. Hawker Beechcraft reported a net loss of $631.90 million on $2.43 billion of sales in 2011, compared with a net loss of $304.30 million on $2.80 billion of sales in 2010. Hawker Beechcraft Inc. and 17 affiliates filed for Chapter 11 reorganization (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan will give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit. Other claims include pensions underfunded by $493 million. Hawker's legal representative is Kirkland & Ellis LLP, its financial advisor is Perella Weinberg Partners LP and its restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Sidley Austin LLP serves as legal counsel and Houlihan Lokey Howard & Zukin Capital Inc. serves as financial advisor to the DIP Agent and the Prepetition Agent. Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of senior secured prepetition lenders holding 70% of the loans. Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee of holders of the 8.500% Senior Fixed Rate Notes due 2015 and 8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company. The members of the Ad Hoc Committee -- GSO Capital Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims or manage accounts that hold claims against the Debtors' estates arising from the purchase of the Senior Notes. Deutsche Bank National Trust Company, the indenture trustee for senior fixed rate notes and the senior PIK-election notes, is represented by Foley & Lardner LLP. An Official Committee of Unsecured Creditors appointed in the case has selected Daniel H. Golden, Esq., and the law firm of Akin Gump Strauss Hauer & Feld LLP as legal counsel. The Committee's financial advisor is FTI Consulting, Inc. On June 30, 2012, Hawker filed its Plan, which proposed to eliminate $2.5 billion in debt and $125 million of annual cash interest expense. The plan would give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. In July 2012, Hawker disclosed it was in exclusive talks with China's Superior Aviation Beijing Co. for the purchase of Hawker's corporate jet and propeller plane operations out of bankruptcy for $1.79 billion. In October 2012, Hawker unveiled that those talks have collapsed amid concerns a deal with Superior wouldn't pass muster with a U.S. government panel and other cross-cultural complications. Sources told The Wall Street Journal that Superior encountered difficulties separating Hawker's defense business from those units in a way that would make both sides comfortable the deal would get U.S. government clearance. The sources told WJS the defense operations were integrated in various ways with Hawker's civilian businesses, especially the propeller plane unit, in ways that proved difficult to untangle. Thereafter, Hawker said it intends to emerge from bankruptcy as an independent company. On Oct. 29, 2012, Hawker filed a modified reorganization plan and disclosure materials. Hawker said the plan was supported by the official creditors' committee and by a "substantial majority" of holders of the senior credit and a majority of holders of senior notes. Hawker said it will either sell or close the jet-manufacturing business. The revised plan still offers 81.9% of the new stock in return for $921 million of the $1.83 billion owing on the senior credit. Unsecured creditors are to receive the remaining 18.9% of the new stock. Holders of the senior credit will receive 86% of the new stock. The senior credit holders are projected to have a 43.1% recovery from the plan. General unsecured creditors' recovery is a projected 5.7% to 6.3%. The recovery by holders of $510 million in senior notes is predicted to be 9.2% to 10%. HD SUPPLY: Plans to Offer $1.3 Billion of Senior Notes ------------------------------------------------------ HD Supply, Inc., intends to commence a private offering of $1,275,000,000 of Senior Notes due 2020. There can be no assurance that the proposed offering of Notes will be completed. HD Supply intends to use the proceeds from the sale of the Notes to refinance its outstanding 14.875% Senior Notes due 2020 and to pay related fees and expenses. The Notes will be offered in a private offering exempt from the registration requirements of the United States Securities Act of 1933, as amended. The Notes will be offered only to qualified institutional buyers pursuant to Rule 144A and to certain persons outside the United States pursuant to Regulation S, each under the Securities Act. The Notes will not be and have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. About HD Supply HD Supply, Inc., headquartered in Atlanta, Georgia, is one of the largest North American wholesale 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 services. Its businesses are organized around three segments: Infrastructure and Energy; Maintenance, Repair & Improvement; and, Specialty Construction. HDS operates through approximately 800 locations throughout the U.S. and Canada serving contractors, government entities, maintenance professionals, home builders and professional businesses. The Company reported a net loss of $543 million for the year ended Jan. 29, 2012, a net loss of $619 million for the year ended Jan. 30, 2011, and a net loss of $514 million for the year ended Jan. 31, 2010. The Company's balance sheet at Oct. 28, 2012, showed $7.67 billion in total assets, $8.55 billion in total liabilities and a stockholders' deficit of $881 million. * * * As reported by the TCR on Jan. 11, 2013, Moody's Investors Service upgraded HD Supply, Inc.'s ("HDS") corporate family rating to B3 from Caa1 and its probability of default rating to B3 from Caa1. This rating action results from our expectations that HDS will refinance a significant portion of its senior subordinated notes due 2015, effectively extending the remainder of its maturities by at least two years to 2017. HD Supply carries a 'B' corporate credit rating, with negative outlook, from Standard & Poor's Ratings Services. HELENA CHRISTIAN: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Helena Christian School, Inc. 3384 Canyon Ferry Road East Helena, MT 59635 Bankruptcy Case No.: 13-60091 Chapter 11 Petition Date: January 29, 2013 Court: U.S. Bankruptcy Court District of Montana (Butte) Judge: Ralph B. Kirscher Debtor's Counsel: J. Colleen Herrington, Esq. DESCHENES & SULLIVAN LAW OFFICE 115 West Kagy Boulevard, Suite O Bozeman, MT 59715 Tel: (406) 585-5981 Fax: (406) 585-5981 E-mail: ch@dslawoffices.net Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Gregory W. Page, administrator. HILL CONSTRUCTION: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Hill Construction, Corp. P.O. Box 9750 San Juan, PR 00908 Bankruptcy Case No.: 13-00601 Chapter 11 Petition Date: January 29, 2013 Court: U.S. Bankruptcy Court District of Puerto Rico (Old San Juan) Debtor's Counsel: Alexis Fuentes Hernandez, Esq. FUENTES LAW OFFICES P.O. Box 9022726 San Juan, PR 00902-2726 Tel: (787) 722-5216 Fax: (787) 722-5206 E-mail: alex@fuentes-law.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/prb13-00601.pdf The petition was signed by CARMEN RIOS, authorized agent. HOSTESS BRANDS: Apollo, Metropoulos Strike $410-Mil. Deal --------------------------------------------------------- Hostess Brands Inc. on Jan. 30 disclosed that the Company has selected affiliates of Apollo Global Management, LLC and Metropoulos & Co. as the stalking horse bidder for the majority of the assets of the Company's snack cake business, which includes both Hostess(R) and Dolly Madison(R) branded products, including the iconic Twinkies(R) brand. Apollo and Metropoulos have agreed to pay $410 million to purchase the brands, 5 bakeries and certain equipment. "We are pleased to name Apollo and Metropoulos as the stalking horse bidder for these valuable and beloved brands," said Hostess Brands Chairman and Chief Executive Officer Gregory F. Rayburn. "Interest in these iconic brands has been intense and competitive and we expect that to continue through a robust, court-authorized auction process. The ultimate goal will be the same we have had since we began marketing all of our assets -- to maximize value for all of the Company's stakeholders and ensure these great products can be enjoyed by their loyal fans for many years to come." Hostess Brands has requested that the U.S. Bankruptcy Court for the Southern District of New York authorize the Company to proceed with an auction for the majority of the assets of the snack cake business on March 13, provided the Company receives competing qualified bids. The Company will select the highest and best offer at the conclusion of the auction. The sale to the winning bidder requires Court approval. As previously announced, Hostess Brands has reached stalking horse agreements, contemplating an aggregate purchase price of more than $440 million, to sell the majority of the assets related to its bread business, including its Wonder(R), Butternut(R), Home Pride(R), Merita(R), Nature's Pride(R), Beefsteak(R), Sweetheart(R), Eddy's(R), Standish Farms(R)and Grandma Emilie's(R)bread brands as well as its Drake's(R)snack cake business. The Company will select the winning bidders for the assets of the bread and snack cake businesses at the conclusion of various auctions. Sales to the winning bidders require Court approval. "The stalking horse bids have set a floor of more than $850 million for the bulk of the Company's assets," Mr. Rayburn said. "We look forward to competitive auctions to further drive value for all of the Company's stakeholders." Jones Day provided legal advice to Hostess Brands on the transaction. Perella Weinberg Partners served as the Company's financial advisor. $410 Million Offer Per the terms of the agreement, Apollo and Metropoulos will acquire certain Hostess Snacks brands, including, among others, Twinkies, Mini Muffins, Cup Cakes, Ho Hos, Zingers and Suzy Q's, and five Hostess Snacks bakeries located throughout the United States. The agreement provides for the acquisition of the assets of Hostess Snacks free and clear and does not require Apollo and Metropoulos to assume any of Hostess Snacks' liabilities or other obligations. The asset purchase agreement constitutes a "stalking horse bid" in a sale process being conducted under Section 363 of Chapter 11 of the U.S. Bankruptcy Code. As such, the acquisition of Hostess Snacks by Apollo and Metropoulos remains subject to approval by the United States Bankruptcy Court for the Southern District of New York and a subsequent auction process in which other interested buyers may submit competing bids for the assets of Hostess Snacks. Completion of the transaction, which is expected to occur prior to the end of April 2013, remains subject to competing offers, approval by the United States Bankruptcy Court, and customary closing conditions. C. Dean Metropoulos, Founder and Chief Executive Officer of Metropoulos & Co. said, "We are pleased to be partnered with Apollo as we seek to resurrect Hostess Snacks and return these legendary products to the American consumer. For more than 25 years we have had the opportunity to acquire and grow some of the world's most widely recognized consumer food and beverage brands, and I look forward to working with Apollo in rebuilding these heritage brands and ensuring their long term availability to their loyal consumers. Never before have we seen such a groundswell of support and desire for a brand's return and revival." Andy Jhawar, a Senior Partner of Apollo and Head of Apollo's Consumer and Food Retail Industry Group added, "[Wed]nesday's approval of the stalking horse agreement is a positive step toward saving some of America's most well-recognized and iconic brands. We believe the Hostess Snacks brands we agreed to acquire offer significant potential for renewed growth and expansion into additional channels of distribution. We are confident that the combined expertise and capital of Apollo and C. Dean Metropoulos, who has an unparalleled track record of value creation in the consumer packaged food and beverage industry, will prove invaluable as we re-launch the Hostess Snacks business." About Apollo Global Management, LLC Apollo -- http://www.agm.com-- is a global alternative investment manager with offices in New York, Los Angeles, Houston, London, Frankfurt, Luxembourg, Singapore, Mumbai and Hong Kong. Apollo had assets under management of approximately $110 billion as of September 30, 2012 in private equity, credit and real estate funds invested across a core group of nine industries where Apollo has considerable knowledge and resources. About Metropoulos & Co. Metropoulos & Co. is a merchant banking and management firm focused principally on the food and consumer sectors in the United States and Europe. In recent years, C. Dean Metropoulos and his management team partners have been involved in more than 74 acquisitions with over $12 billion of aggregate transaction value. Companies where Metropoulos & Co. has been an investor and Metropoulos has been an executive include: Pabst Brewing Company, Pinnacle Foods, Aurora Foods, Stella Foods, The Morningstar Group, International Home Foods, Ghirardelli Chocolates, Mumm and Perrier Jouet Champagnes and Hillsdown Holdings, PLC (Premier International Foods, Burtons Biscuits and Christie Tyler Furniture), among others. About Hostess Brands Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known for iconic brands such as Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution centers and 570 outlets in 49 states. Hostess filed for Chapter 11 bankruptcy protection early morning on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through 12-22056) in White Plains, New York. DHostess Brands disclosed assets of $982 million and liabilities of $1.43 billion as of the Chapter 11 filing. The bankruptcy filing was made two years after predecessors Interstate Bakeries Corp. and its affiliates emerged from bankruptcy (Bankr. W.D. Mo. Case No. 04-45814). In the new Chapter 11 case, Hostess has hired Jones Day as bankruptcy counsel; Stinson Morrison Hecker LLP as general corporate counsel and conflicts counsel; Perella Weinberg Partners LP as investment bankers, FTI Consulting, Inc. to provide an interim treasurer and additional personnel for the Debtors, and Kurtzman Carson Consultants LLC as administrative agent. Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry Wilson, the head of turnaround and restructuring firm MAEVA Advisors, are representing the Teamsters union. Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and Bakery & Confectionery Union & Industry International Pension Fund are Jeffrey R. Freund, Esq., at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright & Jaworski L.L.P. The official committee of unsecured creditors selected New York law firm Kramer Levin Naftalis & Frankel LLP as its counsel. Tom Mayer and Ken Eckstein head the legal team for the committee. Hostess Brands in mid-November opted to pursue the orderly wind down of its business and sale of its assets after the Bakery, Confectionery, Tobacco and Grain Millers Union (BCTGM) commenced a nationwide strike. The Debtor failed to reach an agreement with BCTGM on contract changes. Hostess Brands said it intends to retain approximately 3,200 employees to assist with the initial phase of the wind down. Employee headcount is expected to decrease by 94% within the first 16 weeks of the wind down. The entire process is expected to be completed in one year. HOSTESS BRANDS: 2 Buyers Offer $56.35MM for Drakes, Bread Plants ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Hostess Brands Inc. signed up two buyers to pay a combined $56.35 million for some of the remaining bread business and the Drakes cakes operation. There will be a hearing Feb. 11 in U.S. Bankruptcy Court in White Plains, New York, to approve auction procedures testing whether there are higher or better offers. The report relates that at the Feb. 11 hearing, Hostess will also seek court permission to end life and health-insurance benefits for about 1,500 retirees. According to the report, unless outbid, closely owned United States Bakery will pay $28.85 million for Sweetheart, Standish Farms, Grandma Emilie's, and Eddy's bread brands along with four plants and 14 depots in Alaska, Montana, Utah, Washington, Idaho and North Dakota. McKee Food Corp. is under contract to pay $27.5 million for the Drakes business including Coffee Cakes, Devil Dogs, Ring Dings, and Yodels. Sale proceeds, the report discloses, will be used pay down secured debt. U.S. Bakery is buying plants and bread brands not among those Flowers Foods Inc. intends to buy for $390 million. The report relates there will be a Feb. 28 auction to learn if anyone will top the Flowers bid. Offers in competition with U.S. Bakery and McKee will be due March 12, if the judge goes along with the schedule Hostess proposes at a Feb. 11 hearing for approval of sale procedures. The auctions will both take place March 15, followed by a hearing to approve the sales March 19. Flowers is aiming to buy 20 bread plants, 38 depots and brand names. It already has 44 bakeries generating $3 billion a year in sales, the company said. Hostess filed papers setting up a hearing Feb. 11 for court authority to terminate health and life insurance benefits for about 1,500 retirees. The benefits are costing Hostess about $1.1 million a year. The lenders agreed to fund payment of the benefits only until the end of February. A retiree committee was formed in December to negotiate or litigate with Hostess over the cessation of retirement benefits. 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. HRM LLC: Case Summary & 10 Largest Unsecured Creditors ------------------------------------------------------ Debtor: HRM, LLC 2380 Warren Rd. Walnut Creek, CA 94595 Bankruptcy Case No.: 13-40490 Chapter 11 Petition Date: January 28, 2013 Court: United States Bankruptcy Court Northern District of California (Oakland) Judge: Roger L. Efremsky Debtor's Counsel: R. Kenneth Bauer, Esq. LAW OFFICES OF R. KENNETH BAUER 500 Ygnacio Valley Rd. #328 Walnut Creek, CA 94596 Tel: (925) 945-7945 E-mail: rkbauerlaw@gmail.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the list Company's list of 10 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/canb13-40490.pdf The petition was signed by Edith Nelson, managing member. INTERFAITH MEDICAL: CohnReznick Approved as Financial Advisor ------------------------------------------------------------- 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 CohnReznick LLP as financial advisor. Prior to the Petition Date, CohnReznick served as the Debtor's financial advisor, during which period certain of CohnReznick's employees gained significant familiarity with the Debtor's business and capital structure, and assisted the Debtor in developing analyses required in connection with the case. CohnReznick is expected to. among other things: 1) assist the Debtor in the preparation of thirteen week cash flow forecasts; 2) assist the Debtor in the preparation of financial-related disclosures required by the Court, including the Debtor's schedules of assets and liabilities, statement of financial affairs and first-day pleadings; and 3) assist the Debtor with information and analyses required pursuant to the Debtor's debtor-in-possession financing. The hourly rates of CohnReznick's personnel are: Partner/Senior Partner $580 - $790 Manager/Senior Manager/ Director $430 - $610 Other Professional Staff $270 - $400 Paraprofessional $180 Prior to the Petition Date, the Debtor paid CohnReznick a retainer of $250,000, of which $250,000 currently remains. To the best of the Debtor's knowledge, CohnReznick is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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: Committee Taps CBIZ as Financial Advisor ------------------------------------------------------------ The Official Committee of Unsecured Creditors' in the Chapter 11 case of Interfaith Medical Center, Inc., seeks approval to retain CBIZ Accounting, Tax & Advisory of New York, LLC as financial advisor. The Hon. Carla E. Craig will convene a hearing on the request on Feb. 11, 2013, at 2 p.m. Objections, if any, are due 5:00 p.m. on Feb. 4. CBIZ NY will, among other things: a) assist the Committee in its evaluation of the Debtor's postpetition cash flow and other projections and budgets prepared by the Debtor or its financial advisor; b) monitor the Debtor's activities regarding cash expenditures and general business operations subsequent to the filing of the petition under Chapter 11; and c) assist the Committee in its review of monthly operating reports submitted by the Debtor or its financial advisor. To the best of the Committee's knowledge, CBIZ NY is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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: Kurron to Provide Senior Management Personnel ----------------------------------------------------------------- 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 Kurron Shares of America, Inc. as manager. Kurron will also provide personnel to serve as the Debtor's senior management -- as president and CEO, CFO, COO, quality consultant and special assistant (formerly known as special counsel). Corbett Price will serve as CRO for the Debtor on a full time basis. 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. IVOICE INC: Acquires American Security Capital ---------------------------------------------- IVoice, Inc., has acquired American Security Capital Corporation in order to provide financing and leasing services to the alternative energy industry. In an effort to salvage some value for IVOI and its shareholders, the Company accepted an offer from American Security Resources Corporation to exchange the Company's ownership of Hydra Fuel Cell Corporation for all of the ASCC shares and a note of $100,000. American Security Resources Corporation still controls the Company through its ownership of Class B Common Stock shares ofiVoice, Inc. "iVoice, Inc. acquired Hydra in an exchange of debt securities in December of 2011 and took control in January of 2012. Between the December close date and the January change of control, the Company's previous management issued the remaining authorized Common Stock shares subsequently leaving the Company unable to finance itself and unlock Hydra's market opportunity," stated Norris Lipscomb, CEO of iVoice, Inc. "This transaction allows us to provide value to iVoice, Inc. shareholders while at the same time limiting the capital required." 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. JARRETT ELECTRIC: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Jarrett Electric Co., Inc. P.O. Box 12547 Roanoke, VA 24026-2547 Bankruptcy Case No.: 13-70139 Chapter 11 Petition Date: January 28, 2013 Court: United States Bankruptcy Court Western District of Virginia (Roanoke) Judge: William F. Stone Jr. Debtor's Counsel: Andrew S Goldstein, Esq. Garren R. Laymon, Esq. MAGEE GOLDSTEIN LASKY & SAYERS, P.C. P.O. Box 404 Roanoke, VA 24003 Tel: (540) 343-9800 Fax: (540) 343-9898 E-mail: agoldstein@mglspc.com glaymon@mglspc.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/vawb13-70139.pdf The petition was signed by Daniel S. Jarrett, president. JG WENTWORTH: Growing Debt Prompts Moody's to Cut CFR to 'Caa1' --------------------------------------------------------------- Moody's downgraded the Corporate Family Rating of JGWPT Holdings, LLC to Caa1 from B3. Subsequently, Moody's assigned a CFR of Caa1 to JG Wentworth, LLC, the intermediate holding company under which the consolidated financials are published. Concurrently, Moody's will withdraw the CFR of JGWPT Holdings, LLC. In addition, Moody's assigned ratings of Caa1 to the Senior Secured Term Loan and Senior Secured Revolving Credit Facility issued by Orchard Acquisition Company, LLC, a subsidiary of JGW. The outlook on both the CFR and the debt ratings is stable. JGW is undergoing a leveraged recapitalization that will result in a tripling of the company's corporate debt as it pays its shareholders a very substantial dividend. The downgrade is based on the meaningful increase in leverage and decrease in debt service coverage that result from the transaction. Net proceeds from the USD425 million Senior Secured Term Loan issuance will be used to finance a USD309 million capital distribution to JGW's shareholders as well as to repay an existing USD142 million term loan. JGW maintains a leading market position in the core structured settlement payment purchasing business, a low portfolio default risk and historically strong cash flow. In Moody's view, however, the new debt transaction indicates a more aggressive financial policy than was anticipated in the previous B3 rating, given the large size of the capital distribution, the notable increase in debt service requirements and accompanying high corporate leverage. JGW's financial owners have taken sizeable capital distributions in the past, evidencing the owners' risk appetite. Moody's believes that the risk of future aggressive financial policies remains as the company continues to be majority owned by a number of financial investors. Furthermore, the company's cash flows are already highly leveraged, with the vast majority of cash flows utilized to support securitization structures' debt servicing requirements. Increased interest coverage requirements will also divert resources that could otherwise be utilized to build the franchise or support growth-related infrastructure. This is especially notable given the company's new product and total asset growth plans. Other factors that contributed to the downgrade include an absence of clearly defined financial policies, Chief Financial Officer turnover, and organizational complexity. The rating also continues to be influenced by JGW's significant dependence on the confidence-sensitive securitization market and the illiquid nature of structured settlement payment stream assets. The ratings could be upgraded if the company meaningfully decreases its leverage, improves interest coverage levels and adopts a more conservative financial policy. The ratings could be downgraded if liquidity risk increases, such as through a failure to renew major warehouse lines or securitize receivables, or due to reduced cash flows, such as through a decrease in net yield, loss of market share or a material adverse legal or regulatory ruling. The principal methodology used in this rating was Finance Company Global Rating Methodology published in March 2012. Ratings affected in this action include: JGWPT Holdings, LLC Corporate Family Rating: to Caa1 from B3, which will be subsequently withdrawn. J.G. Wentworth, LLC Corporate Family Rating: Assigned Caa1 PeachHI, LLC Senior Secured: to Caa1 from B3 Orchard Acquisition Company, LLC US$20M Senior Secured Bank Credit Facility: Assigned Caa1 US$425M Senior Secured Bank Credit Facility: Assigned Caa1 JOURNAL REGISTER: Revolver Lender's Lien Mostly Valid ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Journal Register Co. creditors' committee agreed that most of the collateral securing the pre-bankruptcy revolving credit loan is mostly valid and beyond attack. According to the report, the official committee and Wells Fargo Bank NA, the revolver lender, agreed that the lien doesn't stretch to some of the company's property, such as copyrights and $2.4 million in prepaid deposits. In addition, the committee and Wells Fargo agreed that the revolver collateral doesn't include about $360,000 in vehicles and $355,000 in real estate. Absent a higher bid, Journal Register will be reacquired by current lender and owner Alden Global Capital Ltd. largely in exchange for $117.5 million in secured debt and $1.75 million in cash to pay costs of winding down the bankruptcy. Alden's purchase price also includes paying off the $25 million loan from Wells Fargo financing the Chapter 11 effort. About Journal Register Journal Register Company -- http://www.JournalRegister.com/-- is the publisher of the New Haven Register and other papers in 10 states, including Philadelphia, Detroit and Cleveland, and in upstate New York. The Company's more than 350 multi-platform products reach an audience of 21 million people each month. JRC is managed by Digital First Media and is affiliated with MediaNews Group, Inc., the nation's second largest newspaper company as measured by circulation. Journal Register, along with its affiliates, first filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 09-10769) on Feb. 21, 2009. Attorneys at Willkie Farr & Gallagher LLP, served as counsel to the Debtors. Attorneys at Otterbourg, Steindler, Houston & Rosen, P.C., represented the official committee of unsecured creditors. Journal Register emerged from Chapter 11 protection under the terms of a pre-negotiated plan. Journal Register returned to bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-13774) on Sept. 5, 2012, to sell the business to 21st CMH Acquisition Co., an affiliate of funds managed by Alden Global Capital LLC. The deal is subject to higher and better offers. Journal Register exited the 2009 restructuring with $225 million in debt and with a legacy cost structure, which includes leases, defined benefit pensions and other liabilities that have become unsustainable and threatened the Company's efforts for a successful digital transformation. Journal Register managed to reduce the debt by 28% with the Company servicing in excess of $160 million of debt. Alden Global is the holder of two terms loans totaling $152.3 million. Alden Global acquired the stock and the term loans from lenders in Journal Register's prior bankruptcy. Journal Register disclosed total assets of $235 million and liabilities totaling $268.6 million as of July 29, 2012. This includes $13.2 million owing on a revolving credit to Wells Fargo Bank NA. Bankruptcy Judge Stuart M. Bernstein presides over the 2012 case. Neil E. Herman, Esq., Rachel Jaffe Mauceri, Esq., and Patrick D. Fleming, Esq., at Morgan, Lewis & Bockius, LLP; and Michael R. Nestor, Esq., Kenneth J. Enos, Esq., and Andrew L. Magaziner, Esq., at Young Conaway Stargatt & Taylor LLP, serve as the 2012 Debtors' counsel. SSG Capital Advisors, LLC, serves as financial advisors. American Legal Claims Services LLC acts as claims agent. The petition was signed by William Higginson, executive vice president of operations. Otterbourg, Steindler, Houston & Rosen, P.C., represents Wells Fargo. Akin, Gump, Strauss, Hauer & Feld LLP, represents the Debtors' Tranche A Lenders and Tranche B Lenders. Emmet, Marvin & Martin LLP, serves as counsel to Wells Fargo, in its capacity as Tranche A Agent and the Tranche B Agent. The Official Committee of Unsecured Creditors appointed in the case has retained Lowenstein Sandler PC as counsel and FTI Consulting, Inc. as financial advisor. K-V PHARMACEUTICAL: Gynazole-1(R) Now Available for Prescribing --------------------------------------------------------------- Ther-Rx Corporation, a subsidiary of K-V Pharmaceutical Company announced that Gynazole-1(R) (Butoconazole Nitrate Vaginal Cream USP, 2%), indicated for the local treatment of yeast infections (vulvovaginal candidiasis infections caused by Candida) in non- pregnant women, is now available for prescribing. Gynazole-1 is available at major national and regional retail pharmacy chains across the country. Ther-Rx has partnered with Perrigo (www.perrigo.com) to manufacture Gynazole-1. Perrigo is a leading manufacturer of prescription drugs in the U.S. market that has been inspected and approved by the U.S. Food and Drug Administration (FDA) as being in compliance with current Good Manufacturing Practice requirements to manufacture Gynazole-1. "We are pleased to be able to once again offer Gynazole-1 to prescribing healthcare providers and to patients in need of therapy," said Greg Divis, President of Ther-Rx and CEO of K-V Pharmaceutical Company. "The availability of Gynazole-1 represents a positive step forward for the Company as we continue to provide quality, patient-friendly products to support the health of women across the stages of their lives." Yeast infections (VVC) are very common in women. The 2010 Centers for Disease Control and Prevention (CDC) guidelines state that an estimated 75% of women will have at least one episode of VVC, and 40%-45% will have two or more episodes of VVC, within their lifetimes. Gynazole-1, the only one-dose, anytime prescription cream for the treatment of vaginal yeast infections caused by all Candida species in non-pregnant women, is on the CDC recommended list. "Women experiencing vaginal infections are eager for treatments that provide fast initial relief from symptoms and convenience in dosing and administration," said David Gandell, MD, Clinical Professor of Obstetrics and Gynecology, University of Rochester School of Medicine and Dentistry. "Gynazole-1 is a well- established treatment option, so it's great to be able to prescribe it for my patients again." For more information about Gynazole-1, visit www.gynazole-1.com or call Ther-Rx customer service at (877) 567-7676. Gynazole-1 (Butoconazole Nitrate Vaginal Cream USP, 2%) is indicated for the local treatment of vulvovaginal candidiasis (infections caused by Candida). The diagnosis should be confirmed by KOH smears and/or cultures. Note: Gynazole-1 is safe and effective in nonpregnant women; however, the safety and effectiveness of this product in pregnant women has not been established. Important Safety Information for Gynazole-1 (Butoconazole Nitrate Vaginal Cream USP, 2%) About 5.7% of patients enrolled in the Gynazole*1 clinical trials reported complaints such as vulvar/vaginal burning, itching, soreness and swelling, pelvic or abdominal pain or cramping, or a combination of two or more of these symptoms. One percent of patients had treatment-related complaints. Two percent of patients discontinued the study due to adverse events. This cream contains mineral oil. Mineral oil may weaken latex or rubber products such as condoms or vaginal contraceptive diaphragms; therefore, use of such products within 72 hours following treatment with Gynazole*1 is not recommended. Recurrent vaginal yeast infections, especially those that are difficult to eradicate, can be an early sign of infection with the human immunodeficiency virus (HIV) in women who are considered at risk for HIV infection. If clinical symptoms persist, tests should be repeated to rule out other pathogens, to confirm original diagnosis, and to rule out other conditions that may predispose a patient to recurrent vaginal fungal infections. Full prescribing information can be viewed at http://www.gynazole-1.com/PI.PDF About Ther-Rx Corporation Ther-Rx Corporation, a subsidiary of K-V Pharmaceutical Company, is a specialty branded pharmaceutical company with a primary focus in the area of women's healthcare. As such, the Company is committed to advancing the health of women across all the stages of their lives. For further information about K-V Pharmaceutical Company, please visit the Company's corporate Web site at www.kvpharmaceutical.com. About Perrigo From its beginnings as a packager of generic home remedies in 1887, Allegan, Michigan-based Perrigo Company has grown to become a leading global provider of quality, affordable healthcare products. Perrigo develops, manufactures and distributes over-the- counter (OTC) and generic prescription (Rx) pharmaceuticals, infant formulas, nutritional products, dietary supplements and active pharmaceutical ingredients (API). The Company is the world's largest manufacturer of OTC pharmaceutical products for the store brand market. The Company's primary markets and locations of logistics operations have evolved over the years to include the United States, Israel, Mexico, the United Kingdom, India, China and Australia. Visit Perrigo on the Internet (http://www.perrigo.com). About K-V Pharmaceutical K-V Pharmaceutical Company (NYSE: KVa/KVb) -- http://www.kvpharmaceutical.com/-- is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. The Company markets its technology distinguished products through ETHEX Corporation, a subsidiary that competes with branded products, and Ther-Rx Corporation, the company's branded drug subsidiary. K-V Pharmaceutical Company and certain domestic subsidiaries on Aug. 4, 2012, filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-13346, under K-V Discovery Solutions Inc.) to restructure their financial obligations. K-V employed Willkie Farr & Gallagher LLP as bankruptcy counsel, Williams & Connolly LLP as special litigation counsel, and SNR Denton as special litigation counsel. In addition, K-V tapped Jefferies & Co., Inc., as financial advisor and investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. The U.S. Trustee appointed five members to serve in the Official Committee of Unsecured Creditors. Kristopher M. Hansen, Esq., Erez E. Gilad, Esq., and Matthew G. Garofalo, Esq., at Stroock & Stroock & Lavan LLP, represent the Creditors Committee. Weil, Gotshal & Manges LLP's Robert J. Lemons, Esq., and Lori R. Fife, Esq., represent an Ad Hoc Senior Noteholders Group. The Plan provides that in full satisfaction, settlement, release. KINDER MORGAN: S&P Puts 'B+' CCR on CreditWatch Positive -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BBB' corporate credit rating on Kinder Morgan Energy Partners L.P. (KMP) and maintained the stable rating outlook. S&P also placed the 'B+' corporate credit rating on Copano Energy LLC on CreditWatch with positive implications. S&P believes the $5 billion unit-for-unit transaction is broadly neutral to KMP's credit profile. This is due to the credit- favorable unit financing, Copano Energy's relatively small size compared with KMP, and broadly unchanged pro forma credit measures. These positive factors are somewhat offset by Copano Energy's commodity price exposure, but Copano Energy has a sizable fee-based business and KMP's commodity price sensitivity pro forma for the transaction is broadly in line with S&P's expectations. The placement of the Copano Energy corporate credit rating on CreditWatch with positive implications reflects S&P's expectation that the rating will be in line with that on KMP. Copano Energy will be a wholly owned subsidiary of KMP with KMP assuming Copano Energy's adjusted debt of about $1.4 billion (this includes the 100% debt treatment to Copano Energy's $300 million preferred issuance to an affiliate of TPG Capital as per S&P's criteria). S&P expects to resolve the CreditWatch positive status of the Copano Energy rating when the transaction is complete in the third quarter of 2013. S&P expects to raise the corporate credit rating on Copano Energy to 'BBB', in line with that of KMP, upon the close of the transaction. The stable outlook on S&P's rating on KMP reflects S&P's expectation that the transaction will be broadly neutral to the company's debt leverage measures, with its debt to EBITDA in the low 4x area in 2013. S&P also expects the partnership to manage and finance its capital spending program while keeping an adequate liquidity position. "We could lower the ratings if debt to EBITDA were to surpass 4.5x. We are unlikely to raise the ratings unless the partnership embraces a more conservative financial policy and shows less willingness to use debt to fund growth-related capital spending. We also consider KMI's systemwide leverage in our ratings on KMP. If we downgraded KMI, our ratings on KMP would likely be affected due to the links between the two. We would not expect the ratings differential to exceed three notches. However, we would not likely raise our ratings on KMP if we raised our ratings on KMI," said Standard & Poor's credit analyst William Ferara. LABORATORY SKIN: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Laboratory Skin Care, Inc. 75 Shoreway Drive, Bldg. A San Carlos, CA 94070 Bankruptcy Case No.: 13-30195 Chapter 11 Petition Date: January 28, 2013 Court: United States Bankruptcy Court Northern District of California (San Francisco) Judge: Thomas E. Carlson Debtor's Counsel: Cecily A. Dumas, Esq. DUMAS AND CLARK LLP 150 California St. #2200 San Francisco, CA 94111 Tel: (415) 762-1640 E-mail: cecily.dumas@dumasclark.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/canb13-30195.pdf The petition was signed by Zari Mansouri, president. LAGUNA BRISAS: Has Access to Cash Collateral Until Feb. 28 ---------------------------------------------------------- The Bankruptcy Court has approved a fifth stipulation authorizing Byron Chapman, the duly-appointed state court receiver, to continue using cash collateral through and including Feb. 28, 2012, in accordance with a budget. All of the terms and conditions set forth in the second interim stipulation as approved by the Court on July 31, 2012 will continue to remain in full force and effect as though fully set forth in the Order. A copy of the Fifth Stipulation authorizing the continued interim use of cash collateral through Feb. 28 2013, is available at: http://bankrupt.com/misc/lagunabrisas.doc255.pdf About Laguna Brisas Laguna Beach, California-based Laguna Brisas LLC, doing business as Best Western Laguna Brisas Spa Hotel, is owned by A&J Mutual, LLC, which is owned and operated by Dae In "Andy" Kim and his wife Jane. The Company owns a Best Western Plus Hotel and Spa in Laguna Beach, California. The Company filed for Chapter 11 protection (Bankr. C.D. Calif. Case No. 12-12599) on Feb. 29, 2012. Bankruptcy Judge Mark S. Wallace presides over the case. The Debtor filed the Chapter 11 petition to stop foreclosure sale of the first priority trust deed holder, Wells Fargo Bank. The hotel has been in possession of and operated by a receiver, Bryon Campbell, since Oct. 3, 2011. M. Jonathan Hayes, Esq., at the Law Office of M. Jonathan Hayes represents the Debtor in its restructuring effort. Johnny Kim, Esq. -- no relation to the Debtor's insider, "Andy" Kim -- represents the Debtor as special counsel. The Debtor disclosed $15,097,815 in assets and $13,982,664 in liabilities. The petition was signed by Dae In "Andy" Kim, managing member. The Debtor's Plan provides that Wells Fargo Bank will be paid in full, at a contract interest rate of 6.23%, or roughly $57,000 per month. General unsecured claims will be paid in full, pro-rata, in monthly installment of $43,000 over 58 months. General unsecured claims, which are impaired under the Plan, are estimated to aggregate $2.475 million. The Court has scheduled a hearing on the Debtor's Disclosure Statement on Feb. 21, 2013, at 10:30 a.m. LAND SECURITIES: Files for Chapter 11 in Denver ----------------------------------------------- Land Securities Investors, Ltd., LSI Retail II, LLC and Conifer Town Center, LLC sought Chapter 11 protection (Bankr. D. Colo. Case Nos. 13-11167, 13-1113, and 13-11135) in Denver on Jan. 29, 2013. The Debtors are engaged in the business as real estate developers and investors. Land Securities estimated at least $10 million in assets and liabilities. The Debtors are seeking joint administration of their Chapter 11 cases and are seeking to employ Kutner Miller Brinen, P.C. as counsel. The hourly rates of the firm's personnel are: Attorney Rate -------- ---- Lee M. Kutner $460 Jeffrey S. Brinen $400 David M. Miller $350 Aaron A. garber $370 Jenny M.F. Fuji $320 Benjamin H. Shloss $260 Leigh A. Flanagan $320 Paralegal $75 Prepetition, the Debtor paid the firm a retainer for payment of postpetition fees and costs of $44,693. The Debtor filed a separate application for approval for the use of retainer. LAND SECURITIES: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Land Securities Investors, Ltd. 8361 North Rampart Range Road, Suite 208 Littleton, CO 80125 Bankruptcy Case No.: 13-11167 Chapter 11 Petition Date: January 29, 2013 Court: U.S. Bankruptcy Court District of Colorado (Denver) Judge: A. Bruce Campbell Debtor's Counsel: Lee M. Kutner, Esq. KUTNER MILLER, BRINEN, P.C. 303 E. 17th Avenue, Suite 500 Denver, CO 80203 Tel: (303) 832-2400 E-mail: lmk@kutnerlaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Alan R. Fishman, president. Affiliate that simultaneously filed Chapter 11 petitions: Entity Case No. ------ -------- LSI Retail II, LLC 13-11132 Assets: $1,000,001 to $10,000,000 Debts: $1,000,001 to $10,000,000 Conifer Town Center, LLC 13-11135 Assets: $1,000,001 to $10,000,000 Debts: $1,000,001 to $10,000,000 A. A copy of LSI Retail II, LLC's list of its 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/cob13-11132.pdf B. A copy of Conifer Town Center, LLC's list of its 13 largest unsecured creditors is available for free at: http://bankrupt.com/misc/cob13-11135.pdf C. Land Securities Investors' List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ State Farm Insurance Loan $13,500,000 One State Farm Plaza, Suite D7 Bloomington, IL 61710 JP Morgan Chase Loan $7,164,454 Real Estate Finance Group 622 Third Avenue, 8th Floor New York, NY 10017 Ixis Real Estate Capital, Inc. Loan $5,851,500 9 West 5th Street New York, NY 10019 First Bank Loan $3,425,000 Mountain Rising Development 1675 Broadway, Suite 2600 Denver, CO 80202 First Bank Loan $2,248,983 Mountain Rising Development 1675 Broadway, Suite 2600 Denver, CO 80202 Douglas County Treasurer Taxes $1,628,680 100 3rd Street, Suite 120 Castle Rock, CO 80104 Alan Fishman Loan $1,001,071 2770 NE 23rd Street Pompano Beach, FL 33062 HSBC Bank Loan $580,000 Jersey Corporate Banking Centre P.O. Box 14, Green Street St. Helier Jersey JE4 8NJ Jefferson County Treasurer Taxes $258,682 Jefferson County Courthouse 100 Jefferson County Parkway Golden, CO 80419 Park County Treasurer Taxes $232,060 3NP Loan $203,691 Otten Johnson Trade Debt $14,413 Larimer County Treasurer Taxes $10,803 1st Net Real Estate Services, Inc. Trade Debt $7,145 GEMSA Loan Services, LP Trade Debt $6,391 USI New England Trade Debt $5,002 Richard Silverstein, Esq. Trade Debt $4,725 Daniel L. Rubin, P.C. Trade Debt $3,995 Lottner Rubin Fishman Brown & Trade Debt $2,318 Saul, P.C. Internal Revenue Service Taxes $1,755 LENNAR CORP: Fitch Assigns 'BB+' Rating to Proposed Senior Notes ---------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to Lennar Corporation's (NYSE: LEN) proposed offering of a new issue of senior notes due 2018 and an additional amount of its 4.750% senior notes due 2022. These issues will be ranked on a pari passu basis with all other senior unsecured debt. The notes will be guaranteed by some of Lennar's subsidiaries, but those guarantees may be suspended or released under certain circumstances. Net proceeds from the notes offering will be primarily used for working capital and general corporate purposes, which may include the repayment or repurchase of some of its outstanding senior notes. The Rating Outlook is Stable. Sensitivity/Rating Drivers The ratings and Outlook for Lennar reflect the company's strong liquidity position and improved prospects for the housing sector this year and in 2014. The ratings also reflect Lennar's successful execution of its business model, geographic and product line diversity, and much lessened joint venture exposure. There are still challenges facing the housing market that are likely to moderate the early stages of this recovery. Nevertheless, Lennar has the financial flexibility to navigate through the sometimes challenging market conditions and continue to invest in land opportunities. The Industry Fitch's housing forecasts for 2012 were raised a number of times during the course of the year but still reflected 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. Financials Lennar has solid liquidity with unrestricted homebuilding cash of $1,147 million as of Nov. 30, 2012. The company also has an unsecured revolving credit facility of $500 million that expires May 2015. The credit facility may be increased to $525 million, subject to additional commitments. As of Nov. 30, 2012, the company had a $150 million letter of credit and reimbursement agreement with certain financial institutions, which may be increased to $200 million, and also another $50 million letter of credit and reimbursement agreement with certain financial institutions that had a $50 million accordion feature. There is also an additional $200 million letter of credit facility with another financial institution. The company's debt maturities are well-laddered, with about 23% of its senior notes (as of Nov. 30, 2012) maturing through 2015. Homebuilding The company was the third largest homebuilder in 2011 and primarily focuses on entry-level and first-time move-up homebuyers. The company builds in 16 states with particular focus on markets in Florida, Texas and California. Lennar's significant ranking (within the top five or top 10) in many of its markets, its largely presale operating strategy, and a return on capital focus provide the framework to soften the impact on margins from declining market conditions. Fitch notes that in the past, acquisitions (in particular, strategic acquisitions) have played a significant role in Lennar's operating strategy. Compared to its peers Lennar had above-average exposure to joint ventures (JVs) during this past housing cycle. Longer-dated land positions are controlled off balance sheet. The company's equity interests in its partnerships generally ranged from 10% to 50%. These JVs have a substantial business purpose and are governed by Lennar's conservative operating principles. They allow Lennar to strategically acquire land while mitigating land risks and reduce the supply of land owned by the company. They help Lennar to match financing to asset life. JVs facilitate just-in-time inventory management. Nonetheless, Lennar has been substantially reducing its number of JVs over the last few years (from 270 at the peak in 2006 to 36 as of Nov. 30, 2012). As a consequence, the company has very sharply lowered its JV recourse debt exposure from $1.76 billion to $66.7 million ($49.9 million net of joint and several reimbursement agreements with its partners) as of Nov. 30, 2012. In the future, management will still be involved with partnerships and JVs, but there will be fewer of them and they will be larger, on average, than in the past. The company did a good job in reducing its inventory exposure (especially early in the correction) and generating positive operating cash flow. In 2010, the company started to rebuild its lot position and increased land and development spending. Lennar spent about $600 million on new land purchases during 2011 and expended about $225 million on land development during the year. This compares to roughly $475 million of combined land and development spending during 2009 and about $704 million in 2010. During 2012, Lennar purchased approximately $999 million of new land and spent roughly $302 million on development expenditures. Fitch expects land and development spending for 2013 to be sharply higher than in 2012. As a result, Fitch expects Lennar to be more than $500 million cash flow negative this year. Fitch is comfortable with this strategy given the company's cash position, debt maturity schedule and proven access to the capital markets. Rialto During 2010, the company ramped up its investments in Rialto Investments. More recently it has been harvesting the by-products of its efforts. This segment provides advisory services, due- diligence, workout strategies, ongoing asset management services, and acquires and monetizes distressed loans and securities portfolios. (Management has considerable expertise in this highly specialized business.) In February 2010, the company acquired indirectly 40% managing member equity interests in two limited liability companies in partnership with the FDIC, for approximately $243 million (net of transaction costs and a $22 million working capital reserve). Lennar had also invested $69 million in a fund formed under the Federal government's Public-Private Investment Program (PPIP), which was focused on acquiring securities backed by real estate loans. During the three months ended Aug. 31, 2012, the AB PPIP fund started unwinding its operations. During the fourth quarter, Lennar finalized its last sales of the underlying securities in the fund and made its final distributions to the partners, including Lennar. On average the company had $61 million of its equity invested in the fund and it has brought back all of that investment as well as profits and fees totaling $112 million. On Sept. 30, 2010, Rialto completed the acquisitions of approximately $740 million of distressed real estate assets, in separate transactions, from three financial institutions. The company paid $310 million for these assets, of which $124 million was funded by a five-year senior unsecured note provided by one of the selling financial institutions. Rialto Investments had $594.8 million of debt, of which $111 million is recourse to Lennar. In December 2012, Lennar completed the first closing of its second real estate fund with initial equity commitments of approximately $260 million (including $100 million committed by Lennar). Rialto provides Lennar with ancillary income as well as a source of land purchases (either directly or leveraging Rialto's relationship with owners of distressed assets). Fitch views this operation as strategically material to the company's operation, particularly as housing activity remains at relatively low levels. Rental Activities and Large MPCs In addition to the homebuilding, financial services and Rialto operating platforms, Lennar has been incubating a multi-family rental business strategy (beginning in early 2011) as well as FivePoint Land Company which manages large, complex master planned communities in the Western U.S. (including the former Newhall Land and Farming Company). The multi-family JV activities have a pipeline that exceeds $1 billion, and over 6,500 apartments. At Nov. 30, 2012, Lennar had approximately $30 million invested in this business and expects that investment to rise to $100 million by the end of fiscal 2013. The company's long term goal is to build a portfolio of income producing apartment properties across the country. 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, free cash flow trends and uses, and the company's cash position. Positive rating actions may be considered if the recovery in housing is maintained and is more robust than Fitch's current outlook, Lennar shows continuous improvement in credit metrics (with leverage less than 3 times (x) and interest coverage in excess of 5x), and maintains a healthy liquidity position. Negative rating actions could occur if the recovery in housing dissipates and Lennar maintains an overly aggressive land and development spending program. This could lead to consistent and significant negative quarterly cash flow from operations and meaningfully diminished liquidity position (below $700 million). Fitch currently rates Lennar as: -- Issuer Default Rating 'BB+'; -- Senior unsecured debt 'BB+'. The Rating Outlook is Stable. LENNAR CORP: Moody's Rates New Senior Unsecured Notes 'Ba3' ----------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to the new senior unsecured notes of Lennar Corporation that are to be issued in two tranches of still-to-be determined amounts, proceeds of which will be used for working capital and general corporate purposes, which may include the repayment or repurchase of some of its outstanding senior notes. At the same time, Moody's upgraded Lennar's various series of senior unsecured and convertible senior notes to Ba3 from B1. Moody's also affirmed the company's corporate family rating at Ba3 and probability of default rating at Ba3-PD. The SGL rating was affirmed at SGL-2, and the outlook remains stable. The upgrade to Lennar's senior unsecured and convertible senior notes is not a credit event. It reflects the sizable and growing proportion of senior unsecured debt within the capital structure vs. the secured debt, resulting in the elimination of the one notch difference between the corporate family rating and the senior unsecured debt. Formerly, the considerable proportion of secured land purchase and recourse off-balance sheet debt within the capital structure resulted in a one notch difference between the two ratings. The following rating actions were taken: Corporate family rating, affirmed Ba3; Probability of default rating, affirmed at Ba3-PD; Existing senior unsecured notes, upgraded to Ba3, LGD4-58% from B1, LGD4-60%; Existing convertible senior notes, upgraded to Ba3, LGD4-58% from B1, LGD4-60%; Proposed new senior unsecured notes due 2018, assigned a Ba3, LGD4-58%; Proposed tack-on 4.75% senior unsecured notes due 2022, assigned a Ba3, LGD4-58%; Speculative grade liquidity assessment, affirmed at SGL-2; Ratings outlook is stable. Ratings Rationale The Ba3 corporate family rating reflects the company's near industry-leading gross margins; its strong earnings performance, both in a weak housing environment as well as in the current robust market; the slimming down of its joint venture activities into a relatively few (for Lennar) critical land ventures; the substantial tangible equity base; and one of the homebuilding industry's more transparent disclosures of off-balance sheet activities. The company successfully stretched out a heavy debt maturity schedule during a time of uncertain market access through multiple equity and debt issuances, which it continues to do currently, and greatly reduced its formerly outsized recourse joint venture debt exposure. At the same time, Lennar's ratings incorporate its elevated adjusted homebuilding debt leverage, which is a pro forma 57.4% as of November 30, 2012; the expectation of negative cash flow from operations over the next 12 to 18 months; the moderately long land position; the still-substantial, albeit greatly reduced, total debt (as opposed to recourse debt) at its joint venture operations; and its high proportion of speculative construction. In addition, Lennar's propensity to invest in different asset classes and structures compared to more traditional homebuilders adds an additional element of risk to the company's credit profile. While these investments can generate solid returns and cash, especially during growth periods, they can also result in sizable write downs, considerable use of management time, and cash drains, as the joint venture operations did during the recent downturn. Lennar's liquidity is supported by its pro forma USD1.6 billion unrestricted cash position at November 30, 2012, full availability under its USD500 million senior unsecured revolving credit facility due 2015, the availability of about USD161 million at November 30, 2012 under its various letter of credit facilities aggregating USD400 million, and adequate to healthy headroom under its covenants. The stable outlook reflects Moody's expectation that homebuilding industry conditions will remain favorable over the next 12 to 18 months, allowing the company to generate solid operating growth, and that the company will gradually whittle down its currently elevated debt leverage. The ratings could benefit if the company continues to generate positive and growing net income, resumes growing its free cash flow, continues to strengthen its liquidity, and, most importantly, drives its debt leverage sustainably below 45%. Given the current gap between its pro forma debt leverage and the 45% threshold, plus the company's propensity to invest in non- traditional homebuilding ventures, an upgrade within the next 12 to 18 months could be very challenging. The outlook and/or ratings could come under pressure if the economic backdrop suddenly and significantly takes a turn for the worse; the company begins generating negative net income; impairments were again to rise materially; the company were to experience even sharper-than-expected reductions in its trailing 12-month free cash flow generation; and/or adjusted debt leverage were to exceed 60% on a sustained basis. The principal methodology used in this rating was the Global Homebuilding Industry Methodology published in March 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Founded in 1954 and headquartered in Miami, Florida, Lennar specializes in the sale of single-family homes for first-time, move-up and active adult buyers. Lennar also invests in distressed real estate assets and provides mortgage financing to its customers. Total revenues for the 2012 fiscal year that ended November 30, 2012 were approximately USD4.1 billion, and consolidated pretax income (which does not take into account the sizable tax benefit largely due to the reversal of the allowance for its deferred tax asset) was USD222 million. LENNAR CORP: S&P Assigns 'BB-' Rating on Senior Notes Due 2018 -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' issue-level rating and '4' recovery rating to Lennar Corp.'s proposed offering of senior notes due 2018. In a separate transaction, Lennar is also issuing an additional amount of its existing 4.75% senior notes due 2022. The 'BB-' issue-level rating and a '4' recovery rating on these notes remain unchanged. S&P's '4' recovery rating indicates its expectation for an average (30%-50%) recovery in the event of default. Lennar plans to use proceeds from the offerings (which S&P estimates could total approximately $500 million in aggregate) for working capital and general corporate purposes, which may include acquisitions or debt repurchases. From S&P's perspective, the offerings will bolster the company's cash balances, which totaled roughly $1.3 billion at Nov. 30, 2012. This balance provides sufficient capital to fund land investment needed to support the meaningful revenue growth that S&P expects over the next two years. The new notes will rank equally with Lennar's other senior unsecured obligations and will be guaranteed by substantially all of Lennar's homebuilding subsidiaries for as long as these subsidiaries guarantee at least $75 million of parent company obligations. The guarantees can be released under certain circumstances. "Our ratings on Miami-based Lennar reflect our expectation that higher sustained revenue growth and improved profitability over the next 12 to 18 months could result in substantial improvement in Lennar's EBITDA-based credit measures. In our view, proceeds from the proposed note offerings, along with availability under a $525 million unsecured revolving credit facility executed in May 2012 ($500 million of which is currently committed) should enable Lennar to readily finance near-term growth. We also expect a portion of the proceeds will be used to repay debt and extend the company's maturity profile," S&P said. "Given our expectations for Lennar to grow community count while at least maintaining recent absorption trends, we believe Lennar could potentially increase home deliveries by 25% to 30% annually in both 2013 and 2014. We also believe Lennar's operating margin, which totaled 12.2% for the fourth quarter of 2012 (among the highest of its peers), will strengthen modestly over our forecast period as Lennar continues to drive more sales from newer, more profitable communities and leverage its operating platform. Under this scenario, we expect adjusted debt-to-EBITDA to approach the low-6x area by the end of fiscal 2013, down substantially from approximately 13x at Nov. 30, 2011. We expect further improvement in this metric in 2014 (to just below 5x) as increased home sales, higher sales prices, and strengthening operating margins continue to drive strong year-on-year revenues and EBITDA growth," S&P added. "Our stable outlook acknowledges our expectation that Lennar's EBITDA-based credit metrics will strengthen over the next 12 to 18 months as the company continues to increase its overall community count while maintaining its improved margins and absorption levels of around three home sales per community per month. We could lower our rating if home sales slow materially following significant investment in land and inventory to support higher sales levels. Under this scenario, revenue and EBITDA growth would fall substantially below our base-case forecast and recently improved leverage metrics would reverse course and deteriorate. While we do not currently view our downside scenario as likely, we see additional near-term ratings momentum as limited by still-weak leverage metrics and the potential that more aggressive growth, including initiatives beyond the company's core homebuilding segment, could be largely debt funded. However, we could consider raising our rating to 'BB' if annual revenue growth exceeds 30% over the next two years and Lennar's EBITDA margin strengthens to the mid-teens. Under this scenario, we would expect Lennar to comfortably maintain debt-to-EBITDA in the low 4x area and debt to capital to reach the low 40% area," S&P noted. LIBERACE FOUNDATION: Can Access US Bank Cash on Interim Basis ------------------------------------------------------------- The Bankruptcy Court approved, on an interim basis, Liberace Foundation for the Creative and Performing Arts' request to use cash collateral of US Bank National Association, primarily rents, to pay the operating expenses of the Debtor's real property located at 1775 E. Tropicana Avenue, in Las Vegas, Nevada, and to use the amount of $355,000 held in the account at Nevada Trust, which the Debtor says is not encompassed by the claims of USB. According to the interim order, evidence exists in the record that the value of the Property exceeds the amount of USB's claim in an amount sufficient to provide adequate protection. Until further order, however, the Court will require that the rental proceeds, less the expense items appearing in Exhibit A-1 to the Debtor's emergency motion, be remitted to USB each month. The Debtor's secured creditor Schedule "D" lists USB as having a disputed claim in the amount of $1,269,000, secured by the Property. USB filed opposition to the cash collateral motion, accompanied by a request for judicial notice under FRE 201 of the papers filed in the action in the Eighth Judicial District for Clark County, Nevada, to obtain a receiver with respect to the Debtor's Property and certain objections to the supporting Declaration of Brian "Paco" Alvarez to the emergency motion. About Liberace Foundation Founded in 1976, the Liberace Foundation for the Creative and Performing Arts -- http://www.liberace.org/-- helps students in Southern Nevada pursue careers in the performing and creative arts through scholarship assistance and artistic exposure. The foundation has awarded more than 2,700 students with scholarships. It owns the Liberace Museum Collection at 1775 E. Tropicana, in Las Vegas. The Liberace Museum, which has exhibited the jewelry, pianos, garish gowns and other artifacts owned by the great pianist and showman, was opened in 1979. The property is valued at $13 million. The secured creditor, U.S. Bank N.A., is owed $1.269 million. Liberace Foundation filed a Chapter 11 petition (Bankr. D. Nev. Case No. 12-22004) in Las Vegas on Oct. 24, 2012, estimating $10 million to $50 million in both assets and liabilities. Bankruptcy Judge Mike K. Nakagawa presides over the case. The Ghandi Law Offices serves as the Debtor's counsel. The petition was signed by Anna Nateece, business manager. LIGHTHOUSE IMPORTS: Can Employ Joseph Luzinski as CRO ----------------------------------------------------- The Bankruptcy Court authorized Lighthouse Imports, LLC, to employ Development Specialists, Inc., to provide management services and Joseph J. Luzinski, senior vice president in the Miami office of DSU, as Chief Restructuring Officer, nunc pro tunc to Oct. 31, 2012. Based in St. Augustine, Florida, Lighthouse Imports, LLC, dba Toyota of St. Augustine, filed for Chapter 11 protection on Oct. 24, 2012 (Bankr. M.D. Fla. Case No. 12-14459). Judge Karen S. Jennemann presides over the case. R. Scott Shuker, Esq., at Latham, Shuker, Eden & Beaudine, LLP, represents the Debtor. The Debtor scheduled assets of $9,864,450 and liabilities of $24,727,794 as of the Petition Date. LIGHTHOUSE IMPORTS: Can Employ Latham Shuker as Counsel ------------------------------------------------------- The Bankruptcy Court authorized Lighthouse Imports, LLC, to employ R. Scott Shuker, Esq. and the law firm of Latham, Shuker, Eden & Beaudine, LLP, as Debtor's counsel, nunc pro tunc to Oct. 24, 2012. Based in St. Augustine, Florida, Lighthouse Imports, LLC, dba Toyota of St. Augustine, filed for Chapter 11 protection on Oct. 24, 2012 (Bankr. M.D. Fla. Case No. 12-14459). Judge Karen S. Jennemann presides over the case. R. Scott Shuker, Esq., at Latham, Shuker, Eden & Beaudine, LLP, represents the Debtor. The Debtor scheduled assets of $9,864,450 and liabilities of $24,727,794 as of the Petition Date. LODGENET INTERACTIVE: Gets Interim OK to Tap $5MM in Financing -------------------------------------------------------------- Stephanie Gleason at Dow Jones' DBR Small Cap reports that hotel media provider LodgeNet Interactive Corp. received bankruptcy- court approval to access $5 million of its bankruptcy financing, in addition to a number of other procedural motions that will allow the company to continue its operations while under Chapter 11 protection. As reported in the Jan. 30, 2013 edition of the TCR, the Debtors are seeking approval to obtain $15 million of financing from certain prepetition lenders, led by Gleacher Products Corp. as DIP agent. LodgeNet says the DIP Loan will provide them with immediate access to additional liquidity, if necessary, and will allay vendor and customer concerns while the Debtors progress through the chapter 11 cases to confirmation of the Plan. About $5 million in new money term loans will be available upon approval interim of the DIP financing. Gleacher is also the administrative agent for prepetition lenders owed $332.6 million under a term loan and $21.5 million under a revolver as of Dec. 31, 2012. The DIP financing agreement contains a roll-up of $15 million of loans attributable to the DIP lenders under the prepetition credit agreement. About LodgeNet Interactive 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. As of Sept. 30, 2012, LodgeNet, on a consolidated basis, reported $292 million in assets and $449 million in liabilities. LodgeNet Interactive and its affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 13-10238) on Jan. 27, 2013, with a prepackaged Chapter 11 plan of reorganization. The plan extends the maturity date and modifies a $332.6 million term loan and $21.5 million revolver. Colony Capital, LLC, is acquiring 100% of the new shares of the reorganized company for $60 million. Weil, Gotshal & Manges LLP serves as counsel to the Debtors; Leonard Street and Deinard is the co-counsel; Miller Buckfire & Co., LLC and Moorgate Bankers are the investment banker; FTI Consulting, Inc. is the financial advisor; and Kurtzman Carson Consultants is the claims and notice agent. LODGENET INTERACTIVE: Proposes PwC as Independent Accountant ------------------------------------------------------------ LodgeNet Interactive Corporation and its affiliates seek Court approval to hire PricewaterhouseCoopers LLP as independent accountants to perform auditing services. During the 90 days immediately preceding the Petition Date, PwC received from the Debtors and their affiliates fees and expenses totaling $257,544. On Jan. 24, 2013, PwC issued an invoice for $36,040 for unpaid services but now waives its entitlement to those fees. PwC intends to charge the Debtors for the Services based on its estimated fees for such services, which are currently as follows: a. 2012 Financial Statement Audit: $700,000 to $800,000 - Includes $91,000 for procedures related to the goodwill impairment recorded during the second quarter of 2012 b. 2012 Quarterly Reviews: $128,000 -- Includes $38,000 for review of going concern matters and related disclosures included in the Debtors' Sept. 30, 2012 interim unaudited financial statements and Form 10-Q c. If actual hours incurred are different from the underlying estimate or the mix of staff necessary varies significantly, PwC will adjust their billing based on the following rate table: Position Hourly Rate -------- ----------- Partners $675 to $725 National Office $1000 Directors, Senior Managers and Managers $300 to $550 Senior Associates $225 to $290 Associates $125 to $175 To the best of the Debtors' knowledge, neither PwC nor any professional employee of PwC has any connection with or any interest adverse to the Debtors, their creditors, or any other party in interest. 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. As of Sept. 30, 2012, LodgeNet, on a consolidated basis, reported $292 million in assets and $449 million in liabilities. LodgeNet Interactive and its affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 13-10238) on Jan. 27, 2013, with a prepackaged Chapter 11 plan of reorganization. The plan extends the maturity date and modifies a $332.6 million term loan and $21.5 million revolver. Colony Capital, LLC, is acquiring 100% of the new shares of the reorganized company for $60 million. Weil, Gotshal & Manges LLP serves as counsel to the Debtors; Leonard Street and Deinard is the co-counsel; Miller Buckfire & Co., LLC and Moorgate Bankers are the investment banker; FTI Consulting, Inc. is the financial advisor; and Kurtzman Carson Consultants is the claims and notice agent. LODGENET INTERACTIVE: Bankruptcy Prompts Moody's Rating Pullout --------------------------------------------------------------- Moody's Investor's Service withdrew all the ratings of LodgeNet Interactive Corporation upon its filing of a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. Ratings Rationale The following ratings were withdrawn: LodgeNet Interactive Corporation Corporate Family Rating, Ca Probability of Default Rating, D-PD Senior Secured Bank Credit Facility, Ca (LGD3, 45%) Speculative Grade Liquidity Rating SGL-4 LodgeNet's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (ii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside LodgeNet's core industry and believes LodgeNet's ratings are comparable to those of other issuers with similar credit risk. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Sioux Falls, South Dakota, LodgeNet Interactive Corporation (LodgeNet) provides interactive TV services, Network and Cable TV services, video-on-demand, advertising and video game entertainment services to the lodging industry and healthcare facilities. Its revenue for the LTM period ending September 2012 was approximately USD379 million. METRO FUEL: Creditor Pushes for Chapter 7 Liquidation ----------------------------------------------------- Stephanie Gleason at Dow Jones' DBR Small Cap reports that after still failing to name a lead bidder ahead of an auction that has been pushed back four times, creditor New York Commercial Bank is asking the bankruptcy court to push Metro Fuel & Oil Corp. into liquidation rather than allow it to continue to spend money on operations. About Metro Fuel Metro Fuel Oil Corp., is a family-owned energy company, founded in 1942, that supplies and delivers bioheat, biodiesel, heating oil, central air conditioning units, ultra low sulfur diesel fuel, natural gas and gasoline throughout the New York City metropolitan area and Long Island. Owned by the Pullo family, Metro has 55 delivery trucks and a 10 million-gallon fuel terminal in Brooklyn. Financial problems resulted in part from cost overruns in building an almost-complete biodiesel plant with capacity of producing 110 million gallons a year. Based in Brooklyn, New York, Metro Fuel Oil Corp., fka Newtown Realty Associates, Inc., and several of its affiliates filed for Chapter 11 bankruptcy protection (Bankr. E.D.N.Y. Lead Case No. 12-46913). Judge Elizabeth S. Stong presides over the case. Nicole Greenblatt, Esq., at Kirkland & Ellis LLP, represents the Debtor. The Debtor selected Epiq Bankruptcy Solutions LLC as notice and claims agent. Th Debtor tapped Carl Marks Advisory Group LLC as financial advisor and investment banker, Curtis, Mallet-Prevost, Colt & Mosle LLP as co-counsel, AP Services, LLC as crisis managers for the Debtors, and appoint David Johnston as their chief restructuring officer. The petition showed assets of $65.1 million and debt totaling $79.3 million. Liabilities include $58.8 million in secured debt, with $48.3 million owing to banks and $10.5 million on secured industrial development bonds. Metro Terminals Corp., affiliate of Metro Fuel Oil Corp., disclosed $38,613,483 in assets and $71,374,410 in liabilities as of the Chapter 11 filing. The U.S. Trustee appointed seven-member creditors committee. Kelley Drye & Warren LLP represents the Committee. MF GLOBAL: Trustee Raises Estimates for Foreign Customers --------------------------------------------------------- Joseph Checkler at Daily Bankruptcy Review reports that the trustee unwinding MF Global Holdings Ltd.'s brokerage said foreign commodity futures customers will receive slightly higher distributions than he previously estimated. About MF Global New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/-- is one of the world's leading brokers of commodities and listed derivatives. MF Global provides access to more than 70 exchanges around the world. The firm is also one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. It is easily the largest bankruptcy filing so far this year. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. U.S. regulators are investigating about $633 million missing from MF Global customer accounts, a person briefed on the matter said Nov. 3, according to Bloomberg News. MICHAELS STORES: To Redeem $137MM Senior Notes on Feb. 27 --------------------------------------------------------- Michaels Stores, Inc., caused to be delivered to the holders of the Company's outstanding 11 3/8% Senior Subordinated Notes due 2016 an irrevocable notice of redemption relating to the redemption of $137,000,000 in aggregate principal amount of the Company's outstanding Notes. The redemption date is Feb. 27, 2013. The Company will redeem the Redemption Notes at a redemption price equal to 103.792%. In addition, the Company will pay accrued and unpaid interest on the Redemption Notes up to, but not including, the Redemption Date. About Michaels Stores Headquartered in Irving, Texas, Michaels Stores, Inc., is the largest arts and crafts specialty retailer in North America. As of March 9, 2009, the Company operated 1,105 "Michaels" retail stores in the United States and Canada and 161 Aaron Brothers Stores. The Company's balance sheet at Oct. 27, 2012, showed $1.90 billion in total assets, $4.27 billion in total liabilities, and a $2.37 billion total stockholders' deficit. * * * As reported by the TCR on April 5, 2012, Moody's Investors Service upgraded Michaels Stores, Inc.'s Corporate Family Rating to B2 from B3. "The upgrade of Michaels' Corporate Family Rating primarily reflects the positive benefits of its continuing business initiatives which have led to consistent improvements in same store sales," said Moody's Vice President Scott Tuhy. In the April 16, 2012, edition of the TCR, Standard & Poor's Ratings Services raised its corporate credit rating on Irving, Texas-based Michaels Stores Inc. to 'B' from 'B-'. "Standard & Poor's Ratings Services' upgrade on Michaels Stores reflects the improvement in financial ratios following the company's performance in the important fourth quarter, given the seasonality of the company's business," said Standard & Poor's credit analyst Brian Milligan. "The CreditWatch placement remains effective, given the pending IPO." MOUNTAIN PROVINCE: Names Vice President Finance and CFO-Designate ----------------------------------------------------------------- Mountain Province Diamonds Inc. has appointed Bruce Ramsden, B. Com., ACIS, as Vice President Finance and CFO-designate effective Feb. 1, 2013. Mr. Ramsden is an experienced finance executive with more than 30 years experience. Most recently, Mr. Ramsden served as Vice President Finance, CFO and Corporate Secretary of Andean American Gold Corp. prior to the acquisition of that company by Lupaka Gold Corp. last September. Prior to that, he served as VP Finance and CFO of St Andrew Gold Fields Ltd. (2002 - 2005) and Vaaldiam Mining Inc., formerly Tiomin Resources Inc. (2005 - 2010). "We are pleased to welcome Bruce to Mountain Province Diamonds at an important time in the Company's transition," said Patrick Evans, President and CEO. "Bruce's financial skills, experience in the Canadian resource sector and particular experience arranging debt finance facilities will contribute to our continued success as we prepare for the development of the Gahcho Kue diamond mine." Mr. Ramsden will also assume the position of chief financial officer and corporate secretary effective May 1, 2013, upon the departure of the Company's current CFO and corporate secretary on April 30, 2013. About Mountain Province Headquartered in Toronto, Canada, Mountain Province Diamonds Inc. (TSX: MPV, NYSE AMEX: MDM) -- http://www.mountainprovince.com/-- is a Canadian resource company in the process of permitting and developing a diamond deposit known as the "Gahcho Kue Project" located in the Northwest Territories of Canada. The Company's primary asset is its 49% interest in the Gahcho Kue Project. After auditing the financial statements for the year ended Dec. 31, 2011, KPMG LLP, in Toronto, Canada, noted that the Company has incurred a net loss in 2011 and expects to require additional capital resources to meet planned expenditures in 2012 that raise substantial doubt about the Company's ability to continue as a going concern. The Company reported a net loss of C$11.53 million for the year ended Dec. 31, 2011, compared with a net loss of C$14.53 million during the prior year. Mountain Province's balance sheet at Sept. 30, 2012, showed C$53.03 million in total assets, C$8.81 million in total liabilities and C$44.22 million in total shareholders' equity. MTL PUBLISHING: S&P Revises 'B+' Rating Outlook to Stable --------------------------------------------------------- Standard & Poor's Ratings Services revised its 'B+' rating outlook on U.S.-based music publisher MTL Publishing (EMI) to stable from positive. At the same time, S&P affirmed all existing ratings on the company. "The outlook revision to stable reflects our expectation that the pace of ongoing declines in mechanical physical royalties, and the potential for near-term softness in performance and synchronization royalties could contribute to further operating declines," said Standard & Poor's credit analyst Chris Valentine. S&P still see potential for an upgrade if the restructuring plan is successful and leverage falls below S&P's 4.5x threshold, but an upgrade is less compelling at this time given recent operating trends. The 'B+' rating on New York-based MTL Publishing Inc. reflects Standard & poor's Ratings Services' expectation that leverage, although likely to decline, will remain high over the next fiscal year ending March 2013 because of restructuring efforts, but liquidity should be adequate. Sony/ATV, which will be administering the EMI catalog, will provide near-term protection from restructuring cost overruns. MTL's business risk profile is "fair" because of the company's relatively stable revenue provided by a diverse mix of royalty streams, its high EBITDA margin, high variable costs given its administration agreement, its leading global market share, and a management team that is experienced in the business. These factors do not fully offset the ongoing declines in mechanical physical royalties (generated from compositions embodied within recordings and sold in physical formats) associated with CD sale declines, and the potential for near-term softness in performance royalties (generated from broadcast TV and radio, public performance, and Internet streaming) and synchronization royalties (generated from the use of compositions in TV, films, commercials, video games, etc.) because of the weak global economy and still-uncertain advertising demand. S&P views the company's financial profile as "highly leveraged," given its pro forma fully adjusted debt-to-EBITDA ratio of roughly 7.3x as of Sept. 30, 2012, which declines to roughly 5.5x pro forma for expected cost savings. S&P's governance assessment is "fair." "The stable rating outlook reflects our view that while recent operating trends have been soft, we expect the company to gradually reduce leverage. A rating upgrade, which we view as less likely at this time, would require meaningful reduction in fully adjusted leverage to below 4.5x, through EBITDA growth and debt repayment. An upgrade would also likely incorporate a clear indication that financial policy will not become aggressive once MTL reduces leverage below 5.5x, the point that would allow for distributions to equity holders," S&P said. S&P could lower the rating if the integration and restructuring takes longer than expected, or if operating performance deteriorates because of economic pressure or a failure to sign new deals, causing leverage to remain in the high-5x to low-6x area through fiscal 2014. NEWLEAD HOLDINGS: Regains Compliance with NASDAQ Min. Bid Price --------------------------------------------------------------- NewLead Holdings Ltd. has received written notification from the NASDAQ Stock Market LLC indicating that it has regained compliance with the minimum bid price requirement of $1.00 per share for continued listing on the NASDAQ Global Select Market set forth in NASDAQ Listing Rule 5450(a)(1), as its common shares achieved a closing bid price of $1.00 or more for 10 consecutive business days. About NewLead Holdings NewLead Holdings Ltd. -- http://www.newleadholdings.com-- is an international, vertically integrated shipping company that owns and manages product tankers and dry bulk vessels. NewLead currently controls 22 vessels, including six double-hull product tankers and 16 dry bulk vessels of which two are newbuildings. N ewLead's common shares are traded under the symbol "NEWL" on the NASDAQ Global Select Market. PricewaterhouseCoopers S.A. in Athens, Greece, said in a May 15, 2012, audit report NewLead Holdings Ltd. has incurred a net loss, has negative cash flows from operations, negative working capital, an accumulated deficit and has defaulted under its credit facility agreements resulting in all of its debt being reclassified to current liabilities. These raise substantial doubt about its ability to continue as a going concern, PwC said. Newlead Holdings's balance sheet balance sheet at June 30, 2012, showed US$111.28 million in total assets, US$299.37 million in total liabilities and a US$188.08 million total shareholders' deficit. NEXSTAR BROADCATING: Amends Articles of Incorporation ----------------------------------------------------- The Board of Directors of Nexstar Broadcasting Group, Inc., approved amendments to, and restated, the Company's Amended and Restated Bylaws, which became effective immediately upon approval. The principal changes to the Bylaws were: (1) to amend the advance notice provision to require that stockholders provide additional information in connection with submitting a nomination or notice for other business, specifically requiring disclosure that includes derivative ownership, beneficial ownership of the stockholder, group status (including a description of any applicable agreements with respect to the Company), information regarding a nominee and a description of any voting agreements; (2) to specify that the Board and the chair of a stockholder meeting have the right to prescribe the rules and procedures for a stockholder meeting; (3) to specify that business can still be conducted at a stockholder meeting if a quorum was present, but is lost; (4) to specify that the chair of a stockholder meeting (in addition to the stockholders) can adjourn the stockholder meeting, whether or not a quorum is present; (5) to permit remote communications for stockholder meetings; (6) to remove the requirement that the annual meeting be held within 150 days of the close of the Company's fiscal year; and (7) to require that nominees for election as a director of the Company complete a background and qualification questionnaire and enter into an agreement with the Company that prevents that director from entering into any voting or compensation agreement regarding the Company with any third party, obligates that director to adhere to the Company's internal policies (including with regards to confidentiality, conflicts and insider trading) and includes an irrevocable resignation in the event of a breach of the agreement. The Board also made other non-material, technical and stylistic amendments to the Bylaws. A copy of the Amended Bylaws is available for free at: http://is.gd/XstoAM 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: Avenue Capital No Longer Owns Shares ------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Avenue Capital Management II, L.P., and its affiliates disclosed that, as of Jan. 24, 2013, they do not beneficially own any shares of common stock of Nextwave Wireless Inc. Avenue Capital previously reported beneficial ownership of 4,178,148 common shares or a 16.7% equity stake as of Aug. 17, 2012. On Jan. 24, 2013, AT&T Inc. completed its acquisition of NextWave Wireless by means of a merger of Rodeo Acquisition Sub Inc. ("Merger Sub") with and into the Company in accordance with an Agreement and Plan of Merger, dated Aug. 1, 2012, among the Company, AT&T and Merger Sub. Upon consummation of the Merger, each share of the 250,507 shares of Common Stock held by Avenue Spec IV, 19,490 shares of Common Stock held by Avenue Investments and 3,806,798 shares of Common Stock held by Avenue AIV was converted into the right to receive (i) $1.00 per share in cash and (ii) a non-transferable contingent payment right representing a pro rata interest in an amount of up to $25 million held in escrow, which may be reduced in respect of indemnification obligations and other amounts payable to AT&T in accordance with the Merger Agreement. In addition, upon consummation of the Merger, options for an aggregate of 101,353 shares of Common Stock of the Company granted by the Company to Robert T. Symington, an employee of Avenue Capital Management II and a former director of the Company were cancelled for no consideration. Pursuant to an agreement between Mr. Symington and Avenue Capital Management II, any compensation received by Mr. Symington during his service as a director of the Issuer was for the benefit of Avenue Spec IV, Avenue Investments, Avenue AIV, Avenue International, CDP-Global and Avenue Spec V. A copy of the filing is available for free at: http://is.gd/sEt63L 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'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: Polygon Management No Longer Owns Shares ----------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Polygon Management Ltd. and its affiliates disclosed that, as of Jan. 24, 2013, they do not beneficially own any shares of common stock of NextWave Wireless Inc. Polygon Management previously reported beneficial ownership of 2,500,000 common shares or a 10% equity stake as of Aug. 16, 2012. On Jan. 24, 2013, AT&T Inc. completed its acquisition of the Issuer by means of a merger of Rodeo Acquisition Sub Inc. ("Merger Sub") with and into the Issuer in accordance with an Agreement and Plan of Merger, dated Aug. 1, 2012, among the Nextwave Wirelss, AT&T and Merger Sub. Upon consummation of the Merger, each of the 2,500,000 Shares beneficially owned by the Reporting Persons was converted into the right to receive (i) $1.00 per share in cash and (ii) a non-transferable contingent payment right representing a pro rata interest in an amount of up to $25 million held in escrow, which may be reduced in respect of indemnification obligations and other amounts payable to AT&T in accordance with the Merger Agreement. A copy of the amended Schedule 13D is available at: http://is.gd/OZPjvL 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'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. NORTEL NETWORKS: Aborted Settlement Freezes Up Claims Market ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the inability of Nortel Networks Inc. creditors from the U.S., U.K. and Canada to agree on how to carve up $9 billion cash is having an effect on claims, and it isn't good. The mediation began Jan. 14, with the chief justice of Ontario serving as mediator. But efforts to mediate a settlement failed. Without agreement on how the cash should be divided among creditors of the bankruptcies in the three countries, the money can't be distributed. Before mediation failed, unsecured claims against Nortel traded for more than 90 cents on the dollar, according to Joe Sarachek, a managing director of special situations from CRT Special Investments LLC. Since the chance of quick settlement fell by the wayside, claims haven't traded, he said. The spread between the bid and ask is now too wide, Mr. Sarachek said. Buyers are now willing to pay about 79 cents, while sellers still want 90 cents, he said. After settlement came to naught, Mr. Sarachek estimated that the price might fall to the high 70s. If there isn't a settlement, carving up the cash through litigation may delay distribution by four years, Mr. Sarachek said. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation and its various affiliated entities provided next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel did business in more than 150 countries around the world. Nortel Networks Limited was the principal direct operating subsidiary of Nortel Networks Corporation. On Jan. 14, 2009, Nortel Networks Inc.'s ultimate corporate parent Nortel Networks Corporation, NNI's direct corporate parent Nortel Networks Limited and certain of their Canadian affiliates commenced a proceeding with the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act (Canada) seeking relief from their creditors. Ernst & Young was appointed to serve as monitor and foreign representative of the Canadian Nortel Group. That same day, the Monitor sought recognition of the CCAA Proceedings in U.S. Bankruptcy Court (Bankr. D. Del. Case No. 09-10164) under Chapter 15 of the U.S. Bankruptcy Code. That same day, NNI and certain of its affiliated U.S. entities filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 09-10138). In addition, the High Court of England and Wales placed 19 of NNI's European affiliates into administration under the control of individuals from Ernst & Young LLP. Other Nortel affiliates have commenced and in the future may commence additional creditor protection, insolvency and dissolution proceedings around the world. On May 28, 2009, at the request of administrators, the Commercial Court of Versailles, France, ordered the commencement of secondary proceedings in respect of Nortel Networks S.A. On June 8, 2009, Nortel Networks UK Limited filed petitions in U.S. Bankruptcy Court for recognition of the English Proceedings as foreign main proceedings under Chapter 15. U.S. Bankruptcy Judge Kevin Gross presides over the Chapter 11 and 15 cases. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. In the Chapter 11 case, James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as the U.S. Debtors' general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The United States Trustee appointed an Official Committee of Unsecured Creditors in respect of the U.S. Debtors. An ad hoc group of bondholders also was organized. Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, and Christopher M. Samis, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, represent the Official Committee of Unsecured Creditors. An Official Committee of Retired Employees and the Official Committee of Long-Term Disability Participants tapped Alvarez & Marsal Healthcare Industry Group as financial advisor. The Retiree Committee is represented by McCarter & English LLP as Delaware counsel, and Togut Segal & Segal serves as the Retiree Committee. The Committee retained Alvarez & Marsal Healthcare Industry Group as financial advisor, and Kurtzman Carson Consultants LLC as its communications agent. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of Sept. 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of Sept. 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Since the commencement of the various insolvency proceedings, Nortel has sold its business units and other assets to various purchasers. Nortel has collected roughly $9 billion for distribution to creditors. Of the total, $4.5 billion came from the sale of Nortel's patent portfolio to Rockstar Bidco, a consortium consisting of Apple Inc., EMC Corporation, Telefonaktiebolaget LM Ericsson, Microsoft Corp., Research In Motion Limited, and Sony Corporation. The consortium defeated a $900 million stalking horse bid by Google Inc. at an auction. The deal closed in July 2011. Nortel has filed a proposed plan of liquidation in the U.S. Bankruptcy Court. The Plan generally provides for full payment on secured claims with other distributions going in accordance with the priorities in bankruptcy law. OVERSEAS SHIPHOLDING: Recognized as Main Proceeding in U.K. ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Chapter 11 reorganization of Overseas Shipholding Group Inc. in Delaware is an example of a U.S. bankruptcy recognized abroad. According to the report, OSG, one of the world's largest publicly owned transporters of crude oil and petroleum products, filed for Chapter 11 protection in November. On Jan. 29, the U.K. High Court of Justice, Chancery Division, ruled that the U.S. bankruptcy is the foreign main proceeding. Just as the U.S. court would do in a Chapter 15 case for a company primarily in bankruptcy abroad, the High Court halted all legal proceedings and creditor actions in the U.K. Both the U.S. Chapter 15 and the law in England are based on the UNCITRAL Model law on Cross-Border Insolvency. OSG's $300 million in 8.125% senior unsecured notes due 2018 traded Jan. 29 for about 38 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds have climbed about 66% since the last trade on the day of bankruptcy. 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. PACIFIC CARGO: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Pacific Cargo Services, LLC dba Pacific Courier Services, LLC dba Pacific Courier Services-Washington, LLC dba ITG Washington, LLC dba Pacific Cargo Services-Washington, LLC dba Integrity Transportation Group, LLC 3302 NW Marine Dr. Troutdale, OR 97060 Bankruptcy Case No.: 13-30439 Chapter 11 Petition Date: January 28, 2013 Court: United States Bankruptcy Court District of Oregon Judge: Trish M. Brown Debtor's Counsel: Tara J. Schleicher, Esq. FARLEIGH WADA WITT 121 SW Morrison St #600 Portland, OR 97204 Tel: (503) 228-6044 E-mail: tschleicher@fwwlaw.com Scheduled Assets: $7,716.872 Scheduled Liabilities: $12,039,196 A copy of the Company's list of its 20 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/orb13-30439.pdf The petition was signed by James J. Holman, manager. PAR PHARMA: Term Loan Repricing No Impact on Moody's B2 CFR ----------------------------------------------------------- Moody's Investors Service commented that Par Pharmaceutical Companies, Inc.'s proposed re-pricing of its senior secured term loan has no impact on the company's B2 Corporate Family Rating or stable outlook. Existing debt ratings will also remain unchanged. Moody's notes, however, that the proposed amendment is modestly credit positive as it aims to reduce current pricing on the term loan by 50 basis points, as well as reduce the LIBOR floor by 25 basis points. This will result in lower interest expense by about USD8 million a year. Headquartered in Woodcliff Lake, New Jersey, Par is a specialty generic and branded pharmaceutical company operating primarily in the United States. The company generated revenue of about USD1 billion for the twelve months ended September 30, 2012. Par was acquired by TPG Capital in September 2012. PARK AVENUE COMMONS: Case Summary & 8 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Park Avenue Commons, LLC 109 Park Avenue Danbury, CT 06810 Bankruptcy Case No.: 13-50119 Chapter 11 Petition Date: January 28, 2013 Court: United States Bankruptcy Court District of Connecticut (Bridgeport) Judge: Alan H.W. Shiff Debtor's Counsel: James M. Nugent, Esq. HARLOW, ADAMS, AND FRIEDMAN One New Haven Ave., Suite 100 Milford, CT 06460 Tel: (203) 878-0661 Fax: (203) 878-9568 E-mail: jmn@quidproquo.com Scheduled Assets: $590,000 Scheduled Liabilities: $1,658,081 A copy of the Company's list of its eight largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/ctb13-50119.pdf The petition was signed by Yi Ling aka Alison Ling, member. PERMIAN HOLDINGS: Moody's Rates USD175MM Sr. Unsec. Notes 'B3' -------------------------------------------------------------- Moody's Investors Service assigned a B3 Corporate Family Rating to Permian Holdings, Inc. and a B3 rating to its proposed USD175 million senior secured notes due 2018. The net proceeds of the offering will be used to repay existing debt and to pay a distribution to its owners. This is the first time Moody's has rated Permian. The outlook is stable. Ratings Assigned: Corporate Family Rating of B3 Senior Secured Notes Rating of B3, LGD-4 (56%) Probability of Default Rating of B3-PD Outlook Stable Ratings Rationale "New issue proceeds will refinance the existing debt of this manufacturer of wellsite liquids storage tanks and fluid processing systems, more firmly grounding the debt component of its capital structure," commented Andrew Brooks, Moody's Vice President. "Having returned the company to profitability, Permian's financial sponsors will receive a return of their invested capital, the distribution of which will also be funded by the proceeds of this secured notes offering." Permian's B3 CFR reflects the company's small size, its recent history of net losses and modest cash flow generation, the inherent cyclicality of oil and gas drilling activity to which Permian is exposed, the relatively low-technology nature of Permian's storage tank products and the wide range of competitive product, and the increased leverage represented by this debt offering. Offsetting these negatives is Permian's market-leading position and deep customer penetration in a product line, which while low in its relative cost, is a critical component of wellsite operations, its geographic scope covering major hydrocarbon producing basins, the financial flexibility imparted by its largely variable cost business model and a seasoned senior management team who appears to have established a firm footing for future profitability and cash flow. Permian and its predecessor companies have over a 35-year history of manufacturing fluid containment and processing systems required at nearly every onshore oil and gas wellsite for the separation and storage of production streams. Steel and fiberglass storage tanks comprise about 70% of its product line, supplemented by process equipment including heater-treaters and separators. The company's customer base numbers over 700, weighted to global majors and larger independent E&Ps active in multiple basins. Permian competes on the basis of its broad product line, its manufacturing presence near most major producing basins, its long- standing and repeat customer relationships and its ability to manufacture to independent certification standards. Permian was incorporated in its present configuration in 2007 by affiliates of financial sponsors Riverstone Holdings LLC and The Carlyle Group, each of whom hold a 47.7% ownership stake. After consecutive years of losses, new senior management has been installed who appear to have put the company on firmer footing for profitable growth. The B3 rating on Permian's proposed USD175 million senior secured notes reflect both the overall probability of default of Permian, to which Moody's assigns a PDR of B3-PD, and a Loss Given Default of LGD-4 (56%). Permian will enter into a new secured ABL revolving credit (not rated), which will encumber working capital assets. The notes will be secured by all assets other than the working capital assets, against which they will have a second lien. Notwithstanding the limited extent of tangible assets available to secure the notes on a first lien basis relative to the ABL revolver's priority claim on working capital assets, the notes are rated at the B3 CFR under Moody's Loss Given Default Methodology reflecting the size of the potential secured notes' claims relative to the secured ABL. The stable outlook reflects Moody's view that Permian will generate continuing positive free cash flow for debt reduction, notwithstanding its higher debt levels. It is unlikely that Permian would be upgraded in the near term given its relative modest size and narrow product focus, however, increased size and diversity could warrant consideration of an upgrade. The rating could be downgraded if operations begin to generate renewed losses, if debt leverage exceeds 3x, if another large cash distribution to equity materializes or should liquidity concerns impinge on company operations. The principal methodology used in this rating was the Global Oilfield Services Rating 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. Permian Holdings, Inc. is a privately held oil field equipment manufacturer located in Odessa, Texas. PLAY BEVERAGES: Obtains Favorable Ruling in Trademark Lawsuit ------------------------------------------------------------- Play Beverages LLC, CirTran Beverage Corporation and CirTran Corporation on Jan. 31 disclosed that the U.S. District Court, Central District of California has ruled in their favor. The Court denied Playboy Enterprises International, Inc.'s motion for injunction and dismissed Playboy's trademark lawsuit. In an order issued January 30, 2013, U.S. District Judge S. James Otero ruled in favor of Play Beverages and CirTran in declining to enjoin Play Beverages from selling the Playboy Energy Drink. Judge Otero granted Play Beverages' motion to dismiss the case without prejudice, finding that Playboy's lawsuit was inappropriate under the forum selection clause of the License Agreement between Play Beverages and Playboy. Judge Otero ruled that Playboy could not bring its claims in California. Less than two months ago, the U.S. Bankruptcy Court for the District of Utah ruled in favor of Play Beverages and the CirTran companies, vacating a bankruptcy and freeing the companies to take legal actions to protect the product license granted for its Playboy Energy Drink. That judge's ruling took Play Beverages out of bankruptcy, enabling it to continue its action in state courts against Playboy Enterprises and others to protect its license to produce and sell Playboy Energy Drink. "Today's ruling marks continued good news for Play Beverages and the CirTran companies," said Iehab J. Hawatmeh, CirTran's president. "We have been through nearly two years of legal actions, but now there are brighter skies on the horizon. Everyone at Play Beverages and CirTran is excited about getting back to business and regaining the momentum we worked so hard to build in expanding our beverage business and Playboy Energy Drink sales worldwide." Introduced in 2008, Playboy Energy Drink is manufactured and distributed exclusively by CirTran Beverage Corporation, a wholly owned subsidiary of CirTran Corporation under a product license from Playboy Enterprises to Play Beverages, and is currently available in more than 20 countries around the world. About CirTran Corporation Marking its 20th year in business in 2013, CirTran Corporation -- http://www.cirtran.com-- has evolved from its roots as an international, full-service contract manufacturer. From its headquarters in Salt Lake City, Utah, where it operates, along with its Racore Technology electronics manufacturing subsidiary, from an ISO 9001:2000-certified facility, CirTran has grown in scope and geography. Today, CirTran's operations include: CirTran-Asia, a subsidiary with principal offices in ShenZhen, China, which manufactures high-volume electronics, fitness equipment, and household products for the multi-billion-dollar direct response industry; CirTran Online, which offers products directly to consumers through major retail Web sites; and CirTran Beverage, which has partnered with Play Beverages, LLC, to introduce and distribute the Playboy Energy Drink. About Play Beverages On April 26, 2011, three alleged creditors, LIB-MP Beverage, LLC, George Denney, and Warner K. Depuy, filed an involuntary Chapter 7 petition against Play Beverages, LLC, a consolidated entity of the Company, seeking its liquidation. On Aug. 12, 2011, the proceeding was converted into a Chapter 11 reorganization proceeding (Bankr. D. Utah Case No. 11-26046). PLAYBOY ENTERPRISES: S&P Puts 'B-' CCR on CreditWatch Negative -------------------------------------------------------------- Standard & Poor's Rating Services placed all ratings, including its 'B-' corporate credit rating, on Beverly Hills, Ca.-based Playboy Enterprises Inc. on CreditWatch with negative implications. "The CreditWatch listing is based on our expectation that the company is at significant risk of violating its one-time minimum EBITDA covenant at the end of the second quarter of 2013," said Standard & Poor's credit analyst Daniel Haines. The terms of the credit agreement permit the equity sponsor to provide equity of $10 million to eliminate this one-time covenant. The rating reflects the company's weak credit measures, operating shortfalls that have raised the risk of a potential covenant violation in June 2013, and operating risks linked to its business transition. The company is restructuring and transforming itself into a primarily brand management and licensing company. Although the business transition is nearly complete, operating performance has been below S&P's expectations and short of the minimum EBITDA covenant. S&P considers the company's business risk profile "vulnerable," based on declines at the print segment that will continue to pressure overall performance. The strong possibility of a covenant violation in 2013 and high debt leverage underscore S&P's assessment of Playboy's financial risk profile as "highly leveraged." S&P expects Playboy to benefit from new overseas licensing deals, but it still faces the secular decline of the magazine sector. Playboy is a media and lifestyle company, marketing the Playboy brand primarily through licensing. In November 2011, Playboy entered into a licensing deal with Manwin group regarding the operation of Playboy-branded TV and online assets. This segment has been hampered by the availability of free adult content on the Internet. The transaction shifted Playboy's focus to its licensing segment, which is still very small, but has been more stable due to the steady stream of minimum guarantee payments the company receives when most contracts are signed. However, the large volume of small licensing contracts produces some operating volatility from quarter to quarter as negotiating delays may delay potential cash flow. S&P expects this segment's growth to benefit from the company's well-known brand, and in particular, S&P anticipates strong growth internationally relative to domestically as the brand has seen a spike in popularity outside the U.S. Conversely, print operations have exhibited steadily declining results, reflecting the adverse fundamentals of the magazine sector. The CreditWatch listing reflects Playboy's risk of violating its minimum EBITDA covenant on June 30, 2013. S&P could lower the ratings if it becomes increasingly apparent that a breach will occur. S&P could also lower the rating if operating performance weakens and increases the risk that the company will violate either its leverage or interest coverage covenants. S&P could affirm the ratings and remove them from CreditWatch if the company is able to meet its minimum EBITDA requirement or alleviate risks that it will violate the covenant. This could be achieved if operating performance meaningfully exceeds S&P's expectations, or if its sponsor preemptively makes the one-time $10 million equity cure. PREFERRED PROPPANTS: S&P Affirms 'B+' Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its ratings, including its 'B+' corporate credit rating, on Radnor, Pa.-based Preferred Proppants (Preferred) and removed the ratings from CreditWatch, where they were placed with negative implications on Sept. 5, 2012. The rating outlook is negative. "The ratings affirmation on Preferred reflects our expectation that credit metrics will improve in 2013, and that recent covenant amendments and an equity cure have relieved constraints on the company's liquidity position," said Standard & Poor's credit analyst Gayle M. Bowerman. "The negative outlook reflects our view that Preferred faces execution risk as it moves to a logistics-focused sand distribution and resin technology strategy from a mining and production strategy." "Our financial risk profile assessment remains "aggressive", based on the company's high debt levels, concentrated ownership structure, relatively short operating history, and aggressive financial policies. We have also revised our assessment of the company's business risk profile to "weak" from "fair" based on our view that industry conditions will remain difficult in 2013, including an increasingly volatile pricing environment, broader swings in supply and demand and an intensifying level of competition in the sand market," S&P added. "The negative rating outlook reflects our view that Preferred faces industry headwinds and execution risk as it attempts to shift its business to a distribution based model over the upcoming quarters. We could lower the ratings if an improvement in credit metrics were not to occur over the next several quarters such that leverage remained above 4.5x. We believe a lack of traction in quarterly EBITDA improvement could also constrain liquidity, and could also lower the rating if covenant cushions declined to 5%- 10%, consistent with a revision of our liquidity assessment to "less than adequate". This could occur if sales volumes do not increase as projected due to a decline in demand or if the company incurs greater-than-expected costs associated with the strategy change," S&P noted. If Preferred successfully executes on its planned operational and performance initiatives, including ramping up its distribution and resin-coated sales volumes, leading to improved credit metrics with leverage expected to be sustained below 4x and maintaining an adequate liquidity profile, S&P could stabilize the outlook on the rating. An upgrade is unlikely over the next several quarters given the company's size and our view of its aggressive financial policies. QUAIL HOLLOW: Hires McEvoy Firm to Litigate Best Western Rift ------------------------------------------------------------- Quail Hollow Inn, LLC, won Bankruptcy Court permission to employ special counsel Sally M. Darcy of McEvoy Daniels & Darcy P.C. for the limited purpose of handling any claims, issues, and/or disputes between QHI and Best Western International, Inc., whom its primary bankruptcy counsel, Gallagher & Kennedy, P.A., has a conflict precluding its representation of the Debtor in matters relating to Best Western. QHI's primary business is the operation of an 83-room hotel property operated under the name Best Western Plus Quail Hollow Inn. The Gallagher firm represents Best Western in various matters unrelated to QHI. On Nov. 19, 2012, The Helms Law Firm, P.L.C. on behalf of Best Western filed a Motion to Shorten Time to Assume Executory Contract. As a result of Gallagher's conflict in representing QHI in any matter relating to Best Western, QHI tapped McEvoy Daniels as special counsel for such representation. McEvoy Daniels attests it has no connection with the estate's creditors, or any of their attorneys, or any person employed in the Office of the United States Trustee, and represents no interest adverse to QHI. McEvoy Daniels disclosed it represents Kenneth T. and Carol Dunlap along with Ted and Christine Dunlap in the litigation brought by secured creditor Canyon Community Bank (Pima County Superior Court Case No. C20125918). The Dunlaps and the Debtors have waived any conflict arising from the representation of the Dunlaps individually by Darcy. McEvoy Daniels' hourly rates for the professionals and paraprofessionals that will be responsible for the engagement range from $75 to $275 per hour. McEvoy Daniels estimates that the total fees for the engagement will not exceed $5,000 plus actual out of pocket expenses. About Dunlap Oil and Quail Hollow Inn Dunlap Oil Company, Inc., and Quail Hollow Inn, LLC, sought Chapter 11 protection (Bankr. D. Ariz. Case No. 12-23252 and 12-23256) on Oct. 24, 2012. Founded in 1958, Dunlap Oil is a Willcox, Arizona-based operator of 14 gasoline services stations. QOH owns the 89-room outside corridor Best Western Plus Quail Hollow hotel in Willcox. The two companies are owned and operated by the Dunlap family. Judge James M. Marlar presides over the case. John R. Clemency, Esq., and Lindsi M. Weber, Esq., at Gallagher & Kennedy, P.A., serve as the Debtors' counsel. Peritus Commercial Finance LLC serves as financial advisor. QOH declared assets of at least $1 million and debts exceeding $10 million. DOC estimated assets and debts of $10 million to $50 million. The petitions were signed by Theodore Dunlap, president. Ilene J. Lashinsky, the U.S. Trustee for Region 14, has appointed three creditors to serve on an Official Committee of Unsecured Creditor for the Chapter 11 bankruptcy case of Dunlap Oil Company. Pineda Grantor Trust II, successor-in-interest to Compass Bank, is represented by Steven N. Berger, Esq., and Bradley D. Pack, Esq., at Engelman Berger, P.C. Counsel to Canyon Community Bank NA are Jeffrey G. Baxter, Esq., Pat P. Lopez III, Esq., and Rebecca K. O'Brien, Esq., at Rusing Lopez & Lizardi PLLC. RAYMOND KELLEY: 8th Cir. BAP Upholds Accord Requiring Turnover -------------------------------------------------------------- The U.S. Bankruptcy Appellate Panel, Eighth Circuit, affirmed an Aug. 31, 2012 bankruptcy court order requiring Raymond Kelley and Karen Patrice Kelley to convey to Centennial Bank real property. We have jurisdiction over this appeal from the final order of the bankruptcy court. The issue on appeal is whether the bankruptcy court erred in its interpretation of the phrase "abandon the properties to Centennial Bank," as used in its earlier order and in the Kelleys' confirmed Chapter 11 plan, to require the Debtors to convey real property to the Bank. The Eighth Circuit BAP held that the bankruptcy court acted within its discretion when it interpreted its order and the Chapter 11 plan to mean that the Debtors were required to convey the real property to the Bank. The Kelleys filed a petition for relief under Chapter 13 of the United States Code on May 18, 2010. A few months later, the Debtors' case was converted to Chapter 11. The Bank, a long-time creditor of the Debtors with a security interests in various parcels of the Debtors' real property, objected to confirmation of the Chapter 11 plan and filed a motion to dismiss their bankruptcy case. As part of an Agreed Order, the Bank agreed to withdraw its motion to dismiss and its objection to confirmation of the plan provided that, within a certain period of time, the Debtors file an amended plan incorporating language from the Agreed Order. The Agreed Order states that the Debtor and Centennial will jointly market the Debtors' properties for one year from the effective date of the Plan. In the event the properties do not sell within that period of time, the Debtor will abandon the properties to Centennial Bank: a. 80 acres of land on Friendship Road; b. 30 acres of land on Friendship Road; c. Mayflower Car Wash, Miller Street, Mayflower, AR; d. Vacant lot next to Mayflower Car Wash; e. Gold Creek Car Wash, Mayflower, AR; f. Vacant lot 639 Hwy. 365, Mayflower, AR The Debtors filed an amended Chapter 11 plan that incorporates the required language from the Agreed Order. The bankruptcy court confirmed the amended plan. The Agreed Order and Confirmed Plan address details regarding the sale of the properties, including contingencies that could arise, such as disagreement about price. In addition, the Agreed Order and Confirmed Plan make separate provisions for times when the Bank may file ex parte motions for relief from the automatic stay for the Debtors' failure to comply with their other obligations under the Confirmed Plan, such as failure by the Debtors to keep tax and insurance on various properties current. The one-year period in the Agreed Order and in the Confirmed Plan expired without a sale of the properties and the Debtors did not convey the properties to the Bank. Thereafter, the Bank filed a "Petition" with the bankruptcy court, seeking an order directing the Debtors to convey the properties to the Bank. The Debtors objected to the Bank's Petition. After a hearing, the bankruptcy court stated its position on the record and in a written order dated Aug. 31, 2012, noting that the evidence produced at the hearing showed that the Debtors had not cooperated with the Bank's efforts to market and sell the properties and that the properties had not been sold. The bankruptcy court interpreted the phrase "abandon the properties to Centennial Bank" used in the Agreed Order and in the Confirmed Plan and enforced its Agreed Order and Confirmed Plan. The case is Raymond Kelley; Karen Patrice Kelley Debtors- Appellants v. Centennial Bank Movant-Appellee, No. 12-6050 (8th Cir. BAP). A copy of the BAP's Jan. 30, 2013 decision is available at http://is.gd/wZZqspfrom Leagle.com. RESIDENTIAL CAPITAL: Completes Sale of Fannie MSRs to Walter ------------------------------------------------------------ Residential Capital, LLC has completed the sale of the originations and capital markets platform to Walter Investment Management Corp. The sale also includes the Fannie Mae mortgage servicing rights (MSR) portion of ResCap's servicing portfolio, representing approximately $50.4 billion in unpaid principal balance (UPB) at August 31, 2012. The United States Bankruptcy Court, Southern District of Manhattan had approved the sale of the assets last November. "We are pleased to complete the sale of these assets to Walter Investment Management," said ResCap Chief Executive Officer Thomas Marano. "Since the Court's approval of the deal, we have been working diligently with the executives at Walter, our employees and Fannie Mae to ensure a smooth transition for homeowners." The Court-approved sale of ResCap's servicing platform and related assets to Ocwen Loan Servicing, LLC and the sale of a whole loan portfolio to Berkshire Hathaway are still pending completion. Centerview Partners LLC and FTI Consulting are acting as financial advisors to ResCap. Morrison & Foerster LLP is acting as legal advisor to ResCap. Morrison Cohen LLP is advising ResCap's independent directors. 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: 2012 Bonus Program Approved by Judge --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Residential Capital LLC was given permission by the bankruptcy judge to pay bonuses in February that were earned in 2012. Last year's bonuses amount to 93.6% of 2011 bonuses, the company said when seeking court authorization. According to the report, the top executives and managers, numbering about 185, already were approved to receive incentive or retention bonuses, depending on their ranks. They too would participate in the 2012 bonus pool of $33.4 million. The report notes that the almost 200 top managers' and executives' bonuses would be 70% of 2011 bonuses. For executives, the bonuses would represent 58% of total compensation. For recipients of retention bonuses, the 2012 bonuses would be one-third of annual compensation. For the remaining 2,800 workers, the 2012 bonuses would equal 8% of annual compensation. The report also points out that the approval given by the judge Jan. 29 limits incentive plan payments to $4.3 million and caps retention-plan payments to no more than $10.7 million. 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: Committee Hiring FTI as Financial Advisors --------------------------------------------------------------- The official committee of unsecured creditors in the Chapter 11 case of Revstone Industries LLC is seeking Court permission to retain FTI Consulting Inc. as the panel's financial advisors. The Committee will appear before the Court Feb. 6 for approval of the request. FTI's services include assessment and monitoring of the efforts of the Debtor and its professional advisors to maximize the value of its estate and to reorganize successfully. FTI's engagement agreement with the committee provides that the firm will be paid a fixed monthly rate of $85,000 and a completion fee of the greater of $175,000 or an amount derived from a sliding scale based on recoveries resulting directly from FTI's forensic work. The sliding scale is: 1% of the first $5 million; 2% of the next $5 million to $20 million; and 3% of the amounts in excess of $20 million, plus reimbursement of actual and necessary expenses incurred by FTI. The Fixed Completion Fee will be considered earned and payable, subject to Court approval, upon the earliest to occur of: -- confirmation of a chapter 11 plan of reorganization or liquidation in the case; or -- the sale of substantially all of the Debtor's assets. FTI's Samuel Star leads the engagement. Mr. Star attests FTI does not hold or represent any interest adverse to the estate. FTI also requires indemnification from the Debtor, the Committee's paper says. 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. Revstone is being represented by Pachulski Stang Ziehi & Jones LLP. Pachulski replaced Mayer Brown LLP and Richards, Layton & Finger, P.A. 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. An official committee of unsecured creditors has been appointed in the case. Womble Carlyle Sandridge & Rice LLP represents the Committee as counsel. REVSTONE INDUSTRIES: Files Schedules of Assets and Liabilities -------------------------------------------------------------- Revstone Industries LLC filed its schedules of assets and liabilities with the Bankruptcy Court, disclosing: Name of Schedule Total Assets Total Liabilities ---------------- ------------ ----------------- A - Real Property $0 B - Personal Property $29,484,422 C - Property Claimed as Exempt D - Creditors Holding Secured Claims $17,284,622 E - Creditors Holding Unsecured Priority Claims $960,592 F - Creditors Holding Unsecured Nonpriority Claims $119,969,133 ------------ ----------------- $29,484,422 $138,214,348 Revstone's assets include claims/counterclaims against Boston Finance Group LLC, Comvest Capital II L.P., Schoeller Arca Systems Inc., and Patrick O'Mara, which claims are listed as "unknown". Wells Fargo Capital Finance LLC in San Francisco, holds the Schedule D Claim, secued by 100% of the stock in Revstone Transportation LLC. 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. Revstone is being represented by Pachulski Stang Ziehi & Jones LLP. Pachulski replaced Mayer Brown LLP and Richards, Layton & Finger, P.A. 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. An official committee of unsecured creditors has been appointed in the case. Womble Carlyle Sandridge & Rice LLP represents the Committee as counsel. REVSTONE INDUSTRIES: 341 Creditors' Meeting Continued to Feb. 14 ---------------------------------------------------------------- The U.S. Trustee continued to Feb. 14 the meeting of creditors under 11 U.S.C. Sec. 341(a) in the Chapter 11 case of Revstone Industries LLC. The meeting will be held at 10:00 a.m., at J. Caleb Boggs Federal Building, 844 King St., Room 5209, in Wilmington, Delaware. 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. Revstone is being represented by Pachulski Stang Ziehi & Jones LLP. Pachulski replaced Mayer Brown LLP and Richards, Layton & Finger, P.A. 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. An official committee of unsecured creditors has been appointed in the case. Womble Carlyle Sandridge & Rice LLP represents the Committee as counsel. RITE AID: Commences Debt Refinancing Transactions ------------------------------------------------- Rite Aid Corporation on Jan. 31 disclosed that it has commenced a series of debt refinancing transactions that would extend the maturity of a portion of Rite Aid's outstanding indebtedness and lower interest expense. The refinancing transactions are expected to include: -- the amendment and restatement of Rite Aid's existing revolving credit facility; -- the refinancing of Rite Aid's $1.039 billion Tranche 2 Term Loan due 2014 with the proceeds of a new term loan, together with borrowings under the amended revolving credit facility; and -- cash tender offers for Rite Aid's $410.0 million aggregate principal amount of 9.750% Senior Secured Notes due 2016; $470.0 million aggregate principal amount of 10.375% Senior Secured Notes due 2016; and $180.3 million aggregate principal amount of 6.875% Senior Debentures due 2013, with the proceeds from new first and/or second lien term loans, together with borrowings under the amended revolving credit facility and available cash. Rite Aid has not yet determined the amount of the amended revolving credit facility or new term loans. Rite Aid currently has signed commitments for a $1.5 billion revolving credit facility, which are subject to customary terms and conditions. Rite Aid's results of operations and guidance will likely be impacted by fees, expenses and charges related to the refinancing transactions. As part of the Tender Offers, Rite Aid is soliciting consents for amendments that would eliminate or modify certain covenants, events of default and other provisions contained in the indentures governing the Notes. Holders who tender their Notes will be deemed to consent to all of the proposed amendments applicable to that series and holders may not deliver consents without tendering their Notes. The Tender Offers and Consent Solicitations are being made pursuant to separate Offers to Purchase and Consent Solicitation Statements, each dated Jan. 31, 2013, and related Consents and Letters of Transmittal, which more fully set forth the terms and conditions of the Tender Offers and Consent Solicitations. The Tender Offers will expire at midnight, Eastern Time, on Feb. 28, 2013, unless extended or earlier terminated. Rite Aid may extend or terminate one or more of the Tender Offers without impacting the other Tender Offers. Under the terms of the Tender Offers, holders of the Notes who validly tender and do not withdraw their Notes prior to midnight, Eastern Time, on Feb. 13, 2013 (as such time and date may be extended) and whose Notes are accepted for purchase, will receive the applicable "Total Consideration," which is equal to the applicable "Tender Offer Consideration" plus a consent payment of $30.00 per $1,000 principal amount of tendered Notes. Holders of Notes who validly tender their Notes after the Consent Payment Date but on or before the Expiration Date, and whose Notes are accepted for purchase, will receive only the applicable Tender Offer Consideration. Rite Aid reserves the right but is under no obligation, at any point following the Consent Payment Deadline and before the Expiration Date, to accept for purchase Notes of one or more of the series validly tendered and not subsequently withdrawn at or prior to the Consent Payment Deadline, subject to satisfaction or waiver of the conditions to the Tender Offers. In addition to the Total Consideration or the Tender Offer Consideration, holders whose Notes are accepted in the Tender Offer will receive accrued and unpaid interest from and including the most recent interest payment date, and up to, but excluding, the applicable settlement date. Holders of 6.875% Debentures whose tenders are settled prior to Feb. 15, 2013 will be deemed to have consented to giving up any claim to the interest payment due on Feb. 15, 2013 that they might otherwise have as a result of the related interest payment record date of Feb. 1, 2013, and will receive only the accrued interest described above. Rite Aid intends to redeem any 9.750% Notes and 10.375% Notes not tendered in the Tender Offers and Consent Solicitations. Rite Aid intends to satisfy and discharge any 6.875% Debentures that remain outstanding after the Tender Offer and Consent Solicitation. Holders of 6.875% Debentures that are satisfied and discharged will continue to receive regular interest payments and repayment of their 6.875% Debentures will be made at maturity on Aug. 15, 2013. In addition, on Jan. 25, 2013, Rite Aid called for redemption, and will redeem on Feb. 25, 2013, all of its $6.0 million aggregate principal amount of outstanding 9.25% Senior Notes due 2013. The Tender Offers and Consent Solicitations are contingent upon the satisfaction of certain conditions, including, with respect to the 9.750% Notes and the 10.375% Notes, the condition that Rite Aid has completed one or more financing transactions resulting in net proceeds to Rite Aid that are sufficient to pay the Total Consideration, plus the applicable interest payment described above, in respect of all of the 9.750% Notes and the 10.375% Notes. If any of the conditions are not satisfied or waived, Rite Aid is not obligated to accept for payment, purchase or pay for, and may delay the acceptance for payment of, any tendered Notes and may terminate one or more Tender Offers and Consent Solicitations. Requests for documents relating to each Tender Offer and Consent Solicitation may be directed to Global Bondholder Services Corp., the Information Agent, at (866) 804-2200 or (212) 430-3774 (banks and brokers). Citigroup will act as Dealer Manager and Solicitation Agent for each Tender Offer and Consent Solicitation. Questions regarding each Tender Offer and Consent Solicitation may be directed to Citigroup at (800) 558-3745 (toll free) or (212) 723-6106 (collect). About Rite Aid Corp. Drugstore chain Rite Aid Corporation (NYSE: RAD) -- http://www.riteaid.com/-- based in Camp Hill, Pennsylvania, is one of the nation's leading drugstore chains with 4,626 stores in 31 states and the District of Columbia and fiscal 2012 annual revenues of $26.1 billion. Rite Aid reported a net loss of $368.57 million for the fiscal year ended March 3, 2012, a net loss of $555.42 million for the year ended Feb. 26, 2011, and a net loss of $506.67 million for the year ended Feb. 27, 2010. * * * As reported by the Troubled Company Reporter on January 21, 2013, Moody's Investors Service changed Rite Aid Corporation's outlook to positive from stable. All existing ratings including its Caa1 Corporate Family Rating and Speculative Grade Liquidity rating of SGL-3 are affirmed. ROBLEX AVIATION: Fails in Second Attempt to Reinstate Chapter 11 ---------------------------------------------------------------- Bankruptcy Judge Brian K. Tester denied Roblex Aviation Inc.'s second attempt to have its Chapter 11 case reinstated. The judge denied the Debtor's "motion to inform of its intent to file a motion for reconsideration and Debtor's supplement to its request for reconsideration" The Debtor seeks to overturn the opinion and order of Sept. 6, 2012 dismissing the case, and the opinion and order of Nov. 21, 2012 denying reconsideration of the dismissal. First Bank Puerto Rico, Inc., which sought dismissal of the case due to bad faith filing, did not file an objection or response to the second Reconsideration Bid. According to Judge Tester, the Debtor benefited from bankruptcy protection and the use of First Bank's cash collateral for the last two years -- and four bankruptcy cases -- without showing a real intent of reorganization. The Debtor was unable to even propose a plan of reorganization in any of the bankruptcy cases. The Debtor's actions demonstrate a pattern of inability to abide by court orders and reflect a lack of good faith. A copy of the Court's Jan. 30, 2013 Opinion and Order is available at http://is.gd/11GFIifrom Leagle.com. About Roblex Aviation Roblex Aviation Inc., in Bayamon, Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 12-06341) on Aug. 10, 2012. Maria Soledad Lozada Figueroa, Esq., at MS Lozada Law Office serves as the Debtor's counsel. The Debtor scheduled $5,418,527 in assets and $1,460,383 in liabilities. The petition was signed by Roberto E. Rodriguez Amadeo, president. Roblex Aviation filed Chapter 11 petitions three other times: Case No. 12-01745 on March 8, 2012; Case No. 12-00951 on Feb. 9, 2012; and Case No. 11-00055 on Jan. 8, 2011. In the March and February petitions, the Debtor estimated under $1 million in both assets and debts. Rafael Torres Alicea, Esq., represented the Debtors in those two filings. In the 2011 petition, it scheduled $5,418,527 in assets and $1,879,928 in debts. Jose R. Gonzalez Hernandez Law Office represented the Debtor in the 2011 case. ROCMEC MINING: AMF Grants Management Cease Trade Order ------------------------------------------------------ Rocmec Mining Inc. on Jan. 30 disclosed that it has been granted a management cease trade order by its principal regulator, the Autorite des marches financiers, and as such, the AMF has accepted the Corporation's request for such MCTO. As previously announced on January 24, 2013 by way of press release, the application for the MCTO was made by the Corporation in respect to the late filing of the Corporation's annual financial statements, accompanying management's discussion and analysis and related CEO and CFO certifications for the financial year ended September 30, 2012, which were to be filed at the latest on January 28, 2013. The MCTO restricts all trading in securities of the Corporation, whether direct or indirect, by the Chief Executive Officer, the Chief Financial Officer and the directors of the Corporation until such time as the 2012 Annual Financial Statements have been filed by the Corporation. The MCTO does not affect the ability of shareholders who are not insiders of the Corporation to trade their securities. However, the applicable Canadian securities regulatory authorities could determine, in their discretion, that it would be appropriate to issue a general cease trade order against the Corporation affecting all of the securities of the Corporation. As previously announced, the Corporation was not in a position to timely file the 2012 Annual Financial Statements, primarily as a result of the time and costs required for auditors in Peru to complete the audit of the annual financial statements, such audit being required due to the mining operations conducted by Rocmec during the financial year ended September 30, 2012 on the Rey Salomon property located in Peru. Rocmec's board of directors and its management confirm that they are working expeditiously to meet Rocmec's obligations relating to the filing of the 2012 Annual Financial Statements and the Corporation continues to expect to file the 2012 Annual Financial Statements on or about February 25, 2013. The Corporation confirms that it will satisfy the provisions of the alternative information guidelines under Policy Statement 12- 203 respecting Cease Trade Orders for Continuous Disclosure Defaults for so long as it remains in default as a result of the late filing of the 2012 Annual Financial Statements. During the period of default, Rocmec will issue bi-weekly default status reports in the form of further press releases, which will also be filed on SEDAR. The Corporation confirms that there are no insolvency proceedings against it as of the date of this press release. The Corporation also confirms that there is no other material information concerning the affairs of the Corporation that has not been generally disclosed as of the date of this press release. Rocmec is active in the exploration and the development of gold resources in Quebec and Peru. SAMSON RESOURCES: S&P Cuts 2nd Lien Secured Debt Rating to 'B' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its second-lien secured debt ratings on Tulsa, Okla.-based exploration and production (E&P) company Samson Resources Corp. (Samson) to 'B' (one notch lower than the corporate credit rating) from 'B+'. S&P simultaneously revised the recovery rating on this debt to '5', indicating its expectation of modest (10% to 30%) recovery in the event of a payment default, from '4'. At the same time, S&P has affirmed its 'B-' rating on Samson's $2.25 billion senior unsecured notes due 2020. The recovery rating on these notes remains '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default. The revised recovery rating on Samson's $1 billion second-lien term loan reflects changes to Samson's reserve values following a company provided PV-10 report using year-end 2012 reserve values at S&P's stressed price assumptions of $50 per barrel of West Texas Intermediate (WTI) crude oil and $3.50 per million British Thermal Units (BTU) of Henry Hub natural gas. The revision also incorporates the divestiture of some of its Bakken assets to Continental Resources. The corporate credit rating on Samson reflects its significant exposure to natural gas prices, aggressive debt leverage, weak profitability metrics, and its private equity ownership. The ratings also reflect the company's relative size and scale, a favorable cost structure, and some good resource acreage positions. Standard & Poor's Ratings Services considers Samson's business risk "weak", its financial risk "aggressive", and its liquidity "adequate". RATINGS LIST Samson Resources Corp. Corporate credit rating B+/Stable/-- Rating Lowered; Recovery Rating Revised To From Secon-lien secured debt B B+ Recovery rating 5 4 Ratings Affirmed $2.25 bil sr unsecd nts due 2020 B- Recovery rating 6 SCHOOL SPECIALTY: Has $50 Million Funding From Bayside ------------------------------------------------------ To facilitate an orderly sale process for School Specialty Inc., Bayside Finance LLC, the agent for the prepetition term loan lenders, is providing the Debtor new borrowing of up to $50 million. Accordingly, School Specialty and its affiliates seek approval to obtain postpetition financing consisting of (i) a credit facility of $50 million of new money funding from Bayside, (ii) a conversion or roll up- of the $94.7 pre-bankruptcy term loan owed to Bayside into a post-bankruptcy secured facility, and (iii) a $175 million revolving credit to subsume the pre-bankruptcy revolver -- ABL Roll-Up. Prepetition, the Debtors owed $92 million under a term loan were Bayside Financial is the agent. The Debtors also owe $47.6 million on a secured revolving credit with Wells Fargo Capital Finance LLC as agent. The Debtors said that the DIP facilities are the best and only viable financing options available to the Debtors. The Debtors said that the Court's approval of the DIP facilities and the use of cash collateral will enable the Debtors to pursue approval of the sale of their assets without delay. The DIP lenders will provide $25 million upon interim approval of the DIP facility. The DIP facility will incur interest at LIBOR rate +14% per annum. The default rate is +3% per annum, calculated on an actual 360 day basis. The commitment fee is $1,000,000 and the closing fee is $500,000. The DIP facility will mature June 30, 2013. But the DIP lenders under the Bayside DIP facility have set milestones, including: -- Entry of the bid procedures order on or before Feb. 8, 2013; -- Deadline of submission of bids on or before March 19, 2013; -- Auction date on or before March 25, 2013; -- Sale hearing to approve auction results on or before March 27, 2013; -- Closing date for sale to occur on ore before April 11, 2013. The ABL DIP Facility requires an auction before March 29, 2013, a sale order by March 31, and a closing date by April 15, 2013. Bondholders Battle Bayside Peg Brickley at Daily Bankruptcy Review reports that Angelo, Gordon & Co., Lazard Asset Management, Zazove Associates LLC, Steel Partners Holdings LP and other hedge funds are dueling an affiliate of H.I.G. Capital for control of School Specialty. As reported in the Jan. 31, 2013 edition of the TCR, the Steering Committee of Convertible Noteholders filed an objection to the DIP financing motion, stating that the DIP package's roll-up provision, excessive interest and unreasonable milestones are designed for the sole benefit of the private equity firm. The noteholders say that the terms attached to DIP financing would force the Debtor 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. About School Specialty Based in Greenville, Wisconsin, School Specialty is a supplier of educational products for kindergarten through 12th grade. Revenue in 2012 was $731.9 million through sales to 70 percent of the country's 130,000 schools. School Specialty and certain of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 (Bankr. D. Del. Lead Case No. 13-10125) on Jan. 28, 2013, to facilitate a sale to lenders led by Bayside Financial LLC, absent higher and better offers. Attorneys at Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. Alvarez & Marsal North America LLC is the restructuring advisor and Perella Weinberg Partners LP is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. The petition estimated assets of $494.5 million and debt of $394.6 million. SCHOOL SPECIALTY: Proposes KCC as Claims & Notice Agent ------------------------------------------------------- School Specialty Inc. and its affiliates ask the Bankruptcy Court to appoint Kurtzman Carson Consultants LLC as claims and noticing agent to permit KCC to assume full responsibility for the distribution of notices and maintenance, processing and docketing of proofs of claim filed in the Chapter 11 cases. Although the Debtors have not yet filed their schedules of assets and liabilities, they anticipate that there will be in excess of 16,000 entities to be noticed. The Debtors provided KCC a retainer in the amount of $10,000. About School Specialty Based in Greenville, Wisconsin, School Specialty is a supplier of educational products for kindergarten through 12th grade. Revenue in 2012 was $731.9 million through sales to 70 percent of the country's 130,000 schools. School Specialty and certain of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 (Bankr. D. Del. Lead Case No. 13-10125) on Jan. 28, 2013, to facilitate a sale to lenders led by Bayside Financial LLC, absent higher and better offers. Attorneys at Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. Alvarez & Marsal North America LLC is the restructuring advisor and Perella Weinberg Partners LP is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. The petition listed assets of $494.5 million and debt of $394.6 million. SCHOOL SPECIALTY: Robert Robotti Ceases to Hold Common Shares ------------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Robert E. Robotti and his affiliates disclosed that, as of Jan. 22, 2013, they do not beneficially own any shares of common stock of School Specialty, Inc. A copy of the filing is available for free at http://is.gd/u7l4PT 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 filed a Chapter 11 petition (Bank. De. Del. Case No. 13-10125) on Jan. 28, 2013. David N. Vander Ploeg signed the petition as chief financial officer. The Hon. Kevin J. Carey presides over the case. The Debtor is represented by Paul Weiss Rifkind Wharton & Garrison LLP. 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 filed for bankruptcy protection to facilitate the sale of the Company's assets to an affiliate of Bayside Capital, Inc. SCHOOL SPECIALTY: MSD Capital Disposes of 2.8MM Common Shares ------------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, MSD Capital, L.P., and its affiliates disclosed that, as of Jan. 28, 2013, they do not beneficially own any shares of common stock of School Specialty, Inc. During the past 60 days, the reporting persons disposes of 2.8 million common shares. A copy of the filing is available at http://is.gd/mU8sX7 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 filed a Chapter 11 petition (Bank. De. Del. Case No. 13-10125) on Jan. 28, 2013. David N. Vander Ploeg signed the petition as chief financial officer. The Hon. Kevin J. Carey presides over the case. The Debtor is represented by Paul Weiss Rifkind Wharton & Garrison LLP. 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 filed for bankruptcy protection to facilitate the sale of the Company's assets to an affiliate of Bayside Capital, Inc. SINO-FOREST CORP: Implements Plan of Compromise & Reorganization ---------------------------------------------------------------- Sino-Forest Corporation on Jan. 30 disclosed that it has implemented its previously announced Plan of Compromise and Reorganization dated December 3, 2012 pursuant to the Companies' Creditors Arrangement Act (Canada) (the "CCAA") and the Canada Business Corporations Act (as amended, the "Plan") with an implementation date of January 30, 2013. As previously announced, the Plan was overwhelmingly approved by creditors at a meeting of affected creditors held on December 3, 2012 and received approval of the Ontario Superior Court of Justice on December 10, 2012. Pursuant to the Plan, the Company completed a restructuring transaction under which, among other things, Sino-Forest transferred substantially all of its assets, other than certain excluded assets, to a newly formed entity ("Newco") (and/or a wholly-owned subsidiary of Newco) owned by the affected creditors of Sino-Forest in exchange for a release of the claims of affected creditors against Sino-Forest and its subsidiaries. The assets transferred to Newco and/or its wholly-owned subsidiary pursuant to the restructuring transaction included all of the shares of the Company's directly owned subsidiaries which own, directly or indirectly, all of the business operations of the Company. The assets transferred to Newco and/or its wholly-owned subsidiary did not include, among other things, certain litigation claims of the Company against third parties which were transferred to a litigation trust (the "Litigation Trust") established pursuant to the Plan to pursue such claims on behalf of the affected creditors of the Company and certain other stakeholders, and certain cash amounts used to fund the Litigation Trust and certain other cash reserves established under the Plan. Pursuant to the Plan, affected creditors with proven claims against the Company received pro rata distributions of the equity of Newco, certain new notes issued by Newco and interests in the Litigation Trust. In connection with the implementation of the Plan, the court- appointed Monitor of the Company has issued a Sixteenth Report concerning the CCAA process and the Plan, which provides additional details concerning the Plan and Newco (and its wholly- owned subsidiary) and which is available at the Monitor's website for the CCAA proceedings at http://cfcanda.fticonsulting.com/sfc In addition, Sino-Forest ceased to be a reporting issuer in each of the applicable jurisdictions in Canada by order of the applicable Canadian securities regulators immediately prior to the completion of the restructuring transaction. All of the outstanding common shares of Sino-Forest will be cancelled for no consideration on March 4, 2013. About Sino-Forest Corp. Sino-Forest Corporation -- http://www.sinoforest.com/-- is a commercial forest plantation operator in China. Its principal businesses include the ownership and management of tree plantations, the sale of standing timber and wood logs, and the complementary manufacturing of downstream engineered-wood products. Sino-Forest also holds a majority interest in Greenheart Group Limited, a Hong-Kong listed investment holding company with assets in Suriname (South America) and New Zealand and involved in sustainable harvesting, processing and sales of its logs and lumber to China and other markets around the world. Sino-Forest's common shares have been listed on the Toronto Stock Exchange under the symbol TRE since 1995. Sino-Forest Corporation on March 30, 2012, obtained an initial order from the Ontario Superior Court of Justice for creditor protection pursuant to the provisions of the Companies' Creditors Arrangement Act. Under the terms of the Order, FTI Consulting Canada Inc. will serve as the Court-appointed Monitor under the CCAA process and will assist the Company in implementing its restructuring plan. Gowling Lafleur Henderson LLP is acting as legal counsel to the Monitor. During the CCAA process, Sino-Forest expects its normal day-to- day operations to continue without interruption. The Company has not planned any layoffs and all trade payables are expected to remain unaffected by the CCAA proceedings. ST TROPEZ: Case Summary & 10 Largest Unsecured Creditors -------------------------------------------------------- Debtor: St. Tropez Capital, LLC 11960 Crest Place Beverly Hills, CA 90210 Bankruptcy Case No.: 13-12291 Chapter 11 Petition Date: January 28, 2013 Court: United States Bankruptcy Court Central District of California (Los Angeles) Debtor's Counsel: Howard S. Levine, Esq. CYPRESS, LLP 11111 Santa Monica Blvd.., Suite 500 Los Angeles, CA 90025 Tel: (424) 901-0146 Fax: (424) 750-5100 E-mail: howard@cypressllp.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 10 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/cacb13-12291.pdf The petition was signed by Edward Gennady Barsky, managing member. STOCKTON, CA: Can Enter Creditor Deals Without OK, Judge Says ------------------------------------------------------------- Katy Stech at Daily Bankruptcy Review reports that attorneys who are steering struggling Stockton, Calif., through bankruptcy got the power to negotiate deals with creditors with far more secrecy than the usual bankruptcy case. About Stockton, Calif. The City of Stockton, California, filed a Chapter 9 petition (Bankr. E.D. Calif. Case No. 12-32118) in Sacramento on June 28, 2012, becoming the largest city to seek creditor protection in U.S. history. The city was forced to file for bankruptcy after talks with bondholders and labor unions failed. Stockton estimated more than $1 billion in assets and in excess of $500 million in liabilities. The city, with a population of about 300,000, identified the California Public Employees Retirement System as the largest unsecured creditor with a claim of $147.5 million for unfunded pension costs. In second place is Wells Fargo Bank NA as trustee for $124.3 million in pension obligation bonds. The list of largest creditors includes $119.2 million owing on four other series of bonds. The city is being represented by Marc A. Levinson, Esq., and John W. Killeen, Esq., at Orrick, Herrington & Sutcliffe LLP. The petition was signed by Robert Deis, city manager. Mr. Levinson also represented the city of Vallejo, Calif. in its 2008 bankruptcy. Vallejo filed for protection under Chapter 9 (Bankr. E.D. Calif. Case No. 08-26813) on May 23, 2008, estimating $500 million to $1 billion in assets and $100 million to $500 million in debts in its petition. In August 2011, Vallejo was given green light to exit the municipal reorganization. The Vallejo Chapter 9 plan restructures $50 million of publicly held debt secured by leases on public buildings. Although the Plan doesn't affect pensions, it adjusts the claims and benefits of current and former city employees. Bankruptcy Judge Michael McManus released Vallejo from bankruptcy on Nov. 1, 2011. Bloomberg News has noted that Stockton is trying to become the first American city since the Great Depression to use bankruptcy to force bondholders to take less than the principal they're owed. Vallejo, California, exited bankruptcy after persuading lenders to take less interest and extend repayment. The Bankruptcy Court in Sacramento, California, will hold a trial-like hearing in January over whether Stockton is legally entitled to remain in bankruptcy. TERRY SCHWINDT: US Trustee Fails to Block Kutner Miller Hiring -------------------------------------------------------------- Bankruptcy Judge Michael E. Romero authorized Terry Schwindt and Jett Schwindt to employ Kutner Miller Brinen, P.C. as their counsel over the objections of the U.S. Trustee. KMB also servesw as bankruptcy counsel to Eastridge Transportation, LLC, which is owned and managed by the Schwindts. The U.S. Trustee contends there are two actual conflicts of interest creating competition between the estates which would disqualify KMB as counsel for both debtors: (1) the Schwindts have unsecured debts which are not joint obligations of Eastridge and therefore the characterization of $51,867.91 in funding as a loan or an owner contribution to Eastridge creates competition between the two estates to see which one will benefit at the expense of the other; and (2) the Schwindts' oral lease with Eastridge will create competition between estates with respect to the proper lease payment amount and term over the course of the lease. Eastridge, a trucking firm, filed for Chapter 11 relief (Bankr. D. Colo. Case No. 12-22262) on June 11, 2012. Eastridge's Schedule F lists a debt owed to Terry Schwindt for a "[l]oan for operating expenses" in the amount of $51,867. In August 2012, Eastridge's lender, LNV Corp., filed a lawsuit against the Schwindts, seeking recovery on personal guarantees. LNV purchased three loans made by New Frontier Bank to Eastridge. The Schwindts filed their Voluntary Chapter 11 Petition (Bankr. D. Colo. Case No. 12-31418) on Oct. 16, 2012. Judge Romero said KMB is disinterested and does not hold or represent an interest adverse to the estate. The Court also ruled that the Schwindts are not creditors of Eastridge, there are no inter-debtor claims between the Schwindts and Eastridge, and no conflicts of interest between estates exist. A copy of the Court's Jan. 28, 2013 Order is available at http://is.gd/wKjyCEfrom Leagle.com. THQ INC: Court Grants Motion to Approve Sale of Assets ------------------------------------------------------ THQ Inc. announced that the U.S. Bankruptcy Court has granted a motion to approve a sale of the majority of THQ's assets to multiple buyers. The Court approved the sales of three of THQ's owned studios and games in development, as well as Evolve, a working title under development at Turtle Rock Studios, Homefront 2, Metro: Last Light and South Park: The Stick of Truth. Under the terms of the agreements with the successful and approved bidders, the THQ estate will receive approximately $72 million, making the total estimated value of the estate $100 million including certain assets and other intellectual properties which were excluded from the sale. The Court approved the sale of Relic Studios to Sega Corporation for $26.6 million; the sale of Volition Inc. and Metro: Last Light to Koch Media GmbH for $22.3 million and $5.9 million, respectively; the sale of Homefront 2 to Crytek GmbH for $0.5 million; the sale of Evolve to Take-Two Interactive Software, Inc. for $10.9 million; and the sale of THQ Montreal and South Park: The Stick of Truth to Ubisoft LLC for $2.5 million and $3.3 million, respectively. Excluded from the sales were the company's publishing businesses, Vigil Games, and certain other assets and intellectual properties, which will remain part of the THQ estate and will continue in the Chapter 11 process. Brian Farrell, Chairman and CEO of THQ, noted, "While we had hoped that the restructuring process would allow the company to remain intact, I am heartened that the majority of our studios and games will continue under new ownership. It has been my pleasure to work alongside this great group of people, and I am proud of the imaginative and artistic games that our team has created. Although we will no longer be able to work together with a unified mission, I am confident that the talent we have assembled will continue to make an impression on the video game industry. For those whose positions are not likely to continue, I sincerely regret this outcome and we will be meeting with you over the next few days to discuss the transition." Jason Rubin, President of THQ, added, "I was brought in eight months ago to help turn this ship around, and while I'm disappointed that we could not effect a sale for the entire operating business, I am pleased that the new buyers will be providing jobs to many of our very talented personnel. When we first announced the sale process, I said I would be happy if the company's games and people had a bright future, even if it meant I did not have a job at the end of it. And I still feel that way." The new owners have not articulated their plans for the assets, or their intentions to extend employment to THQ employees included in the sale. THQ expects the new owners to extend employment to most employees and to continue development of the games they purchased that are currently in development. The assets that are not included in the sale agreements will remain part of the Chapter 11 case. THQ will continue to seek appropriate buyers, if possible. THQ will continue to employ a small number of headquarters staff beyond January 25 to assist with the transition. Qualified bids received by January 22 were reviewed by the company and the creditors committee. Through an auction process that lasted 22 hours, the successful bidders were determined, and the hearing to approve the sales took place this afternoon. Ten bidders participated in the proceedings, including bids for the entire company as well as for individual assets. The sales closed on January 24. Clearlake Capital Group, L.P., had submitted a "stalking horse" bid for substantially all of THQ's assets in December 2012. In accordance with Section 363 of the U.S. Bankruptcy Code, the Court supervised an auction to determine the highest and best bid(s) for the company's assets in accordance with the bid procedures approved by the Court. Clearlake will receive a break-up fee of $1 million, as stated in its stalking horse asset purchase agreement. A copy of the Form 8-K is available at http://is.gd/hWnUuh About THQ Inc. THQ Inc. (NASDAQ: THQI) -- http://www.thq.com/-- is a worldwide developer and publisher of interactive entertainment software. The Company develops its products for all popular game systems, personal computers, wireless devices and the Internet. Headquartered in Los Angeles County, California, THQ sells product through its network of offices located throughout North America and Europe. THQ Inc. and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-13398) on Dec. 19, 2012. THQ has a deal to sell its video-game development business to Clearlake Capital Group LP for about $60 million, absent higher and better offers at an auction proposed for January 2013. Clearlake and existing lender Wells Fargo Capital Finance LLC are providing $10 million of DIP financing. Attorneys at Young Conaway Stargatt & Taylor, LLP and Gibson, Dunn & Crutcher LLP serve as counsel to the Debtors. FTI Consulting and Centerview Partners LLC are the financial advisors. Kurtzman Carson Consultants is the claims and notice agent. UNIFRAX I: Mood's Affirms 'Caa1' Rating on New Sr. Unsec. Notes --------------------------------------------------------------- Moody's Investors Service affirmed Unifrax I LLC's B2 Corporate Family Rating, affirmed the Caa1 rating on its proposed senior unsecured notes, and adjusted the rating on its proposed first lien senior secured credit facilities to B1 from Ba3. The adjustment reflects an announced change in the structure of the company's proposed recapitalization transaction that results in more first lien debt and less senior unsecured debt than contemplated originally. The rating outlook is stable. "The proposed revisions are modestly positive to the company's overall credit profile, but increased leverage through the first lien level prompted a one notch reduction in the ratings on the bank debt,' said Ben Nelson, Moody's lead analyst for Unifrax. The transaction increases total debt by USD20 million, but this will not cause any meaningful deterioration in Unifrax's credit profile. Moody's also anticipates a net reduction in cash interest of at least a few million dollars per year due to the change in debt mix and better expected pricing across all debt instruments, though the transaction has not yet closed. Unifrax plans to increase its proposed senior secured term loans to USD465 million from USD400 million and reduce its proposed unsecured notes issuance to USD205 million from USD250 million. Moody's expect that much of the proceeds from the incremental USD20 million in debt will be help reduce outstanding revolver borrowings or be held as cash on the balance sheet for general corporate purposes. Ratings action: Issuer: Unifrax I LLC Corporate Family Rating, Affirmed B2 Probability of Default Rating, Affirmed B2-PD Proposed First Lien Senior Secured Credit Facilities, Adjusted to B1 (LGD3 33%) from Ba3 (LGD2 28%) Proposed Senior Unsecured Notes, Affirmed Caa1 (LGD5 86%, revised from 83%) Outlook, Stable The B2 ratings on the existing senior secured credit facilities will be withdrawn following the completion of the proposed transactions and full repayment of these obligations. The ratings are subject to Moody's review of the final terms and conditions of the proposed transactions. Ratings Rationale The B2 CFR is constrained by modest size, a narrow product line of ceramic fiber products, and exposure to cyclical automotive and industrial end markets. The rating acknowledges cyclical end market characteristics and incorporates some tolerance for variation in earnings, but incorporates expectations for relatively stable profit margins through economic cycles. The rating benefits from high margins, strong market positions, broad customer base, and operational and geographic diversity. Good liquidity also supports the rating. The stable rating outlook anticipates improved free cash flow and that the company will maintain a good liquidity position. Moody's could downgrade the rating with adverse developments with respect to the company's operations or end markets, expectations for leverage sustained above 5 times, marginal or negative free cash flow generation, or deterioration in the company's liquidity position. Conversely, Moody's could upgrade the rating with expectations for leverage below 4 times and retained cash flow to debt above 10% on a sustained basis. An upgrade likely would require a commitment to more conservative financial policies. The principal methodology used in this rating was the Global Chemical Industry published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. Unifrax I LLC produces heat-resistant ceramic fiber products for a variety of industrial applications. Private equity firm American Securities acquired the company in a secondary leveraged buyout transaction from private equity firm AEA Investors in late 2011. Headquartered in Niagara Falls, New York, the company generated revenues of approximately USD431 million for the twelve months ended September 30, 2012. UNIFRAX HOLDING: S&P Cuts Rating on New Sr. Secured Debt to 'B+' ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its recovery rating on Unifrax Holding Co.'s proposed senior secured debt to '2', indicating S&P's expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default, from '1' (90% to 100% recovery expectation). S&P lowered its issue-level rating on this debt to 'B+' (one notch higher than the corporate credit rating) from 'BB-', in accordance with its notching criteria for a '2' recovery rating. S&P's view is that the larger size of this debt class reduces recovery prospects in the event of a default. The rating revisions follow Unifrax's upsizing of its proposed senior secured term loan due 2018 by $65 million, bringing the aggregate senior secured facility amount to $515 million. The company reduced the proposed senior unsecured notes due 2019 by $45 million to $205 million. The issue-level rating on the senior unsecured notes remains at 'B-' (one notch lower than the corporate credit rating) with a recovery rating of '5', indicating S&P's expectation of expectation of modest (10%-30%) recovery in a payment default scenario. The 'B' corporate credit rating and stable outlook remain unchanged. RATINGS LIST Unifrax Holding Co. Corporate Credit Rating B/Stable/-- Rating Lowered; Recovery Rating Revised To From Unifrax I LLC Senior secured $515 mil sr secd credit fac B+ BB- Recovery rating 2 1 Ratings Remain Unchanged Unifrax I LLC Senior unsecured $205 million notes due 2019 B- Recovery rating 5 UTSTARCOM HOLDINGS: General Shareholders Meeting Set for March 21 ----------------------------------------------------------------- UTStarcom Holdings Corp. will hold an extraordinary general meeting of its shareholders on Thursday, March 21, 2013, at 1:00 p.m., Beijing time, to seek approval for a previously announced 3-for-1 reverse share split. UTStarcom's Board of Directors believes that implementing a reverse share split is likely to improve the marketability and liquidity of UTStarcom's ordinary shares. The meeting will be held at UTStarcom's offices located at Room 303, Building H, Phoenix Place, No. A5 Shuguangxili, Chaoyang District, Beijing, P.R. China, 100028. Shareholders of record as of the close of business on Feb. 5, 2013, are entitled to notice of and vote at the EGM. If approved, the reverse share split will become effective immediately upon approval by the Company's shareholders. Upon becoming effective, every three outstanding and authorized ordinary shares of UTStarcom as of the effective date will be automatically combined into one issued and outstanding ordinary share. About UTStarcom, Inc. UTStarcom, Inc. (Nasdaq: UTSI) -- http://www.utstar.com/-- is a global leader in IP-based, end-to-end networking solutions and international service and support. The Company sells its solutions to operators in both emerging and established telecommunications markets around the world. UTStarcom enables its customers to rapidly deploy revenue-generating access services using their existing infrastructure, while providing a migration path to cost-efficient, end-to-end IP networks. The Company's headquarters are currently in Alameda, California, with its research and design operations primarily in China. The Company had income of $11.77 million in 2011, following a net loss of $65.29 million in 2010, and a net loss of $225.70 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $505.93 million in total assets, $279.29 million in total liabilities and $226.64 million in total equity. VECTOR GROUP: Moody's Affirms B2 CFR, Rates USD375MM Notes Ba3 -------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Vector Group Ltd. proposed offering of USD375 million in senior secured (2nd lien) notes 2021. Moody's also affirmed the company's B2 Corporate Family Rating and B2-PD Probability of Default Rating. The change to a stable outlook reflects Moody's expectation that credit metrics, including interest coverage and debt-to-EBITDA, will modestly improve over the next 12 to 18 months and the company's liquidity profile will continue to remain strong. Ratings of the existing senior secured notes will be withdrawn upon successful completion of the tender offer. Proceeds from the proposed offering combined with funds provided by the company's November issuance of USD230 million subordinated convertible notes (unrated) will be used to refinance existing debt and to invest in existing and new real estate investments through its wholly owned subsidiary, New Valley LLC. Vector recently announced Douglas Elliman, its 50% investee, terminated its franchise agreement with Prudential Real Estate. Douglas Elliman will be required to redeem the approximately 20% equity interest that Prudential owns. As a result of this transaction, Vector will hold a majority ownership of Douglas Elliman. Although the company's real estate activities provide an important source of earnings and cash flow diversification, the variability and inconsistency in its performance as compared to Vector's tobacco operations is an ongoing credit risk. In addition, the senior secured notes do not benefit from a guarantee from these unrestricted subsidiaries. The stable outlook for Vector reflects Moody's expectation that despite the holding company's relatively high leverage, Moody's expects the company to generate strong cash flow from operations and from investments, maintain high cash balances and continue to prudently manage its real estate portfolio. Despite the growing reliance on the real estate investments to service the holding company debt obligations and dividend, Vector's significant cash holdings (USD217 million at September 30th plus proceeds from recent offerings) and highly profitable tobacco operations support its good liquidity profile. Notwithstanding, the strong liquidity and cash flow, Vector maintains a dividend payout that is significantly in excess of its cash flow from operations and is reliant on its ability to monetize its real estate investments in order to support its financial policies. Absent a sizable asset disposition, Moody's expects free cash flow to remain negative over the next 12 to 18 months. The following ratings of Vector have been assigned: - USD375 million of senior secured notes due 2021 at Ba3 (LGD2, 27%) The following ratings of Vector have been affirmed: - Corporate Family Rating of B2; - Probability of Default Rating of B2-PD; - Speculative Grade Liquidity Rating of SGL-2 The following ratings of Vector will be withdrawn upon successful closing of the notes offering: - USD415 million senior secured notes due 2015 at Ba3 (LGD2, 27%) The rating outlook is stable. Ratings Rationale Vector's B2 Corporate Family Rating reflects its relatively small scale and more limited pricing flexibility as a deep discount manufacturer in the highly regulated and declining domestic cigarette industry. The ratings are also constrained by Vector's high leverage, negative free cash flow, and the ongoing threat of adverse tobacco litigation. Vector's ratings are supported by its sustainable MSA cost advantage, its track record of gaining share in the retail distribution channel and good profitability metrics. Vector's real estate investments are conservatively managed and provide an additional, albeit potentially volatile, source of earnings diversification and cash flow with modest capital requirements. The company's increasing reliance on payments from its various non-guarantor and unrestricted real estate investments is a growing risk given the increased leverage at the holding company to fund real estate investments. Vector's rating is supported a good liquidity profile but is highly reliant on maintaining significant cash balances to offset its very high dividend payments, annual MSA payments and negative free cash flow of the consolidated entity. To upgrade Vector's ratings, litigation risk would need to further diminish and the company's profitability and credit metrics would need to improve with no adverse impact on volume growth and/or market share. An upgrade would require EBITA margins to be sustained above 30%, debt-to-EBITDA to remain below 4.0 times and sustained positive free cash flow after dividends. Any unexpected material increase in litigation risk or decline in free cash flow could result in a ratings downgrade. Vector's ratings could also be downgraded if pricing flexibility trends, anti-tobacco legislation and growth prospects for the discount cigarette industry are adversely impacted resulting in a decline in credit metrics including EBITA margins below 20% or debt-to- EBITDA sustained above 5.0 times. The principal methodology used in this rating was the Global Tobacco published in November 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Vector Group Ltd. is a holding company with subsidiaries engaged in domestic cigarettes manufacturing, real estate development and brokerage. Vector's revenues during the twelve months ended September 30, 2012 were approximately USD580 million (net of excise taxes of USD520 million). VECTOR GROUP: S&P Assigns 'B+' Rating to Senior Notes Due 2021 -------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B+' secured debt rating to Miami, Fla.-based Vector Group Ltd.'s proposed senior notes due 2021. At the same time, S&P is assigning a recovery rating of '2', indicating its expectation for substantial (70% to 90%) recovery for noteholders in the event of a payment default. The 'B' corporate credit rating on Vector Group remains unchanged. The outlook is stable. Proceeds from the proposed refinancing, in addition to some cash on hand, will be used to repay the company's existing $415 million of senior debt due 2015 (the company has launched a cash tender offer for all of its outstanding 11% senior secured notes), inclusive of fees and the redemption premium. S&P do not foresee a material change in key credit protection measures following the transaction. Cash on hand totaled approximately $436.3 million as of Sept. 30, 2012, pro forma for the November 2012 issuance of $230 million of convertible notes due 2019, but prior to the company making its Master Settlement Agreement payment in December 2012. Specifically, S&P forecasts total debt to EBITDA to be in the low-5x area and funds from operations to total debt between 8% and 9% by the end of 2013. Vector Group's leverage remains consistent with S&P's indicative ratio of total debt to EBITDA above 5.0x and FFO to total debt below 12%, reflecting a "highly leveraged" financial risk profile. The ratings on Miami-based tobacco and real estate company Vector Group reflect Standard & Poor's opinion that the company will continue to maintain a "highly leveraged" financial risk profile as a result of its relatively high debt and its aggressive financial policy. S&P continues to view the company's business risk profile as "weak," reflecting its participation in the intensely competitive discount segment within the declining cigarette industry, significant litigation risk inherent to U.S. tobacco manufacturers, and lack of geographic diversification. RATINGS LIST Vector Group Ltd. Corporate credit rating B/Stable/-- New Ratings Proposed senior notes due 2021 B+ Recovery rating 2 VELATEL GLOBAL: Ironridge to Resell 32-Mil. of Series A Shares -------------------------------------------------------------- Velatel Global Communications, Inc., filed a Form S-1 registration statement with the U.S. Securities and Exchange Commission relating to the resale of up to 32,000,000 Series A common shares, par value $0.001 per Series A common share of the Company issuable upon conversion of Series B preferred shares by Ironridge Technology Co., a division of Ironridge Global IV, Ltd. The Company will not receive any proceeds from the resale of the Series A common shares by Selling Stockholder. The Company's Series A common shares are quoted on the OTC LinkTM quotation platform of OTC Markets Group, Inc. under the symbol VELA.QB. The liquidity of the Company's Series A common shares is restricted as our Series A common shares fall within the definition of a penny stock. A copy of the Form S-1 prospectus is available at: http://is.gd/XiX8VN About VelaTel Global VelaTel acquires spectrum assets through acquisition or joint venture relationships, and provides capital, engineering, architectural and construction services related to the build-out of wireless broadband telecommunications networks, which it then operates by offering services attractive to residential, enterprise and government subscribers. VelaTel currently focuses on emerging markets where internet penetration rate is low relative to the capacity of incumbent operators to provide comparable cutting edge services, or where the entry cost to acquire spectrum is low relative to projected subscribers. VelaTel currently has project operations in People's Republic of China, Croatia, Montenegro and Peru. Additional target markets include countries in Latin America, the Caribbean, Southeast Asia and Eastern Europe. VelaTel's administrative headquarters are in Carlsbad, California. For more information, please visit www.velatel.com. After auditing the 2011 results, Kabani & Company, Inc., in Los Angeles, California, expressed substantial doubt as to the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred a net loss for the year ended Dec. 31, 2011, cumulative losses of $254 million since inception, a negative working capital of $16.4 million and a stockholders' deficiency of $9.93 million. The Company reported a net loss of $21.79 million in 2011, compared with a net loss of $66.62 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $21.55 million in total assets, $26.54 million in total liabilities and a $4.99 million total stockholders' deficiency. WARNER SPRINGS: Wants Plan Exclusivity Until May 31 --------------------------------------------------- Warner Springs Ranchowners Association asks the Bankruptcy Court to extend for a second time its exclusive periods to propose a plan and solicit acceptances of that plan until May 31, 2013, and July 31, 2013, respectively. The Debtor says that its bankruptcy case involves the sale of the Warner Springs Ranch that is co-owned by the Debtor and over 1,200 other individuals and entities. As a result, its case presents complexities that are not typically present in a Chapter 11 bankruptcy case. Since the granting of the first extension of the Debtor's exclusive periods, it has made significant and noteworthy progress in its Chapter 11 case and has expeditiously moved to set up the Section 363(h) adversary case for final resolution, by default, stipulation and trial, if necessary. On May 4, 2012, the Debtor commenced Adversary Proceeding No. 12-90153 in order to obtain authority to sell the entire ranch, including the interests of the UDI owners. In connection the potential sale of the Warner Springs Ranch, the Debtor says it has recently accepted an offer to purchase the Ranch after several months of marketing. In order to complete the lengthy process of selling the Ranch, the proceeds of which will be used as the basis of its plan of reorganization, it needs additional time to focus on completing the sale without spending time and resources on preparation of a plan or defending against competing plans. The sale of the Ranch will not be consummated until after expiration of a 90-day due diligence period, which will expire in early March 2013. About Warner Springs Ranchowners Warner Springs Ranchowners Association, a California non-profit mutual benefit corporation, filed for Chapter 11 protection (Bankr. S.D. Calif. Case No. 12-03031) on March 1, 2012. Judge Louise DeCarl Adler presides over the case. Daniel Silva, Esq., and Jeffrey D. Cawdrey, Esq., at Gordon & Rees LLP, represent the Debtor. The Debtor has hired Andersen Hilbert & Parker LLP as special counsel. Timothy P. Landis, P.H., serves as the Debtor's environmental consultant. The Debtor's schedules disclosed $14,079,894 in assets and $1,466,076 in liabilities as of the Chapter 11 filing. Warner Springs Ranchowners Association manages and co-owns 2,300 acres of unencumbered rural land known as the Warner Springs Ranch in San Diego County, California. The property has a 150-acre golf course, natural hot springs, 250 cottage style hotel rooms, tennis courts, swimming pools and a private airport. The Debtor co-owns the property with over 1,200 other individuals and entities. The Debtor currently holds 2,106 undivided tenancy-in-common fee interests ("UDIs") in the property. The Debtor has entered into a listing agreement with CB Richard Ellis as its broker to assis with the marketing and sale of the Ranch, which has beenn approved by the court. The Debtor accepted a stalking horse bid on Nov. 14, 2012. Currently, the Debtor is in the process of preparing the bid procedures, the aset purchase agreement, and other related sale documents to present to the Court for consideration. WELCH ENTERPRISES: Section 341(a) Meeting Scheduled for Feb. 19 --------------------------------------------------------------- The U.S. Trustee will hold a first meeting of creditors in the bankruptcy case of Welch Enterprises, LLC, on Feb. 19, 2013, 2:00 p.m. at Meeting Room, 182 St. Francis Street, Mobile, AL 36602. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Welch Enterprises, LLC, a Grove Hill, Alabama-based logging company, filed a Chapter 11 petition (Bankr. S.D. Ala. Case No. 13-00255) in Mobile, Alabama, on Jan. 25, 2013. The Debtor disclosed $13.3 million in assets and $1.41 million in liabilities in its schedules. Barry A. Friedman, Esq., at Barry A. Friedman & Associates, PC, serves as counsel to the Debtor. The petition was signed by Jeremy C. Welch as member. XINERGY CORP: S&P Cuts CCR to CCC, Secured Notes Rating to CCC- --------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its corporate credit rating on Xinergy to 'CCC' from 'CCC+'. S&P lowered its issue-level rating on the company's senior secured notes to 'CCC-' from 'CCC'. The '5' recovery rating indicates S&P's expectation for modest (10% to 30%) recovery in the event of a payment default under its scenario. All ratings remain on CreditWatch, where they were placed with negative implications on Oct. 19, 2012. "The downgrade and CreditWatch listing reflect our view that the company faces the rising potential for a liquidity shortfall over the next year--given our expectation for negative funds from operation in 2013 and capital expenditures relating to the build out of its newer West Virginia metallurgical (met) coal mine," said Standard & Poor's credit analyst Gayle M. Bowerman. We believe that anemic demand for thermal coal will continue over the next several quarters and that near-term conditions in the domestic met coal market will remain unfavorable due to weakness in the global steel industry. "We currently assess Xinergy's liquidity position as "less than adequate". As of Sept. 30, 2012, the company had $46 million in cash, and obtained a $20 million senior secured term loan commitment in October 2012, which is payable in two equal installments. Fiscal quarter and year end Dec. 31, 2012, numbers have not been released. Uses of cash include our estimate for a $20 million to $40 million funds from operation deficit in 2013 and perhaps $20 million of capital expenditures. In our view, liquidity could become particularly tight in the middle of the year, before the newer West Virginia met mine is fully operational. Xinergy is subject to incurrence covenants under its bond indenture," S&P added. The corporate credit rating on Xinergy also reflects what Standard & Poor's considers to be the combination of the company's "highly leveraged" financial risk and "vulnerable" business risk, characterized by the company's small size, unprofitable operations, and high debt burden. S&P expects operating conditions to remain difficult for all domestic coal miners this year. In S&P's opinion, Xinergy faces the additional challenge of operating in the Central Appalachian region, which is becoming increasingly expensive and difficult to mine because of mature, thinning seams and stringent permitting and safety regulations that contribute to escalating costs. S&P expects to resolve its ratings and remove them from CreditWatch within the next several weeks. S&P could affirm its ratings and remove them from CreditWatch if Xinergy bolsters its liquidity position in the near term. This could occur through a combination of new debt commitments, equity or hybrid capital sources, and/or asset dispositions. This scenario would also have to assume that Xinergy's newer West Virginia met coal mine was on track to become fully operational and cash flow positive toward the end of the year. S&P could lower its ratings one notch if the company does not obtain additional capital, thereby heightening the risk of a nearer term liquidity event. S&P could also lower its rating to 'CC' if the company announced an exchange offer or similar restructuring, which S&P would classify as distressed. * S&P Revises Ratings on 3 Exploration & Production Companies ------------------------------------------------------------- Standard & Poor's Ratings Services revised its recovery and issue- level ratings on three speculative-grade U.S.-based Exploration & Production (E&P) companies: Berry Petroleum Co., PetroQuest Energy Inc., and Penn Virginia Corp. The changes come after Standard & Poor's revised its recovery criteria and recovery price deck for speculative-grade E&P companies on Sept. 14, 2012. Standard & Poor's uses the recovery price deck to value the reserves and consequently, determine the recovery expectations on the debt of E&P companies. The revised recovery price deck assumptions are $50 per barrel of WTI crude oil (up from $45), $3.5 per million Btu of Henry Hub natural gas (down from $4), and a 55% natural gas liquids to WTI ratio. RATINGS LIST* Berry Petroleum Co. Corporate Credit Rating BB-/Stable/-- Upgraded To From Senior unsecured issue rating BB- B+ Senior unsecured recovery rating 3 5 PetroQuest Energy Inc. Corporate Credit Rating B/Stable/-- Upgraded To From Senior unsecured issue rating B+ B Senior unsecured recovery rating 2 3 Penn Virginia Corp. Corporate Credit Rating B/Positive/-- Downgraded To From Senior unsecured issue rating B- B Senior unsecured recovery rating 5 4 * This list does not include previously published issue-level and recovery rating changes from applying the revised E&P recovery criteria. * Fitch Says U.S. Non-bank Financial Retail Bond Volumes to Rise ---------------------------------------------------------------- Some non-bank financial companies have begun to rely more heavily on long-dated, unsecured retail notes as a critical source of funding, and issuance volumes are likely to rise again in 2013, according to Fitch Ratings. "Retail notes, targeted specifically at yield-hungry small investors, are marketed with lower face values (often as low as $25) and offer a coupon premium on bonds with maturities that can be 30 years or more. Despite the higher coupons, we believe that many U.S. nonbank financial firms, including business development companies (BDCs), broker-dealers, and traditional asset managers, will continue to tap retail bonds as a source of ample unsecured financing that may prove to be a good alternative to variable rate, short-term funding in a rising rate environment," Fitch says. "BDCs, including Pennant Park, Solar Capital, and Fifth Street, have issued retail notes over the past few months with coupons generally in the 5.75%-6.75% range. Among broker-dealers issuing retail bonds last year were Stifel Financial and Raymond James. "In all, nonbank financials issued approximately $1.5 billion of retail notes in 2012. Assuming a continuation of the low-rate environment through 2013, we expect issuance levels to approach or exceed that amount this year. For many of the smaller BDCs, this appears to be a good way to ensure liquidity in an inaugural bond offering. "Retail notes provide a source of funding diversification for nonbank issuers, extending maturities and lowering refinancing risk while offering an important source of unsecured funding for many 'BBB' category financials that want an alternative to secured revolvers and the need to encumber assets. In some cases, larger issuers with higher ratings may also look to retail note issuance if pricing and/or tenors are very attractive. This week's offering of 30- and 40-year retail bonds by GE Capital, with coupon rates under 5%, serves as an example. "Funding flexibility of financial issuers relying heavily on the retail bond market could weaken if small investors incur losses in a rising rate scenario. Investors clearly face elevated duration risk, and issuers could potentially confront market access challenges if liquidity in the retail bond market dries up. This in turn could restrict growth opportunities for some financial issuers if funding sources are more constrained in the future. Still, on balance, we believe the reduction of refinancing risk for issuers -- resulting from the long tenor of the bonds -- contributes to a more stable long-term funding profile." * Moody's Sees Strong Global ACBP Performance in 2013 ----------------------------------------------------- The credit quality of US and Canadian asset-backed commercial paper will be stable and strong, respectively, in 2013, while bank and sovereign risk will remain a critical issue for European ABCP programs, says Moody's. Regulatory uncertainty will remain an issue in both the US and Europe, and issuance will grow little, if at all, in 2013. The new report, titled "Global ABCP Outlook", is now available on Moody's website. In Moody's view, the credit outlook for ABCP in the US is stable, primarily because of the credit quality of the bank program sponsors and support providers. Asset credit quality is currently less of a concern as transaction credit enhancement, liquidity support and program credit enhancement strongly mitigate any potential risk. The outlook for the credit quality of Canadian ABCP programs is strong, for two reasons: the robust credit quality of the funded assets and the stable credit quality of the banks providing liquidity support. The credit quality of new transactions will be of the same high investment-grade quality as that of existing transactions. In Europe, bank risk will remain a critical issue for ABCP programs, which will be vulnerable to further reductions in government support for sponsoring banks with exposures to weaker euro area economies. Sovereign risk will have a negative impact on both bank sponsors and assets domiciled in weaker jurisdictions. However, few program transactions have exposures to peripheral countries, and program sponsors may elect to fully support any further transaction additions secured on assets from these jurisdictions. Moody's notes that, the regulatory environment in the US remains in flux. The ABCP market has weathered the increase in costs resulting from changing capital and liquidity charges and has benefitted from delays or reprieves or found workarounds to address some of the new rules or changes before they took effect. While unresolved issues remain, none will be problematic in 2013. However, uncertainty is likely to be a drag on issuance volume. In Europe, ongoing regulatory changes will have the greatest impact on bank sponsors. New EU regulations could increase the costs of supporting or operating programs, and banks may find achieving the liquidity coverage ratio a challenge in a stressed market. Still, banks have reportedly already started preparing for a number of these regulatory changes, the effects of which are partly evident in the consolidation of bank-sponsored conduits and the withdrawal of a number of programs from the market altogether. Moody's believes that ABCP issuance in the US could stabilize in 2013, albeit below current levels, following the long decline that began in 2007. Several sponsors expanded their programs in 2012 and new business from banks active in the market will offset any declines. Issuance in Canada will remain about the same in 2013 as in 2012, because the increase in new transactions will offset the termination and amortization of older ones. Issuance in Europe will be lower, constrained by (1) regulatory issues, (2) a lack of borrower demand, and (3) program terminations, as well as the consolidation of bank-sponsored programs. However, the significant refinancing needs of non- investment grade corporates could support issuance. * Moody's Notes Improvement in Non-Financial Corporate Sectors -------------------------------------------------------------- The fourth quarter of 2012 saw a slight improvement in the overall outlook for global non-financial corporate sectors, despite continued economic weakness in Europe and a slowing of the US recovery, Moody's Investors Services says in a new report, "Resilient US Household Spending Supports Number of Global Corporate Sectors." Most sectors continued to have stable outlooks through the quarter, and there was a small uptick in positive outlooks. "We changed the industry outlooks for just five sectors globally during the final quarter of 2012," says Managing Director and author of the report, Mark Gray. "The percentage of sectors with stable business conditions remained virtually unchanged at 65%, while positive outlooks gained slightly." Moody's industry outlooks reflect the rating agency's view of fundamental business conditions for an industry over the coming 12 to 18 months. While negative industry outlooks continue to outnumber positive ones, at 22% compared with 14%, positive outlooks were up 4% during the fourth quarter of 2012 compared with a year earlier, Gray says. In particular, steadier US housing demand has boosted consumer industries, including Consumer Durables and Consumer Products. "We changed our outlook for the Consumer Durables sector to positive from stable in part because stronger residential construction and home sales will lift sales of white goods and other household products," Mr. Gray says. "And while middle-income earners will remain cautious for some months yet, we also expect spending on discretionary products to gradually increase." Moody's newly positive outlook for the Consumer Products sector reflects expected growth in operating income for the makers of household, personal care and non-durable goods, particularly those most exposed to the fast-growing Latin American and Asian emerging markets. In the energy sector, capacity rationalization will benefit the Refining and Marketing industry, which changed to stable from negative during 2012's final quarter. US growth will help offset weakness in Europe, led by growing demand for distillates. During the fourth quarter of 2012, the only outlook that moved to negative from stable was that for the Global Chemicals industry. "Weak economic conditions in Europe and slow growth in the US will have a meaningful negative impact on the big European chemicals producers, and cause prices to soften in other regions as well," Mr. Gray says. The Chemical's industry's growth in the developing markets will not fully offset its weakness in Europe, he adds. * Record-Low Interest on Junk Debt Very Dangerous ------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that according to David Tawil, co-founder of Maglan Capital LP, the record-low interest rates on junk-rated corporate debt are "very dangerous" and "cannot continue forever". The Barclays U.S. High-Yield Index for all junk debt touched a record-low yield of 5.61% on Jan. 24, Barclays Plc said. Four days later, Barclays's index for lower junk-rated companies dropped to a record of 7.87% for issues with ratings of about Caa from Moody's Investors Service and CCC from Standard & Poor's. The yields represent the lowest since London-based Barclays began the indexes in 1983. "Some of the refinancing deals getting done now are starting to get laughable, in the sense of the credit quality of the borrower and the low interest rates," Mr. Tawil said in an interview. "The government has incentivized lenders to lend to unworthy borrowers," and even for credit-worthy companies, "rates are unjustifiably low," he said. HD Supply Inc., the wholesale-supply business once owned by Home Depot Inc., is an example of a low-rated company benefiting from rock-bottom rates. On Jan. 29, Atlanta-based HD was selling $1.28 billion in senior unsecured notes in a private placement rated CCC+ by Standard & Poor's. The new debt was expected to yield about 7.375%. Proceeds will be used to refinance existing debt. While companies gain, "the government has left the unemployed out in the cold during this free-money fest," Mr. Tawil said. * Canadian Personal Bankruptcy Filings Continue to Decline ---------------------------------------------------------- For the one-year period ending September 30, 2012, total consumer insolvencies have decreased yet again for an overall reduction of 5.2%. Bankruptcy filings in Canada have continued to decline at a rate of 10.7%, while consumer proposals (i) were on the rise again for a total of 4.7%, according to data recently released by the Office of the Superintendent of Bankruptcy (OSB). The OSB is reporting the most significant reductions in personal bankruptcy rates across the provinces in Newfoundland (-21.0%), Prince Edward Island (-20.9%), Manitoba and Saskatchewan (-20.5%) and Alberta (-17.2%). Consumer proposal filings were most drastically increased in Prince Edward Island (+77.5%), New Brunswick (+49.4%), and British Columbia (+22.4%). New Brunswick was the only province recording an overall rise in consumer insolvencies (both bankruptcy and proposal filings) for the time period. It bears noting that proposal filings well exceed the number of bankruptcy filings in the province, indicating that more consumers are opting to pay back debts than filing for bankruptcy. Will the Trend Continue? In regard to the Canadian Economy, Craig Wright, senior vice- president and chief economist at RBC Economics stated, "The slower pace of debt accumulation is a step in the right direction, although it has been tempered by the fact that the pace of personal income growth has been lackluster to date." He added, "Tightening labor market conditions and stronger wage increases may act to remedy this situation soon, paving the way for an eventual leveling off in the debt-to-income ratio." David Smith, Trustee in Bankruptcy and Co-Founder of Personal Bankruptcy Canada, adds, "Banks and the governments are again recognizing the overall problem of record levels of consumer debt. Simply put -- the issue of record debt cannot be solved simply by hoping things get better. Canadians suffering with debt problems should continue to talk to Trustees and understand the legal options available to truly solve the record debt problem they are facing." For additional information about Canada personal bankruptcy and consumer proposals, visit http://www.PersonalBankruptcyCanada.ca (i) Consumer proposals are court-approved debt repayment arrangements allowed for by a provision in the Bankruptcy and Insolvency Act. About Personal Bankruptcy Canada Personal Bankruptcy Canada is a leading resource for Canadian debt and bankruptcy information. Its national network of independent professional trustees in bankruptcy, located throughout the Canadian provinces and territories, are dedicated to helping Canadians overcome and resolve debt and financial problems. * Consumers Union Renews Call for Debt Collection Reforms --------------------------------------------------------- Consumers Union, the public policy and advocacy arm of Consumer Reports, called on federal regulators on Jan. 30 to protect vulnerable consumers from abusive debt collection practices. The consumer group renewed its push for reforms just as the Federal Trade Commission issued a report showing that debt collectors don't verify alleged debts in half of the cases studied. "Too often, consumers are harassed about debts that have already been paid off or that they never owed in the first place," said Suzanne Martindale, staff attorney for Consumers Union. "[Wednes] day's report shows that debt buyers often target consumers even though they can't prove that the debts are legitimate. It's time to enact some common sense reforms that protect consumers from these unfair debt collection practices." The FTC analyzed over 5,000 portfolios of consumer debt involving nearly 90 million consumers owing an estimated $143 billion. The study covered nine of the nation's largest debt buyers, which make up more than 75 percent of the industry. The FTC found that consumers disputed an estimated one million debts each year but that debt buyers only verified 500,000 of those disputed debts. Consumers Union's 2011 report issued with the East Bay Community Law Center detailed how debt collectors are filing an increasing number of lawsuits against consumers even though often they don't have proof to back up their claims. Without the proper documentation, debt collectors may sue on invalid debts, such as those that have been paid already. The problem is made worse when consumers don't receive timely notice that they have been sued on the debt or when the debt is so old that the consumer does not have good records to show whether the debt is owed or the amount claimed is correct. To address widespread debt collection and debt buying abuses, Consumers Union has urged state and federal regulators to enact a number of reforms, including: -- End robo-signing and attempts to collect without proper documentation: Debt collectors should be required to document that they are attempting to collect from the right person, for the right amount, and on a debt that they can lawfully recover. -- Establish a sell by date for all debt: It should be illegal to sell or attempt to collect debt that is more than seven years old, which is too old to be reported on a credit report under the federal Fair Credit Reporting Act. -- Require debt collectors to provide more information to consumers: All debt collectors, including debt buyers, should be required to identify the name of the original creditor and to provide an itemized record of the total principal, interest, fees, and other charges that have been added to the debt, and to provide detailed records about the debt to consumers within five days after the first notification. -- Require debt collectors to submit more detailed information when filing suit: Debt collectors should be required to submit basic information about the debt, including the name of the original creditor and an itemized record of the total principal, interest, fees, and other charges that have been added to the debt, when they sue over a debt, so that the consumer can see if it is his or her debt, and in the right amount. -- Increase oversight to ensure consumers are properly notified of lawsuits: Courts should be required to provide supplemental notice of all filed debt collection lawsuits to debtors and default judgments should be prohibited if the notice is returned to the court as undeliverable. In February 2012, the Federal Trade Commission reported that it handled over 180,000 consumer complaints about debt collectors in 2011, more than any other industry. * Debtwire Releases Distressed Debt Market Outlook Survey --------------------------------------------------------- Debtwire, in association with Bingham McCutchen LLP and Macquarie Capital, on Jan. 30 announced 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, available for download here, 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. * Optimism Slightly Receding in Office Markets, Survey Shows ------------------------------------------------------------ The latest Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey projecting a three-year outlook for the state's overall commercial real estate industry remains predominately upbeat, with developer sentiment remaining optimistic towards multifamily and industrial asset types and cautiously optimistic toward commercial office markets. The survey was conducted in November 2012 to examine office, industrial and multifamily markets. Multifamily Sector Continues to Grow Following last July's survey projections, multifamily development continues to boom with increased housing demand and decreasing vacancy rates of 4.5 percent in multifamily markets. This turnaround in multifamily residential construction is being driven by high occupancy rates and rising rents, particularly in the Bay Area, as household formation begins to rebound in California. While new generations entering the workforce are seeking housing closer to work, the survey also shows families leaving single- family homes for multifamily homes. "Our survey shows that, despite the new projects underway -- and there are many of them throughout the state -- our panels are very optimistic about what those markets are going to look like three years hence," said Nickelsburg. Industrial Sector Continues to Grow Industrial markets had positive forecasts in all regions, due in part to anticipated increases in California exports driving demand for distribution and manufacturing space, particularly from China and other Asian markets. Since 2011, private investment in industrial facilities remains up by about $15 billion. The survey indicates that opportunities for new developments have emerged in the industrial space market -- particularly in Inland Empire markets. Office Development Shows Tension Between Developers and Economic Activity Industry sentiment for the office sector three years out, while still optimistic, shifted downward from six months ago. This, however, may reflect developers' concerns over the looming fiscal cliff, as the survey was taken in November 2012. Projects coming out of the ground, as well as those in the pipeline, could prove forecasters wrong in 2013 and beyond. "We are still seeing strength in the market today. More developers have been taking notice that market conditions now justify demolishing older structures, and taking steps to build new ones," said John Tipton, Real Estate Department Partner at Allen Matkins. "This is a very significant indication of commitment, not only of capital, but to the strength of the development cycle." Many developers remain optimistic that a number of new large office developments remain ready to enter the market, and that demand is still very much alive in San Francisco, Los Angeles, and particularly in San Diego's North County. "The sheer scale of some existing portfolios that will likely come to market in 2013, like that of Blackstone's EOP Trust, could be influential in keeping the commercial real estate investment market forward-moving," said Tony Natsis, Real Estate Department Chairman at Allen Matkins. Based on the survey's aggregate results, California's real estate market will remain bullish through 2015. About the SurveyFor a copy of the latest Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey and Index Research Project, please visit http://www.allenmatkins.com or http://www.uclaforecast.com The Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey and Index Research Project polled a panel of California real estate professionals in the development and investment markets, on various aspects of the commercial real estate market. The survey is designed to capture incipient activity by commercial real estate developers. To achieve this goal, the panel looks at the markets three years in the future, and building conditions over the three-year period. The survey was initiated by Allen Matkins and the UCLA Anderson Forecast in 2006, furtherance of their interest in improving the quality of current information and forecasts of commercial real estate. About Allen Matkins Founded in 1977, Allen Matkins -- http://www.allenmatkins.com -- is a California-based law firm with approximately 220 attorneys in four major metropolitan areas of California: Los Angeles, San Francisco, Orange County and San Diego. The firm's core specialties include real estate, real estate and commercial finance, bankruptcy and creditors' rights, construction, land use, natural resources, environmental, corporate and securities, intellectual property, joint ventures, taxation, employment and labor law, and dispute resolution and litigation in all these matters. For more than 35 years, Allen Matkins has helped clients turn opportunity and challenge into success by providing practical advice, innovative solutions and valuable business opportunities. When clients' challenges require experienced trial counsel, Allen Matkins has a proven track record of successful litigation before juries, judges and arbitrators. About UCLA Anderson Forecast UCLA Anderson Forecast -- http://www.uclaforecast.com-- is one of the most widely watched and often-cited economic outlooks for California and the nation and was unique in predicting both the seriousness of the early-1990s downturn in California and the strength of the state's rebound since 1993. More recently, the Forecast was credited as the first major U.S. economic forecasting group to declare the recession of 2001. * Solyndra-Style Problems Seen in $8.33-Bil. Loan Guarantee ----------------------------------------------------------- Documents newly acquired under a Freedom of Information Act (FOIA) request and subsequent litigation show that Solyndra-like problems are plaguing the controversial $8.33 billion federal loan guarantee conditionally committed for the construction of two nuclear reactors (Vogtle 3 and 4) in Georgia, according to a new analysis by Synapse Energy Economics and Earth Track for the Southern Alliance for Clean Energy (SACE). Available at http://bit.ly/nonukeloansthe new report and related memo are based on hundreds of Department Energy (DOE) documents dated between June 2008 and July 2012. The analysis provides extensive new information about problems with the handling of the loan guarantee process for the Vogtle Project, the adequacy of the financial terms for the federal loan guarantees, risks to taxpayers not fully addressed in DOE's credit subsidy analysis, and indications of political interference with key financial decisions related to the conditional loan guarantees. Among the key findings: -- Repeated indications of involvement in the loan guarantee process and terms by political appointees. An e-mail from December 2010 points to unspecified communication between the White House and the Nuclear Energy Institute over issues of concern. (In this and other cases, extensive redactions in the FOIA documents make the precise focus of the meetings and discussion unclear.) An email from February 2010 notes that DOE did not "deal" with Shaw [the firm slated to do much of the reactor construction]; rather, "the [W]hite [H]ouse did." Efforts for DOE to close out consultation, most likely on loan terms, was handled "at the political level" of the Department of the Treasury, according to another email. Emails from DOE staff indicate that Secretary Chu was involved in discussions with key Vogtle Project players over loans details as well. "MEAG's CEO, Bob Johnston got a call on Friday from Secretary Chu and they discussed the progress that had been made with Southern and where we stood on our [the MEAG] term sheet negotiation," read one email. As the report notes: "Those discussions were generally with the top management of the companies. This is a potentially troubling blurring of financial risk review, political discussion, and potential modification of loan terms." -- Credit subsidy payments that appear too low to offer adequate protection to taxpayers in the event of a default. According to the report: "Even the high estimate for Georgia Power ($52 million), for example, would add only about 1/8% to borrowing costs over the life of the loan. This increment, which is supposed to protect taxpayers from the risk of default on the first nuclear reactors built in the U.S. in 30 years, is likely less than the Federal Financing Bank (FFB) markup on the loan relative to the Department of the Treasury's base cost of borrowing." The uncensored documents also reveal that the other major utility partners were offered a conditional loan guarantee with substantially higher credit subsidy fees than Georgia Power, but were still not protective of taxpayers. Oglethorpe Power's fee was 2.5-4.3% for a range of $70-132 million and MEAG's fee was 5-11.1% for a range of $108-186 million. -- Stale credit subsidy values. Despite continuing changes to the loan terms and a deteriorating power market over the past two years, there is no indication that DOE has adjusted credit subsidy estimates to reflect those dramatic changes. -- Over-reliance on external contractors for key risk evaluations. DOE appears not to have built sufficient analytic tools and staff expertise internally to properly assess credit risks and deal structure. -- Inadequate control of credit subsidy assessment process. Credit subsidy values were issued to borrowers before the credit subsidy model was finalized, and there is some indication that Vogtle Project borrowers may have been given access to the analytic models DOE used to assess credit risks and subsidy rates. Sara Barczak, program director, Southern Alliance for Clean Energy, said: "The Vogtle loan guarantee puts nearly 16 times as much at stake for taxpayers when compared to Solyndra. Taxpayers cannot afford an $8.33 billion gamble when the odds are stacked against them as badly as they are here. The very large exposure to losses for U.S. taxpayers should the Vogtle Project go awry, along with the known complexities of building two new reactors, underscore the importance of an objective and unbiased review of the project, its borrowers, and the appropriate credit subsidy level. Political interference increases fiscal risks because political pressure can supplant economic and financial assessments in driving funding decisions and terms." Mindy Goldstein, director, Turner Environmental Law Clinic, said: "One of the biggest problems plaguing the federal loan guarantee program is DOE's reluctance to make documents available for public review. Despite committing $8.33 billion dollars of taxpayer money, DOE fought tirelessly to keep much of the information about the deal private. Only after repeated requests and litigation were most of the documents reviewed in this report released in full. Even more troubling, DOE appears unwilling to waiver from its practice of secrecy -- recent requests by Southern Alliance for Clean Energy for new documents concerning the loan guarantees for the Vogtle Project have resulted in incomplete and heavily redacted responses from the agency." Doug Koplow, report author and founder, Earth Track, noted that: "Despite widespread redactions, the documents released indicate significant problems with the DOE's loan guarantee process. These include insufficient internal expertise, inadequate oversight by other agencies, turnover of key staff, indications of political involvement with borrowers and loan terms, and credit subsidy payments that are likely too small to protect the taxpayer in a default. Both the inadequate review process and the massive scale of the Vogtle conditional commitment create troubling precedents." Max Chang, report author and associate, Synapse Energy Economics, noted: "Our review of the documents released by DOE indicate that the credit subsidy fee has not changed for the three borrowers since February 2010. We know that since 2010 the prospect for nuclear power has changed dramatically. These include events like the devastating Fukushima Dai-ichi nuclear accident in 2011, project delays with Vogtle, and declining power prices as a result of surging supplies of natural gas." Additional report highlights include the following: -- Over reliance on third parties to assess the risk for taxpayers. "While some external input is useful in order to bolster DOE's expertise (e.g., review by external credit rating agencies), the released documents suggest that all key tools used to assess project risk were developed and held by private companies, and that individuals outside of the government were relied on for most tasks related to modifying and interpreting model runs, and addressing deal structure. Extensive redactions in credit subsidy models precluded third-party review of the validity of either the input assumptions or the results." -- Principal repayment delayed as long as possible, maximizing the interest rate subsidy to borrowers. According to released documents, none of the more than $3 billion in principal that Georgia Power will borrow gets repaid before years 29 and 30 of the loan. Back-loading of repayments is known as a "balloon structure," and OMB expressed a desire not to see it repeated on other guarantees. Both MEAG and OPC are also slated to have large amounts of debt remaining at the end of the 30-year loan term and will need to refinance to pay off the DOE. -- Disagreements between DOE and OMB on credit subsidy amounts were evident in the released documents. However the details and extent of the disagreements, as well as how differences were bridged, have all been entirely redacted. Earth Track and Synapse Energy Economics conducted a preliminary review of hundreds of documents associated with the $8.33 billion conditional loan guarantees committed by the U.S. Department of Energy for the construction of two proposed Toshiba-Westinghouse AP1000 nuclear reactors, Vogtle 3 and 4 in Georgia. The released documents relate to three individual borrowers: Georgia Power Corporation, Oglethorpe Power Corporation, and Municipal Electric Authority of Georgia and include virtually unredacted term sheets and credit subsidy estimates. The documents are available at: http://www.scribd.com/doc/122597588/Full-Vogtle-FOIA-Online-Index and http://www.scribd.com/doc/122803019/FOIA-Synapse-Earthtrack- Online-Index About SACE Southern Alliance for Clean Energy -- http://www.cleanenergy.org -- promotes responsible energy choices that create global warming solutions and ensure clean, safe and healthy communities throughout the Southeast. Founded in 1985, SACE is the only regional organization primarily focused on developing clean energy solutions throughout the Southeast. * 2012 Foreclosure Activity Up in 57% of U.S. Metros ---------------------------------------------------- RealtyTrac(R) on Jan. 31 released its 2012 Year-End Metropolitan Foreclosure Market Report, which shows 2012 foreclosure activity increased from 2011 in 120 (57 percent) out of the nation's 212 metropolitan statistical areas with a population of 200,000 or more. Foreclosure activity during the year decreased from 2010 -- when foreclosures peaked in most markets -- in 181 out of the 212 markets tracked in the report (85 percent). Foreclosure activity in 2012 decreased from 2011 in 12 out of the nation's 20 largest metro areas, led by Phoenix (down 37 percent), San Francisco (down 30 percent), Detroit (down 26 percent), Los Angeles (down 24 percent), and San Diego (down 24 percent). But 2012 foreclosure activity increased in eight of the 20 largest metros, led by Tampa (80 percent increase), Miami (36 percent increase), Baltimore (34 percent increase), Chicago (30 percent increase), and New York (28 percent increase). "Markets with increasing foreclosure activity in 2012 took the first step in finally purging delayed distress left over from the bursting housing bubble," said Daren Blomquist, vice president at RealtyTrac. "Meanwhile, the underlying fundamentals in many of those markets are slowly improving, making it an opportune time to absorb additional foreclosure inventory this year -- and that is particularly good news for buyers and investors hungry for more inventory to purchase in those markets." Florida cities account for eight of top 20 metro foreclosure rates Despite double-digit percentage decreases in foreclosure activity compared to 2011, California cities accounted for the top four metro foreclosure rates, led by Stockton with 3.98 percent of housing units (one in 25) with a foreclosure filing during the year -- nearly three times the national average. Other California cities with foreclosure rates among the 20 highest were Riverside-San Bernardino-Ontario at No. 2 (3.86 percent of housing units with a foreclosure filing), Modesto at No. 3 (3.82 percent), Vallejo-Fairfield at No. 4 (3.73 percent), Merced at No. 11 (3.23 percent), Bakersfield at No. 15 (3.11 percent), and Sacramento at No. 20 (2.94 percent). All seven California cities in the top 20 documented declining foreclosure activity compared to 2011. Florida cities accounted for eight of the 20 highest metro foreclosure rates, led by Miami at No. 5 with 3.71 percent of housing units with a foreclosure filing during the year. Other Florida cities in the top 20 were Palm Bay-Melbourne-Titusville at No. 6 (3.60 percent), Orlando at No. 8 (3.46 percent), Tampa at No. 12 (3.22 percent), Lakeland at No. 13 (3.17 percent), Jacksonville at No. 14 (3.14 percent), Cape Coral-Fort Myers at No. 18 (3.08 percent), and Ocala at No. 19 (3.01 percent). Except for Cape Coral-Fort Myers, all Florida cities in the top 20 documented increasing foreclosure activity from 2011 to 2012. Other cities with foreclosure rates among the nation's 20 highest were Atlanta at No. 7 (3.51 percent of housing units with a foreclosure filing), Chicago at No. 9 (3.31 percent), Rockford, Ill., at No. 10 (3.28 percent), Las Vegas at No. 16 (3.10 percent), and Phoenix at No. 17 (3.09 percent). Best Places to Buy Foreclosures in 2013 To select the best places to buy foreclosures in 2013, RealtyTrac scored all metro areas with a population of 500,000 or more by summing up four numbers: months' supply of foreclosure inventory, percentage of foreclosure sales, foreclosure discount, and percentage increase in foreclosure activity in 2012. Topping the list of best places to buy foreclosures in 2013 was the Palm Bay-Melbourne-Titusville metro area in Florida with a total score of 394: 34 months' supply of inventory, foreclosure sales representing 24 percent of all sales, average foreclosure discount of 28 percent, and a 308 percent increase in foreclosure activity in 2012 compared to 2011. Five other Florida cities ranked among the Top 20 best places to buy foreclosures: Lakeland, Tampa, Jacksonville, Orlando, and Miami. Five New York cities ranked among the 20 best places to buy foreclosures in 2013, based largely on big backlogs of foreclosure inventory and big increases in foreclosure activity in 2012: Rochester, Albany, New York, Poughkeepsie, and Syracuse. Other cities in the Top 20 were Chicago, Ill.; El Paso, Texas; Philadelphia; Allentown, Pa.; Youngstown, Ohio; Bridgeport, Conn.; Cleveland, Ohio; New Haven, Conn.; and Indianapolis, Ind. Worst Places to Buy Foreclosures in 2013 The metro with the lowest score was McAllen, Texas, with a 12- month supply of foreclosure inventory, foreclosure sales accounting for 7 percent of all sales, an average foreclosure discount of 21 percent, and a 66 percent decrease in foreclosure activity in 2012 compared to 2011. Metros with the lowest scores were dominated by cities in the west, including Ogden, Utah; Las Vegas, Salt Lake City, Phoenix, Portland, Ore., San Jose, Calif., and Honolulu. Report Methodology The RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing entered into the RealtyTrac database during the quarter -- broken out by type of filing. Some foreclosure filings entered into the database during a quarter may have been recorded in previous quarters. Data is collected from more than 2,200 counties nationwide, and those counties account for more than 90 percent of the U.S. population. RealtyTrac's report incorporates documents filed in all three phases of foreclosure: Default -- Notice of Default (NOD) and Lis Pendens (LIS); Auction -- Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). For the quarterly report, if more than one foreclosure document is received for a property during the quarter, only the most recent filing is counted in the report. The quarterly report also checks if the same type of document was filed against a property previously. If so, and if that previous filing occurred within the estimated foreclosure timeframe for the state where the property is located, the report does not count the property in the current quarter. About RealtyTrac Inc. RealtyTrac -- http://www.realtytrac.com-- is a supplier of U.S. real estate data, with more than 1.5 million active default, foreclosure auction and bank-owned properties, and more than 1 million active for-sale listings on its website, which also provides essential housing information for more than 100 million homes nationwide. This information includes property characteristics, tax assessor records, bankruptcy status and sales history, along with 20 categories of key housing-related facts provided by RealtyTrac's wholly-owned subsidiary, Homefacts(R). RealtyTrac's foreclosure reports and other housing data are relied on by the Federal Reserve, U.S. Treasury Department, HUD, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate. * Ontario's Debt Loan Larger Than California, Report Says --------------------------------------------------------- Ontario's debt load is higher than that of California, America's most-indebted state, and could reach 66 per cent of GDP by 2019 unless the provincial government musters the courage to rein in spending, says a new report released on Jan. 31 by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. "California has been roundly criticized by news media and the financial markets for its inability to control spending and reduce deficits. Yet Ontario, with a fraction of California's population and a significantly smaller economy, is carrying a debt load almost two-thirds larger than California," said Jason Clemens, Fraser Institute executive vice-president and co-editor of The State of Ontario's Indebtedness. "The first priority for incoming Ontario Premier Kathleen Wynne has to be taking action on the province's precarious financial situation. Ontario simply cannot continue spending money it doesn't have; otherwise it will soon be compared to Greece, not California." The State of Ontario's Indebtedness examines Ontario's deficit and debt from three perspectives: a comparison to California, the future of Ontario's debt if current spending trends continue, and a comparison of Ontario's debt load and spending outlook to that of Greece. Combined, the three chapters detail the extent of the problem facing Ontario and paint a cautionary tale of what could happen if the Ontario government delays taking action. "Comparisons to Greece may seem farfetched but Ontario's net debt to GDP currently sits at 37 per cent, the same as Greece in 1984," said Niels Veldhuis, Fraser Institute president and co-editor of the report. "The 2012 Drummond report should have been a wake-up call for the Ontario government, yet the response was a collective yawn and a figurative shrug of the shoulders. Ontario's debt problem is real and unsustainable." University of Calgary economist Ron Kneebone contributes a chapter to The State of Ontario's Indebtedness calculating that Ontario's net debt will balloon to 66 per cent of GDP by 2019-20 if it maintains the status quo in terms of spending and revenues. "The failure of past Ontario governments to control spending has added significantly to the province's debt load and today saddles Ontario taxpayers with more than $10 billion in annual interest payments. That's money that isn't available for health care, education or other social services," Mr. Veldhuis said. Kneebone concludes that the Ontario government could hold the debt-to-GDP ratio at roughly 40 per cent by 2019-20 if the province can dramatically slow the growth in spending in both health care and education to match the growth in the economy. "Health and education spending grew at an average annual rate of seven per cent in the decade prior to the recession, compared to GDP growth of 4.3 per cent. Limiting the rate of growth in health and education spending will not be easy and requires significant reform of both programs," Mr. Veldhuis said. To help put Ontario's debt in context, a second chapter in the report compares Ontario to California, which in 2009 made international headlines as a "fiscal train wreck" and appeared headed for bankruptcy. Ontario and California are measured against one another using a slightly different indicator than is normal: bonded debt. The reason for the alternative measure is that California doesn't publish data on net debt, which is the normally used measure in Canada and elsewhere. On any comparative measure of bonded debt, Ontario fares much worse than California. Ontario's debt is almost two-thirds larger than California's even though California is much larger in both the size of its economy and its population. As a share of the economy, Ontario's debt (38.6 per cent) is more than five times larger than California's (7.7 per cent). Ontario's per-capita debt ($17,921) is more than four-and-a-half times that of California ($3,833) and Ontario spends more than three times the amount of revenues on interest costs as California. "The frightening aspect of Ontario's debt is the lack of attention it receives, not just from politicians, but from the media, organized labor, businesses, and just about every single Ontarian," Mr. Clemens said. "Ontario is in a worse situation than California and it will only get worse unless the provincial government finds a way to reduce spending." The report concludes with a chapter by Lakehead University economist Livio Di Matteo comparing Ontario's fiscal situation to Greece. Mr. Di Matteo points out that Greece's net debt to GDP stood at 37 per cent in 1984, the same level as Ontario's today and increased to 66 per cent over the next decade. Since then, Greece's net public debt has spun out of control, reaching 163 per cent of GDP in 2011. Mr. Di Matteo explains that Ontario and Greece share a common trait over the past 30 years: trends in spending and revenues diverged, meaning the long-term trend is towards larger deficits and debt accumulation rather than smaller deficits or even surpluses. "If Ontario continues spending at its current rate, its net debt will increase to 66 per cent from 37 per cent in just seven years. It took Greece 10 years to experience a similar increase. This highlights the unsustainability of Ontario's current spending trends," Mr. Veldhuis said. Inaction or insufficient spending reforms could mean that somewhere down the road, Ontario could experience a fiscal crisis of Greek proportions. While not there yet, the pain and severity of reform needed in Greece serves as an example to Ontarians about the benefits of proactive reform now before a crisis evolves. "Neither Ontario nor Greece has been responsible in managing their fiscal situations. Fortunately, Ontario is in a position where it can still restore its public finances to good health without the type of fiscal trauma currently underway in Greece," Clemens said. The Fraser Institute -- http://www.fraserinstitute.org-- is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 86 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. * Bryan Cave's H. Mark Mersel Earns AV Preeminent(R) Rating ----------------------------------------------------------- H. Mark Mersel, a lawyer based in Irvine, California whose primary areas of practice are Commercial Litigation, Real Estate Litigation and Bankruptcy, has earned the AV Preeminent(R) rating from Martindale-Hubbell(R) Martindale-Hubbell, a division of LexisNexis(R), has confirmed that attorney H. Mark Mersel, a partner of Bryan Cave LLP, still maintains the AV Preeminent Rating, Martindale-Hubbell's highest possible rating for both ethical standards and legal ability, even after first achieving this rating in 2005. H. Mark Mersel is a lawyer based in Irvine, California whose primary areas of practice are Commercial Litigation, Real Estate Litigation and Bankruptcy. For more than 130 years, lawyers have relied on the Martindale- Hubbell AV Preeminent(R) rating while searching for their own expert attorneys. Now anyone can make use of this trusted rating by looking up a lawyer's rating on Lawyers.com or martindale.com. The Martindale-Hubbell(R) AV Preeminent(R) rating is the highest possible rating for an attorney for both ethical standards and legal ability. This rating represents the pinnacle of professional excellence. It is achieved only after an attorney has been reviewed and recommended by their peers -- members of the bar and the judiciary. Congratulations go to H. Mark Mersel who has achieved the AV Preeminent(R) Rating from Martindale- Hubbell(R). H. Mark Mersel commented on the recognition: "I am thankful to my peers who nominated me for this distinction, and proud to have earned this, the highest possible Martindale-Hubbell rating." To find out more or to contact H. Mark Mersel at Bryan Cave LLP, call 949-223-7160, or visit http://www.bryancave.com As a result of this honor, American Registry LLC, has added H. Mark Mersel to The Registry(TM) of Business and Professional Excellence. For more information, search The Registry(TM) at http://www.americanregistry.com Contact Information: H. Mark Mersel Telephone: 949-223-7160 E-mail: mark.mersel@bryancave.com Web site: http://www.bryancave.com * Dan McElhinney Joins National DRC Business Development Team ------------------------------------------------------------- Donlin, Recano & Company, Inc., a division of DF King Worldwide and leading provider of claims, noticing, balloting, solicitation and technology solutions, said Daniel McElhinney has joined the firm as a Director. Based in New York, Dan is part of DRC's national business development team, focusing on developing and maintaining relationships with DRC's growing list of clients. "The experience, talent and ambition Dan brings to DRC is expected to help define and grow our market share in 2013" says Scott Stuart, Esq., Executive Director of DRC. A seasoned bankruptcy veteran, Dan began his career as a law clerk to then Chief Judge Arthur J. Gonzalez in the Southern District of New York and then, practiced in the Business Reorganization and Restructuring Department at Willkie Farr & Gallagher LLP, where he represented clients such as ATX Communications, Classic Communications, Werner Ladder, Safelite Glass Corp. and Episcopal Health Services. Prior to joining DRC, Dan was most recently a Managing Director with Epiq Bankruptcy Solutions. Dan holds a BA from Hamilton College and received his J.D. from Brooklyn Law School. He is also a member of the American Bankruptcy Institute, the Turnaround Management Association and the New York Institute of Credit. Donlin Recano, a division of DF King Worldwide -- http://www.king-worldwide.com/-- and a leader in claims, noticing, balloting and technology solutions, also provides bondholder identification services, pre-pack bankruptcy solicitation and balloting, crisis communications, financial printing services and call center services through one of the largest and most technologically advanced call centers in the country. King Worldwide is a financial communications, proxy solicitation and stakeholder management company, serving over 1,000 public company, mutual fund family and private equity firm clients domiciled in North America, Europe and Asia. * BOOK REVIEW: The Health Care Marketplace ------------------------------------------ Author: Warren Greenberg, Ph.D. Publisher: Beard Books Softcover: 179 pages List Price: $34.95 Review by Henry Berry Greenberg is an economist who analyzes the healthcare field from the perspective that "health care is a business [in which] the principles of supply and demand are as applicable . . . as to other businesses." This perspective does not ignore or minimize the question of the quality of health, but rather focuses sharply on the relationship between the quality of healthcare and economic factors and practices. For better or worse, the American healthcare system to a considerable degree embodies the beliefs, principles, and aims of a free-market capitalist economic system driven by competition. In the early sections of The Health Care Marketplace, Greenberg takes up the question of how physicians and how hospitals compete in this system. "Competition among physicians takes place locally among primary care physicians and on a wider geographical scale among specialists. There is competition also between M.D.s and allied practitioners: for example, between ophthalmologists and optometrists and between psychiatrists and psychologists. Regarding competition between physicians in a fee-for-service practice and those in managed care plans, Greenberg cites statistics and studies that there was lesser utilization of healthcare services, such as hospitalization and tests, with managed care plans. Some of the factors affecting the economics of different areas of the healthcare field are self-evident, albeit may be little recognized or little realized by consumers. One of these factors is physician demeanor. Most readers would see a physician's demeanor as a type of personality exhibited during the course of the day. But after the author notes that "[c]ompetition also takes place in professional demeanor, location, and waiting time," the word "demeanor" takes on added meaning. The demeanor of a big-city plastic surgeon, for example, would be markedly different from that of a rural pediatrician. Thus, demeanor has a relationship to the costs, options, services, and payments in the medical field, and also a relationship to doctor education and government funding for public health. Greenberg does not follow his economic data and summarizations with recommendations or advice. He leaves it to the policymakers to make decisions on the basis of the raw economic data and indisputable factors such as physician demeanor. Nor does he take a political position when he selects what data to present or emphasize. It is this apolitical, unbiased approach that makes The Health Care Marketplace of most value to readers interested in understanding the economics of the healthcare field. Without question, a thorough understanding of the factors underlying the healthcare marketplace is necessary before changes can be made so that the health needs of the public are better met. Conditions that are often seen as intractable because they are regarded as social or political problems such as the overcrowding of inner-city health centers or preferential treatment of HMOs are, in Greenberg's view, problems amenable to economic solutions. According to the author, the basic economic principle of supply-and-demand goes a long way in explaining exorbitantly high medical costs and the proliferation of specialists. Greenberg's rigorous economic analysis similarly yields an informative picture of the workings of other aspects of the healthcare field. Among these are hospitals, insurance, employee health benefits, technology, government funding of health programs, government regulation, and long-term health care. In the closing chapter, Greenberg applies his abilities as a keen- eyed observer of the economic workings of the U.S. healthcare field to survey healthcare systems in three other countries: Canada, Israel, and the Netherlands. "An analysis of each of the three systems will explain the relative doses of competition, regulation, and rationing that might be used in financing of health care in the United States," he says. But even here, as in his economic analyses of the U.S. healthcare system, Greenberg remains nonpartisan and does not recommend one of these three foreign systems over the other. Instead he critiques the Canadian, Israel, and Netherlands systems -- "none [of which] makes use of the employer in the provision of health insurance," he says -- to prompt the reader to look at the present state and future of U.S. healthcare in new ways. The Health Care Marketplace is not a book of limited interest, and the author's focus on the economics of the health field does not make for dry reading. Healthcare is a central concern of every individual and society in general. Greenberg's book clarifies the workings of the healthcare field and provides a starting point for addressing its long-recognized problems and moving down the road to dealing effectively with them. Warren Greenberg is Professor of Health Economics and Health Care Sciences at George Washington University, and also a Senior Fellow at the University's Center for Health Policy Research. Prior to these positions, in the 1970s he was a staff economist with the Federal Trade Commission. He has written a number of other books and numerous articles on economics and healthcare. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers" public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors" Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Carmel Paderog, Meriam Fernandez, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2013. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $975 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000 or Nina Novak at 202-241-8200. *** End of Transmission ***