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/raid1/www/Hosts/bankrupt/TCR_Public/130221.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, February 21, 2013, Vol. 17, No. 51 Headlines 1220 SOUTH: To Seek Approval of Sale-Based Plan on March 12 3S/DEVELOPMENT, LLC: Case Summary & 2 Unsecured Creditors ADVANSOURCE BIOMATERIALS: Has $113,000 Profit in Dec. 31 Quarter ALLY FINANCIAL: Banking Subsidiary Sells Mortgage Unit to Walter AMERICAN SUZUKI: Amends Plan Ahead of Feb. 28 Hearing AMERICAN AIRLINES: $11-Bil. US Airways Merger a Boon to Big Firms AOXING PHARMACEUTICAL: Incurs $3.1-Mil. Net Loss in Fiscal Q2 ATLANTIC COAST: Wellington Reports 4.7% Equity Stake at Dec. 31 ATLANTIC COAST: Ithan Creek Holds 4.7% Equity Stake at Dec. 31 AVAYA INC: S&P Assigns 'CCC+' Rating to 2nd Lien Notes Due 2021 BERNARD L. MADOFF: Safe Harbor Doesn't Protect Some Customers BESRA GOLD: Incurs $4.6-Mil. Net Loss in Dec. 31 Quarter BIG SANDY: Wants Plan Filing Period Extended Until March 11 BON-TON STORES: FMR LLC Discloses 12.9% Equity Stake BURGER KING: Fitch Raises Issuer Default Rating to 'B+' BURLINGTON HOLDINGS: S&P Retains 'B-' CCR Following $50MM Add-On CAESARS ENTERTAINMENT: Online Gaming Bill is Positive, Fitch Says CCCG LLC: Chapter 11 Case Summary & 5 Unsecured Creditors COMPTON, CA: Wells Capital Invests in Bond Offering CONEX INTERNATIONAL: Ch. 7 Trustee Sues Ex-Execs Over $246M Buyout COVENANT BANCSHARES: Wipfli LLP Raises Going Concern Doubt DAFFY INC: Can Borrow $12M from Jericho I to Pay Wells Fargo Loans DETROIT, MI: In Fiscal Emergency Amid $326.6-Mil. Budget Gap DEWEY & LEBOEUF: Ex-Partner Sues Barclays Over Firm Capital Loan DIGICEL LIMITED: Fitch Rates $700 Million Senior Notes 'B' DIGICEL LIMITED: Moody's Rates New $700-Mil. Senior Notes 'B1' DOGWOOD PROPERTIES: Voluntary Chapter 11 Case Summary EDUCATION HOLDINGS: Can Hire DLA Piper, A&M as Ch.11 Professionals ELBIT IMAGING: To Suspend Interest Payments to Noteholders ENERGY FUTURE: Warns of Bankruptcy Risk; Kirkland & Ellis Tapped FRANCES CARLSON: Bankruptcy Filing Stays U.S. Lawsuit GOODYEAR TIRE: Moody's Retains Ba3 CFR, Outlook Changed to Neg. GREEN OAK: Case Summary & 14 Largest Unsecured Creditors GSC GROUP: April 22 Hearing on Kaye Scholer, Capstone Deals HARRISONBURG REDEVELOPMENT: Moody's Lowers Debt Rating to 'B2' HAWKER BEECHCRAFT: Plans Midyear Sale of Hawker Jet Business HERON LAKE: Incurs $32.4-Mil. Net Loss in Fiscal 2012 HOTEL OUTSOURCE: Incurs $421,000 Net Loss in Third Quarter HYPERTENSION DIAGNOSTICS: Incurs $42,500 Net Loss in Fiscal Q2 ICEWEB INC: Incurs $791,126 Net Loss in 2013 Q1 IMPLANT SCIENCES: Files Form 10-Q, Reports $3.7-Mil. Loss INDEPENDENCE TAX IV: Reports $2.1-Mil. Net Income in Dec. 31 Qtr. INSPIRATION BIOPHARMACEUTICALS: Wants April Plan Deadline INSPIRATION BIOPHARMACEUTICALS: Completes Sale of IB1001 ISTAR FINANCIAL: Ori Uziel Holds 4.2% Equity Stake at Dec. 31 ISTAR FINANCIAL: Valinor Discloses 6% Equity Stake at Dec. 31 ISTAR FINANCIAL: Fir Tree Lowers Equity Stake to 1% at Dec. 31 JOURNAL REGISTER: Taps Keen Realty as Real Estate Advisor JOURNAL REGISTER: Borough of Lansdale Acquires Goodson Property JOURNAL REGISTER: Panel Not Objecting to Revolving Lender's Liens K-V PHARMACEUTICALS Plan Outline Hearing Set for March 19 KPG INVESTMENTS: Voluntary Chapter 11 Case Summary LAND HOLDINGS: Moody's Rates Proposed $162.5-Mil. Term Loan 'B3' LCI HOLDING: Committee Hires Pachulski Stang as Counsel LCI HOLDING: FTI Okayed as Committee's Financial Advisor LCI HOLDING: Meeting of Creditors Continued Until March 12 LEHMAN BROTHERS: To Make Third Payment to Creditors April 4 LEHMAN BROTHERS: Wants to Compel London Whale Testimony LEHMAN BROTHERS: $91.2-Mil. Reserve for US Airways Claim Okayed LEVEL 3: Loomis Sayles Discloses 4.8% Equity Stake at Dec. 31 LEVEL 3: Southeastern Asset Discloses 21.6% Equity Stake LEVEL 3: V. Prem Watsa Discloses 7% Equity Stake at Dec. 31 LSP ENERGY: Has Until April 21 to Solicit Acceptances of Plan MC2 CAPITAL: Court Rules on Committee's Claim Objections MDU COMMUNICATIONS: Incurs $137,000 Net Loss in Fiscal Q1 MEDIA HOLDCO: S&P Assigns 'B+' CCR; Rates $50MM Facility 'BB' MEDIA GENERAL: P. Troob Holds 6% Class A Shares at Dec. 31 MERRILL COMMUNICATIONS: Moody's Rates New $390-Mil. Loan '(P)B1' METRO FUEL: Sells Assets, Hearing on Exclusivity Feb. 26 MF GLOBAL: Plan Proponents Seeks Delay of JPM Bid to Pursue Claim MF GLOBAL: To Present Plan for Confirmation on April 5 MGM RESORTS: Janus Capital Discloses 7.7% Equity Stake at Dec. 31 MGM RESORTS: Paulson & Co. Discloses 7.7% Equity Stake at Dec. 31 MOORE FREIGHT: Feb. 28 Set as General Claims Bar Date MPG OFFICE: Appaloosa Discloses 7% Equity Stake at Dec. 31 MPG OFFICE: HG Vora Holds 7.9% Equity Stake as of Dec. 31 MPG OFFICE: DW Investment Discloses 8.1% Equity Stake at Dec. 31 OCALA FUNDING: Plan Outline Hearing Set for March 6 OCWEN LOAN: Fitch Assigns 'B/RR4' Rating to $1.3BB Term Loan OMTRON USA: Has Court Okay to Hire Fox Rothschild as Attorney OMTRON USA: Court Okays Nexsen Pruet as Local Counsel OTTAWA BUS: Webster Capital May Pursue Newbys' Loan Guaranties OZARKS MEDICAL: S&P Withdraws 'BB-' Rating on 1997 and 1999 Bonds PALATIN TECHNOLOGIES: Incurs $1.7-Mil. Net Loss in Dec. 31 Qtr. PANDA SHERMAN: S&P Assigns 'B' Rating to $372 Million Debt PATRIOT COAL: Balks at Union Bid to Delay Bonus Plans PENSON WORLDWIDE: Claims Bar Date Set for March 11 PHARMACEUTICAL RESEARCH: Moody's Affirms 'B2' CFR, Outlook Stable PINNACLE AIRLINES: $52-Mil. in Add'l Financing Approved PINNACLE AIRLINES: Wins Court Nod to Settle WTC, et al. Claims POINT CENTER: Case Summary & 20 Largest Unsecured Creditors PORTER BANCORP: D. Ellefson Discloses 5% Equity Stake at Dec. 31 POSEIDON CONCEPTS: In Default of Loan Agreement POWELL STEEL: Proposes Ciardi as Chapter 11 Counsel POWELL STEEL: Seeks to Use Cash Collateral to Pay Employees POWELL STEEL: Files Amended List of Top Unsecured Creditors POWELL STEEL: Section 341(a) Meeting Scheduled for March 12 PRA INTERNATIONAL: S&P Affirms 'B' Corp. Credit Rating READER'S DIGEST: Wins Interim OK of Loans, First-Day Motions READER'S DIGEST: Updated Chapter 11 Case Summary READER'S DIGEST: Secured Lenders to Get Full Recovery, Fitch Says READER'S DIGEST: S&P Cuts CCR to 'D' After Chapter 11 Filing REALOGY CORP: Incurs $543 Million Net Loss in 2012 REGAL ENTERTAINMENT: Acquisition Deal No Impact on Fitch Ratings REGAL ENTERTAINMENT: Hollywood Buyout No Impact on Moody's B1 CFR REMY INTERNATIONAL: Moody's Rates New $325MM Sr. Secured Loan B1 REMY INTERNATIONAL: S&P Affirms 'B+' CCR; Rates $325MM Loan 'B+' RESIDENTIAL CAPITAL: List of Contracts Assigned to Ocwen RHYTHM AND HUES: Arranges $17MM Financing From Fox and Universal RHYTHM AND HUES: Former Employee Barcelo Commences Class Suit RHYTHM AND HUES: Ex-Employee Capizzi Files Class Suit ROTHSTEIN ROSENFELDT: Investor Wants TD Bank Suit in Fla. Court SALON MEDIA: Incurs $806,000 Net Loss in Dec. 31 Quarter SCHOOL SPECIALTY: Auction Scheduled for March 25 SCOTTSDALE VENETIAN: Voluntary Chapter 11 Case Summary SEAFRANCE SA: Eurotunnel to Fight Antitrust Review of Ship Buy SEARS HOLDINGS: B. Berkowitz Reports 17% Equity Stake at Dec. 31 SECUREALERT INC: Incurs $562,000 Net Loss in Fiscal 2013 Q1 SPEEDY CASH: Higher Debt Service Cues Moody's to Cut CFR to Caa1 SPEEDY CASH: Moody's Downgrades Senior Secured Notes to Caa1 SPEEDY GROUP: S&P Assigns 'B' ICR; Rates $125MM Notes 'CCC+ SPIRIT REALTY: TPG-Axon Discloses 7% Equity Stake at Dec. 31 SPIRIT REALTY: James Dondero Holds 5% Equity Stake at Dec. 31 STANFORD INT'L BANK: Investors Sue Antigua, Caribbean Central Bank STATION CASINOS: S&P Assigns 'CCC+' Rating to $500MM Sr. Notes STEVE & BARRY'S: Cerberus Rips Ruling in Malpractice Case SUNGARD DATA: S&P Assigns 'BB' Rating to $2BB Term Loan Due 2020 T&T ENERGY: Coal Miner Files for Bankruptcy in Kentucky THOMPSON CREEK: Kevin Douglas Reports 7% Equity Stake at Dec. 31 THQ INC: Deal for Take-Two to Take Over WWE Games Approved THQ INC: Shareholder Official Committee of Equity Holders TRANS NATIONAL COMMS: Wins Court Approval of Sale Procedures TRIAD GUARANTY: William Ratliff Discloses 20.5% Equity Stake TRINITY COAL: Creditors Force Essar Mining Companies to Ch. 11 TRINITY COAL: Creditors Want Trustee, Offer $15MM for Wind-Down TRINITY COAL: Involuntary Chapter 11 Case Summary US POSTAL: Congress Urged to Act Swiftly to Restore Stability US POSTAL: CAGW Balks at Plan to Develop Clothing Line USEC INC: Van Eck Discloses 5.6% Equity Stake as of Dec. 31 USG CORP: Prem Watsa Discloses 7.6% Equity Stake at Dec. 31 UTSTARCOM INC: Artis Capital Lowers Stake to 1% at Dec. 31 VEYANCE TECHNOLOGIES: S&P Assigns 'B' CCR; Outlook Stable VIRGINIA GOLF: Case Summary & 8 Largest Unsecured Creditors W3 CO.: Moody's Rates New $330 Million Credit Facility 'B1' WARNER MUSIC: Incurs $80 Million Net Loss in Fiscal Q1 WEB.COM GROUP: Moody's Lowers Rating on 1st Lien Debt to 'B1' WESTERN BIOMASS: District Court to Hear Midwest Lawsuit YRC WORLDWIDE: J. Altman Discloses 12% Equity Stake at Dec. 31 YRC WORLDWIDE: Whitebox Advisors Discloses 7% Stake at Dec. 31 YRC WORLDWIDE: Catalyst Fund Lowers Stake to 3% at Dec. 31 ZF MICRO: Restarts Production of ZFx86 Microchip After Bankruptcy * Consumer Spending to Remain Restrained, Economist Says * Derivatives Can Add to Company's Market Value, Research Shows * Financial Crisis Cost Tops $22 Trillion, GAO Report Says * Mortgage Bill Faces Tough Road in Congress * Renter Default Risk Down in 4Q, CoreLogic Report Shows * States' Foreclosure Pace Affects Home Prices * Golden State Group Reacts to LA Times Student Loan Article * Courtney Pozmantier Joins Greenberg Glusker's Bankruptcy Group * Dallas Bankruptcy Expert Jeffery Erler Joins Gruber Hurst * Thompson Hine Lawyers Named to Georgia Trend's 2012 Legal Elite * Recent Small-Dollar & Individual Chapter 11 Filings ********* 1220 SOUTH: To Seek Approval of Sale-Based Plan on March 12 ----------------------------------------------------------- The Bankruptcy Court will convene a hearing to consider confirmation of the Chapter 11 plan of reorganization of 1220 South Ocean Boulevard, LLC, and final approval of the disclosure statement at a hearing on March 12, 2013, at 9:30 a.m. The Bankruptcy Court has conditionally approved the disclosure statement and set these deadlines: Balloting Deadline Feb. 26, 2013 Objections to Plan Confirmation March 5, 2013 Objections to Final Approval of DS March 8, 2013 Report of Plan Proponent and Confirmation Affidavit March 8, 2013 Under the Plan, the Debtor intends to sell the "estate home" by private sale, pursuant to 11 U.S.C. Section 363, free and clear of all liens and other interest, with such liens and other interests being paid 100% of their allowed claims from the proceeds of sale. The Debtor will continue to market for sale the Estate Home through its real estate broker, with the goal of obtaining a bona fide contract for sale on or before Dec. 2, 2013. If the Debtor is unable to effectuate a private sale, the estate home will be sold by auction on Dec. 16, 2013, pursuant to 11 U.S.C. Section 363. Under the Plan, the TD Bank's secured claim of $22.9 million (Class 1) and New Providence's secured claim of $7.34 million (Class 2) will be paid in full from the proceeds of the private sale and/or auction. Unsecured creditors with claims totaling $22.5 million (Class 4) will, on the Effective Date, be paid in full, without interest, from the proceeds of the private sale and/or auction. Holders of equity interests (Class 5) will continue to exist but will receive no distribution under the Plan. A copy of the Disclosure Statement is available at: http://bankrupt.com/misc/1220south.doc86.pdf About 1220 South Ocean 1220 South Ocean Boulevard, LLC, filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 12-32609) in its home-town in West Palm Beach, Florida. The Debtor disclosed $74 million in total assets and $41.5 million in liabilities as of Sept. 7, 2012. According to http://1220southocean.com/,1220 South Ocean is a French-inspired waterfront estate homes and resort located in Palm Beach. Owned by real estate developer Dan Swanson, president of Addison Development, 1220 South Ocean sits on 2.5 private and secure acres of land, has 20,000 square feet of living plus an additional 7,000 square feet of loggias, garages & guest house. The resort is located four miles to Palm Beach International Airport. Mr. Swanson other developments include the Phipps Estates in Palm Beach and Addison Estates at the Boca Hotel. Kenneth S. Rappaport, Esq., at Rappaport Osbourne & Rappaport, in Boca Raton, Florida, serves as counsel to the Debtor. 3S/DEVELOPMENT, LLC: Case Summary & 2 Unsecured Creditors --------------------------------------------------------- Debtor: 3S/Development, LLC 5700 Executive Drive Baltimore, MD 21228 Bankruptcy Case No.: 13-12747 Chapter 11 Petition Date: February 18, 2013 Court: U.S. Bankruptcy Court District of Maryland (Baltimore) Debtor's Counsel: Kim Y. Johnson, Esq. P.O. Box 643 Laurel, MD 20725-0643 Tel: (443) 838-3614 Fax: (301) 725-2065 E-mail: kimyjcounsel@aol.com Estimated Assets: $1,750,000 Estimated Debts: $5,766,000 A copy of the Company's list of its two largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/mdb13-12747.pdf The petition was signed by Scott R. Steele, president. ADVANSOURCE BIOMATERIALS: Has $113,000 Profit in Dec. 31 Quarter ---------------------------------------------------------------- AdvanSource Biomaterials Corporation filed its quarterly report on Form 10-Q, reporting net income of $113,000 on $869,000 of revenues for the three months ended Dec. 31, 2012, compared with a net loss of $651,000 on $356,000 of revenues for the three months ended Dec. 31, 2011. For the nine months ended Dec. 31, 2012, the Company had a net loss of $604,000 on $1.8 million of revenues, compared with a net loss of $1.2 million on $1.5 million of revenues for the nine months ended Dec. 31, 2011. The Company's balance sheet at Dec. 31, 2012, showed $3.5 million in total assets, $2.5 million in total liabilities, and stockholders' equity of $1.0 million. According to the regulatory filing, the Company has experienced negative operating margins and negative cash flows from operations and expects to continue to incur net losses in the foreseeable future. "During the nine months ended Dec. 31, 2012, we incurred a net loss of $604,000, and used cash from operating activities of $448,000. We anticipate incurring losses at least through fiscal 2013 as we continue our efforts to grow revenues, expand selling and marketing activities, expand into new sales territories, and continue research and development activities to promote new product introductions and enhancements to existing products. As of Dec. 31, 2012, we had an accumulated deficit of $36,973,000 and cash of $75,000." A copy of the Form 10-Q is available at http://is.gd/rn7PY7 Wilmington, Mass.-based AdvanSource Biomaterials Corporation develops advanced polymer materials which provide critical characteristics in the design and development of medical devices. The Company's biomaterials are used in devices that are designed for treating a broad range of anatomical sites and disease states. ALLY FINANCIAL: Banking Subsidiary Sells Mortgage Unit to Walter ---------------------------------------------------------------- Reuters reported that Ally Financial Inc.'s banking subsidiary said on Monday it agreed to sell a mortgage unit to Walter Investment Management Corp as the U.S. auto lender continues to pull back from the home loan business. The Reuters report related that Ally Bank said in October that it was selling its business lending operation, which buys mortgages from other lenders and makes loans through brokers. The transaction, which includes 300 employees, is expected to close on February 28. The companies did not disclose the terms of the deal, Reuters noted. Reuters said Ally Financial, which is 74% owned by the U.S. government after a series of bailouts, is focusing on U.S. auto lending and Internet banking as it works to pay back taxpayers. In May, the lender's Residential Capital mortgage unit filed for bankruptcy, and Ally announced plans to sell its international operations. Reuters added that Ally Bank also said in October that it was selling collection rights on $122 billion in mortgages. Reuters reported last month that Ocwen Financial Corp was in the lead to buy the portfolio. Ally Bank has said it plans to continue making a "modest level" of jumbo and conventional mortgages through third-party lenders. AMERICAN SUZUKI: Amends Plan Ahead of Feb. 28 Hearing ----------------------------------------------------- American Suzuki Motor Corporation amended the Jan. 16 version of its Plan of Liquidation to, among other things, provide for: 1. The classification of South Motors Suzuki, Inc.'s claim as class 6 under the Plan. The Class 6 claim is unimpaired and South Motors is deemed to have accepted the Plan. South Motors will receive from the Liquidating Entity, as a result of the voluntary subordination by SMC, payment in full in cash on account of the Allowed Claim. 2. The creation of the ASMC Liquidating Trust for creditors entitled to receive distributions under the Plan. The ASMC Liquidating Trust will be headed by an advisory committee with Michael M. Ozawa and R. Todd Neilson as its initial members. 3. The transfer to the ASMC Liquidating Trust of all estate assets that are not purchased assets and all cash, property and other proceeds derived from those assets on and after the effective date of the plan. The Amended Plan also provides that Suzuki Motors will retain its liens on the ASMC Trust Assets, pursuant to the prepetition loan and security agreement, until SMC's Secured Claims have been satisfied in full or those assets have been disposed of by the ASMC Liquidating Trust. To the extent those assets are disposed of by the ASMC Liquidating Trust prior to SMC's Secured Claims having been satisfied in full, SMC's Liens will attach to the proceeds of those assets with the same validity, extent and priority as existed prior to the disposition of those assets. M. Freddie Reiss, who also serves as the chief restructuring officer of the Debtors, will serve as Liquidating Trustee. The hearing to consider confirmation of the Plan is set for Feb. 28, 2013, before Judge Scott C. Clarkson of the U.S. Bankruptcy Court for the Central District of California, Santa Ana Division, A black-lined version of the Debtor's 3rd Amended Plan, dated Feb. 14, 2013, is available for free at: http://bankrupt.com/misc/asuzuki_3rdplan0214.pdf About American Suzuki Established in 1986, American Suzuki Motor Corporation is the sole distributor of Suzuki automobiles and vehicles in the United States. American Suzuki wholesales virtually all of its inventory through a network of independently owned and unaffiliated dealerships located throughout the continental United States. The dealers then market and sell the Suzuki Products to retail customers. Suzuki Motor Corp., the 100% interest holder in the Debtor, manufacturers substantially all of the Suzuki products. American Suzuki has 295 employees. There are approximately 220 automotive dealerships, over 900 motorcycle/ATV dealerships, and over 780 outboard marine dealerships. American Suzuki filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 12-22808) on Nov. 5, 2012, to sell the business to SMC, absent higher and better offers. SMC is not included in the Chapter 11 filing. The Debtor disclosed assets of $233 million and liabilities totaling $346 million. Debt includes $32 million owing to the parent on a revolving credit and $120 million for inventory financing. There is about $4 million owing to trade suppliers. The Court approved the amended Chapter 11 Plan. Under the Company's amended Plan, its Motorcycles/ATV and Marine divisions, along with its continued Automotive parts and service operation, will be sold to a newly organized, wholly-owned subsidiary of Suzuki Motor Corporation, enabling those operations to continue uninterrupted. The new entity will use the ASMC brand name and operate in the continental U.S. Bankruptcy Judge Catherine E. Bauer signed an order Oct. 6 reassigning the case to Judge Scott Clarkson. ASMC's legal advisor on the restructuring is Pachulski Stang Ziehl & Jones LLP, and its financial advisor is FTI Consulting, Inc. Nelson Mullins Riley & Scarborough LLP is serving as special counsel on automobile dealer and industry issues. Further, ASMC has proposed the appointment of Freddie Reiss, Senior Managing Director at FTI Consulting, as chief restructuring officer, and has also added two independent Board members to assist it through this period. Rust Consulting Omni Bankruptcy, a division of Rust Consulting, Inc., is the claims and notice agent. The Debtor has retained Imperial Capital, LLC as investment banker. SMC is represented by lawyers at Klee, Tuchin, Bogdanoff & Stern LLP. The Official Committee of Unsecured Creditors is represented by Irell & Manella LLP. AlixPartners, LLC serves as its financial advisor. AMERICAN AIRLINES: $11-Bil. US Airways Merger a Boon to Big Firms ----------------------------------------------------------------- Brian Baxter, writing for The Am Law Daily, reported that almost a dozen Am Law 100 firms have landed lead advisory roles on the proposed $11 billion merger of American Airlines parent AMR Corp. and US Airways Group -- a Valentine's Day deal that could create the world's largest airline and cap more than a decade of consolidation in the U.S. commercial aviation industry. The Am Law Daily report said the AMR bankruptcy, which began when the carrier glided into Chapter 11 in November 2011, has already generated millions in legal fees for at least 20 law firms, including the now-defunct Dewey & LeBoeuf. Weil, Gotshal & Manges is serving as lead bankruptcy and deal counsel to longtime client AMR through corporate and M&A partners Thomas Roberts and Glenn West -- the managing partner of the firm's Dallas office -- and business finance and restructuring partners Stephen Karotkin and Alfredo Perez, the Am Law Daily said. Weil has been paid more than $38.9 million by AMR since the start of the company's Chapter 11 case through December 31, in addition to the $9.9 million in fees it received from the airline in the year prior to its Chapter 11 filing, the report noted. Paul Hastings, which is serving as special labor and antitrust counsel to AMR, has been paid nearly $14.8 million by the debtor through December 31, the Am Law Daily said. The report also noted that AMR retained Dewey as its special litigation counsel last March, and bankruptcy court records show the bankrupt firm was paid $3.65 million for its services after filing its final fee application in late August. Cooley, a firm that picked up several other Dewey defectors, has been paid more than $1.4 million by AMR, the report further noted. AMR also employs Jones Day as its U.S. antitrust co-counsel on its proposed tie-up with US Airways and Debevoise & Plimpton as special aircraft counsel. Am Law Daily recalled that in 2011, Debevoise's aviation practice chair John Curry III led a Debevoise team advising AMR on its $38 billion purchase of 460 aircraft from Airbus and Boeing. AMR has paid Debevoise nearly $21.1 million for its services through December 31. Another firm, Texas litigation boutique Yetter Coleman, has received nearly $2.7 million through that same time period in its role as special litigation counsel to AMR, the Am Law Daily said. Am Law Daily also pointed out other top billers during AMR's Chapter 11: -- special benefits counsel the Groom Law Group ($4 million), -- special litigation counsel Kelly Hart & Hallman ($1.9 million), -- special labor and employment counsel Morgan, Lewis & Bockius ($1.7 million), -- special union counsel Sheppard, Mullin, Richter & Hampton ($1.4 million), -- corporate counsel Winstead ($1 million), -- special labor and employment counsel Ford & Harrison ($776,000), -- special counsel Haynes and Boone ($759,000), -- special litigation counsel Harris, Finley & Bogle ($673,000), and -- special IP counsel Brinks Hofer Gilson & Lione ($669,000). The Am Law Daily also noted that the official unsecured creditors committee appointed in AMR's case has hired Skadden, Arps, Slate, Meagher & Flom, led by corporate restructuring partners John "Jack" Butler Jr., and Jay Goffman. The Am Law Daily said Butler and Goffman are veterans of airline bankruptcies, and Skadden advised America West Airlines on its 2005 acquisition of US Airways out of bankruptcy, the second time in three years the latter was forced into Chapter 11. Skadden has been paid more than $12.7 million for its services in AMR's Chapter 11 case through December 31, the report further noted. New York bankruptcy boutique Togut, Segal & Segal, is also co-counsel to the AMR creditors' committee. Latham & Watkins, Dechert, and Cadwalader, Wickersham & Taft, O'Melveny & Myers, Duane Morris, and Shearman & Sterling advised US Airways on the potential bid for AMR. Latham corporate partners Peter Kerman and Anthony Richmond and bankruptcy partner D.J. "Jan" Baker -- who joined the firm from Skadden in 2009 -- have taken the lead advising US Airways in connection with its pursuit of AMR, according to Am Law Daily. The Am Law Daily noted that Paul Galleberg, vice president of legal affairs at US Airways, is a former Latham partner who joined the airline in 2011. Jenner & Block is representing a committee of retired AMR employees in the airline's Chapter 11 case. The Am Law Daily pointed out that court filings show that AMR has paid Jenner $547,000 through December 31, as well as another $421,000 during that same period to Milbank, Tweed, Hadley & McCloy, which is advising an ad hoc group of bondholders. A support and settlement agreement filed by AMR with the SEC on Thursday shows that White & Case and Kramer Levin Naftalis & Frankel are advising other debt holders, according to the Am Law Daily. Robert Keach, cochair of the business reorganization and insolvency practice at Portland, Maine?based Bernstein, Shur, Sawyer & Nelson, was appointed as fee examiner in AMR's bankruptcy case last June, the Am Law Daily noted. Court records show the firm has been paid $756,000 by AMR through December 31. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. AMR and US Airways Group, Inc., on Feb. 14, 2013 announced a definitive merger agreement under which the companies will combine to create a premier global carrier, which will have an implied combined equity value of approximately $11 billion. The deal is subject to clearance by U.S. and foreign regulators and by the bankruptcy judge overseeing AMR's bankruptcy case. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AOXING PHARMACEUTICAL: Incurs $3.1-Mil. Net Loss in Fiscal Q2 ------------------------------------------------------------- Aoxing Pharmaceutical Company, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $3.1 million on $3.3 million of sales for the three months ended Dec. 31, 2012, compared with a net loss of $294,447 on $2.1 million of sales for the prior fiscal period. For the six months ended Dec. 31, 2012, the Company reported a net loss of $3.6 million on $5.9 million of sales, compared with a net loss of $1.2 million on $3.7 million of sales for the six months ended Dec. 31, 2011. The Company's balance sheet at Dec. 31, 2012, showed $44.0 million in total assets, $26.0 million in total liabilities, and stockholders' equity of $18.0 million. "We have incurred recurring operating losses and had an accumulated deficit of $42.3 million as of Dec. 31, 2012. We had negative working capital of $1.4 million as of as of Dec. 31, 2012. Our history of operating losses and lack of binding financing commitments raise substantial doubt as to our ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/j4XoWq About Aoxing Pharmaceutical Jersey City, N.J.-based Aoxing Pharmaceutical Company, Inc., is a specialty pharmaceutical company specializing in research, development, manufacturing and distribution of a variety of narcotic, pain-management, and addiction treatment pharmaceutical products. As of Dec. 31, 2012, the Company had one operating subsidiary: Hebei Aoxing Pharmaceutical Co., Inc., which is organized under the laws of the People's Republic of China. As of Dec. 31, 2012, the Company owned 95% of the issued and outstanding common stock of Hebei. Hebei now has China's largest and the most advanced manufacturing facility for highly regulated narcotic medicines, addressing a very under-served and fast-growing market in China. * * * As reported in the TCR on Oct. 22, 2012, BDO China Dahua CPA Co., Ltd, in Shenzhen, China, expressed substantial doubt about Aoxing's ability to continue as a going concern. The independent auditors noted that the Company continues to incur losses from operations, has negative cash flow from operations and a working capital deficit. ATLANTIC COAST: Wellington Reports 4.7% Equity Stake at Dec. 31 --------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Wellington Management Company, LLP, disclosed that, as of Dec. 31, 2012, it beneficially owns 124,020 shares of common stock of Atlantic Coast Financial Corporation representing 4.72% of the shares outstanding. A copy of the filing is available for free at http://is.gd/mLKVx3 About Atlantic Coast Jacksonville, Florida-based Atlantic Coast Financial Corporation is the holding company for Atlantic Coast Bank, a federally chartered and insured stock savings bank. It is a community- oriented financial institution serving northeastern Florida and southeastern Georgia markets through 12 locations, with a focus on the Jacksonville metropolitan area. The Company's balance sheet at Sept. 30, 2012, showed $784.8 million in total assets, $741.7 million in total liabilities, and stockholders' equity of $43.1 million. Consent Order With OCC On Aug. 10, 2012, the Company's Board of Directors of the Bank agreed to a Consent order (the Agreement) with its primary regulator, the OCC. Among other things the Agreement provides that by Dec. 31, 2012, the Bank must achieve and maintain total risk based capital of 13.00% of risk weighted assets and Tier 1 capital of 9.00% of adjusted total assets. As a result of entering into the Agreement to achieve and maintain specific capital levels, the Bank's capital classification under the Prompt Corrective Action (PCA) rules has been lowered to adequately capitalized, notwithstanding actual capital levels that otherwise would be deemed well capitalized under such rules. The Bank has satisfied all requirements under the Agreement to date. The Bank applied for and received OCC approval for an extension to Dec. 8, 2012, to file its Strategic Plan and Capital Plan. ATLANTIC COAST: Ithan Creek Holds 4.7% Equity Stake at Dec. 31 -------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Echange Commission, Ithan Creek Master Investment Partnership (Cayman) II, L.P., and Wellington Hedge Management, LLC, disclosed that, as of Dec. 31, 2012, they beneficially own 124,020 shares of common stock of Atlantic Coast Financial Corporation representing 4.72% of the shares outstanding. A copy of the filing is available for free at http://is.gd/6vcJIW About Atlantic Coast Jacksonville, Florida-based Atlantic Coast Financial Corporation is the holding company for Atlantic Coast Bank, a federally chartered and insured stock savings bank. It is a community- oriented financial institution serving northeastern Florida and southeastern Georgia markets through 12 locations, with a focus on the Jacksonville metropolitan area. The Company's balance sheet at Sept. 30, 2012, showed $784.8 million in total assets, $741.7 million in total liabilities, and stockholders' equity of $43.1 million. Consent Order With OCC On Aug. 10, 2012, the Company's Board of Directors of the Bank agreed to a Consent order (the Agreement) with its primary regulator, the OCC. Among other things the Agreement provides that by Dec. 31, 2012, the Bank must achieve and maintain total risk based capital of 13.00% of risk weighted assets and Tier 1 capital of 9.00% of adjusted total assets. As a result of entering into the Agreement to achieve and maintain specific capital levels, the Bank's capital classification under the Prompt Corrective Action (PCA) rules has been lowered to adequately capitalized, notwithstanding actual capital levels that otherwise would be deemed well capitalized under such rules. The Bank has satisfied all requirements under the Agreement to date. The Bank applied for and received OCC approval for an extension to Dec. 8, 2012, to file its Strategic Plan and Capital Plan. AVAYA INC: S&P Assigns 'CCC+' Rating to 2nd Lien Notes Due 2021 --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC+' issue-level rating to U.S.-based Avaya Inc.'s proposed second-lien notes due 2021. The recovery rating is '5', reflecting S&P's expectation of modest (10% to 30%) recovery for second-lien debt holders in the event of default. The company's existing ratings, including the 'B-' corporate credit rating, are unchanged. The outlook is stable. The proposed notes will rank equally with all of Avaya's future second-lien debt and junior to existing and future senior secured debt. The company plans to use the proceeds from this offering to retire its senior unsecured notes due 2015. As of Feb. 19, 2013, approximately 90% of 2015 unsecured noteholders have agreed to exchange their notes for the second-lien notes at par plus an incentive fee. The ratings reflect Avaya's business risk profile, which S&P characterizes as "weak," based on the company's challenges to reestablish consistent growth in enterprise communications core markets. The ratings also reflect its "highly leveraged" financial risk profile; leverage remains very high, at about 10x for the 12 months ended Dec. 31, 2012, including underfunded pension adjustments, operating lease adjustments, and certain recurring restructuring costs. S&P views Avaya's management and governance as "fair". "Based on our expectations for a gradual improvement to revenue performance and steady margin trends, we expect EBITDA margins will improve toward 20% over the coming year. We also expect cash payments for restructuring to subside, as well as capital expenditures and pension funding to remain steady over the coming year, resulting in a moderation of negative free cash flow and leverage, as well as maintenance of more than $200 million quarter end cash balances over the coming 12 months. In the December quarter, Avaya reported an 11% year-over-year revenue decline, about a 300 basis point sequential improvement to its gross margins, flat sequential operating expenses, and negative free cash flow of $24 million," S&P said. "We believe Avaya has "adequate" liquidity over the next 12 months. On Dec. 30, 2012, cash amounted to $285 million and the company had collective availability of about $450 million under revolving credit facilities expiring in 2016. We expect cash uses to include about $430 million of cash interest expense, $120 million of capital expenditures, $170 million of pension funding, and about $135 million of cash restructuring costs over the coming 12 months. Completion of the current debt transaction will void springing maturity conditions applicable to first-lien debt and, as a result, weighted average debt maturities for loans and notes extend by almost two years to 2017. The company's next significant debt maturity will be its first-lien term loan due October 2014 (approximately $580 million principal outstanding as of Dec. 31, 2012)," S&P added. The rating outlook is stable. S&P expects that over the coming year EBITDA growth will resume from current levels and that the company will revive a path toward positive free cash flow and that this performance should position it to meet its 2014 refinancing requirements. A downgrade would likely be the result of a sustained deterioration in operating trends, causing EBITDA generation to decline, free cash flow to remain negative or weak, or cash balances to erode below $200 million, increasing refinancing concerns for 2014 maturities. S&P will not consider an upgrade until Avaya has considerably reduced leverage, to a debt-to-EBITDA level of below 7x on a sustained basis. RATINGS LIST Avaya Inc. Corporate Credit Rating B-/Stable/-- New Rating Avaya Inc. Second-Lien Notes Due 2021 CCC+ Recovery Rating 5 BERNARD L. MADOFF: Safe Harbor Doesn't Protect Some Customers ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trustee for Bernard L. Madoff Investment Securities Inc. won a victory on Feb. 15 when U.S. District Judge Jed Rakoff filed an opinion allowing lawsuits to go back six years against people who actually knew there was fraud. The report notes that the victory was the second in one week by Irving Picard, the Madoff trustee. Earlier, Judge Rakoff ruled that Mr. Picard isn't required to pay claims of customers who received stolen money within two years of bankruptcy. According to the report, the decision at the week's end was the product of contentions by customers or later recipients of stolen funds that they should be protected by the safe harbor prohibiting suits looking back more than two years before bankruptcy. For those who knew Madoff was a fraud, the trustee said it was "intellectually corrupt" for them to hide behind the so-called bankruptcy safe harbor. In a three-page opinion on Feb. 15, Judge Rakoff, the Bloomberg report relates, ruled that the safe harbor can't be used as a defense by anyone who was the first or subsequent recipient of stolen money and had "actual knowledge" of Madoff's fraud. Judge Rakoff said he will file a more lengthy opinion later giving his reasons in detail. The report recounts that Judge Rakoff handed down opinions in September 2011 and April 2012 ruling that Section 546(e) of the U.S. Bankruptcy Code, known as the safe harbor, only allows a bankruptcy trustee to sue for recovery of payments going back two years before bankruptcy. Mr. Picard wanted all suits to reach back six years. Judge Rakoff set aside a group of lawsuits involving defendants who allegedly either knew or had reason to believe Madoff was conducting a fraud. Mr. Picard told Judge Rakoff about two lawsuits where the defendants allegedly received cash payments for years from Madoff that were neither reported to the Internal Revenue Service nor shown on their account statements. Mr. Picard said it was "intellectually corrupt" for those defendants nonetheless to argue they are protected by the safe harbor. The report also points out that Mr. Picard took the position the safe harbor was enacted by Congress "to prevent disruptions of the securities markets." Mr. Picard contended the safe harbor shouldn't be used to protect those with knowledge or a high level of suspicion that Madoff was conducting a fraud. Evidently from the Feb. 15 ruling, Judge Rakoff will disregard the safe harbor only for those who actually knew there was a fraud, not those who had a high level of suspicion. 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.) BESRA GOLD: Incurs $4.6-Mil. Net Loss in Dec. 31 Quarter -------------------------------------------------------- Besra Gold Inc. reported a net loss of US$4.6 million on US$21.5 million of sales for the three months ended Dec. 31, 2012, compared with net income of US$2.0 million on US$28.8 million of sales for the three months ended Dec. 31, 2011. "On Nov. 21, 2012, 41, 40 and 90% of the outstanding principal amounts of the 8% senior secured redeemable gold delivery promissory notes due May 31, 2013, 9% CAD subordinated unsecured convertible redeemable promissory notes due March 26, 2014, and 8% USD unsecured convertible redeemable notes due May 6, 2015, were amended into 8% Gold-Linked notes due May 6, 2015. Capital restructure expenses amounted to US$4.0 million and consist of US$1.8 million of the increase in face value of the amended gold loan from US$3.8 million to US$5.6 million, US$2.0 million of the deferred fees on old debt were expensed upon adoption of extinguishment accounting and US$0.2 million of consultant fees." For the six months ended Dec. 31, 2012, the Company had a net loss of US$8.3 million on US$40.7 million of sales as compared to net income of US$2.4 million on US$41.2 million of sales for the six months ended Dec. 31, 2011. The Company's balance sheet at Dec. 31, 2012, showed US$118.3 million in total assets, US$75.3 million in total liabilities, and stockholders' equity of US$43.0 million. "During the quarter ended June 30, 2012, the Company had a significant disruption to its operations at the Phuoc Son Mine which negatively impacted the cash flows and profitability. The Phuoc Son Mine has now resumed normal operations. As at Dec. 31, 2012, the Group's current liabilities exceeded its current assets by US$10.6 million. As a result, there is a substantial doubt regarding the ability of the Company to continue as a going concern." A copy of the Company's consolidated financial statements for the three-month period ended Dec. 31, 2012, is available at: http://is.gd/XtoNRm A copy of the Management Discussion and Analysis is available at: http://is.gd/vNTYih Headquartered in Toronto, Ontario, Canada, Besra Gold Inc. and its subsidiaries' principal activities are the acquisition, exploration, development, mining and re-instatement of gold bearing properties in Southeast Asia. The Company has two key properties located in Central Vietnam: the Bong Mieu Gold property and the Phuoc Son Gold property; as well as one key property in Central Malaysia: The Bau Gold property; and, one key property in the Northern Philippines: The Capcapo Gold property. BIG SANDY: Wants Plan Filing Period Extended Until March 11 ----------------------------------------------------------- Big Sandy Holding Company asks the Bankruptcy Court to extend its exclusive period to file a plan until March 11, 2013, and the period to solicit acceptances for that plan until May 10, 2013. According to Big Sandy, since the filing of its case, its primary focus has been the marketing, auction and sale of the capital stock of Mile High Banks, its primary asset. The Debtor obtained approval of the sale on Dec. 7 and closed the sale on Dec. 31. The Debtor says it intends to file a liquidating plan and has already secured Thomas M. Kim, CTP, Senior Managing Director, r2 Advisors, LLC, to take on the role as plan administrator and come into management to see the case through confirmation. The Debtor believes that a 45-day extension will provide it with the necessary time to prepare the plan. About Big Sandy Holding Founded in 1991, Big Sandy Holding Company is a Colorado corporation registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. Big Sandy is the direct corporate parent of Mile High Banks, a Colorado state chartered Bank. Big Sandy filed for Chapter 11 bankruptcy (Bankr. D. Colo. Case No. 12-30138) on Sept. 27, 2012, to recapitalize the Bank. Bankruptcy Judge Michael E. Romero presides over the case. Michael J. Pankow, Esq., and Joshua M. Hantman, Esq., at Brownstein Hyatt Farber Schreck, LLP, serve as the Debtor's counsel. In its petition, Big Sandy estimated $10 million to $50 million in assets and debts. The petition was signed by Dan Allen, chairman/CEO/president. Big Sandy has a deal to sell substantially all of its assets -- essentially 100% of the issued and outstanding capital stock of Mile High Banks -- Strategic Growth Bancorp Inc., subject to higher and better offers. Strategic is prepared to proceed with a transaction which would recapitalize the Bank in accordance with regulatory requirements -- by up to $90 million -- and acquire the Bank from the Debtor for $5.5 million. Richard A. Wieland, U.S. Trustee for Region 19, was unable to form a an official committee of unsecured creditors in the Debtor's case. BON-TON STORES: FMR LLC Discloses 12.9% Equity Stake ---------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission on Feb. 13, 2013, FMR LLC and Edward C. Johnson 3d disclosed that they beneficially own 2,221,409 shares of common stock of Bon-Ton Stores Incorporated representing 12.950% of the shares outstanding. FMR LLC previously reported beneficial ownership of 2,003,409 common shares or a 11.719% equity stake as of Aug. 9, 2012. A copy of the amended filing is available for free at http://is.gd/wszP4W About Bon-Ton Stores The Bon-Ton Stores, Inc., with corporate headquarters in York, Pennsylvania and Milwaukee, Wisconsin, operates 273 department stores, which includes 11 furniture galleries, in 24 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger's and Younkers nameplates and, in the Detroit, Michigan area, under the Parisian nameplate. The Company's balance sheet at Oct. 27, 2012, showed $1.84 billion in total assets, $1.80 billion in total liabilities, and $40.30 million in total shareholders' equity. * * * As reported by the TCR on July 13, 2012, Moody's Investors Service revised The Bon-Ton Stores, Inc.'s Probability of Default Rating to Caa1/LD from Caa3. The Caa1/LD rating reflects the company's exchange of $330 million of new senior secured notes due 2017 for $330 million of its unsecured notes due 2014. Moody's also affirmed the company's Corporate Family Rating at Caa1 and affirmed the Caa3 rating assigned to the company's senior unsecured notes due 2014. Moody's said the affirmation of the company's 'Caa1' corporate family rating reflects the company's persistent negative trends in sales and operating margins and uncertainties that the company's strategies to reverse these trends will be effective. BURGER KING: Fitch Raises Issuer Default Rating to 'B+' ------------------------------------------------------- Fitch Ratings has upgraded the ratings of Burger King Worldwide, Inc. and its related entities as follows: Burger King Worldwide, Inc. (Parent Holding Co.) -- Long-term Issuer Default Rating (IDR) to 'B+' from 'B'. Burger King Capital Holdings, LLC (BKCH/Parent of Burger King Holdings, Inc.) and Burger King Capital Finance, Inc. (BKCF/Financing Subsidiary) as Co-Issuers -- Long-term IDR to 'B+' from 'B'; -- 11% sr. discount notes due 2019 to 'B-/RR6' from 'CCC+/RR6'. Burger King Holdings, Inc. (Direct Parent of Burger King Corporation) -- Long-term IDR to 'B+' from at 'B'. Burger King Corporation (Operating Company) -- Long-term IDR to 'B+' from at 'B'; -- Secured revolver due 2015 to 'BB+/RR1' from 'BB/RR1'; -- Secured term loan A due 2017 to 'BB+/RR1' from 'BB/RR1'; -- Secured term loan B due 2019 to 'BB+/RR1' from 'BB/RR1'; -- 9.875% senior unsecured notes due 2018 to 'B+/RR4' from 'B/RR4'. At Dec. 31, 2012, Burger King had approximately $3 billion of total debt. The Rating Outlook is Positive. Rating Rationale: The upgrade of Burger King's ratings is due to the firm's operating income growth, declining financial leverage, and improving brand image which should support positive future same- store sales (SSS) performance. Burger King is successfully executing its stated business strategy which includes improving its North American business, becoming nearly 100% franchised, and accelerating international expansion, mainly via franchisees or master franchisee joint ventures (JVs). Global net restaurant growth was 3.9% or a total of 485 restaurants during 2012. Global SSS have been positive for six consecutive quarters and were 3.2% for the 2012 year, a stark improvement versus a decline of 0.5% during 2011. Burger King's expanded line of premium burgers, smoothies, chicken strips, and salads along with promotions such as the 55-cent anniversary WHOPPER celebration helped drive traffic during 2012. Income from operations increased 15.2% to $418 million while EBITDA grew 11.5% to $652 million in 2012. Burger King's EBITDA margin of 33.2% for 2012, up from 25% in 2011, is benefiting from an accelerated pace of refranchising lower margin company-operated restaurants, reduced general and administrative expenses (G&A) and higher royalty income. Burger King was 97% franchised at Dec. 31, 2012 and expects to be nearly 100% franchised by the end of 2013. For the year ended Dec. 31, 2012, total debt-to-operating EBITDA was 4.7x and total adjusted debt-to-operating EBITDAR was approximately 5.4x. Cash flow from operations totaled $224 million and FCF (cash flow from operations less capital expenditures and dividends) was $140 million. Fitch projects that rent-adjusted leverage will fall below 5.0x in 2013 due mainly to EBITDA growth. Fitch also believes Burger King has the capacity to generate $150 million or more of FCF annually due to lower capital expenditure requirements once fully franchised. Fitch views this level of FCF as meaningful for a company with Burger King's revenue base and debt structure. Total revenue for 2012 was $2 billion and, as mentioned previously, total debt was $3 billion. Positive Outlook: The Positive Outlook is due to deleveraging expectations over the near-to-intermediate term, Fitch's view that Burger King's North America operations will continue to improve, and the fact that the company is laying a solid foundation for faster international growth. Operating EBITDA during 2013 will be supported by controlled management general and administrative expenses (G&A), same-store sales growth, and additional franchisee fees and royalties as units are developed. Burger King expects to spend $200 - $220 million annually on a go-forward basis on G&A overhead, is tweaking its barbell menu pricing strategy to increase its competitiveness during 2013, and sees further accelerated international net restaurant growth in 2013. Term loan amortization, as discussed below, will result in only modest debt reduction over the near term. Burger King currently plans to refinance its higher coupon debt in the 2014/2015 time period. The firm's 9.875% notes due in 2018 and 11% discount notes due 2019 are subject to a make whole payment until Oct. 15, 2014 and April 15, 2015, which makes calling these notes uneconomical prior to late 2014. Key Rating Drivers: Declining Leverage and Meaningful Cash Flow Generation Burger King's rent-adjusted leverage has declined from nearly 7.0x to approximately 5.0x following the October 2010 leveraged buy-out by 3G Capital Partners, Ltd. The improvement has been due to the positive impact of reduced G&A expenses and SSS growth on operating income and cash flow. Selling, general, and administrative expenses declined to $346 million in 2012 from $417 million in 2011 and as mentioned previously global SSS increased 3.2% versus a decline of 0.5% in 2011. Additionally, a growing percentage of franchised units, which provide high-margin royalty-based revenue, are improving Burger King's ability to generate more stable operating cash flow. Lower capital expenditures as franchisees fund remodeling and new unit growth along with a modest common dividend should also support discretionary FCF. Burger King expects capital expenditures to decline to $30 - $40 million in 2013, from $70 million in 2012, and increased its quarterly dividend to $0.05/share resulting in an approximate $70 million annual cash outflow for 2013. Same-Store Sales (SSS) Growth and Net New Unit Development SSS performance and net new unit growth are important rating drivers for Burger King's credit ratings, as they are a key indicator of the health of the Burger King system. As a fully franchised entity, these business statistics are expected to provide insight on operating earnings and cash flow trends. Fitch believes premium menu items such as the recently launched Avocado and Swiss Whopper, a new improved coffee platform, value-oriented promotions, and limited time offers to drive transactions will support SSS performance during 2013, although the firm will lap strong comparisons in the first half. Moreover, master franchise JV agreements established during 2012 should support meaningful new unit development in markets including Asia, Eastern Europe, Latin America, and South Africa during 2013. North American Operations Improvement in Burger King's North America operations is a key factor in Fitch's ratings as the region represented 63% of Burger King's $751 million of adjusted EBITDA excluding unallocated management general and administrative expenses and 58% of the firm's 12,997 system wide restaurants in 2012. Fitch views Burger King's progress related to its four pillar strategy - Menu, Marketing, Image, and Operations - for North America positively as the company is experiencing improvement in guest satisfaction and is gradually broadening its customer base to include more women and customers over the age of 50. Burger King's reorganized field organization and new mandatory on- line training for operators should improve store-level operations and strengthen its relationship with franchisees. Furthermore, recent refranchising agreements have been structured to include required remodeling, solidifying the firm's ability to reach its goal of having 40% of its North America system remodeled by 2015. At Dec. 31, 2012, the Burger King system had reimaged 19% of its 7,476 units in the U.S. and Canada, an improvement from 11% at the beginning of 2012. Recovery Ratings: The 'RR1' Recovery Rating on Burger King's secured debt reflects Fitch's belief that recovery prospects on these obligations would remain outstanding at 91%-100% if the firm were to file for bankruptcy protection or restructure its balance sheet. Collateral for this debt includes a perfected first-priority security in interest in substantially all of Burger King's and each guarantor's assets including intangible assets, subject to certain exceptions. Conversely, the 'B+/RR4' rating on Burger King's 9.875% 2018 notes is due to Fitch view that recovery would be average or in the 31% - 50% range in a distressed situation. The 'B-/RR6' rating on BKCH's and BKCF's 11% discount notes due 2019 implies recovery prospects of 10% or less in a distressed situation. These notes are structurally subordinated to debt issued by Burger King Corporation because they are not guaranteed and were not issued by the operating company which holds the vast majority of the firm's $5.6 billion of assets at Dec. 31, 2012. Liquidity and Maturities: Burger King has consistently maintained good liquidity. At Dec. 31, 2012, the firm had $547 million of cash and at Sept. 30, 2012, $118.5 million of revolver availability net of letters of credit. Liquidity is supported by the firm's FCF, which Fitch projects can average at least $150 million annually as mentioned previously. Maturities are manageable in the intermediate term and consist mainly of term loan amortization payments through 2018. Beginning Dec. 31, 2012, Burger King's new term loan A amortizes at a rate of $6.4 million per quarter, stepping up to $12.9 million on Dec. 31, 2013, $19.3 million on Dec. 31, 2014, $25.8 million on Dec. 31, 2015, and $32.2 million on Dec. 31, 2016 with the balance payable at maturity. The new term loan B amortizes in quarterly installments equal to 0.25% of original principal with the balance due at maturity. Financial Covenants: Burger King's credit agreement subjects the firm to maximum total leverage, not adjusted for leases, and minimum interest coverage financial maintenance covenants. Maximum leverage, excluding up to $450 million of cash, is 6.25x beginning Dec. 31, 2012, stepping down to 6.0x March 31, 2013 through June 30, 2013, 5.75x Sept. 30, 2013 through March 31, 2014, 5.25x June 30, 2014 through June 30, 2015, and 5.0x thereafter. Minimum interest coverage is 1.7x beginning Dec. 31, 2012 until June 30, 2013 increasing to 2.0x after June 30, 2015. Burger King should maintain good cushion under these covenants as current metrics are well within these parameters. Following the end of the fiscal quarter ending Dec. 31, 2012 and thereafter, Burger King is required to use 50% of its annual Excess Cash Flow (as defined by the agreement) for term loan repayment if total leverage is greater than 4.5x. The requirement declines to 25% if total leverage is less than 4.5x but greater than 3.5x or 0% if total leverage is less than 3.5x. Fitch anticipates that Burger King will not be required to make an excess cash flow payment in 2013. Rating Sensitivities Future developments that may, individually or collectively, lead to a positive rating action include: -- Material additional deleveraging; such that total adjusted debt-to-operating EBITDAR falls below the 4.5x range, along with continued strong FCF could result in an upgrade in Burger King's ratings; -- Sustainably strong SSS performance, particularly in North America, would be required for additional upgrades. Future developments that may, individually or collectively, lead to a negative rating action include: -- A downgrade in the near term is not anticipated given Burger King's improved leverage profile, good liquidity, and lack of near-term maturities; -- However, a meaningful increase in leverage, due to increased debt or a prolonged period of SSS declines, increased covenant risk, and negligible FCF could result in a downgrade in ratings. BURLINGTON HOLDINGS: S&P Retains 'B-' CCR Following $50MM Add-On ---------------------------------------------------------------- Standard & Poor's Ratings Services said that its 'B-' corporate credit and issue-level ratings on U.S. off-price apparel retailer Burlington Coat Factory Warehouse Corp. are unaffected by the retailer's upsizing of the recently rated senior unsecured payment-in-kind (PIK) toggle notes to $350 million from $300 million. According to the company, it will use the additional proceeds from the offering to fund a divided to its sponsors. Pro forma leverage increases slightly, but S&P expects leverage to be in the 6x area over the next year. For the corporate credit rating rationale, see the research update on Burlington Coat Factory Warehouse published on Feb. 14, 2013. RATINGS LIST Burlington Coat Factory Warehouse Corp. Corporate credit rating B-/Stable/-- Senior secured term loan B+ Recovery rating 1 Senior unsecured CCC Recovery rating 6 Burlington Holdings LLC Burlington Holdings Finance Inc. $350 mil sr unsecd notes due 2018 CCC Recovery rating 6 CAESARS ENTERTAINMENT: Online Gaming Bill is Positive, Fitch Says ----------------------------------------------------------------- Fitch Ratings believes the expected passage of online gaming in New Jersey is a positive ratings consideration for Borgata and to lesser extent for Caesars Entertainment Corp. Fitch rates Borgata's Issuer Default Rating (IDR) 'B-' with a Stable Outlook and Caesars' IDR 'CCC' with a Negative Outlook. (Marina District Finance Company, Inc is the issuing entity for Borgata). On February 7, New Jersey Governor Chris Christie conditionally vetoed an online gaming bill passed by the state's legislature in December 2012. The conditional veto calls for an increase in tax rate to 15% from 10%, a 10-year sunset provision to allow for a review of online gaming in the state and additional safeguards. The leaders in both houses in the New Jersey legislature stated that they plan to move forward on the revised bill on February 26th. Important provisions untouched by the governor were the exclusivity to the Atlantic City casinos, no limit on the type of games offered and ability to serve non-residents (as long as they are playing within the state). The New Jersey bill, along with other states' online gaming proposals, is summarized in Fitch's Online Gaming Monitor. The report also provides an overview of recent trends in online gaming and of companies that may benefit from proliferation of online gaming in the U.S. Online Gaming A Positive For New Jersey Casinos The passage of the online gaming in New Jersey would be a positive for Atlantic City market as a whole since it may help reverse the trend of New Jersey area players choosing closer to home gambling options in Pennsylvania and New York. Fitch expects Atlantic City casinos to experience some cannibalization from online gaming but on a net basis incremental gaming revenues accruing to Atlantic City casinos should still be positive when taking into account the following: -- ability to cross-market between physical casinos and online gaming; -- online poker's established popularity among poker players; -- ability to recapture New Jersey residents traveling to New York or Pennsylvania to gamble; and -- the added convenience factor, which may increase session time, frequency and speed of wagering by players. Additionally, online gaming also has the prospect of being a higher margin business relative to Atlantic City's land based operations, which generally have margins below 20%. Although the following may eat into the margin upside: -- the tax rate differential (17.5% compared to land-based 9.25%); -- potential for having third-party agreements for online gaming platforms and content; and -- initial marketing and promotional activity to ramp up the online business. More near term, the prospect of participating in online gaming has been keeping unprofitable casinos open in Fitch's view. In absence of online gaming, casinos like Atlantic Club would likely close removing unneeded capacity from the city thus relieving competitive pressure. Some May Benefit More Than Others While Fitch believes that online gaming will be a net positive for New Jersey casinos as a whole, some operators will benefit more than others while more marginal participants in online gaming may see aggregate online and land based revenues decline. The need for substantial capital to get online gaming operational and the industry's propensity to cluster around top two or three most competitive operators (especially in case of poker) may leave several of the nine license holders with less than their fair share of online gaming revenues. Fitch expects the bulk of online gaming revenue to accrue to Caesars (has four Atlantic City properties) and Borgata, which together account for over 60% of the city's gaming revenues and have deep player databases. Caesars and Borgata's parent companies (Boyd and MGM) have established relationships with 888 Holdings plc and bwin.party, respectively, which are large online gaming companies in Europe. Other operators that may get a fair share of online gaming revenues include Golden Nugget and Atlantic Club. The former is licensed for online poker in Nevada and the latter is being bought by PokerStars, the largest online poker operator in the world. Specific Borgata Credit Considerations Fitch believes that online gaming is positive for Borgata although the exact benefit is hard to quantify. H2 Gaming Capital forecasts online gaming revenues for Nevada at $682 million in year five of implementation of all online game types. Taking out sports betting (50% of H2's estimate) and multiplying the estimate by three times to adjust for the difference in population equals roughly $1 billion. If we adjust that by half to be conservative and to account for higher than average propensity to gamble in Nevada a reasonable starting place is approximately $500 million for online gaming potential in New Jersey. The $500 million estimate equates to just under $75 loss per average adult in the state and is at the low end of Wall Street estimates Fitch has seen. Further assuming that Borgata retains 20% market share implies $100 million in online revenue, half of which Fitch assumes will come at expense of Borgata's land-based revenue. If Borgata generates 20% margin on this business, online gaming could grow Borgata's EBITDA by $10 million relative to Borgata's EBITDA of $140.5 million for the last-12 month period ending Sept. 30, 2012. Fitch believes $10 million is conservative and there is upside to that estimate, especially if sports betting is implemented in the state. Fitch's 20% EBITDA margin estimate takes into account fees Borgata may have to pay to an online gaming platform provider, which in Borgata's case could be the partnership between Borgata's parent companies and bwin.party. While online gaming may take a year or more to implement and several years to ramp up, more near term the prospect of online gaming may help offset concerns relating to the possible gaming expansion in New York. This in turn may make it easier to refinance Borgata's 9.5% secured notes coming due October 2015 (callable at 104.75 October 2013). If the New York legislature passes an expansion bill this session, the measure will go to a referendum this November. Fitch sees New York gaming expansion, which may include table games at Aqueduct and Yonkers, as the most material near-term event risk for Borgata. Caesars Considerations For Caesars Fitch assumes 40% online gaming revenues market share, which equates to $20 million in incremental EBITDA. Like with Borgata, Fitch's market share assumption corresponds to Caesars' land-based market share. Fitch believes this assumption is reasonable given the strength of Caesars' rewards program, its World Series of Poker brand and established experience with online gaming (i.e. for-money online gaming in Europe and social gaming in U.S.). While not inconsequential, online gaming income from New Jersey alone will not materially move the needle for Caesars in terms of the company's ability to grow into its highly leveraged capital structure. On consolidated basis, Caesars has $23.5 billion of debt and $2.0 billion of reported adjusted EBITDA for last 12- month period ending Sept. 30, 2012 for debt/EBITDA ratio of 11.8x. More meaningful catalysts for Caesars would be a stronger recovery on the Las Vegas Strip (40% of consolidated EBITDA) and/or federal level legalization of online gaming (or at least poker). For creditors, an interesting consideration is how Caesars will allocate New Jersey online gaming EBITDA between its restricted groups and Caesars Interactive, which is outside the two main restricted groups - Caesars Entertainment Operating Company (OpCo; IDR rated 'CCC' with Negative Outlook by Fitch) and the PropCo. Three of Caesars' four casinos in Atlantic City are part of the Opco and Harrah's Atlantic City is part of the PropCo. CCCG LLC: Chapter 11 Case Summary & 5 Unsecured Creditors --------------------------------------------------------- Debtor: CCCG, LLC 110 Buffalo Run Lafayette, LA 70503 Bankruptcy Case No.: 13-50137 Chapter 11 Petition Date: February 18, 2013 Court: U.S. Bankruptcy Court Western District of Louisiana (Lafayette) Judge: Robert Summerhays Debtor's Counsel: David Patrick Keating, Esq. THE KEATING FIRM, APLC P.O. Box 3426 Lafayette, LA 70502 Tel: (337) 354-2464 Fax: (337) 354-2467 E-mail: rick@thekeatingfirm.com Scheduled Assets: $1,175,000 Scheduled Liabilities: $1,032,600 A copy of the Company's list of its five unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/lawb13-50137.pdf The petition was signed by Bethany Laukhuff, managing member. COMPTON, CA: Wells Capital Invests in Bond Offering --------------------------------------------------- Wells Capital, a division of Wells Fargo Bank, agreed on Feb. 19 to purchase $5,000,000 in a short-term security bond offering from the City of Compton, CA, (the City), in a tax revenue anticipation note (TRAN) negotiated by IFS Securities (IFS). IFS Securities, the City's investment banker, had several buyers interested in the City's note offering. "The city manager's recovery plan and the positive action taken since his arrival last August was a key factor in obtaining the order for the whole note issue from Wells Capital," explained Craig Walker, IFS Securities vice president, public finance. "By utilizing a lockbox structure of revenues which is a first for Los Angeles County we were able to provide security to Wells Capital and flexibility for the City," he added. The City of Compton's finance team for the offering included IFS, underwriter; Comer Capital Group, LLC, financial advisor; Peck Shaffer & Williams, LLP, bond counsel; Sevfarth Shaw, LLC, special counsel; and US Bank, trustee. "After an extensive review of the City of Compton's finances, it's great to have one of the largest banks in California validate Compton's credit worthiness, especially in light of the financial rumors the City had to address in 2012," City Manager G. Harold Duffey, said. This is the stated opinion of Mr. Duffey as the bank has not expressed a public opinion. Mr. Duffey acknowledged that the TRAN was possible only with the support of the Los Angeles Board of Supervisors and Los Angeles County's Administrator and Auditor Controller. The County agreed to establish a "lockbox system" in which proceeds that would normally be distributed to Compton would be held in trust and paid directly to Wells Fargo. This process, the first of its kind in Los Angeles County, reduces the creditors risk and allows the City to receive an advance on its tax allocations. Last summer the City had to fend off speculation that it would file bankruptcy by September. "It's February 2013 and we are still in business," Duffey added. The City, like most cities in California, depends on sales and property taxes that flow from the state or county government and those distributions are cyclical. However, expenses occur on a monthly basis, which sometimes lead to cash flow issues. "Cities usually address cash flow needs by issuing short-term internal borrowing from other funds," reported Brandon Comer, Comer Capital Group, the City's Financial Advisor. "I think we are moving the City in the right direction," Duffey said. The City hired a new auditor to resolve issues from the unsigned 2010/11 audit. CalPERS dropped its lawsuit against the City and the City is in good standing with its retirement accounts. It's also important to note that this debt will be repaid by June 28, 2013, with remaining 2012/13 property and sales tax allocations. "IFS is pleased to have served the City and assist in their entry into the capital markets. Institutional credit access is a key component for cities and counties to manage their finances properly. By assisting Compton on their first TRAN we feel proud to have made that capital market access possible with such a high quality institution as Wells Capital," commented IFS Securities President Alex McKenzie. IFS Securities, Inc. -- http://www.ifssecurities.com-- is a full- service independent broker-dealer who understands retail and wholesale advisory networks as well as global capital markets. Based in Atlanta, GA, IFS Securities has 32 offices in 17 states and Puerto Rico and is a member of FINRA, MSRB and SIPC. CONEX INTERNATIONAL: Ch. 7 Trustee Sues Ex-Execs Over $246M Buyout ------------------------------------------------------------------ Lance Duroni of BankruptcyLaw360 reported that the bankruptcy trustee for Texas-based Conex International LLC on Friday sued the oil industry contractor's former owners and management over a $246 million leveraged buyout that allegedly tipped the company into Chapter 7. The report related that the 2008 buyout was designed to cash out shareholders -- led by Conex founder and Chairman John Duplissey and his family -- while shifting the risk of the transaction to the company's creditors and the buyer, Heico Companies LLC, according to an adversary complaint filed in Delaware bankruptcy court. On Feb. 20, 2011, Wells Fargo, Bank of Montreal, and The Prudential Insurance Company of America, commenced an involuntary Chapter 7 bankruptcy case against Conex Holdings, LLC, and an involuntary Chapter 11 bankruptcy cases against Conex International, LLC (Bankr. D. Del. Case No. 11-10503) and Advantage Blasting & Coating, LLC (Bankr. D. Del. Case No. 11- 10502). COVENANT BANCSHARES: Wipfli LLP Raises Going Concern Doubt ---------------------------------------------------------- Covenant Bancshares, Inc., filed on Feb. 13, 2013, its annual report on Form 10-K for the fiscal year ended Dec. 31, 2011. Wipfli LLP, in Oak Brook, Illinois, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations and the Company's subsidiary Bank does not meet its minimum capital requirements established by the Federal Deposit Insurance Corporation and the Illinois Department of Financial and Professional Regulation. The Company reported a net loss of $2.9 million on $2.4 million of net interest income for 2011, compared with a net loss of $1.1 million on $2.7 million of net interest income for 2010. The Company's balance sheet at Dec. 31, 2011, showed $62.5 million in total assets, $61.5 million in total liabilities, and stockholders' equity of $987,000. A copy of the Form 10-K is available at http://is.gd/b1Gkaq Covenant Bancshares, Inc., headquartered in Forest Park, Illinois, is a holding company for Covenant Bank. Covenant Bank, with a loan portfolio consisting primarily of loans secured by single family residences has seen a rapid and precipitous decline in the value of the collateral securing its loan portfolio and a sharp decrease in the Bank's capital. DAFFY INC: Can Borrow $12M from Jericho I to Pay Wells Fargo Loans ------------------------------------------------------------------ Daffy's, Inc. won court authority to obtain postpetition financing totalling $12,030,387 from Jericho Acquisition I LLC in an amount sufficient to satisfy in full the loans with Wells Fargo Bank, National Association, and cash collateralize certain letters of credit with Wells Fargo. As of Dec. 27, 2012, the total outstanding amount of the Wells Fargo Loans was $11,707,262 and the total outstanding amount of the Wells Fargo Letters of Credit was $323,125. Jericho I will be entitled to (i) a first priority valid, perfected, and enforceable Lien, subject only to the Carve Out and the Permitted Prior Liens, upon substantially all of the Debtor's real and personal property securing a first priority valid, perfected, and enforceable secured claim in the amount of the Jericho I DIP Loan Amount and (ii) a superpriority administrative expense in the amount of the Jericho I DIP Loan Amount, subject to the Carve Out. Other than senior secured claims related to the permitted prior liens, the DIP liens and DIP superpriority claim are subordinate only to (a) allowed administrative expenses for fees required to be paid to the Clerk of the Court and to the Office of the United States Trustee; and (b) professional fees of, and costs and expenses incurred by, professionals or professional firms retained by the Debtor and of any committee allowed by the Court after the date of entry of the Interim Order up to $250,000. About Daffy's Inc. Secaucus, New Jersey-based Daffy's Inc., a 19-store chain, off- price retailer of designer fashions for women, men, children, and the home, located in the New York metropolitan area and Philadelphia, filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-13312) on Aug. 1, 2012, with a plan to shutter the business and pay off creditors in full. A copy of the Plan is available at: http://bankrupt.com/misc/Daffys_Chapter_11_Plan.pdf The Debtor has an Asset Purchase, Assignment and Support Agreement, dated as July 18, 2012, with Marcia Wilson, The Wilson 2003 Family Trust, and Jericho Acquisitions I LLC, pursuant to which the Debtor's leasehold interests will be sold to Jericho Acquisitions I LLC through the Plan. The Debtor has hired Gordon Brothers Retail Partners, LLC and Hilco Merchant Resources LLC to liquidate the Debtor's inventory. The Debtor estimates that the proceeds received from the liquidation of its inventory and the sale of its leasehold interests will exceed at least $60 million to satisfy approximately $37 million in claims. Cost of administering the chapter 11 case will not exceed approximately $5 million (after certain expenses are reimbursed pursuant to the Purchase Agreement). Accordingly, the Debtor believes that the disposition Of its principal assets will generate more than sufficient cash to pay all holders of Allowed Claims (as such term is defined in the Plan) in full, with interest, thus rendering all lasses under the Plan unimpaired. The Debtor has filed its schedules, disclosing $51,106,469 in total assets and $36,646,856 in total liabilities. Bankruptcy Judge Martin Glenn presides over the case. The Debtor is represented by Andrea Bernstein, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotwill & Manges LLP as counsel. Donlin, Recano & Company, Inc., serves as claims and notice agent. The Debtor's case is being funded by a $10 million postpetition financing with Vim-3, L.L.C., Vimwilco, L.P., and Marcia Wilson, as successor to Vim Associates, as guarantors; and Wells Fargo, National Association, as DIP lender. The DIP loan consists of $2.5 million in new money loans available on a revolving basis; and the roll up of $6.2 million of existing prepetition debt. Counsel for the DIP Lender are Donald E. Rothman, Esq., and Nathan C. Pagett, Esq., at Riemer & Braunstein LLP. Gordon Brothers and Hilco Merchant Resources are represented by Curtis, Mallet-Prevost, Colt & Mosle LLP. Jericho Acquisition is represented by Brad Eric Scheler, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP. Marcia Wilson is represented by Dana B. Cobb, Esq., at Beattie Padovano, LLC. DETROIT, MI: In Fiscal Emergency Amid $326.6-Mil. Budget Gap ------------------------------------------------------------ Michael Bathon, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that according to a report that clears the way for a state takeover of Detroit, a fiscal emergency exists in the city, where officials can't reverse a slide that created a $326.6 million budget gap. A fiscal crisis grips Michigan's most-populous city, according to the report, which was ordered by Governor Rick Snyder. The conclusion lets the first-term Republican name an emergency manager to take control of Detroit's finances, a move that may spur a political backlash. He can also seek to modify and enforce an April agreement, crafted to avert a takeover. That deal envisioned spending cuts and concessions from city workers. The governor won't make a decision for "a week or two," according to Sara Wurfel, a spokeswoman. Detroit would be the sixth city in the state to be put under an emergency manager, if he takes that step. "I am not surprised by the findings of the state's financial review team," Mayor Dave Bing said in a statement. "My administration will stay focused on the initiatives that most directly impact the citizens of Detroit: public safety, public lighting, transportation, recreation and neighborhood blight removal." With the consent agreement failing to sufficiently ease Detroit's financial strains after more than six months, Gov. Snyder in December ordered state Treasurer Andy Dillon to start a preliminary review of its fiscal situation. That led to a full examination of the city's spending and long-term liabilities by a six-member team, which produced the Feb. 19 report. The city is on track to have a cash shortfall of more than $100 million by June, according to the report. Had it not borrowed to help cover earlier deficits, Detroit would have had an accumulated funding gap of $936.8 million by June of last year, the review team said. They said the city has amassed more than $14 billion in debt and long-term liabilities for pensions and post-employment benefits for municipal workers. "No satisfactory plan exists to resolve a serious financial problem," according to the report. DEWEY & LEBOEUF: Ex-Partner Sues Barclays Over Firm Capital Loan ---------------------------------------------------------------- Helen Christophi of BankruptcyLaw360 reported that a former Dewey & LeBoeuf LLP partner sued Barclays Bank PLC in New York federal court Tuesday over a loan the bank claims he accepted to fund his capital account at the defunct law firm, saying he never took out the loan. The report related that L. Londell McMillan, who headed Dewey's entertainment, media and sports group before the firm went belly- up, claimed Tuesday that he had declined to sign up for a loan program offered by Dewey and Barclays to fund his capital investment in the firm. About Dewey & LeBoeuf Dewey & LeBoeuf LLP sought Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the wind-down of its operations. The firm had struggled with high debt and partner defections. Dewey disclosed debt of $245 million and assets of $193 million in its chapter 11 filing late evening on May 29, 2012. Dewey & LeBoeuf LLP operated as a prestigious, New York City- based, law firm that traced its roots to the 2007 merger of Dewey Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird -- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in 1929. In recent years, more than 1,400 lawyers worked at the firm in numerous domestic and foreign offices. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for $6 million. The Pension Benefit Guaranty Corp. took $2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The creditors committee hired Brown Rudnick LLP led by Edward S. Weisfelner, Esq., as counsel. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. Dewey filed a Chapter 11 Plan of Liquidation and an accompanying Disclosure Statement on Nov. 21, 2012. It filed amended plan documents on Dec. 31, in an attempt to address objections lodged by various parties. A second iteration was filed Jan. 7, 2013. The plan is based on a proposed settlement between secured lenders and Dewey's official unsecured creditors' committee. It also incorporates a settlement approved by the bankruptcy court in October where 440 former partners will receive releases in return for $71.5 million in contributions. Revel AC Inc. has reached an agreement with the majority of its lenders to significantly reduce its debt by enacting a debt-for- equity conversion restructuring through voluntary, prepackaged Chapter 11 cases, the casino announced Tuesday. DIGICEL LIMITED: Fitch Rates $700 Million Senior Notes 'B' ---------------------------------------------------------- Digicel Limited's proposed US$700 million senior notes due 2021. Proceeds from the issuance are expected to be used to refinance DL's US$510 million senior notes due 2014 and for general corporate uses. 'RR4' rated securities have average recovery prospects given default and characteristics consistent with securities historically recovering 31% - 50% of current principal and related interest. The Issuer Default Rating (IDR) of DL and its parent, Digicel Group Limited, is 'B'. The Rating Outlook is Stable. Key Rating Drivers Digicel's ratings reflect solid operating performance and cash from operations (CFO) generation, diversified revenue, and expectation for stable credit metrics. In addition, the ratings are supported by its position as the leading provider of wireless services in most of its markets and strong brand recognition. Digicel's credit quality is tempered by continued high leverage and the exposure of its operations to low rated countries. Under Fitch's approach to rating entities within a corporate group structure, the IDRs of DGL, DL and Digicel International Finance Limited are the same and viewed on a consolidated basis as they have a weaker parent and the degree of linkage between parent and subsidiaries is considered strong. For issue ratings, Fitch rates debt at DIFL one notch higher than its parent DL reflecting its above average recovery prospects. DL's ratings reflect the increased burden the DGL subordinated notes place on the operating assets and the loss of financial flexibility. The ratings of DGL incorporate their subordination to debt at DIFL and DL, as well as the subordinated notes' below-average recovery prospects in the event of default. Stable Operating Trends Fitch expects value added services (VAS) as a percentage of revenue to continue increasing its share in revenues. Positive trends in VAS have supported revenues and EBITDA over the past few quarters, offsetting pressures from traditional voice services in some markets due to reductions in MTR, tax increases and strong competition. In addition Papua New Guinea (PNG) growth continues to support operating results. For the quarter ended Dec. 31, 2012 VAS accounted for 23% of service revenues, of which 16% is non-SMS revenue. Both SMS and other data services have posted positive trends. DGL has diversified its cash flow generation and asset base leading to lower business risk over the past several years. EBITDA growth from PNG should further diversify cash flow generation from Jamaica and Haiti in the coming years as cash flow coming from these two countries remains material at an estimated 40%. Positively, Digicel Pacific Limited (DPL), a subsidiary of DGL, has continued growing and is now generating positive free cash flow. DPL's growth is underpinned by PNG which is now able to pay dividends to DGL after dividend blockers have been removed. For the 12 months ended Dec. 31, 2012 DPL contributed approximately 24% of DGL's EBITDA. The most important contributors to DGL's EBITDA are Jamaica, Haiti, PNG, Trinidad & Tobago and French West Indies (FWI). Lower Capex Supporting Free Cash Flow (FCF) Fitch expects positive FCF in the coming years, in the absence of special dividends, as funds from operations (FFO) modestly grow and capex declines from its peak in FY2012. Capex to revenue ratio is expected to trend towards 10% in the next few years. Lower capital expenditures should have a positive effect on FCF in the medium term amid a stable dividend policy of US$40 million per year. DGL paid a US$300 million special dividend during the first quarter of FY2013. Digicel expects that for the near future the company will not raise its 42.52% (44.97% including warrants) stake in Digicel Holdings Central America Limited (DHCAL), which owns the operation in Panama. Leverage at DGL remains high but is expected to gradually decline in the medium term, as EBITDA grows and indebtedness remains relatively stable. As of Dec. 31, 2012 and last twelve months EBITDA, total debt to EBITDA was 4.4 times (x) and net debt to last twelve months EBITDA was 4.1x. At DL, total debt to EBITDA was 2.8x for this same period. Total DGL's debt of Dec. 31, 2012 was approximately US$4.9 billion and cash balances amounted to US$353 million. Total consolidated debt is allocated as follows: US$2,275 million at DGL, US$1,560 million at DL, US$892 million at DIFL and US$180 million at DPL. Improving Maturity Profile The debt maturity profile has been extended with DGL's US$1.5 billion issuance due 2020 done last year and the proposed DL issuance. Following the completion of the proposed offering, Digicel will not face any significant maturity until FY2018. Before this date the largest maturity in a single year should be close to US$300 million. Cash balances of US$353 million as of Dec. 31, 2012 further supports liquidity. Rating Sensitivities A negative rating action could be triggered if consolidated leverage at DGL approaches 6.0x. While refinancing risk should be eased with the proposed transaction, inability to refinance in advance sizeable bullet maturities in the medium to longer term could pressure credit quality. Positive factors for credit quality would be a sustained reduction in gross leverage at DGL to about 4.0x or below and an increase in free cash flow generation. Fitch currently rates DGL, DL and DIFL as follows: DGL -- Long-term IDR 'B' -- US$1.5 billion 8.875% senior subordinated notes due 2020 'B-/RR5'; -- US$775 million 10.5% senior subordinated notes due 2018 'B-/RR5'. DL -- Long-term IDR 'B'; -- US$800 million 8.25% senior notes due 2017 'B/RR4'; -- US$510 million 12% senior notes due 2014 'B/RR4'; -- US$250 million 7% senior notes due 2020 'B/RR4'. DIFL -- Long-term IDR 'B'; -- Senior secured credit facility 'B+/RR3'. The Rating Outlook is Stable. DIGICEL LIMITED: Moody's Rates New $700-Mil. Senior Notes 'B1' -------------------------------------------------------------- Moody's Investors Service has assigned a B1 rating to Digicel Limited's proposed $700 million senior unsecured notes due 2021. DL is a wholly-owned subsidiary of Digicel Group Limited. Net proceeds will be used to repurchase the entire tranche of the DL 12% senior notes due 2014 ($510 million outstanding) via a tender offer and for general corporate purposes. In addition, Moody's affirmed Digicel's B2 Corporate Family Rating (CFR) and B2-PD Probability of Default Rating (PDR). In conjunction with the rating action, Moody's affirmed the ratings on the existing debt at DGL and DL. The rating outlook is stable. Moody's views the transaction favorably due to the extension of the 2014 debt maturity and comparatively lower coupon on the new notes, which will reduce interest expense. Following the debt refinancing, Moody's expects consolidated leverage at DGL will remain under 5.0x total debt to EBITDA (Moody's adjusted). Moody's believes Digicel will manage its adjusted leverage at between 4.5x and 5.0x over the next two years, given EBITDA expansion related to the continued success in growing its markets, particularly in the South Pacific territories, and increasing cash flow contributions from operations in Haiti and Papua New Guinea. Overall deleveraging is expected to be tempered by Moody's expectation that the company could use debt funding to consolidate the remaining equity of its affiliate, Digicel Holdings Central America, that it does not already own, and for future acquisitions and capex. Rating Assigned: Issuer: Digicel Limited $700 Million Senior Unsecured Notes due 2021 -- B1 (LGD-3, 39%) Ratings Affirmed: Issuer: Digicel Group Limited Corporate Family Rating -- B2 Probability of Default Rating -- B2-PD The assigned rating is subject to review of final documentation and no material change in the terms and conditions of the transaction as advised to Moody's. Digicel intends to use the debt offering proceeds to retire the existing DL 12% notes due 2014. Moody's will withdraw the rating on these notes upon full repayment. Ratings Rationale: Digicel's B2 CFR is supported by its leading position as the largest wireless telecommunications carrier in the Caribbean, as well as its successful track record at gaining significant market share and producing solid operating results relatively quickly after new markets are launched. The company's growing penetration in markets outside of its long-standing Jamaica base has resulted in quick deleveraging from roughly the 10.0x level following recapitalization of the balance sheet in early 2007, to 4.7x total debt to EBITDA (Moody's adjusted) as of December 31, 2012. However, Digicel's history of debt funded acquisitions and sizable dividend payments, plus the likelihood that in the future DGL will acquire the portion of DHCAL that it does not currently own weigh down the rating. While the company continues to have strong diversification, this is mitigated by its exposure to Jamaica (about 18% of total revenue), which is struggling to revive its economy and experiencing competitive telecom pricing following the imposition of a new regulatory and tax scheme designed to increase government receipts. A positive offset is the robust GDP growth expected this year from Papua New Guinea (17% of revenue) and Haiti (21% of revenue). Digicel's very good liquidity supports the rating. Moody's expects that the company will end FY14 (ending March 31, 2014) with cash balances near the levels at December 31, 2012 (roughly $353 million). Cash flow from operations on a Moody's adjusted basis continue to demonstrate strong improvement rising to $544 million for the LTM period ended December 2012 compared to $525 million in FY12. However, Digicel produced negative free cash flow of $186 million in the LTM period, mainly due to high capital expenditures (for Voila Haiti network integration and 4G rollouts) and a $300 million special dividend paid in June 2012. Moody's expects DGL to generate solid free cash flow of about $100 million (after dividends) in FY14, as Papua New Guinea and Haiti contribute healthy cash flows. Digicel also maintains a $893 million unrated senior secured credit facility (matures 2017) at its Digicel International Finance Ltd. subsidiary, however there are no further draws available under this facility. Rating Outlook Given the incremental debt incurred as a result of this capital raise and the debt raised in February 2012, the stable outlook reflects Moody's opinion that despite continuing subscriber and cash flow growth, DGL is unlikely to drive debt to EBITDA leverage to below 4.0x (Moody's adjusted) over the rating horizon. The outlook also reflects Moody's view that over the next two years, the company could use debt to acquire more DHCAL equity from its principal shareholder, Denis O'Brien. What Could Change the Rating - UP Moody's could upgrade Digicel's rating if the company demonstrated a less aggressive dividend philosophy, financial policies targeted leverage lower than 4.0x debt to EBITDA (Moody's adjusted), and if the operations generated free cash flow in excess of 5% of total debt (Moody's adjusted) on a sustained basis while maintaining very good liquidity. What Could Change the Rating - DOWN The ratings could be downgraded if operational shortfalls or unexpected acquisitions/investments elevated Digicel's leverage above 6.0x debt to EBITDA (Moody's adjusted) over an 18 to 24 month horizon. The ratings will likely come under pressure if competition escalates in the company's core markets or if deterioration in the political, economic and regulatory environments in the Caribbean or South Pacific markets result in declining operating cash flows and weak liquidity. The principal methodology used in rating Digicel Group Limited was Global Telecommunications Industry published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Incorporated in Hamilton, Bermuda, with headquarters in Kingston, Jamaica, W.I., Digicel is the largest provider of wireless telecommunication services in the Caribbean. Revenue for the twelve months ended December 31, 2012 totaled $2.5 billion. DOGWOOD PROPERTIES: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Dogwood Properties, G.P. 4180 East Raines Road Memphis, TN 38118-0000 Bankruptcy Case No.: 13-21712 Chapter 11 Petition Date: February 16, 2013 Court: United States Bankruptcy Court Western District of Tennessee (Memphis) Judge: Jennie D. Latta Debtor's Counsel: Russell W. Savory, Esq. GOTTEN, WILSON, SAVORY & BEARD, PLLC 88 Union Avenue, 14th Floor Memphis, TN 38103 Tel: (901) 523-1110 E-mail: russell.savory@gwsblaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The Debtor did not file its list of largest unsecured creditors when it filed its petition. EDUCATION HOLDINGS: Can Hire DLA Piper, A&M as Ch.11 Professionals ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware granted Education Holdings 1, Inc.'s applications to employ: -- DLA Piper (Contact: Matthew M. Murphy) as counsel at the following hourly rates: partner at $530 to 1,120, counsel at 300 to 940, associate at $320 to $730, paraprofessional at $85 to $455; and -- Alvarez & Marsal North America (Contact: Robert Campagna, Jr.) as financial advisor at the following hourly rates: managing director at $675 to $875, director at $475 to $675, associate at 345 to 475 and analyst at 275 to 375. About Education Holdings 1 Education Holdings 1, Inc., is a holding company that through its Penn Foster division, operates the oldest and one of the largest distance career schools in the world - generating over 150,000 new enrollments annually for its accredited, career-focused, online degree and vocational programs in the U.S., Canada and over 150 other countries in the world. In March 2012, Education Holdings sold its higher education readiness (HER) division, including the name and brand the Princeton Review, to an affiliate of Charlesbank Capital Partners. Education Holdings, just three years after acquiring using borrowed funds the Penn Foster distance career schools for $170 million, sought Chapter 11 protection (Bankr. D. Del. Case No. 13- 10101) on Jan. 21, 2013, with a bankruptcy-exit plan negotiated with major debt holders. Penn Foster Education Group, Inc. nor Penn Foster Inc. are not included in the Chapter 11 filings. ELBIT IMAGING: To Suspend Interest Payments to Noteholders ---------------------------------------------------------- Saabira Chaudhuri at Dow Jones' DBR Small Cap reports that Elbit Imaging Ltd. said it will suspend interest payments to noteholders as the real estate company evaluates a possible restructuring. Earlier this month, the company suspended payments on the bonds' principal, as part debt settlement process. Elbit Imaging Ltd. (Nasdaq: EMITF; TASE: EMIT) is an Israel-based holding company that operates in various fields, including construction of commercial and entertainment centers; management of hotels; development of cell therapy products; construction of residential projects; and distribution and marketing of fashion apparel and accessories. ENERGY FUTURE: Warns of Bankruptcy Risk; Kirkland & Ellis Tapped ---------------------------------------------------------------- Reuters reported that U.S. power company Energy Future Holdings , formerly TXU Corp, said it could go into bankruptcy, liquidation or insolvency if lenders or noteholders accelerate repayment of all borrowings. Reuters, citing a source familiar with the matter, said the company had hired law firm Kirkland & Ellis and asset manager Blackstone Group LP to advise on ways to deal with its debt load, which totaled $52 billion at the end of September. "If lenders or noteholders accelerate the repayment of all borrowings, we would likely not have sufficient assets and funds to repay those borrowings," Energy Future Holdings said under the risk factors section of a regulatory filing on Tuesday, according to Reuters. Reuters noted that the company in January extended the maturity date of a $16.5 billion term loan to 2017 from 2014 and has also exchanged debt on which it owed cash payments for debt on which interest payments could be deferred. The hiring of advisers came just months before the company, taken private in 2007 in the largest leveraged buyout ever, must start making payments on some of its debt, Reuters said. The $45 billion TXU buyout, which loaded the company with debt, is viewed as one of the most spectacular failures of the last decade's buyout boom, according to Reuters. KKR & Co, one of the private equity firms that led the TXU deal, has written off 95% of the value of its investment in the company. TPG Capital Management and Goldman Sachs Group Inc's private equity arm were also part of the consortium that took the company private. The TXU takeover was built on hopes that natural gas prices would stay high; instead they have dropped sharply, with benchmark U.S. prices falling about 57% to around $3.22 per million British thermal units now from around $7.50 per mmBtu in February 2007, Reuters said. Energy Future Holdings, according to Reuters, is the largest power generator in Texas and has three units. The merchant power unit, Luminant, which owns more than 15,000 megawatts of nuclear, coal and gas-fired power plants, and its retail business, TXU Energy, are unregulated. Its power delivery business, Oncor, is regulated. About Energy Future Energy Future Holdings Corp., formerly known as TXU Corp., is a privately held diversified energy holding company with a portfolio of competitive and regulated energy businesses in Texas. Oncor, an 80%-owned entity within the EFH group, is the largest regulated transmission and distribution utility in Texas. The Company delivers electricity to roughly three million delivery points in and around Dallas-Fort Worth. EFH Corp. was created in October 2007 in a $45 billion leverage buyout of Texas power company TXU in a deal led by private-equity companies Kohlberg Kravis Roberts & Co. and TPG Inc. Energy Future had a net loss of $1.91 billion on $7.04 billion of operating revenues for the year ended Dec. 31, 2011, compared with a net loss of $2.81 billion on $8.23 billion of operating revenues during the prior year. The Company's balance sheet at Sept. 30, 2012, showed $42.73 billion in total assets, $51.90 billion in total liabilities and a $9.16 billion total deficit. * * * On Feb. 1, 2013 ratings release, Standard & Poor's Ratings Services raised its corporate credit ratings on Energy Future to 'CCC' from 'D' following the completion of several debt exchanges, each of which were consider distressed. "The 'CCC' rating reflects a credit profile that has an unsustainable capital structure over the long term, but a lack of near-term maturities, along with the likelihood of additional distressed exchange over the near term," said Standard & Poor's credit analyst Terry Pratt. FRANCES CARLSON: Bankruptcy Filing Stays U.S. Lawsuit ----------------------------------------------------- District Judge Martin Reidinger entered a ruling on February 14, 2013, staying the action captioned UNITED STATES OF AMERICA, Plaintiff, v. FRANCES CARLSON, REIDAR G. CARLSON, and REIDAR'S RETREAT, LLC, Defendants, Civil Case No. 1:12-cv-00036-MR-DLH, (W.D.N.C.), as against Defendant Frances Carlson only. Ms. Carlson has notified the Court that she filed a bankruptcy case under Chapter 11 of the United States Bankruptcy Code in the Middle District of Florida. It is well-settled that "[w]hen litigation is pending against the debtor at the time a bankruptcy case is commenced, the litigation is stayed automatically," ruled Judge Reidinger. All other claims pending in the action remain unaffected by the stay. A copy of the District Court's February 14, 2013 Order is available at http://is.gd/OmYyGYfrom Leagle.com. GOODYEAR TIRE: Moody's Retains Ba3 CFR, Outlook Changed to Neg. --------------------------------------------------------------- Moody's Investors Service affirmed the Ba3 Corporate Family Rating of The Goodyear Tire & Rubber Company and changed the rating outlook to negative from stable. The Speculative Grade Liquidity Rating was affirmed at SGL-2. Ratings Affirmed: The Goodyear Tire & Rubber Company Corporate Family Rating, Ba3; Probability of Default Rating, Ba3-PD; SGL-2, Speculative Grade Liquidity Rating; $1.2 billion second lien term loan due 2019, Ba1 (LGD-2, 16%) 8.75% senior unsecured guaranteed notes due 2020, B1 (LGD-4, 66%); 8.25% senior unsecured guaranteed notes due 2020, B1 (LGD-4, 66%); 7.0% senior unsecured guaranteed notes due 2022, B1 (LGD-4, 66%); 7.0% senior unsecured unguaranteed notes due 2028, B2 (LGD-6, 96%); (P)B1, guaranteed senior unsecured shelf. Goodyear Dunlop Tires Europe B.V.: Baa3 (LGD-1, 6%), EUR400 million of first lien revolving credit facilities due April 2016; Ba2 (LGD-2, 27%), EUR250 million of senior unsecured notes due April 2019. Ratings Rationale: Goodyear's Ba3 Corporate Family Rating reflects the company's strong position as a leading manufacturer of automotive tires combined with the success of offsetting increasing raw material costs by selling a greater share of higher value added tires. The strength of the company's market position and strategy has generated an improvement in year over year EBIT margins. Yet, the continued growth of underfunded pension liabilities is limiting the benefit of these improvements on the overall financial metrics. The continued successful execution of the company's strategy will be required over the intermediate-term as global tire volumes could face pressures due to weak macroeconomic conditions particularly in Europe. Goodyear's EBIT/interest of about 1.8x and Debt/EBITDA of about 4.9x at December 31, 2012 are weak for the assigned rating and the negative outlook reflects the need for leverage and interest coverage to strengthen over the coming year. Goodyear has indicated its intention to take actions to de-risk its U.S. unfunded pension obligations including implementing a hedging strategy to protect against adverse market moves in interest rates and asset returns while allowing upside participation. Moody's considers the company's actions to address its pension obligations as constructive and could contribute to metric improvement over the coming year. Nevertheless, the ratings consider the potential for such improvement to be tempered by weak economic trends. Goodyear's negative outlook reflects Moody's belief that the company's credit metrics will remain weak for the assigned rating over the near-term. Goodyear has successfully taken actions to mitigate increasing raw material costs and strengthen its European operations. However, prospects for generating credit metrics consistent with the assigned rating also are reliant on a robust recovery in demand in the company's end markets. Any recovery in demand will likely be accompanied by increased cost pressures for the company's raw materials. Goodyear's SGL-2 Speculative Grade Liquidity is supported by strong cash balances and revolver availability. Global cash on hand at December 31, 2012 was $2.3 billion which includes about $561 million of cash located in regions where access could be constrained. As of December 31, 2012, Goodyear had $1.2 billion of remaining borrowing base availability under the U.S. $2.0 billion ABL revolving credit facility. Goodyear's Euro 400 million revolving credit facility was undrawn as of December 31, 2012 with Euro 7 million of letters of credit outstanding and the Pan European accounts receivable securitization facility had Euro 264 million of availability. Goodyear is expected to be modestly cash flow positive over the near-term. There is a coverage ratio covenant test under the $2.0 billion revolver which comes into effect only when availability under the revolver, plus cash balances of the parent and guarantor subsidiaries under the facility, goes below $200 million, which is unlikely to be activated in the near-term. Goodyear has the capacity under the indentures for its unsecured obligations to pledge additional assets (subject to the terms, limitations and exclusions provided in the respective indentures). Should the permissible basket of liens exceed the prescribed amount, Goodyear would be required to ratably secure the unsecured notes and bonds issued under the indentures. Upward rating migration is unlikely over the intermediate term. Any improvement in Goodyear's credit metrics would first help to position the company more solidly in the Ba3 rating. However, a positive rating outlook or rating change could result from a de- leveraging of Goodyear's balance sheet, or if industry conditions evolve to permit the company to sustain better margins through sustained product pricing and/or lesser exposure to volatile commodity costs. A higher rating or outlook could result from EBIT/interest being sustained above 3.0x, and debt/EBITDA approaching 3.0x while maintaining a good liquidity profile. Goodyear continues to face significant business challenges stemming from highly competitive tire markets and significant volatility in raw material costs. It has been pursuing strategies that have strengthened its competitive profile, yet overall financial metrics remain weak for the Ba3 Corporate Family Rating. A lower rating could result if Goodyear is unable to offset expected lower volume trends, competitive pressures, and increasing raw material costs through the combination of improved product mix, pricing, or restructuring actions. Developments that suggest that the EBIT margin will revert below 5% for a protracted period, that the company will not be able to restore free cash flow generation, or that the company will not be able to make progress toward lowering debt to EBITDA below the 4.5x could put downward pressure on the rating. Ratings pressure could also arise from a meaningful decrease in the liquidity profile. The principal methodology used in this rating was the Global Automotive Supplier Industry Methodology published in January 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. The Goodyear Tire & Rubber Company, based in Akron, OH, is one of the world's largest tire companies with 52 manufacturing facilities in 22 countries around the world. Revenues in 2012 were approximately $21 billion. GREEN OAK: Case Summary & 14 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Green Oak Realty Development, LLC 20 Commercial Court Auburn, NH 03032 Bankruptcy Case No.: 13-10363 Chapter 11 Petition Date: February 18, 2013 Court: U.S. Bankruptcy Court District of New Hampshire (Manchester) Debtors' Counsel: Robert L. O'Brien, Esq. O'BRIEN LAW FIRM P.O. Box 357 New Boston, NH 03070-0357 Tel: (603) 459-9965 Fax: (603) 250-0822 E-mail: roboecf@gmail.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 Affiliates that simultaneously filed for Chapter 11: Debtor Case No. ------ -------- K&B Crushing Equipment, LLC 13-10365 Assets: $1,000,001 to $10,000,000 Debts: $1,000,001 to $10,000,000 Keith A. Babb 13-10362 The petitions were signed by Keith A. Babb, sole member manager. A. A copy of Green Oak Realty's list of its 14 largest unsecured creditors filed with the petition is available for free at http://bankrupt.com/misc/nhb13-10363.pdf B. A copy of K&B Crushing's list of its 20 largest unsecured creditors filed with the petition is available for free at http://bankrupt.com/misc/nhb13-10365.pdf GSC GROUP: April 22 Hearing on Kaye Scholer, Capstone Deals ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that there will be an April 22 hearing to consider approval of the settlements with the law firm Kaye Scholer LLP and Capstone Advisory Group LLC and Robert Manzo in connection with fund manager GSC Group Inc.'s Chapter 11 case. The U.S. Trustee had alleged that that Kaye Scholer, as lawyers for GSC Group, filed inaccurate and misleading court papers in connection with the retention of Capstone and Mr. Manzo as the company's financial advisers. Kaye Scholer on Feb. 18 disclosed that it has agreed on a settlement with the U.S. Trustee. The firm agreed to pay $1.5 million, consisting of $1.15 million of the more than $5 million in fees already paid the firm, plus withdrawal of a pending application for $352,000 in unpaid fees. The settlement contains "no acknowledgement by Kaye Scholer of any wrongdoing." Capstone on Feb. 13 announced a settlement with the U.S. Trustee. Through the settlement, if approved, Capstone will reduce its total fees for post-filing work for the GSC Group by $1 million, or approximately 15%. Capstone has agreed to withdraw its final fee application of $2.75 million and give up $635,000 that it was paid as compensation. The U.S. Trustee also entered into a settlement agreement with Mr. Manzo under which he will resign as the liquidating trustee in the case and will forgo payment of about $175,000 of the $398,500 in accrued but unpaid fees Mr. Manzo has incurred. The Bloomberg report notes that Black Diamond Capital Finance LLC said in a court filing last week that it opposes the settlement with the financial advisers. The firm said that Mr. Manzo, as trustee for the creditors' trust, is spending several million dollars more than the trust agreement allows. As part of his settlement, Mr. Manzo will step down as trustee for the trust. Black Diamond or others can file objections by March 15, when they can also oppose professionals' fee requests. If Black Diamond or others seek larger disgorgements for inaccurate court filings, papers likewise must be filed by March 15. Black Diamond was the proponent of the Chapter 11 plan for GSC that was approved and confirmed in February 2012. Mr. Manzo was named as trustee to handle the creditors' trust created when the plan was approved. Mr. Manzo entered into a fee-sharing agreement with Capstone and was identified in court papers as an employee of the firm. But the U.S. Trustee later discovered that Capstone was only a contractor and thus the fee-sharing agreement was barred. According to the U.S. Trustee, Kaye Scholer incurred fees of $6.13 million, while Capstone's were $6.07 million, not including a success fee not yet granted. About GSC Group Florham Park, New Jersey-based GSC Group, Inc. -- http://www.gsc.com/-- was a private equity firm that specialized in mezzanine and fund of fund investments. Originally named Greenwich Street Capital Partners Inc. when it was a subsidiary of Travelers Group Inc., GSC became independent in 1998 and at one time had $28 billion of assets under management. Market reverses, termination of some funds, and withdrawal of customers' investments reduced funds under management at the time of bankruptcy to $8.4 billion. GSC Group, Inc., filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 10-14653) on Aug. 31, 2010, estimating assets at $1 million to $10 million and debts at $100 million to $500 million as of the Chapter 11 filing. Effective Jan. 7, 2011, James L. Garrity Jr., was named Chapter 11 trustee for the Debtors. The Chapter 11 trustee completed the sale of business in July 2011 and filed a liquidating Chapter 11 plan and explanatory disclosure statement in late August. The bankruptcy court authorized the trustee to sell the business to Black Diamond Capital Finance LLC, as agent for the secured lenders. Proceeds were used to pay secured claims. The price paid by the lenders' agent was designed for full payment on $256.8 million in secured claims, with $18.6 million cash left over. Black Diamond bought most assets with a $224 million credit bid, a $6.7 million note, $5 million cash, and debt assumption. A minority group of secured lenders filed an appeal from the order allowing the sale. Through a suit in state court, the minority lenders failed to halt Black Diamond from completing the sale. The Chapter 11 Trustee and Black Diamond filed rival repayment plans for GSC Group. The Chapter 11 trustee reached a handshake deal on Dec. 13, 2011, ending the dispute with Black Diamond that delayed a $235 million asset sale. Michael B. Solow, Esq., at Kaye Scholer LLP, served as the Debtor's bankruptcy counsel. Epiq Bankruptcy Solutions, LLC, was the Debtor's notice and claims agent. Capstone Advisory Group LLC served as the Debtor's financial advisor. The Chapter 11 trustee tapped Shearman & Sterling LLP as his counsel, and Togut, Segal & Segal LLP as his conflicts counsel. Black Diamond Capital Management, LLC, is represented by attorneys at Latham & Watkins and Kirkland & Ellis LLP. HARRISONBURG REDEVELOPMENT: Moody's Lowers Debt Rating to 'B2' -------------------------------------------------------------- Moody's has downgraded to B2 from Aaa the rating of Harrisonburg Redevelopment & Housing Auth, VA Taxable Multi-family Housing Revenue Bonds (Huntington Village Apartments Project) 2001B (the "Bonds"), affecting $1,635,000 of outstanding debt. This rating action concludes the review for downgrade initiated on November 12, 2012 and also removes the Bonds from review for downgrade following the publication of Moody's new methodology on US Stand-Alone Housing Bond Programs Secured by Credit Enhanced Mortgages on December 13, 2012. Ratings Rationale: On January 5, 2010 the Aaa rating of the Bonds was affirmed. However, the Trust Fund balances that were used in Moody's assumptions for the cash flow projections were overstated, which resulted in a mistake in Moody's expectations and calculation of the asset-to-debt ratio. The assumptions have now been corrected, and the rating action reflects that change. In addition, since 2010, the continued low interest rate environment as well as general account balances in excess of amounts set forth in the indenture have deteriorated the financial position of the Bonds. The calculated asset-to-debt ratio is currently 99.1%, which means that if full payment is received on the loan and the Bonds are redeemed early there would be insufficient funds to pay off all of the Bonds. Furthermore, Moody's calculates that at a 0% reinvestment rate, there will be cash flow shortfalls in 2019. These potential shortfalls are reflected in the B2 rating assigned to the Bonds. What Could Change the Rating: UP - An increase in the asset-to-debt ratio above 100% and to a level where cash flow shortfalls are not projected under stress scenarios. - Higher interest rate environment that reduces the probability of default or diminishes the expected loss. What Could Change the Rating: DOWN - Further deterioration of the asset-to-debt ratio. The principal methodology used in this rating was US Stand-Alone Housing Bond Programs Secured by Credit Enhanced Mortgages published in December 2012. HAWKER BEECHCRAFT: Plans Midyear Sale of Hawker Jet Business ------------------------------------------------------------ Emily Glazer and Jon Ostrower at Daily Bankruptcy Review report that the head of Beechcraft Corp. said it plans to sell the assets of its shuttered Hawker's business jet unit by midyear as part of the firm's exit from bankruptcy protection. Bechcraft, formerly Hawker Beechcraft, on Feb. 19 disclosed that it has formally emerged from the Chapter 11 process as a new company well-positioned to compete vigorously in the worldwide business aviation, special mission, trainer and light attack markets. The company's Joint Plan of Reorganization was approved by the U.S. Bankruptcy Court for the Southern District of New York on Feb. 1, 2013, and became effective on Feb. 15, 2013. Beechcraft exits the restructuring process with a dramatically reduced debt load, a stable, restructured balance sheet and the support of a well-capitalized shareholder base. The Plan 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%. 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. The Official Committee of Unsecured Creditors 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. HERON LAKE: Incurs $32.4-Mil. Net Loss in Fiscal 2012 ----------------------------------------------------- Heron Lake BioEnergy, LLC, filed on Feb. 13, 2013, its annual report on Form 10-K for the fiscal year ended Oct. 31, 2012. Boulay, Heutmaker, Zibell & Co. P.L.L.P., in Minneapolis, Minnesota, expressed substantial doubt about Heron Lake BioEnergy's ability to continue as a going concern. The independent auditors noted that the Company has incurred losses due to difficult market conditions and the impairment of long- lived assets. "The Company is out of compliance with its master loan agreement and is operating under a forbearance agreement whereby the Company agreed to sell substantially all of its assets." Forbearance Agreement with Agstar On Feb. 12, 2013, the Company entered into a second amended and restated forbearance agreement with AgStar. Under the forbearance agreement, AgStar agreed to forbear from exercising its legal and contractual rights and remedies provided in the loan documents and by applicable law, including, but not limited to, the right to foreclose the real estate mortgages and security agreements and to obtain the appointment of a receiver pursuant to applicable law, until March 31, 2013, in order to permit the Company to close on the transactions contemplated by the asset purchase agreement with Heron Lake Guardian, LLC, for the sale of the Company's ethanol plant assets and the asset purchase agreement with FCA Co-op for the sale of the grain storage and handling facilities of the Company's subsidiary, Lakefield Farmers Elevator, LLC. On Feb. 1, 2013, the Company completed the sale of substantially all the assets of Lakefield Farmers Elevator to FCA Co-op pursuant to the terms of the asset purchase agreement dated Jan. 3, 2013. "Under the forbearance agreement, it is an event of default, among other things, if we fail to close (i) on the sale of our grain storage and handling facilities as contemplated by asset purchase agreement dated Jan. 3, 2013, with FCA Co-op on or before Feb. 28, 2013, or (ii) on the sale of our ethanol plant assets to Guardian Energy Heron Lake, LLC, on or before March 31, 2013. "The closing of each of the asset purchase agreements with FCA Co-op and Guardian Energy Heron Lake, LLC, is subject to the satisfaction or wavier of various conditions. One condition to the closing of sale transaction with Guardian Energy Heron Lake, LLC, is the approval of our members and we will call a Special Meeting of Members for this purpose. We cannot guarantee that we will be able to satisfy the closing conditions set forth in the respective asset purchase agreements or that we will be able to satisfy these conditions in time for a closing by the dates AgStar requires under the forbearance agreement." "Accordingly, if the sale of our grain storage and handling facilities and the sale of our ethanol plant assets are not closed by the respective dates stated above for any reason, AgStar may accelerate all of our indebtedness and may seize the assets that secure our indebtedness, causing us to lose control of our business. We may also be forced to sell our assets, restructure our indebtedness, submit to foreclosure proceedings, cease operations or seek bankruptcy or reorganization protection." Results of Operations for the Year Ended Oct. 31, 2012 The Company reported a net loss of $32.35 million on $168.66 million of revenues for the year ended Oct. 31, 2012, compared with net income of $543,017 on $164.12 million of revenues for the year ended Oct. 31, 2011. The Company recorded an impairment charge of approximately $27.84 million as of Oct. 31, 2012. The impairment charge was recorded after analysis by the Company whereby the fair value of long-lived assets was less than the carrying value. There was no similar impairment in 2011. The Company also recorded settlement expense of $900,000 related to a dispute with its former coal supplier. The Company's balance sheet at Oct. 31, 2012, showed $66.58 million in total assets, $49.03 million in total liabilities, and members' equity of $17.55 million. A copy of the Form 10-K is available at http://is.gd/AE7XuK Amendment to Form 10-Q for the July 31, 2012 Quarter Heron Lake has amended its quarterly report for the quarter ended July 31, 2012, to correct an error relating to revenue recognition. The Company erroneously priced certain sales transactions related to both ethanol and distillers grains sales under the marketing agreement with Gavilon, LLC. As a result of this error, revenue was understated as of July 31, 2012, the Company said. The Company reported net income of $557,887 on $41.91 million of revenues for the three months ended July 31, 2012, compared with a net loss of $742,737 on $43.01 million of revenues for the three months ended July 31, 2011. The Company reported a net loss of $1.94 million on $121.96 million of revenues for the nine months ended July 31, 2012, compared with net income of $1.37 million on $120.24 million of revenues for the nine months ended July 31, 2011. The Company's balance sheet at July 31, 2012, showed $95.06 million in total assets, $47.06 million in total liabilities, and members' equity of $48.00 million. A copy of the Form 10-Q/A is available at http://is.gd/UTiF7O About Heron Lake Heron Lake BioEnergy, LLC, operated a dry mill, coal fired ethanol plant in Heron Lake, Minnesota. After completing a conversion in November 2011, the Company is now a natural gas fired ethanol plant. Its subsidiary, HLBE Pipeline Company, LLC, owns 73% of Agrinatural Gas, LLC, the pipeline company formed to construct, own, and operate a natural gas pipeline that provides natural gas to the Company's ethanol production facility through a connection with the natural gas pipeline facilities of Northern Border Pipeline Company in Cottonwood County, Minnesota. Its subsidiary, Lakefield Farmers Elevator, LLC, has grain facilities at Lakefield and Wilder, Minnesota. At nameplate, the Company's ethanol plant has the capacity to process approximately 18.0 million bushels of corn each year, producing approximately 50 million gallons per year of fuel-grade ethanol and approximately 160,000 tons of distillers' grains with soluble. HOTEL OUTSOURCE: Incurs $421,000 Net Loss in Third Quarter ---------------------------------------------------------- Hotel Outsource Management International, Inc., reported a net loss of $421,000 on $780,000 of revenues for the three months ended Sept. 30, 2012, compared with a net loss of $490,000 on $885,000 of revenues for the same period of 2011. For the nine months ended Sept. 30, 2012, the Company had a net loss of $$2.4 million on $2.5 million of revenues, compared with a net loss of $1.4 million on $2.5 million of revenues for the same period of 2011. The Company's balance sheet showed $5.3 million in total assets, $3.3 million in total liabilities, and stockholders' equity of $2.0 million. "The Company continues to incur losses ($2,422,000 in the nine months ended Sept. 30, 2012) and also has a deficit in working capital of $548,000 for this period. In order to implement the Company's basic business plan for completion of the installation of additional minibars, the Company will need additional funds." A copy of the Form 10-Q is available at http://is.gd/hiz4GB About Hotel Outsource New York-based Hotel Outsource Management International, Inc., is a holding company for several subsidiaries which market and operate computerized minibars in hotels located in the United States, Canada, Europe and Israel. HOMI was incorporated in Delaware on Nov. 9, 2000, under the name Benjamin Acquisitions, Inc. * * * Barzily & Co., in Jerusalem, Israel, said that the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a "going concern". HYPERTENSION DIAGNOSTICS: Incurs $42,500 Net Loss in Fiscal Q2 -------------------------------------------------------------- Hypertension Diagnostics, Inc., reported a net loss of $42,500 on $13,437 of revenues for the three months ended Dec. 31, 2012, compared with a net loss of $213,649 on $1.2 million of revenues for the three months ended Dec. 31, 2011. For the quarter ended Dec. 31, 2012, the Company's plastics production facility was not operating. According to the regulatory filing, the Company has moved into its new facility and has restarted processing operations. The Company anticipates its operations in the quarter ending March 31, 2013, will be at approximately 67% compared to its operations of last year at the same time. For the six months ended Dec. 31, 2012, the Company had a net loss of $772,337 on $48,059 of revenues, compared with a net loss of $1.2 million on $1.2 million of revenues for the six months ended Dec. 31, 2011. The Company's balance sheet at Dec. 31, 2012, showed $1.0 million in total assets, $1.9 million in total liabilities, and a stockholders' deficit of $896,994. A copy of the Form 10-Q is available at http://is.gd/wXwpql Hypertension Diagnostics, Inc., was incorporated under the laws of the State of Minnesota on July 19, 1988. The Company was previously engaged in the medical device business. In August 2011, it sold its medical device inventory, subleased its office and manufacturing facility, and entered into a limited license agreement with a company owned by Jay Cohn, a founder and a director of the Company. In September 2011, the Company formed HDI Plastics Inc., a wholly owned-subsidiary, entered into a new lease agreement, purchased selected manufacturing assets from Compass Bank and Cycled Plastics and began engaging in the business of plastics reprocessing in Austin, Tex. On March 29, 2012, the Company ceased operations at the Austin facility and the Company began working to relocate the processing facility to a new location. As of Dec. 31, 2012, the Company has relocated its operations to a facility in Taylor, Texas and has recently resumed limited operations. The Company's principal executive offices are located in Minnetonka, Minnesota. * * * As reported in the TCR on Oct. 2, 2012, Moquist Thorvilson Kaufmann & Pieper LLC, in Edina, Minnesota, expressed substantial doubt about Hypertension's ability to continue as a going concern, citing net losses and stockholders' deficit. ICEWEB INC: Incurs $791,126 Net Loss in 2013 Q1 ----------------------------------------------- IceWEB, Inc., reported a net loss of $791,126 on $313,411 of sales for the three months ended Dec. 31, 2012, compared with a net loss of $1.0 million on $758,898 of sales for the prior fiscal period. The Company's balance sheet at Dec. 31, 2012, showed $1.8 million in total assets, $3.5 million in total liabilities, and a stockholders' deficit of $1.7 million. The Company has had losses since inception that raise doubt about its ability to continue as a going concern. In addition, the Company is not in compliance with debt covenants under its Financing Agreements with Sand Hill Finance LLC. As reported in the TCR on Jan. 14, 2012, D'Arelli Pruzansky, P.A., in Boca Raton, Florida, expressed substantial doubt about IceWEB's ability to continue as a going concern. The independent auditors noted that the Company had net losses of $6,485,048 for the year ended Sept. 30, 2012. A copy of the Form 10-Q is available at http://is.gd/AdfUZ6 Sterling, Va.-based IceWEB, Inc., manufactures and markets purpose-built appliances, network and cloud-attached storage solutions and delivers on-line cloud computing application services. The Company's customer base includes U.S. government agencies, enterprise companies, and small to medium sized businesses (SMB). IMPLANT SCIENCES: Files Form 10-Q, Reports $3.7-Mil. Loss --------------------------------------------------------- Implant Sciences Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $3.7 million on $6.9 million of revenues for the three months ended Dec. 31, 2012, compared with a net loss of $3.3 million on $1.1 million of revenues for the prior fiscal period. For the six months ended Dec. 31, 2012, the Company reported a net loss of $16.5 million on $8.4 million of revenues, compared with a net loss of $6.4 million on $2.2 million of revenues for the six months ended Dec. 31, 2011. The Company's balance sheet at Dec. 31, 2012, showed $4.7 million in total assets, $42.2 million in total liabilities, and a stockholders' deficit of $37.5 million. "Despite our current sales, expense and cash flow projections and the cash available from our line of credit with DMRJ, we will require additional capital in the third quarter of fiscal 2013 to fund operations and continue the development, commercialization and marketing of our products. Our failure to achieve our projections and/or obtain sufficient additional capital on acceptable terms would have a material adverse effect on our liquidity and operations and could require us to file for protection under bankruptcy laws. These conditions raise substantial doubt as to our ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/zQf14v About Implant Sciences Wilmington, Massachusetts-based Implant Sciences Corporation (OTC QB:IMSC) develops, manufactures and sells sophisticated sensors and systems for Security, Safety, and Defense (SS&D) markets. * * * As reported in the TCR on Oct. 2, 2012, Marcum LLP, in Boston, Massachusetts, expressed substantial doubt about Implant Sciences; ability to continue as a going concern, citing net losses and negative cash flows from operations. "As of Sept. 25, 2012, the Company's principal obligation to its primary lender was approximately $33,429,000 with accrued interest of approximately $3,146,000. The Company is required to repay all borrowings and accrued interest to this lender on March 31, 2013. These conditions raise substantial doubt about its ability to continue as a going concern." INDEPENDENCE TAX IV: Reports $2.1-Mil. Net Income in Dec. 31 Qtr. ----------------------------------------------------------------- Independence Tax Credit Plus L.P. IV filed its quarterly report on Form 10-Q, reporting net income of $2.1 million on $1.0 million of total revenues for the three months ended Dec. 31, 2012, compared with net income of $2.0 million on $1.0 million of total revenues for the three months ended Dec. 31, 2011. For the nine months ended Dec. 31, 2012, the Partnership had net income of $4.7 million on $3.1 million of total revenues, compared with net income of $1.3 million on $3.0 million of total revenues for the nine months ended Dec. 31, 2011. The Partnership's balance sheet at Dec. 31, 2012, showed $14.6 million in total assets, $27.8 million in total liabilities, and a partners' deficit of $13.2 million. "At Dec. 31, 2012, the Partnership's liabilities exceeded assets by $13,221,176 and for the nine months ended Dec. 31, 2012, had net income of $4,692,293, including gain on sale of properties of $5,336,670. These factors raise substantial doubt about the Partnership's ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/UIPjcc New York-based Independence Tax Credit Plus L.P. IV is a limited partnership which was formed under the laws of the State of Delaware on Feb. 22, 1995. The Partnership's initial business was to invest in other partnerships owning leveraged apartment complexes that are eligible for the low-income housing tax credit enacted in the Tax Reform Act of 1986, some of which may also be eligible for the historic rehabilitation tax credit. The Partnership is currently in the process of developing a plan to dispose of all of its investments. It is anticipated that this process will continue to take a number of years. INSPIRATION BIOPHARMACEUTICALS: Wants April Plan Deadline --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts (Eastern Division) authorized Inspiration Biopharmaceuticals, Inc., to sell its rights to IB1001, a recombinant factor IX (rFIX) for the treatment of hemophilia B to Cangene Corporation. The sale closed following the Court's approval. Cangene has agreed to pay $5.9 million upfront, up to $50 million in potential additional commercial milestones as well net sales payments equivalent to tiered double digit percentage of IB1001 annual net sales. The Debtor is required to provide certain post-transition services in connection with the sale of the assets to Cangene and the proposed sale of its products identified as Factor VIII or OBI01 to Baxter Healthcare Corporation. In light with these obligations, the Debtor asks the Court to extend its exclusive period to file a plan of reorganization until April 28, 2013, and its exclusive period to solicit acceptances of that plan until June 27, 2013. The Debtor says it needs the extension for it to comply with its obligations under the sale and complete a liquidating plan. The Debtor tells the Court that it cannot yet determine the universe of claims filed against its estates as the claims bar date has been set for April 3. About Inspiration Biopharmaceuticals Inspiration Biopharmaceuticals Inc. develops recombinant blood coagulation factor products for the treatment of hemophilia. Inspiration, based in Cambridge, Massachusetts, has two products in what the company calls "advanced clinical development." Two other products are in "pre-clinical development." None of the products can be marketed as yet. Inspiration filed for voluntary Chapter 11 reorganization (Bankr. D. Mass. Case No. 12-18687) on Oct. 30, 2012, in Boston. Bankruptcy Judge William C. Hillman oversees the case. Mark Weinstein and Michael Nolan, at FTI Consulting, Inc., serve as the Debtor's Chief Restructuring Officers. The Debtor is represented by Harold B. Murphy of Murphy & King. The petition shows assets and debt both exceed $100 million. Assets include patents, trademarks and the products in development. Liabilities include $195 million owing to Ipsen Pharma SAS, which is also a 15.5% shareholder. Ipsen -- http://www.ipsen.com/-- is also owed $19.4 million in unsecured debt. There is another $12 million in unsecured claims. Ipsen is pledged to provide $18.3 million in financing. The Debtor disclosed $20,383,300 in assets and $241,049,859 in liabilities. Ipsen is represented in the case by J. Eric Ivester, Esq., at Skadden Arps. The Official Committee of Unsecured Creditors tapped Jeffrey D. Sternklar and Duane Morris LLP as its counsel, and The Hawthorne Consulting Group, LLC as its financial advisor. INSPIRATION BIOPHARMACEUTICALS: Completes Sale of IB1001 -------------------------------------------------------- Ipsen and Inspiration Biopharmaceuticals Inc. on Feb. 20 announced the closing of the sale of the proprietary hemophilia B product, IB1001 (recombinant FIX), to Cangene Corporation. The transaction was announced on February 6, 2013. Ipsen and Inspiration jointly agreed to sell their respective commercialization rights to IB1001 as part of the transaction. Cangene acquired worldwide rights to IB1001, a recombinant factor IX currently under regulatory review in the United States and Europe. This transaction follows the announcement last month that Ipsen and Inspiration had agreed to sell OBI-1 (recombinant porcine FVIII) to Baxter International. Cangene acquired worldwide rights to IB1001, as well as Inspiration's rights to two product candidates in pre-clinical development: IB1007 (recombinant FVIIa) and IB1008 (recombinant FVIII). Under the terms of the agreement, Cangene has agreed to pay $5.9 million upfront, up to $50 million in potential additional commercial milestones as well net sales payments equivalent to tiered double digit percentage of IB1001 annual net sales. IB1001 is currently under regulatory review by both the FDA in the US and the EMA in Europe. The product was placed on clinical hold by the FDA in July 2012. Inspiration has been working to resolve the issues that led to the clinical hold and has discussed its plans to address the clinical hold with relevant regulatory authorities. Inspiration recently received a Complete Response Letter from the US Food and Drug Administration (FDA) regarding the Biologics License Application (BLA) for IB1001. A Complete Response Letter is issued by the FDA when the Agency determines that an application cannot be approved in its current form. The letter is consistent with previous discussions with FDA around the presence of host cell proteins (HCP) in IB1001 responsible for formation of anti-HCP antibodies in 26% of clinical trial subjects. Inspiration worked diligently to implement manufacturing process changes for drug substance to significantly reduce the levels of host cell proteins aimed at eliminating host cell proteins responsible for the immunogenic response to HCP in some clinical trial subjects. Preliminary comparability data available to date on drug substance manufactured using the original and the modified processes suggest that the process changes have been successful with no observed deleterious effect on the factor IX protein itself. No additional clinical data was requested under the Clinical Response Letter. Next steps for the development of IB1001 are now determined by Cangene. Inspiration and Ipsen previously announced the sale of OBI-1 to Baxter International. The United States Bankruptcy Court in Boston approved that transaction on January 24, 2013, and the Federal Trade Commission is currently reviewing the transaction under the Hart-Scott-Rodino Act. Baxter has agreed to pay $50 million upfront, up to $135 million in potential additional development and commercial milestones as well as tiered net sales payments ranging from 12.5% to 17.5% of OBI-1 annual net sales. On the transaction, Evercore Partners served as common financial advisor to Inspiration and Ipsen; Lazard and Banque Hottinguer & Cie served as financial advisors to Ipsen. About the partnership agreement between Inspiration and Ipsen and the product portfolio In January 2010, Inspiration entered into a strategic agreement with Ipsen, leveraging the combined expertise and resources of the two companies, to develop a broad portfolio of hemophilia products and two products in phase III. IB1001, an investigational intravenous recombinant factor IX (rFIX) therapy for the treatment and prevention of bleeding episodes in people with hemophilia B and OBI-1 an investigational intravenous recombinant porcine factor VIII (rpFVIII) therapy for the treatment of patients with i) acquired hemophilia A and ii) congenital hemophilia A who have developed inhibitors against human FVIII. In August 2011, Ipsen and Inspiration announced the extension of their agreement to create a hemophilia business unit structure that will act as the exclusive sales organization for all hemophilia products commercialized under the Inspiration brand in Europe. In July 2012 Inspiration announced that IB1001 was placed on clinical hold by the Food and Drug Administration (FDA). On August 21, 2012, Ipsen and Inspiration renegotiated their 2010 partnership. This agreement aimed to establish an effective structure whereby Ipsen gained commercial rights in key territories. Inspiration remains responsible for the world-wide development of OBI-1 and IB1001. Ipsen paid a bridging facility for an amount of $30 million providing both Inspiration with time to secure independent third party financing and Ipsen with time to assess potential ways forward. On August 31, 2012, Ipsen paid Inspiration $7.5 million and received a warrant for 15% of Inspiration's equity. Ipsen had agreed to pay Inspiration an additional $12.5 million if Inspiration had raised third party financing by the contractual deadline of 30 September 2012. Inspiration did not manage to raise external funding by this contractual deadline. On October 30, 2012, Inspiration commenced a voluntary reorganization case pursuant to Chapter 11's provisions of the United States Bankruptcy Code with the objective of leading a joint marketing and sales process. Ipsen is seeking to exit hemophilia through this process. On January 24, 2013, Ipsen and Inspiration announced that they had entered into an Asset Purchase Agreement for the sale of OBI-1 to Baxter subject to closing conditions. On February 6, 2013, Ipsen and Inspiration announced that they had entered into an Asset Purchase Agreement for the sale of IB1001 to Cangene subject to closing conditions. On February 20, 2013, Ipsen and Inspiration announced the closing of the sale of IB1001 to Cangene. About Inspiration Biopharmaceuticals Inspiration Biopharmaceuticals Inc. develops recombinant blood coagulation factor products for the treatment of hemophilia. Inspiration, based in Cambridge, Massachusetts, has two products in what the company calls "advanced clinical development." Two other products are in "pre-clinical development." None of the products can be marketed as yet. Inspiration filed for voluntary Chapter 11 reorganization (Bankr. D. Mass. Case No. 12-18687) on Oct. 30, 2012, in Boston. Bankruptcy Judge William C. Hillman oversees the case. Mark Weinstein and Michael Nolan, at FTI Consulting, Inc., serve as the Debtor's Chief Restructuring Officers. The Debtor is represented by Harold B. Murphy of Murphy & King. The petition shows assets and debt both exceed $100 million. Assets include patents, trademarks and the products in development. Liabilities include $195 million owing to Ipsen Pharma SAS, which is also a 15.5% shareholder. Ipsen -- http://www.ipsen.com/-- is also owed $19.4 million in unsecured debt. There is another $12 million in unsecured claims. Ipsen is pledged to provide $18.3 million in financing. The Debtor disclosed $20,383,300 in assets and $241,049,859 in liabilities. Ipsen is represented in the case by J. Eric Ivester, Esq., at Skadden Arps. The Official Committee of Unsecured Creditors tapped Jeffrey D. Sternklar and Duane Morris LLP as its counsel, and The Hawthorne Consulting Group, LLC as its financial advisor. ISTAR FINANCIAL: Ori Uziel Holds 4.2% Equity Stake at Dec. 31 ------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Ori Uziel disclosed that, as of Dec. 31, 2012, he beneficially owns 3,510,000 shares of common stock of iStar Financial Inc. representing 4.2% of the shares outstanding. Mr. Uziel previously reported beneficial ownership of 5,000,000 common shares or a 6.1% equity stake as of Dec. 31, 2011. A copy of the amended filing is available at http://is.gd/BOV3rX About iStar Financial New York-based iStar Financial Inc. (NYSE: SFI) provides custom- tailored investment capital to high-end private and corporate owners of real estate, including senior and mezzanine real estate debt, senior and mezzanine corporate capital, as well as corporate net lease financing and equity. The Company, which is taxed as a real estate investment trust, provides innovative and value added financing solutions to its customers. The Company reported a net loss of $25.69 million in 2011, compared with net income of $80.20 million in 2010. iStar Financial's balance sheet at Sept. 30, 2012, showed $6.94 billion in total assets, $5.52 billion in total liabilities, $14.20 million in redeemable noncontrolling interests, and $1.40 billion in total equity. * * * In March 2012, Fitch affirmed the company's 'B-' issuer default rating. The IDR affirmation is based on a manageable debt maturity profile of the company, pro forma for the recently- consummated secured financing that extends certain of the company's debt maturities, relieving the overhang of significant unsecured debt maturities in 2012 and 2013. While this 2012 financing does not reduce the amount of total debt outstanding, the company's debt maturity profile is more manageable over the next two years, with only 48% of debt maturing pro forma, down from 61%. Given the mild improvement in commercial real estate fundamentals and value stabilization, the company's loan and real estate owned portfolio performance will likely improve going forward, which should increase the company's ability to repay upcoming indebtedness. As reported by the TCR on Oct. 5, 2012, Standard & Poor's Ratings Services affirmed its 'B+' long-term issuer credit rating on iStar Financial Inc. In October 2012, Moody's Investors Service upgraded the corporate family rating to B2 from B3. The current rating reflects the REIT's success in extending near term debt maturities and improving fundamentals in commercial real estate. The ratings on the October 2012 senior secured credit facility takes into account the asset coverage, the size and quality of the collateral pool, and the term of facility. ISTAR FINANCIAL: Valinor Discloses 6% Equity Stake at Dec. 31 ------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Valinor Management, LLC, and David Gallo disclosed that, as of Dec. 31, 2012, they beneficially own 5,277,612 shares of common stock of iStar Financial Inc. representing 6.31% of the shares outstanding. Valinor previously reported beneficial ownership of 5,575,088 common shares or a 6.81% of the shares outstanding. A copy of the amended filing is available for free at http://is.gd/4LVAzX About iStar Financial New York-based iStar Financial Inc. (NYSE: SFI) provides custom- tailored investment capital to high-end private and corporate owners of real estate, including senior and mezzanine real estate debt, senior and mezzanine corporate capital, as well as corporate net lease financing and equity. The Company, which is taxed as a real estate investment trust, provides innovative and value added financing solutions to its customers. The Company reported a net loss of $25.69 million in 2011, compared with net income of $80.20 million in 2010. iStar Financial's balance sheet at Sept. 30, 2012, showed $6.94 billion in total assets, $5.52 billion in total liabilities, $14.20 million in redeemable noncontrolling interests, and $1.40 billion in total equity. * * * In March 2012, Fitch affirmed the company's 'B-' issuer default rating. The IDR affirmation is based on a manageable debt maturity profile of the company, pro forma for the recently- consummated secured financing that extends certain of the company's debt maturities, relieving the overhang of significant unsecured debt maturities in 2012 and 2013. While this 2012 financing does not reduce the amount of total debt outstanding, the company's debt maturity profile is more manageable over the next two years, with only 48% of debt maturing pro forma, down from 61%. Given the mild improvement in commercial real estate fundamentals and value stabilization, the company's loan and real estate owned portfolio performance will likely improve going forward, which should increase the company's ability to repay upcoming indebtedness. As reported by the TCR on Oct. 5, 2012, Standard & Poor's Ratings Services affirmed its 'B+' long-term issuer credit rating on iStar Financial Inc. In October 2012, Moody's Investors Service upgraded the corporate family rating to B2 from B3. The current rating reflects the REIT's success in extending near term debt maturities and improving fundamentals in commercial real estate. The ratings on the October 2012 senior secured credit facility takes into account the asset coverage, the size and quality of the collateral pool, and the term of facility. ISTAR FINANCIAL: Fir Tree Lowers Equity Stake to 1% at Dec. 31 -------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Fir Tree, Inc., disclosed that, as of Dec. 31, 2012, it beneficially owns 1,312,300 shares of common stock of iStar Financial Inc. representing 1.6% of the shares outstanding. Fir Tree previously reported beneficial ownership of 4,653,602 common shares or a 5.7% equity stake as of Dec. 31, 2011. A copy of the amended filing is available for free at: http://is.gd/RMdxzn About iStar Financial New York-based iStar Financial Inc. (NYSE: SFI) provides custom- tailored investment capital to high-end private and corporate owners of real estate, including senior and mezzanine real estate debt, senior and mezzanine corporate capital, as well as corporate net lease financing and equity. The Company, which is taxed as a real estate investment trust, provides innovative and value added financing solutions to its customers. The Company reported a net loss of $25.69 million in 2011, compared with net income of $80.20 million in 2010. iStar Financial's balance sheet at Sept. 30, 2012, showed $6.94 billion in total assets, $5.52 billion in total liabilities, $14.20 million in redeemable noncontrolling interests, and $1.40 billion in total equity. * * * In March 2012, Fitch affirmed the company's 'B-' issuer default rating. The IDR affirmation is based on a manageable debt maturity profile of the company, pro forma for the recently- consummated secured financing that extends certain of the company's debt maturities, relieving the overhang of significant unsecured debt maturities in 2012 and 2013. While this 2012 financing does not reduce the amount of total debt outstanding, the company's debt maturity profile is more manageable over the next two years, with only 48% of debt maturing pro forma, down from 61%. Given the mild improvement in commercial real estate fundamentals and value stabilization, the company's loan and real estate owned portfolio performance will likely improve going forward, which should increase the company's ability to repay upcoming indebtedness. As reported by the TCR on Oct. 5, 2012, Standard & Poor's Ratings Services affirmed its 'B+' long-term issuer credit rating on iStar Financial Inc. In October 2012, Moody's Investors Service upgraded the corporate family rating to B2 from B3. The current rating reflects the REIT's success in extending near term debt maturities and improving fundamentals in commercial real estate. The ratings on the October 2012 senior secured credit facility takes into account the asset coverage, the size and quality of the collateral pool, and the term of facility. JOURNAL REGISTER: Taps Keen Realty as Real Estate Advisor --------------------------------------------------------- Journal Register Company, et al., are asking the bankruptcy judge at a hearing today, Feb. 21, to approve its hiring of Keen Realty Advisors, LLC as special real estate advisor. Keen Realty will perform lease consulting and advisory services for the Debtors. Keen Realty's compensation structure includes an advisory fee of $5,000; transaction and base fee which is the greater of $4,000 or 6% of savings to be calculated. 21st CMH Acquisition Co. has signed a deal to purchase the Debtors' assets, absent higher and better offers. Pursuant to the asset purchase agreement, if the Debtors determine to retain a real estate advisor to assist in their negotiations with the landlords regarding potential modifications to the terms of the leases, the proposed buyer has agreed to pay the fees of any real estate advisor incurred in connection therewith in an amount not to exceed $50,000. To the best of the Debtors' knowledge, Keen Realty does not hold or represent interest materially adverse to the interest of the estate. 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. JOURNAL REGISTER: Borough of Lansdale Acquires Goodson Property --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved a stipulation between debtor Goodson Holding Company and The Borough of Lansdale for relief from the automatic stay to the extent necessary to proceed with condemnation or acquisition, approving sale of property. Pursuant to the stipulation, among other things: 1. the parties agree that relief from the stay must be (and is) granted by the Court; 2. the Borough of Lansdale is authorized to file its declaration of taking or to acquire the property by deed in lieu of condemnation from the Debtor; and 3. the proceeds of any conveyance or the compensation paid pursuant to any taking will be paid to the Debtors and thereafter will be applied in accordance with the Final DIP loan order and agreement. Goodson Holding Company owns certain property located in the Borough of Lansdale, Montgomery County, Pennsylvania. The Debtor related that on Feb. 3, 2010, Lansdale Borough Council authorized the Borough to undertake the design of a Wood Street and Vine Street Connector Project contemplating, inter alia, construction of the roadway connector between Vine Street and Wood Street including widening of roadways and construction of sidewalk improvements. Lansdale Borough, in order to complete the Connector Project, must acquire temporary construction easements and fee simple ownership interests in certain portions of parcels of land adjacent to Wood Street, Derstine Avenue, Susquehanna Avenue and Vine Street extending from Main Street to South Broad Street, all within the Borough. In this relation, the Borough expressed that it is prepared to file a declaration of taking. The Borough has completed an appraisal of the property to be condemned and is prepared to offer the Debtor $7,400. According to the Debtors, the property has no other value or use by any third party and is not currently of material use or value to them. The project will result in improved "street-scape" along Debtor's Derstine Avenue property line which will be beneficial to Debtor's property value; and the Debtor has no objection to the acquisition by the Borough or the price to be paid therefore. 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. JOURNAL REGISTER: Panel Not Objecting to Revolving Lender's Liens ----------------------------------------------------------------- Journal Register Company, et al., Wells Fargo Bank, N.A., in its capacity as prepetition lender under the revolving loan agreement, and the Official Committee of Unsecured Creditors providing that the Committee would not raise objections to the validity of liens and security interests of the prepetition revolving lender in the prepetition collateral. The parties agree that the prepetition collateral won't include certain excluded assets, a list of which is available for free at: http://bankrupt.com/misc/JournalRegister_lenderstipulation.pdf 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 PHARMACEUTICALS Plan Outline Hearing Set for March 19 --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York will convene a hearing on March 19, 2013 at 11:00 a.m., to consider adequacy of the information in K-V Discovery Solutions, Inc., et al.'s proposed Chapter 11 Plan. Objections, if any, are due 4 p.m. on March 7. As reported in the TCR on Jan. 16, 2013, Bill Rochelle, the bankruptcy columnist for Bloomberg News, reported the Debtors filed a Chapter 11 reorganization plan where first-lien lenders will receive 82% of the stock along with a $50 million second-lien term loan. A group of the lenders making a $85 million loan to finance the plan will receive 15% of the new stock. The report noted that the percentage recovery for the creditors is left blank in the draft disclosure materials filed along with the plan. The plan is supported by holders of 78% of the $225 million in senior secured notes, according to the disclosure statement. According to the report, holders of $200 million in convertible notes are to have 3% of the new stock along with the ability to purchase more stock in a $20 million rights offering at a price related to full payment of the senior notes. General unsecured creditors are being offered $1 million cash to divide among themselves. Senior and subordinated bonds have soared in price since October. The first-lien notes last traded on Jan. 7 for 91 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The secured notes are up 138% since Oct. 9. About K-V Pharmaceutical K-V Pharmaceutical Company (NYSE: KVa/KVb) -- http://www.kvpharmaceutical.com/-- is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. The Company markets its technology distinguished products through ETHEX Corporation, a subsidiary that competes with branded products, and Ther-Rx Corporation, the company's branded drug subsidiary. K-V Pharmaceutical Company and certain domestic subsidiaries on Aug. 4, 2012, filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-13346, under K-V Discovery Solutions Inc.) to restructure their financial obligations. K-V employed Willkie Farr & Gallagher LLP as bankruptcy counsel, Williams & Connolly LLP as special litigation counsel, and SNR Denton as special litigation counsel. In addition, K-V tapped Jefferies & Co., Inc., as financial advisor and investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. The U.S. Trustee appointed five members to serve in the Official Committee of Unsecured Creditors. Kristopher M. Hansen, Esq., Erez E. Gilad, Esq., and Matthew G. Garofalo, Esq., at Stroock & Stroock & Lavan LLP, represent the Creditors Committee. Weil, Gotshal & Manges LLP's Robert J. Lemons, Esq., and Lori R. Fife, Esq., represent an Ad Hoc Senior Noteholders Group. The Plan provides that in full satisfaction, settlement, release. KPG INVESTMENTS: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: KPG Investments LLC 1200 Glynn Avenue, Suite 7 Brunswick, GA 31520 Bankruptcy Case No.: 13-20172 Chapter 11 Petition Date: February 18, 2013 Court: U.S. Bankruptcy Court Southern District of Georgia (Brunswick) Debtor's Counsel: Paul A. Schofield, Esq. THE SCHOFIELD LAW FIRM, P.C. P.O. Box 389 Brunswick, GA 31521 Tel: (912) 275-7018 Fax: (912) 275-7019 E-mail: cmecf@schofieldlawfirm.com Estimated Assets: $0 to $50,000 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 Keith A. Graversen, owner. LAND HOLDINGS: Moody's Rates Proposed $162.5-Mil. Term Loan 'B3' ---------------------------------------------------------------- Moody's Investors Service assigned a B3 Corporate Family Rating to Land Holdings I, LLC. A B3 was also assigned to the company's proposed $162.5 million 7-year term loan while a Ba3 was assigned to its proposed $10 million 5-year super priority revolver. Moody's also assigned a Caa1-PD Probability of Default Rating. The rating outlook is stable. This is the first time Moody's has assigned a rating to Land Holdings. Land Holdings was formed for the purpose of owning the license to develop a new casino in Biloxi, Mississippi. The company began construction of Scarlett's Pearl Casino Resort located in D'Iberville, MS in December 2012. Land Holdings is 100% owned by Robert A. Granieri. Total project costs are about $285 million and the planned opening is September 2014. New ratings assigned: Corporate Family Rating at B3 Probability of Default Rating at Caa1-PD $162.5 million proposed senior secured term loan at B3 (LGD 3, 37%) $10.0 million proposed super priority revolver at Ba3 (LGD 1,1%) Stable rating outlook The ratings are subject to the conclusion of the transactions, as proposed, and Moody's review of final documentation. Ratings Rationale: Land Holdings' B3 Corporate Family Rating reflects the start-up nature of the company's single asset casino project and the risks related to existing and potential new competition. Mississippi is an unlimited license jurisdiction, and as a result, there are no significant barriers to entry for new competition. Also considered is that the sole owner of and equity contributor to Land Holdings has no prior casino ownership or operating experience. Positive rating consideration is given to the significant cash equity contribution to the project, at about 36% of total project costs. Also considered is Moody's expectation that the project will generate EBITDA in the range of $34 million to $42 million, more than enough to cover the company's fixed charges, and debt/EBITDA after the first full year of operations of between 4.3 times and 5.3 times. Along with the significant cash equity contribution, Moody's also views Land Holdings' attractive casino location as a key rating driver. Scarlett's Pearl Casino Resort will be the first gaming facility in the Biloxi market encountered by patrons driving to the area from Interstate 110. Additionally, Land Holdings' has very good liquidity. The proposed debt financing and remaining cash equity contribution will fully fund the remaining project costs, including an interest reserve on the term loan that will prefund interest payments, and fund the first interest payment scheduled after the project opens. Land Holdings' Caa1-PD Probability of Default Rating is one-notch lower than the company's B3 Corporate Family Rating. This difference reflects the company's all bank capital structure and the utilization of a higher than average family recovery rate of 65%. The all bank capital structure, which in Moody's view gives lenders a better ability to take prompt action if Land Holdings credit profile deteriorates, thereby providing greater-than- average recovery values. The stable rating outlook reflects the fully funded nature of Land Holdings' casino project along with the credit support provided by a cash funded interest reserve and various cash funded contingencies. In addition, the stable outlook acknowledges that there will be a disbursement agreement and guaranteed maximum price contract in effect. The stable outlook also reflects Moody's current view that Scarlett's Pearl Casino Resort will ramp up at a level and pace that will be more than enough to cover Land Holding's debt service requirement during the first year of operations. Land Holdings' ratings could be downgraded prior to opening if there is any event that causes a delay in Scarlett's Pearl Casino Resort's opening or if total project costs substantially exceed what is currently budgeted. Ratings could also be lowered if it appears that market conditions are changing in a manner that would make it difficult for Land Holdings to achieve targeted business volumes and cover its fixed charges. A higher rating is not likely over the near-term given the development status of Scarlett's Pearl Casino Resort and prospective nature of the rating. A higher rating would require that the casino open on time and on budget, and if it appears likely that recurring EBITDA minus capital expenditures to total interest expense will exceed 1.0 time and if debt/EBITDA of 4.5 times can be achieved and maintained over the longer-term. The principal methodology used in this rating was the Global Gaming Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. LCI HOLDING: Committee Hires Pachulski Stang as Counsel ------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized the Official Committee of Unsecured Creditors in the Chapter 11 cases of LCI Holdings Company, Inc, et al., to retain Pachulski Stang Ziehl & Jones LLP as its counsel. The hourly rates of PSZJ's personnel are: Partners $525 - $975 Of Counsel $495 - $745 Associates $395 - $495 Paralegals $185 - $275 The professionals and paralegals designated to represent the Committee and their standard hourly rates are: Laura Davis Jones $955 Bradford J. Sandier $695 James B. O'Neill $675 Peter J. Keane $395 Lynzy McGee $275 To the best of the Committee's knowledge, PSZJ is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About LifeCare LCI Holding Company, Inc., and its affiliates, doing business as LifeCare Hospitals, operate eight "hospital within hospital" facilities and 19 freestanding facilities in 10 states. The hospitals have about 1,400 beds at facilities in Louisiana, Texas, Pennsylvania, Ohio and Nevada. LifeCare is controlled by Carlyle Group, which holds 93.4% of the stock following a $570 million acquisition in August 2005. LCI Holding Company, Inc., and its affiliates, including LifeCare Holdings Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-13319) on Dec. 11, 2012, with plans to sell assets to secured lenders. Ken Ziman, Esq., and Felicia Perlman, Esq., at Skadden, Arps, Slate Meagher & Flom LLP, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. Huron Management Services LLC will provide the Debtors an interim chief financial officer and certain additional personnel; and (ii) designate Stuart Walker as interim chief financial officer. The steering committee of lenders is represented by attorneys at Akin Gump Strauss Hauer & Feld LLP and Blank Rome LLP. The agent under the prepetition and postpetition secured credit facility is represented by Simpson Thacher & Barlett LLP. The Debtors disclosed assets of $422 million and liabilities totaling $575.9 million as of Sept. 30, 2012. As of the bankruptcy filing, total long-term obligations were $482.2 million consisting of, among other things, institutional loans and unsecured subordinated loans. A total of $353.4 million is owing under the prepetition secured credit facility. A total of $128.4 million is owing on senior subordinated notes. LifeCare Hospitals of Pittsburgh, LLC, a debtor-affiliate disclosed $24,028,730 in assets and $484,372,539 in liabilities as of the Chapter 11 filing. The Official Committee of Unsecured Creditors is represented by Pachulski Stang Ziehl & Jones LLP. FTI Consulting, Inc., serves as its financial advisor. LCI HOLDING: FTI Okayed as Committee's Financial Advisor -------------------------------------------------------- The Hon. Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware authorized the Official Committee of Unsecured Creditors in the Chapter 11 cases of LCI Holdings Company, Inc, et al., to retain FTI Consulting, Inc. as financial advisor The Committee said that it needs the services of FTI to assess and monitor the efforts of the Debtors and their professional advisors to maximize the value of their assets. The hourly rates of FTI's personnel are: Senior Managing Directors $790 - $895 Directors/Managing Directors $570 - $755 Consultants/Senior Consultants $290 - $540 Administrative/Paraprofessionals/ Associates $120 - $235 Steven Simms, senior managing director with FTI, assures the Court that the firm does not hold or represent any interest adverse to the estate. About LifeCare LCI Holding Company, Inc., and its affiliates, doing business as LifeCare Hospitals, operate eight "hospital within hospital" facilities and 19 freestanding facilities in 10 states. The hospitals have about 1,400 beds at facilities in Louisiana, Texas, Pennsylvania, Ohio and Nevada. LifeCare is controlled by Carlyle Group, which holds 93.4% of the stock following a $570 million acquisition in August 2005. LCI Holding Company, Inc., and its affiliates, including LifeCare Holdings Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-13319) on Dec. 11, 2012, with plans to sell assets to secured lenders. Ken Ziman, Esq., and Felicia Perlman, Esq., at Skadden, Arps, Slate Meagher & Flom LLP, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. Huron Management Services LLC will provide the Debtors an interim chief financial officer and certain additional personnel; and (ii) designate Stuart Walker as interim chief financial officer. The steering committee of lenders is represented by attorneys at Akin Gump Strauss Hauer & Feld LLP and Blank Rome LLP. The agent under the prepetition and postpetition secured credit facility is represented by Simpson Thacher & Barlett LLP. The Debtors disclosed assets of $422 million and liabilities totaling $575.9 million as of Sept. 30, 2012. As of the bankruptcy filing, total long-term obligations were $482.2 million consisting of, among other things, institutional loans and unsecured subordinated loans. A total of $353.4 million is owing under the prepetition secured credit facility. A total of $128.4 million is owing on senior subordinated notes. LifeCare Hospitals of Pittsburgh, LLC, a debtor-affiliate disclosed $24,028,730 in assets and $484,372,539 in liabilities as of the Chapter 11 filing. The Official Committee of Unsecured Creditors is represented by Pachulski Stang Ziehl & Jones LLP. FTI Consulting, Inc., serves as its financial advisor. LCI HOLDING: Meeting of Creditors Continued Until March 12 ---------------------------------------------------------- The U.S. Trustee for Region 3 continued until March 12, 2013, at 9:30 a.m. the meeting of creditors in the Chapter 11 cases of LCI Holding Company, Inc., et al. The meeting will be held at J. Caleb Boggs Federal Building, 844 King St., Room 5209, Wilmington, Delaware. The meeting of creditors was originally slated for Jan. 24. The meeting, which is required under Section 341(a) of the Bankruptcy Code, offers creditors a one-time opportunity to examine a bankrupt company's representative under oath about its financial affairs and operations that would be of interest to the general body of creditors. About LifeCare LCI Holding Company, Inc., and its affiliates, doing business as LifeCare Hospitals, operate eight "hospital within hospital" facilities and 19 freestanding facilities in 10 states. The hospitals have about 1,400 beds at facilities in Louisiana, Texas, Pennsylvania, Ohio and Nevada. LifeCare is controlled by Carlyle Group, which holds 93.4% of the stock following a $570 million acquisition in August 2005. LCI Holding Company, Inc., and its affiliates, including LifeCare Holdings Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-13319) on Dec. 11, 2012, with plans to sell assets to secured lenders. Ken Ziman, Esq., and Felicia Perlman, Esq., at Skadden, Arps, Slate Meagher & Flom LLP, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. Huron Management Services LLC will provide the Debtors an interim chief financial officer and certain additional personnel; and (ii) designate Stuart Walker as interim chief financial officer. The steering committee of lenders is represented by attorneys at Akin Gump Strauss Hauer & Feld LLP and Blank Rome LLP. The agent under the prepetition and postpetition secured credit facility is represented by Simpson Thacher & Barlett LLP. The Debtors disclosed assets of $422 million and liabilities totaling $575.9 million as of Sept. 30, 2012. As of the bankruptcy filing, total long-term obligations were $482.2 million consisting of, among other things, institutional loans and unsecured subordinated loans. A total of $353.4 million is owing under the prepetition secured credit facility. A total of $128.4 million is owing on senior subordinated notes. LifeCare Hospitals of Pittsburgh, LLC, a debtor-affiliate disclosed $24,028,730 in assets and $484,372,539 in liabilities as of the Chapter 11 filing. The Official Committee of Unsecured Creditors is represented by Pachulski Stang Ziehl & Jones LLP. FTI Consulting, Inc., serves as its financial advisor. LEHMAN BROTHERS: To Make Third Payment to Creditors April 4 ----------------------------------------------------------- Lehman Brothers Holdings Inc. said it will make a third payment to creditors under its $65 billion payout plan on April 4. The company, which has already paid half of the $65 billion it aims to pay by 2016 or so, did not disclose how much creditors will be paid in the third distribution. In order to receive payment, creditors have to submit documents, including an Internal Revenue Service tax form and certification pertaining to Office of Foreign Assets Control compliance, by March 8. Lehman won't recognize any transfer of claims recorded on the claims register after February 23, 2013. In its initial distribution on April 17, 2012, Lehman paid $22.5 billion to creditors. Its creditors received $10.208 billion while creditors of its commercial paper unit received $3.235 billion. Lehman paid $10.2 billion in the second distribution on October 1. More than $6.75 billion was paid to its creditors while more than $2.51 billion went to creditors of the commercial paper unit. Lehman had said it intends to raise $53 billion through 2016 or so to pay an average of 18 cents on the dollar on final claims of $300 billion. The company also has been whittling down some claims that would potentially add cash for payment to creditors. In November 2012, the company agreed to sell Archstone Enterprise LP in a $6.5 billion cash and stock deal. Under the deal, Lehman will receive nearly $2.69 billion in cash plus 34.5 million shares of Equity Residential's stock and 14.9 million shares of AvalonBay Communities Inc.'s stock that are worth about $3.8 billion combined. Lehman's payout plan, which treats creditors of its subsidiaries better than its own creditors, was confirmed by the U.S. Bankruptcy Court for the Southern District of New York in December 2011. Early last year, the company emerged from bankruptcy protection. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: Wants to Compel London Whale Testimony ------------------------------------------------------- Lehman Brothers Holdings Inc. wants to question the JPMorgan Chase & Co. trader known as the "London Whale" in connection with its $8.6 billion lawsuit against the bank, Reuters reported. In a court filing, Lehman and a committee of its unsecured creditors said months of disclosures about the trader, Bruno Iksil, suggest that he played a "greater role" than previously thought in the events underlying the lawsuit. They asked U.S. Bankruptcy Judge James Peck for permission to ask French authorities to compel Mr. Iksil's testimony, Reuters reported. Mr. Iksil's "practice of intentional mismarking" of trades warranted an inquiry into trades he oversaw that led to an "unjustified multimillion-dollar collateral call" on September 9, 2008, according to the court filing. Mr. Iksil worked for JPMorgan in London and is no longer employed by the New York-based bank. Lehman sued JPMorgan in early 2010 to recover billions of dollars that the bank allegedly seized as collateral. The excessive collateral demanded by JPMorgan, which served as Lehman's main clearing bank in the 2008 financial crisis, allegedly drove the company into bankruptcy. The case is Lehman Brothers Holdings Inc. v. JPMorgan Chase Bank NA, 12-01874, U.S. Bankruptcy Court, Southern District of New York (Manhattan). About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: $91.2-Mil. Reserve for US Airways Claim Okayed --------------------------------------------------------------- The U.S. Bankruptcy Court in Manhattan approved a $91.2 million reserve for US Airways Inc.'s claim against Lehman Brothers Holdings Inc. US Airways filed a $564.7 million claim against the company, which stemmed from its purchase of securities made through former employees of Lehman's brokerage. Lehman previously challenged the filing of US Airways' claim, saying it should not be held liable for claims that arose from deals involving groups or companies that did not file for bankruptcy protection. Last month, Lehman withdrew its request for court approval of a $200 million reserve for Essex Equity Holdings USA LLC's $1.2 billion claim. The request was filed on January 15 as part of the company's effort to implement its $65 billion payout plan, which the bankruptcy court approved in December 2011. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEVEL 3: Loomis Sayles Discloses 4.8% Equity Stake at Dec. 31 ------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Loomis Sayles & Co., L.P., disclosed that, as of Dec. 31, 2012, it beneficially owns 11,125,542 shares of common stock of Level 3 Communications Inc. representing 4.86% of the shares outstanding. Loomis Sayles previously reported beneficial ownership of 11,460,100 commmon shares or a 5.23% equity stake as of Oct. 31, 2011. A copy of the amended filing is available at: http://is.gd/3SFAef About Level 3 Communications Headquartered in Broomfield, Colorado, Level 3 Communications, Inc., is a publicly traded international communications company with one of the world's largest communications and Internet backbones. The Company reported a net loss of $756 million in 2011, a net loss of $622 million in 2010, and a net loss of $618 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $13.21 billion in total assets, $12.01 billion in total liabilities, and $1.20 billion in total stockholders' equity. * * * As reported by the TCR on April 2, 2012, Fitch Ratings upgraded Level-3 Communications' Issuer Default Rating to 'B' from 'B-' on Oct. 4, 2011, and assigned a Positive Outlook. The rating action followed LVLT's announcement that the company closed on its previously announced agreement to acquire Global Crossing Limited (GLBC) in a tax-free, stock-for-stock transaction. In the July 20, 2012, edition of the TCR, Moody's Investors Service affirmed Level 3 Communications, Inc.'s corporate family and probability of default ratings at B3. The Company's B3 ratings are based on expectations that net synergies from the recently closed acquisition of Global Crossing Ltd. will reduce expenses sufficiently such that Level 3 will be modestly cash flow positive (on a sustained basis) by late 2013. Level 3 carries a 'B-' corporate credit rating from Standard & Poor's Ratings Services. LEVEL 3: Southeastern Asset Discloses 21.6% Equity Stake -------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission on Feb. 14, 2013, Southeastern Asset Management, Inc., and its affiliates disclosed that they beneficially own 47,121,339 shares of common stock of Level 3 Communications, Inc., representing 21.6% of the shares outstanding. Southeastern Asset previously reported beneficial ownership of 44,150,956 common shares or a 20.8% equity stake as of Feb. 6, 2012. A copy of the amended filing is available at: http://is.gd/a3WFFB About Level 3 Communications Headquartered in Broomfield, Colorado, Level 3 Communications, Inc., is a publicly traded international communications company with one of the world's largest communications and Internet backbones. The Company reported a net loss of $756 million in 2011, a net loss of $622 million in 2010, and a net loss of $618 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $13.21 billion in total assets, $12.01 billion in total liabilities, and $1.20 billion in total stockholders' equity. * * * As reported by the TCR on April 2, 2012, Fitch Ratings upgraded Level-3 Communications' Issuer Default Rating to 'B' from 'B-' on Oct. 4, 2011, and assigned a Positive Outlook. The rating action followed LVLT's announcement that the company closed on its previously announced agreement to acquire Global Crossing Limited (GLBC) in a tax-free, stock-for-stock transaction. In the July 20, 2012, edition of the TCR, Moody's Investors Service affirmed Level 3 Communications, Inc.'s corporate family and probability of default ratings at B3. The Company's B3 ratings are based on expectations that net synergies from the recently closed acquisition of Global Crossing Ltd. will reduce expenses sufficiently such that Level 3 will be modestly cash flow positive (on a sustained basis) by late 2013. Level 3 carries a 'B-' corporate credit rating from Standard & Poor's Ratings Services. LEVEL 3: V. Prem Watsa Discloses 7% Equity Stake at Dec. 31 ----------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, V. Prem Watsa and its affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 15,708,872 shares of common stock of Level 3 Communications, Inc., representing 7.1% of the shares outstanding. V. Prem previously reported beneficial ownership of 15,708,920 common shares or a 7.6% equity stake as of Dec. 31, 2011. A copy of the filing is available for free at: http://is.gd/u171uZ About Level 3 Communications Headquartered in Broomfield, Colorado, Level 3 Communications, Inc., is a publicly traded international communications company with one of the world's largest communications and Internet backbones. The Company reported a net loss of $756 million in 2011, a net loss of $622 million in 2010, and a net loss of $618 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $13.21 billion in total assets, $12.01 billion in total liabilities, and $1.20 billion in total stockholders' equity. * * * As reported by the TCR on April 2, 2012, Fitch Ratings upgraded Level-3 Communications' Issuer Default Rating to 'B' from 'B-' on Oct. 4, 2011, and assigned a Positive Outlook. The rating action followed LVLT's announcement that the company closed on its previously announced agreement to acquire Global Crossing Limited (GLBC) in a tax-free, stock-for-stock transaction. In the July 20, 2012, edition of the TCR, Moody's Investors Service affirmed Level 3 Communications, Inc.'s corporate family and probability of default ratings at B3. The Company's B3 ratings are based on expectations that net synergies from the recently closed acquisition of Global Crossing Ltd. will reduce expenses sufficiently such that Level 3 will be modestly cash flow positive (on a sustained basis) by late 2013. Level 3 carries a 'B-' corporate credit rating from Standard & Poor's Ratings Services. LSP ENERGY: Has Until April 21 to Solicit Acceptances of Plan ------------------------------------------------------------- The U.S. Bankruptcy Court in Delaware extended LSP Energy Limited Partnership, et al.'s exclusive period to solicit acceptances of its Plan of Liquidation until April 21, 2013. The Bankruptcy Court has scheduled a March 25 confirmation hearing for the approval of the Debtors' Plan, which projects a recovery of 32% for holders of $42.9 million in unsecured claims. About LSP Energy LSP Energy Limited, which owned and operated an electricity generation facility located in Batesville, Mississippi, filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 12-10460) on Feb. 10, 2012. Judge Mary F. Walrath oversees the case. Lawyers at Whiteford Taylor & Preston LLC serve as the Debtors' counsel. LSP has a $20 million secured loan provided by lenders including John Hancock Financial Services Inc. LSP was forced into bankruptcy following mechanical problems that took one of three units out of service. Bondholders have claims for $211 million on two series of secured bonds. In addition, there was a $3.9 million working capital facility and $23.3 million in secured debt owing to an affiliate of Siemens AG, which repairs and maintains the facility. The Debtor has completed the sale of its 837-megawatt electric generating plant in Batesville, Mississippi, to South Mississippi Electric Power Assn. for $272.6 million. MC2 CAPITAL: Court Rules on Committee's Claim Objections -------------------------------------------------------- Judge Alan Jaroslovsky of the U.S. Bankruptcy Court for the Northern District of California entered a ruling on February 14, 2013, granting in part and denying in part, a motion for summary judgment filed by the Official Unsecured Creditors' Committee in In re MC2 Capital Partners, LLC, Debtor(s), No. 11-14366. Many of MC2's vendors hold claims against the estate for contract work performed between 2008 and 2011. Included in those vendors are Paramount Scaffold, Verrips Construction, RV Stitch Construction and Stitch Construction, all of which filed actions against Thomas Monahan -- the Debtor's president, managing member and responsible individual in bankruptcy -- or one of his entities to collect on debts owed by MC2. Mr. Monahan is a principal or controls several other business entities, including Monahan Pacific Construction Corporation, Monahan Pacific Corporation and Shaw Capital Partners, LLC. Mr. Monahan settled the actions by agreeing to pay the creditors lesser amounts than the full amount of their claims. As part of the settlement, the claims of the creditors were transferred to Shaw, which was not itself a defendant in the actions. On February 23, 2012, RV Stitch assigned its claim to Shaw in exchange for $20,000 and Stitch assigned its claim to Shaw for $15,000. On April 5, 2012, Shaw, as assignee, filed two proofs of claim: #32 on behalf of RV Stitch Construction for $94,740.89 and #33 on behalf of Stitch Construction for $21,711.20. On May 25, 2012, Paramount assigned its $60,716.44 claim to Shaw for an undisclosed amount, and Verrips assigned its $7,195 claim to Shaw for an undisclosed amount. On June 25, 2012, Shaw filed two notices of the transfer of Paramount's $60,716.14 claim and of Verrip's $7,040 claim to Shaw. Shaw's claims total $184,363.53, for which it paid $35,000 plus the undisclosed amounts for the Paramount and Verrips claims. The Official Unsecured Creditors' Committee objected to each of Shaw's claims based on various grounds, including Paramount's and Verrip's failure to file a proof of claim, the general failure to set forth adequate evidence of a claim, and general set-off rights held by MC2 for inadequate or incomplete work by the vendors. The Committee has moved for summary judgment on the four objections; Shaw opposes. Judge Jaroslovsky agrees with the Committee in one respect only: Shaw's claims are limited to the amount actually paid. The Court rejected the Committee's argument that "the claims should be disallowed because the assignment by which Shaw acquired the claims of the original vendors explicitly released any claims or rights originally held against MC2" as making no sense. "[T]he motion for summary judgment will be granted in part, and it shall be deemed without controversy in further proceedings that the claims assigned to Shaw may be allowed at most in the amount paid to the transferor. In all other respects, the motion will be denied," Judge Jaroslovsky ruled. A copy of the Bankruptcy Court's February 14, 2013 Memorandum is available at http://is.gd/qY7CXBfrom Leagle.com. About MC2 Capital Partners MC2 Capital Partners, LLC, is a single purpose entity formed to build and develop an 82-unit multi-family residential project in San Rafael, California. MC2 filed for Chapter 11 bankruptcy (Bankr. N.D. Calif. Case No. 11-14366) on Dec. 1, 2011. Judge Alan Jaroslovsky presides over the case. In its petition, the Debtor estimated $10 million to $50 million in assets and $50 million to $100 million in debts. The Debtor's manager is Monahan Pacific Corporation. Thomas Monahan -- an officer and director of Monahan Pacific Corporation and the holder of 95% of the LLC equity interests in the Debtor -- signed the petition. He has been appointed as responsible individual for the Debtor. MDU COMMUNICATIONS: Incurs $137,000 Net Loss in Fiscal Q1 --------------------------------------------------------- MDU Communications International, Inc., reported a net loss of $136,503 on $6.0 million of revenue for the three months ended Dec. 31, 2012, compared with a net loss of $2.0 million on $6.9 million of revenue for the prior fiscal period. The Company's balance sheet at Dec. 31, 2012, showed $18.1 million in total assets, $30.9 million in total liabilities, and a stockholders' deficit of $12.8 million. "Based on current projections, the Company does not expect its available cash, estimated revenues and remaining Credit Facility to be sufficient to cover liquidity needs for the next twelve months. Without additional funding sources, proceeds from asset sales, or a merger, the Company forecasts that its available capital will be depleted sometime during its second fiscal quarter 2013. Additionally, the Company will be facing maturity and repayment of its Credit Facility on June 30, 2013." A copy of the Form 10-Q is available at http://is.gd/0lXaxr About MDU Communications Totowa, N.J.-based MDU Communications International, Inc., is a national provider of digital satellite television, high-speed Internet, digital voice and other information and communication services to residents living in the United States multi-dwelling unit ("MDU") market -- estimated to include 26 million residences. * * * As reported in the TCR on Dec. 27, 2012, CohnReznick LLP, in Roseland, New Jersey, expressed substantial doubt about MDU's ability to continue as a going concern. The independent auditors noted that the Company has incurred significant recurring losses, has a working capital deficit, and an accumulated deficit of $75 million at Sept. 30, 2012. They also noted that the Company's $30 million Credit Facility matures on June 30, 2013. MEDIA HOLDCO: S&P Assigns 'B+' CCR; Rates $50MM Facility 'BB' ------------------------------------------------------------- Standard & Poor's Ratings Services assigned Media Holdco L.P., the majority owner of ION Media Networks Inc., its 'B+' corporate credit rating. S&P rates the two entities on a consolidated basis. The outlook is stable. In addition, S&P assigned ION Media Networks' $50 million five- year revolving credit facility its 'BB' issue-level rating (two notches higher than the 'B+' corporate credit rating), with a recovery rating of '1', indicating S&P's expectation for very high (90% to 100%) recovery for lenders in the event of a payment default. The revolving credit facility will be used for general corporate purposes and is expected to be undrawn at the time of closing. S&P also assigned Media Holdco's $255 million 5.5-year term loan B S&P's 'BB-' issue-level rating (one notch higher than the 'B+' corporate credit rating), with a recovery rating of '2', indicating S&P's expectation for substantial (70% to 90%) recovery in the event of a payment default. The proceeds from the term loan will be used to buy out two of the three owners of Media Holdco L.P. Following the transaction, Black Diamond Capital Management will be the sole owner of Media Holdco, which currently owns an 87% equity stake in ION Media Networks. "The 'B+' rating on Media Holdco reflects our view of ION Television's modest ratings, minimal original programming, above- average use of infomercials, and limited track record since its last restructuring," said Standard & Poor's credit analyst Daniel Haines. These factors underpin S&P's view of the business profile as "weak." S&P regards the company's financial risk profile as "aggressive" due to its private-equity ownership and modest leverage. The final pricing on the new term loan was higher than the proposed pricing, and pro forma interest coverage and discretionary cash flow are slightly below S&P's initial expectations. Pro forma for the transaction, lease-adjusted debt to EBITDA is 2.7x and lease-adjusted EBITDA coverage of interest is 4.7x (S&P do not add back to EBITDA stock compensation that is only payable in cash). Pro forma EBITDA coverage of cash interest is 6.6x. S&P views the company's management and governance as "fair." ION Media owns and operates 60 UHF TV broadcast stations, including stations in all of the top 20 markets in the U.S. The company's flagship network, ION Television, has extensive reach, covering 100 million homes, largely through cable system carriage. ION Television must be carried by cable and satellite providers in markets where ION has a TV station. Its "must carry" election under FCC rules means that it foregoes compensation in order to obtain carriage. Cable systems have often chosen to carry it in markets where it does not have a station, subject to a negotiated percentage of ad revenue or inventory. In the past, the company generated the majority of its revenue from infomercials. Over the last couple years, the company has increased the amount of programming it airs, and now programs around 16 hours per day. Programming consists mainly of off-broadcast network and off-cable network shows, often in their second run, and original programming is limited. The company has been successful in raising advertising rates but S&P believes it will be difficult to continue to do so. ION Television is also vulnerable to ongoing ratings erosion affecting broadcasting and cable networks. S&P views the lack of original programming as an obstacle to generating subscription fees and growing advertising rates. MEDIA GENERAL: P. Troob Holds 6% Class A Shares at Dec. 31 ---------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Peter J. Troob and his affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 1,830,353 shares of Class A Common Stock of Media General, Inc., representing 6.7% of the shares outstanding. A copy of the filing is available for free at http://is.gd/NTdWAr About Media General Richmond, Virginia-based Media General Inc. (NYSE: MEG) -- http://www.mediageneral.com/-- is an independent communications company with interests in newspapers, television stations and interactive media in the United States. The Company incurred a net loss of $193.41 million in for the year ended Dec. 31, 2012, a net loss of $74.32 million for the year ended Dec. 25, 2011, and a net loss of $22.63 million for the fiscal year ended Dec. 26, 2010. The Company's balance sheet at Dec. 31, 2012, showed $773.42 million in total assets, $949.64 million in total liabilities and a $176.22 million stockholders deficit. * * * As reported by the Troubled Company Reporter on April 12, 2012, Moody's Investors Service downgraded, among other things, Media General's Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to Caa1 from B3, concluding the review for downgrade initiated on Feb. 13, 2012. The downgrade reflects the significant increase in interest expense associated with the company's credit facility amend and extend transaction and an assumed issuance of at least $225 million of new notes, which will result in limited free cash flow generation and constrain Media General's capacity to reduce its very high leverage. The weak free cash flow and high leverage create vulnerability to changes in the company's highly cyclical revenue and EBITDA generation. In the Oct. 10, 2012, edition of the TCR, Standard & Poor's Ratings Services raised its rating on Richmond, Va.-based Media General Inc. to 'B-' from 'CCC+' and removed it from CreditWatch, where it was placed with positive implications on May 18, 2012. "The corporate credit rating on Media General is based on our expectation that the company will be able to maintain adequate liquidity despite its very high leverage," noted Standard & Poor's credit analyst Jeanne Shoesmith. MERRILL COMMUNICATIONS: Moody's Rates New $390-Mil. Loan '(P)B1' ---------------------------------------------------------------- Moody's Investors Service assigned a provisional Corporate Family Rating of (P)B3 to Merrill Communications LLC (New), and provisional ratings of (P)B1 to the proposed $390 million senior secured term loan and (P)Ba3 to the proposed $30 million senior secured first-out revolving credit facility. The proposed term loan and revolver are expected to be issued following an anticipated debt restructuring. Moody's expects to assign a Probability of Default Rating of B3-PD to Merrill upon close of the transaction. The ratings outlook is stable. Moody's expects to convert the provisional ratings to definitive ratings upon the close of the restructuring transaction, contingent upon the receipt and review of final documentation. The restructuring will likely be viewed by Moody's as a default on the existing second-lien debt, and as a result, the PDR of Merrill Corporation (reflecting the pre-restructuring capital structure) will likely be lowered to D-PD upon closing. If implemented as proposed, the anticipated restructuring will put in place a longer term capital structure with improved liquidity, including significantly reduced cash interest payments and the elimination of sizeable restructuring-related fees going forward. However, Merrill's credit metrics (including the proposed HoldCo notes) will remain essentially unchanged, with pro-forma debt/EBITDA in the mid-5 times and interest coverage in the mid-1 times (EBITDA-CapEx)/interest expense (including cash and PIK interest) as of October 31, 2012. Excluding the proposed HoldCo notes, leverage will be in the high-3 times debt/EBITDA, and cash interest coverage in the high-2 times on a pro-forma basis. Under the terms of the restructuring transaction, proceeds from the proposed $390 million senior secured term loan and approximately $42 million of balance sheet cash are expected to repay in full the existing $374 million first lien term loan, $33 million revolver borrowings, accrued interest and transaction expenses. The revolver and term loan are expected to be secured by substantially all of Merrill's assets, to benefit from upstream guarantees by all domestic subsidiaries and to have maximum total leverage and minimum interest coverage covenants. The revolver will have a priority claim relative to the term loan with respect to the application of proceeds of all of the collateral and guarantees and consequently is ranked ahead of the term loan in Moody's priority of claims waterfall. The existing $227 million second lien term loan (inclusive of accrued interest) is expected to be converted into $227 million of unsecured HoldCo PIK notes due 2023. The existing second-lien holders will also receive 75% of the common equity in the post- restructuring entity. The new senior secured credit agreement is expected to restrict payment of interest on the HoldCo notes while the senior secured debt is outstanding, however will allow for redemption of HoldCo notes and payment of shareholder dividends in an amount up to cumulative excess cash flow (as defined), as long as on a pro-forma basis Merrill remains in compliance with financial covenants and net senior leverage does not exceed 3.0 times. The agreement will also include a 75% excess cash flow sweep. Separately, the HoldCo notes indenture is expected to require redemption of PIK accrued interest 63 months after the closing, and payment of cash interest following that date. Ratings assignments: Issuer: Merrill Communications LLC (New) Corporate Family Rating of (P)B3 Proposed $30 million super-priority senior secured revolving credit facility due 2018 at (P)Ba3 (LGD1, 1%) Proposed $390 million senior secured term loan due 2018 at (P)B1 (LGD2, 27%) Stable ratings outlook Moody's will withdraw all existing ratings of Merrill Corporation and Merrill Communications LLC upon close of the transaction. Ratings Rationale: The provisional (P)B3 CFR reflects Merrill's relatively high leverage and adequate interest coverage pro-forma for the anticipated debt restructuring. The restructuring will not materially change debt levels, and Merrill's debt/EBITDA (including the proposed HoldCo notes), will remain in the mid-5 times range and interest coverage (including both cash and PIK interest) will remain in the mid-1 times (EBITDA-CapEx)/interest expense. However, Merrill will benefit from substantially improved liquidity, due to meaningful free cash flow generation and long term debt maturities. The rating also incorporates the dependence of the company's earnings on volatile capital markets cycles and its operations in the highly competitive transaction services, legal and regulatory businesses, partially offset by Merrill's strong position in the majority of its markets. The stable outlook reflects Moody's expectations of steady near- term operating performance and substantial improvement in cash flow generation post-restructuring due in part to the expectation of PIK interest on the holdco notes. The ratings could be downgraded if Merrill's operating performance, liquidity or market position deteriorate, or if Moody's comes to expect that debt/EBITDA will be sustained above 6 times (including Moody's adjustments). The ratings could be upgraded if Merrill steadily grows profitability, demonstrates a commitment to debt reduction and substantially improves credit metrics. A ratings upgrade will likely require debt/EBITDA sustained below 4.5 times (including Moody's adjustments) and a good liquidity position including FCF/debt over 10%. The principal methodology used in this rating was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Merrill Communications LLC (New) provides document and data management services, litigation support, branded communication programs, fulfillment, imaging, and printing services to the financial, insurance, legal, life sciences and other market segments. The company generated revenue of approximately $832 million for the twelve months ended October 31, 2012. METRO FUEL: Sells Assets, Hearing on Exclusivity Feb. 26 -------------------------------------------------------- Metro Fuel Oil Corp. received bankruptcy-court approval to sell its assets to United Refining Energy Corp. for $27 million, according to reporting by Stephanie Gleason at Dow Jones' DBR Small Cap. Meanwhile, the Bankruptcy Court entered a bridge order extending Metro Fuel's exclusive plan proposal period until a hearing on the Debtor's request for an extension. A hearing for Feb. 26, 2013, at 11:00 a.m., has been set. The Debtors last month filed a motion to extend their exclusive periods to (i) file a plan through and including April 25, 2013; and (ii) solicit acceptances for that plan through and including June 24, 2013, citing that they will use the requested extension to complete the sale of their businesses, and then to develop and build consensus for a feasible Chapter 11 plan. The Official Committee of Unsecured Creditors supports the "modest" extension of exclusivity. 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) on Sept. 27, 2012. 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. On Feb. 15, 2015, the Bankruptcy Court entered an order approving the sale of substantially all of the assets of the Debtors to United Refining Energy Corp., and its assignees and designees for the Base Purchase Price of $27,000,000, as adjusted prior to the Closing, and as further adjusted by the payments contemplated by Section 2.7(d) of the APA. MF GLOBAL: Plan Proponents Seeks Delay of JPM Bid to Pursue Claim ----------------------------------------------------------------- Creditors who co-proposed the Chapter 11 plan for MF Global Holdings Ltd. asks U.S. Bankruptcy Judge Martin Glenn to postpone consideration of JPMorgan Chase Bank, N.A.'s bid to prosecute claims against MF Global Holdings on behalf of its finance unit. As reported on Feb. 15 by the Troubled Company Reporter, JPMorgan is asking for approval to prosecute MF Global Finance's claim against the holding company in a bid to knock out a $928 million claim against the finance unit. If the claim falls, the distribution to JPMorgan and other creditors of the finance unit would significantly increase. The bank arranged a March 6 hearing for permission to sue. In a Feb. 18 filing, the group asked Judge Glenn to postpone consideration of JPMorgan's request until after the conclusion of the April 5 hearing on the confirmation of MF Global's liquidation plan. The request "will be moot if the plan is confirmed because the plan contemplates the settlement of the very claims that JPMorgan seeks standing to challenge," the group said. The group also asks Judge Glenn to set a tentative status conference for the next available business day following the conclusion of the confirmation hearing. If JPMorgan's motion is not moot following the confirmation hearing, the group proposed that the judge and the parties establish a schedule at the status conference for discovery and a hearing on the bank's request be rescheduled. If the plan is confirmed and JPMorgan's motion becomes moot, the motion should be summarily denied, the group further said. Judge Glenn will hold a hearing on March 6 to consider the creditor co-proponents' request. Louis Freeh, the Chapter 11 trustee for the MF Global holding company, filed together with creditors a Chapter 11 plan that predicts a recovery of 13.4% to 39.1% for holders of $1.134 billion in unsecured claims against the parent holding company. Bank lenders would have the same recovery on their $1.148 billion claim against the holding company. The predicted recovery is 14.7% to 34% for holders of $1.19 billion in unsecured claims against MF Global Finance USA Inc., one of the companies under the umbrella of the holding company trustee. Bank lenders' claims against the finance subsidiary are scheduled for the same percentage recovery on their $1.148 billion claim. The plan deals only with creditors of the MF Global holding company, not with customers and creditors of the brokerage. The plan co-proponents include Deutsche Bank Securities Inc., an affiliate of Citigroup Inc., Knighthead Master Fund LP, Royal Bank of Scotland Plc, an affiliate of Blue Mountain Capital Inc. and Waterstone Capital Management LP. 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. MF GLOBAL: To Present Plan for Confirmation on April 5 ------------------------------------------------------ MF Global Holdings Ltd. and its affiliated debtors are now a step closer to emerging from Chapter 11 protection after a bankruptcy judge approved the outline of their proposed liquidation plan. Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved today the disclosure statement, which outlines the major provisions of MF Global's liquidation plan. In his five-page decision, Judge Glenn also gave MF Global the go- signal to begin the solicitation of votes for the liquidation plan. MF Global needs to get a majority of votes in favor of the liquidation plan and a court order confirming the plan to finally emerge from bankruptcy protection. The record date for holders of MF Global claims who want to vote is Feb. 7 and the voting deadline is March 25. Creditors entitled to vote are required to follow a process governing the solicitation of votes, which the bankruptcy judge also approved in his February 19 order. Judge Glenn will hold a hearing on April 5 to consider confirmation of the liquidation. Objections are due by March 25. A copy of the court order and accompanying documents is available for free at http://is.gd/8DbRBh Judge Glenn last week told the liquidation plan's backers, including the defunct firm's trustee and a group of banks and hedge funds, their plan was not "confirmable" without changes to key provisions protecting the creditor group from potential lawsuits and allowing them to claim large amounts of fees and expenses. The group's lawyer assured the judge he would deal with the "showstoppers," as the judge called them, according to a February 19 report by Bloomberg News. New York-based JPMorgan Chase & Co., an MF Global creditor and arranger of a $1.2 billion loan, has said it remains opposed to the proposed liquidation plan, Bloomberg News reported. The liquidation plan was drawn up by banks and hedge funds including Citigroup Global Markets Inc. and Silver Point Capital LP, and revised with the MF Global parent's trustee, Louis Freeh. The disclosure statement predicts a recovery of 13.4% to 39.1% for holders of $1.134 billion in unsecured claims against the holding company. Bank lenders would have the same recovery on their $1.148 billion claim against the holding company. The predicted recovery is 14.7% to 34% for holders of $1.19 billion in unsecured claims against MF Global Finance USA Inc. Bank lenders' claims against the finance subsidiary are scheduled for the same percentage recovery on their $1.148 billion claim. 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. MGM RESORTS: Janus Capital Discloses 7.7% Equity Stake at Dec. 31 ----------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Janus Capital Management LLC disclosed that, as of Dec. 31, 2012, it beneficially owns 37,445,220 shares of common stock of MGM Resorts International representing 7.7% of the shares outstanding. Janus Capital previously reported beneficial ownership of 47,560,483 common shares or a 9.7% equity stake as of Dec. 31, 2011. A copy of the amended filing is available at: http://is.gd/dYoZjU About MGM Resorts MGM Resorts International (NYSE: MGM) -- http://www.mgmresorts.com/-- has significant holdings in gaming, hospitality and entertainment, owns and operates 15 properties located in Nevada, Mississippi and Michigan, and has 50% investments in four other properties in Nevada, Illinois and Macau. The Company reported net income of $3.23 billion in 2011 and a net loss of $1.43 billion in 2010. MGM's balance sheet at Sept. 30, 2012, showed $27.83 billion in total assets, $18.56 billion in total liabilities, and $9.26 billion in total stockholders' equity. Bankruptcy Warning In the Form 10-K for the year ended Dec. 31, 2011, the Company said that any default under the senior credit facility or the indentures governing the Company's other debt could adversely affect its growth, its financial condition, its results of operations and its ability to make payments on its debt, and could force the Company to seek protection under the bankruptcy laws. * * * As reported by the TCR on Nov. 14, 2011, Standard & Poor's Ratings Services raised its corporate credit rating on MGM Resorts International to 'B-' from 'CCC+'. In March 2012, S&P revised the outlook to positive from stable. "The revision of our rating outlook to positive reflects strong performance in 2011 and our expectation that MGM will continue to benefit from the improving performance trends on the Las Vegas Strip," S&P said. In March 2012, Moody's Investors Service affirmed its B2 corporate family rating and probability of default rating. The affirmation of MGM's B2 Corporate Family Rating reflects Moody's view that positive lodging trends in Las Vegas will continue through 2012 which will help improve MGM's leverage and coverage metrics, albeit modestly. Additionally, the company's declaration of a $400 million dividend ($204 million to MGM) from its 51% owned Macau joint venture due to be paid shortly will also improve the company's liquidity profile. The ratings also consider MGM's recent bank amendment that resulted in about 50% of its $3.5 billion senior credit facility being extended one year from 2014 to 2015. As reported by the TCR on Oct. 15, 2012, Fitch Ratings has affirmed MGM Resorts International's (MGM) Issuer Default Rating (IDR) at 'B-' and MGM Grand Paradise, S.A.'s (MGM Grand Paradise) IDR at 'B+'. MGM RESORTS: Paulson & Co. Discloses 7.7% Equity Stake at Dec. 31 ----------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Paulson & Co. Inc. disclosed that, as of Dec. 31, 2012, it beneficially owns 37,645,600 shares of common stock of MGM Resorts International representing 7.7% of the shares outstanding. Paulson & Co. previously reported beneficial ownership of 37,417,600 common shares or a 7.65% equity stake as of Dec. 31, 2011. A copy of the amended filing is available at: http://is.gd/cQnU4b About MGM Resorts MGM Resorts International (NYSE: MGM) -- http://www.mgmresorts.com/-- has significant holdings in gaming, hospitality and entertainment, owns and operates 15 properties located in Nevada, Mississippi and Michigan, and has 50% investments in four other properties in Nevada, Illinois and Macau. The Company reported net income of $3.23 billion in 2011 and a net loss of $1.43 billion in 2010. MGM's balance sheet at Sept. 30, 2012, showed $27.83 billion in total assets, $18.56 billion in total liabilities, and $9.26 billion in total stockholders' equity. Bankruptcy Warning In the Form 10-K for the year ended Dec. 31, 2011, the Company said that any default under the senior credit facility or the indentures governing the Company's other debt could adversely affect its growth, its financial condition, its results of operations and its ability to make payments on its debt, and could force the Company to seek protection under the bankruptcy laws. * * * As reported by the TCR on Nov. 14, 2011, Standard & Poor's Ratings Services raised its corporate credit rating on MGM Resorts International to 'B-' from 'CCC+'. In March 2012, S&P revised the outlook to positive from stable. "The revision of our rating outlook to positive reflects strong performance in 2011 and our expectation that MGM will continue to benefit from the improving performance trends on the Las Vegas Strip," S&P said. In March 2012, Moody's Investors Service affirmed its B2 corporate family rating and probability of default rating. The affirmation of MGM's B2 Corporate Family Rating reflects Moody's view that positive lodging trends in Las Vegas will continue through 2012 which will help improve MGM's leverage and coverage metrics, albeit modestly. Additionally, the company's declaration of a $400 million dividend ($204 million to MGM) from its 51% owned Macau joint venture due to be paid shortly will also improve the company's liquidity profile. The ratings also consider MGM's recent bank amendment that resulted in about 50% of its $3.5 billion senior credit facility being extended one year from 2014 to 2015. As reported by the TCR on Oct. 15, 2012, Fitch Ratings has affirmed MGM Resorts International's (MGM) Issuer Default Rating (IDR) at 'B-' and MGM Grand Paradise, S.A.'s (MGM Grand Paradise) IDR at 'B+'. MOORE FREIGHT: Feb. 28 Set as General Claims Bar Date ----------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Tennessee established Feb. 28, 2013, as the deadline for any individual or entity to file proofs of claim arising prepetition against Moore Freight Service and G.R.E.A.T. Logistics. The Court also set March 27 as the governmental units bar date. About Moore Freight Service and G.R.E.A.T. Logistics Moore Freight Service, Inc. and G.R.E.A.T. Logistics Inc. sought Chapter 11 protection (Bankr. M.D. Tenn. Case Nos. 12-08921 and 12-08923) in Nashville on Sept. 28, 2012. Moore Freight is a freight service company specializing in flat gas transportation. Founded in 2001, Moore is the largest commercial flat glass logistics firm in the U.S. It operates in the U.S., Canada and Mexico. GLI does not have any operations other than the limited, occasional freight brokerage services currently provided to Moore Freight. Bankruptcy Judge Keith M. Lundin oversees the cases. Attorneys at Harwell Howard Hyne Gabbert & Manner PC serve as counsel. LTC Advisory Services LLC serves as the Debtor's financial advisors. Moore Freight estimated assets and debts of $10 million to $50 million. CEO Dan R. Moore signed the petitions. Counsel for the Debtor's pre-bankruptcy and DIP lender, Marquette Transportation Finance, Inc., are Linda W. Knight, Esq., at Gullett, Sanford, Robinson & Martin, PLLC; and Thomas J. Lallier, Esq., at Foley & Mansfield PLLP. MPG OFFICE: Appaloosa Discloses 7% Equity Stake at Dec. 31 ---------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Appaloosa Management L.P. and its affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 4,099,174 shares of common stock of MPG Office Trust, Inc., representing 7.17% of the shares outstanding. A copy of the filing is available for free at http://is.gd/f0bDBO About MPG Office Trust MPG Office Trust, Inc., fka Maguire Properties Inc. -- http://www.mpgoffice.com/-- is the largest owner and operator of Class A office properties in the Los Angeles central business district and is primarily focused on owning and operating high- quality office properties in the Southern California market. MPG Office Trust is a full-service real estate company with substantial in-house expertise and resources in property management, marketing, leasing, acquisitions, development and financing. The Company has been focused on reducing debt, eliminating repayment and debt service guarantees, extending debt maturities and disposing of properties with negative cash flow. The first phase of the Company's restructuring efforts is substantially complete and resulted in the resolution of 18 assets, relieving the Company of approximately $2.0 billion of debt obligations and potential guaranties of approximately $150 million. The Company reported net income of $98.22 million in 2011, compared with a net loss of $197.93 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $1.86 billion in total assets, $2.59 billion in total liabilities, and a $729.16 million total deficit. MPG OFFICE: HG Vora Holds 7.9% Equity Stake as of Dec. 31 --------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, HG Vora Special Opportunities Master Fund, Ltd., and its affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 4,521,500 shares of common stock of MPG Office Trust, Inc., representing 7.9% of the shares outstanding. HG Vora previously reported beneficial ownership of 3,089,700 common shares or a 6.09% equity stake as of Aug. 6, 2012. A copy of the amended filing is available for free at http://is.gd/YFgJLq About MPG Office Trust MPG Office Trust, Inc., fka Maguire Properties Inc. -- http://www.mpgoffice.com/-- is the largest owner and operator of Class A office properties in the Los Angeles central business district and is primarily focused on owning and operating high- quality office properties in the Southern California market. MPG Office Trust is a full-service real estate company with substantial in-house expertise and resources in property management, marketing, leasing, acquisitions, development and financing. The Company has been focused on reducing debt, eliminating repayment and debt service guarantees, extending debt maturities and disposing of properties with negative cash flow. The first phase of the Company's restructuring efforts is substantially complete and resulted in the resolution of 18 assets, relieving the Company of approximately $2.0 billion of debt obligations and potential guaranties of approximately $150 million. The Company reported net income of $98.22 million in 2011, compared with a net loss of $197.93 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $1.86 billion in total assets, $2.59 billion in total liabilities, and a $729.16 million total deficit. MPG OFFICE: DW Investment Discloses 8.1% Equity Stake at Dec. 31 ---------------------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, DW Investment Management, LP, and DW Investment Partners, LLC, disclosed that, as of Dec. 31, 2012, they beneficially own 4,625,267 shares of common stock of MPG Office Trust, Inc., representing 8.1% of the shares outstanding. A copy of the filing is available at http://is.gd/8dmPko About MPG Office Trust MPG Office Trust, Inc., fka Maguire Properties Inc. -- http://www.mpgoffice.com/-- is the largest owner and operator of Class A office properties in the Los Angeles central business district and is primarily focused on owning and operating high- quality office properties in the Southern California market. MPG Office Trust is a full-service real estate company with substantial in-house expertise and resources in property management, marketing, leasing, acquisitions, development and financing. The Company has been focused on reducing debt, eliminating repayment and debt service guarantees, extending debt maturities and disposing of properties with negative cash flow. The first phase of the Company's restructuring efforts is substantially complete and resulted in the resolution of 18 assets, relieving the Company of approximately $2.0 billion of debt obligations and potential guaranties of approximately $150 million. The Company reported net income of $98.22 million in 2011, compared with a net loss of $197.93 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $1.86 billion in total assets, $2.59 billion in total liabilities, and a $729.16 million total deficit. OCALA FUNDING: Plan Outline Hearing Set for March 6 --------------------------------------------------- The Hon. Jerry A. Funk of the U.S. Bankruptcy Court for the Middle District of Florida will convene a hearing on March 6, 2013, at 10:30 a.m. to consider adequacy of the information in the disclosure statement explaining Ocala Funding, LLC's proposed Chapter 11 plan. Objections, if any, are due seven days before the date of the hearing. As reported in the Troubled Company Reporter on Feb. 7, 2013, Bill Rochelle, the bankruptcy columnist for Bloomberg News, reported that the Debtor filed a proposed Chapter 11 plan to implement an agreement reached before bankruptcy in July by holders of almost all of Ocala's $1.5 billion in secured and $800 million in unsecured claims. According to the report, the plan will create a trust to prosecute lawsuits on behalf of creditors with more than $2.5 billion in claims. The explanatory disclosure statement will come up for approval at a March 6 hearing in U.S. Bankruptcy Court in Jacksonville, Florida. Once disclosure materials are approved, creditors can vote on the plan. Ocala, the report related, said creditors' recoveries will flow from "complex causes of action against large financial institutions and/or government sponsored entities." Ocala said it intends to sue Federal Home Loan Mortgage Corp. to recover $805 million in alleged fraudulent transfers. Ocala's principal creditors include Deutsche Bank AG, with a claim of $1.16 billion; BNP Paribas Mortgage Corp., owed $463.3 million; and Federal Deposit Insurance Corp., with a claim of $898.9 million. There is only $17.5 million in secured claims to be paid. About Ocala Funding Orange, Florida-based Ocala Funding, LLC, a funding vehicle once controlled by mortgage lender Taylor Bean & Whitaker Mortgage Corp., filed a Chapter 11 petition (Bankr. M.D. Fla. Case No. 12-04524) in Jacksonville on July 10, 2012. Ocala Funding used to be the largest originator and servicer of residential loans. Ocala was created by Taylor Bean to purchase loans originated by TBW and selling the loans to third parties, Freddie Mac. In furtherance of this structure Ocala raised money from noteholders Deutsche Bank AG and BNP Paribas Mortgage Corp. and other financial institutions, as secured lenders through sales of asset-backed commercial paper. Ocala disclosed $1,747,749,787 in assets and $2,650,569,181 in liabilities as of the Chapter 11 filing. Taylor Bean was forced to file for Chapter 11 relief (Bankr. M.D. Fla. Case No. 09-07047) on Aug. 24, 2009, amid allegations of fraud by Taylor Bean's former CEO Lee Farkas and other employees. Mr. Farkas is now serving a 30-year prison term for 14 counts of conspiracy and fraud for being the mastermind of a $2.9 billion bank fraud. Mr. Farkas allegedly directed the sale of more than $1.5 billion in fake mortgage assets to Colonial Bank and misappropriated more than $1.5 billion from Ocala. TBW's bankruptcy also caused the demise of Colonial Bank, which for years was TBW's primary bank. TBW and its joint debtor-affiliates confirmed their Second Amended Joint Plan of Liquidation on July 21, 2011, and the TBW Plan became effective on Aug. 10, 2011. The TBW Plan established the TBW Plan Trust to marshal and distribute all remaining assets of TBW. Neil F. Lauria, as CRO for TBW and trustee of the TBW Plan Trust, signed the Chapter 11 petition of Ocala. Ocala holds 252 mortgage loans with an unpaid balance of $42.3 million as of May 31, 2012. The Debtor also holds five "real estate owned" properties resulting from foreclosures. The Debtor also holds $22.4 million in proceeds of mortgage loans previously owned by it that are on deposit in an account in the Debtor's name at Regions Bank. It also has an interest in $75 million in cash, consisting of proceeds of mortgage loans previously owned by the Debtor, that are in an account maintained by Bank of America, N.A. as prepetition indenture trustee for the benefit of the Noteholders. The Debtor also holds a claim in the current amount of $1.6 billion against the estate of TBW. The largest unsecured creditors include the Federal Deposit Insurance Corp., owed $898,873,958; and Cadwalader, Wickersham & Taft LLP, owed $1,632,385. Judge Jerry A. Funk presides over Ocala's case. Proskauer Rose LLP and Stichter, Riedel, Blain & Prosser, serve as Ocala's counsel. Neil F. Lauria at Navigant Capital Advisors, LLC, serves as the Debtor's Chief Restructuring Officer. OCWEN LOAN: Fitch Assigns 'B/RR4' Rating to $1.3BB Term Loan ------------------------------------------------------------ Fitch Ratings has assigned a long-term Issuer Default Rating (IDR) of 'B' to Ocwen Loan Servicing, LLC and 'B/RR4' ratings to OLS' proposed $1.3 billion senior secured term loan (term loan). OLS is the primary operating company and wholly-owned subsidiary of OCN, a provider of mortgage servicing and asset management services. Rating Action Rationale The 'B' ratings reflect the guaranty provided to OLS by Ocwen Financial Corporation and its subsidiaries (rated 'B' by Fitch) for the due and punctual payment in full of amounts due under its obligations and the modest impact of the term loan issuance on OCN's overall leverage. The Recovery Rating of 'RR4' reflects average recovery prospects in a distressed scenario based upon collateral coverage for the term loan. The term loan is secured by a first priority security interest in all unencumbered assets of the company and a pledge of the capital stock of all current and future subsidiaries. Consistent with OCN's IDR, the ratings of OLS have also been placed on Rating Watch Negative. The proceeds of the issuance are expected to finance OLS' acquisition of mortgage servicing advances and assets from Residential Capital, LLC (ResCap), pay certain fees and expenses in connection with the ResCap transaction, and to refinance OLS' existing $314 million senior secured term loan. The issuance of the term loan coincided with the closing of the ResCap transaction, which occurred on Feb. 15, 2013. Fitch expects the $1.3 billion term loan will modestly increase OCN's overall leverage on a pro forma basis and will have a marginal impact to OCN's credit profile in the medium-term. Operating cash flow, mandatory repayment features under the term loan and voluntary prepayments by OCN is expected to repay the term loan within the next two to three years. Fitch downgraded and placed the ratings of OCN on Rating Watch Negative on Nov. 8, 2012 following the announcement of its $3 billion joint winning bid to purchase the servicing portfolio of ResCap in bankruptcy. This followed OCN's announced acquisition of Homeward Residential Holdings, Inc. (Homeward) for $750 million on Oct. 3, 2012. The downgrade reflected Fitch's view that OCN's broader acquisition strategy and increased willingness to assume direct or indirect leverage indicated an increased level of credit risk. OCN closed the Homeward transaction on Dec. 27, 2012. Due to OCN's close operating and strategic relationship with Home Loan Servicing Solutions, LLC (HLSS), Fitch views any positive impact from OCN's deleveraging through sales to HLSS to be constrained due to the shifting of balance sheet leverage to a related affiliate, on which a significant portion of its future subservicing revenue will be dependent. Fitch views HLSS as important to OCN's overall strategy to migrate to a 'capital light', fee-for-servicing model and OCN is expected to remain the primary source of portfolio assets for HLSS in the medium-term. To date, HLSS has purchased from OCN $3.2 billion of advance receivables under an unpaid principal balance (UPB) of $82.7 billion since its initial public offering in March 2012. HLSS expects OCN's purchase of Homeward and ResCap's servicing portfolios will add an additional $120 billion of UPB to its purchase pipeline. Susbidiary and Affiliated Company Rating Drivers and Sensitivities OLS is the primary operating company and wholly-owned subsidiary of OCN. Its IDRs are aligned because of the irrevocable and unconditional guaranty provided by OCN and its subsidiaries. Therefore, the ratings are sensitive to the same factors that might drive a change in OCN's IDR. Rating Drivers and Sensitivities - IDRS AND TERM LOAN The resolution of the Rating Watch will be evaluated based upon OCN's ability to integrate the Homeward, ResCap and any potential other near-term acquisitions with minimal impact to revenue and cash flow generation and service disruptions. The ratings could be affirmed if OCN is able to maintain sufficient liquidity and funding flexibility over an extended period of time and reduce balance sheet leverage to pre-acquisition levels in the context of OCN and HLSS as combined entities. Conversely, the ratings could be downgraded further due to a material reduction in revenues and cash flow generation caused by a material change in OCN's cost structure resulting from integration, legal and regulatory risks. The Recovery Ratings of the term loan are also sensitive to changes in collateral values and advance rates under secured borrowing facilities, which ultimately impact the level of available asset coverage. Should future acquisitions resulting in a significant increase in balance sheet leverage over and above Fitch's expectations for the current rating level, this could also result in negative rating actions. Fitch has assigned these ratings: Ocwen Loan Servicing, LLC -- Long-term IDR 'B'; Rating Watch Negative; -- Senior secured term loan 'B/RR4'; Rating Watch Negative. OMTRON USA: Has Court Okay to Hire Fox Rothschild as Attorney ------------------------------------------------------------- Omtron USA, LLC, sought and obtained permission from the U.S. Bankruptcy Court for the District of Delaware to employ Fox Rothschild LLP as its attorney to provide legal advice with respect to the Debtor's powers and duties as debtor-in-possession in the management of its property and administration of its estate. Fox Rothschild will charge on an hourly basis for its legal services in accordance with its ordinary and customary rates. About Omtron USA Omtron USA bought poultry producer Townsends Inc. out of bankruptcy in 2011, shut down operations in later that year, and filed its own Chapter 11 petition (Bankr. D. Del. Case No. 12- 13076) on Nov. 9, 2012, in Delaware. The Debtor disclosed $40,633,406 in assets and $4,518,756 and liabilities. Omtron paid $24.9 million in February 2011 for the North Carolina operations belonging to Townsends Inc. OMTRON USA: Court Okays Nexsen Pruet as Local Counsel ----------------------------------------------------- Omtron USA, LLC, sought and obtained authorization from the U.S. Bankruptcy Court for the District of Delaware to employ Nexsen Pruet, PLLC, as local counsel. The Debtor is a limited liability company organized and existing under the laws of Delaware with a principal place of business in Chatham County, North Carolina. The Debtor told the Court that it is necessary for the Debtor to be represented by local counsel in the performance of duties imposed upon it in the bankruptcy proceedings to: a. assist in its investigation and examination of contracts, loans, leases, financing statements, and other related documents; b. advise the Debtor in the administration of its bankruptcy estate pursuant to the Local Bankruptcy Rules; c. advise the Debtor regarding the North Carolina law; d. assist the Debtor in proposing a plan of reorganization or liquidation; and e. facilitate consummation of the Debtor's confirmed reorganization or liquidation plan. To the best of the Debtor's knowledge, Nexsen Pruet has no connection with the Debtor, its creditors, or any other parties- in-interest or with any attorneys for them, except to the extent Nexsen Pruet currently represents Verizon Wireless in various unrelated matters and was contacted, but not retained or ordered, to act as a receiver for the Debtor. About Omtron USA Omtron USA bought poultry producer Townsends Inc. out of bankruptcy in 2011, shut down operations in later that year, and filed its own Chapter 11 petition (Bankr. D. Del. Case No. 12- 13076) on Nov. 9, 2012, in Delaware. John H. Strock, III, Esq., at Fox Rothschild LLP, in Wilmington, Delaware, serves as counsel to the Debtor. The Debtor disclosed $40,633,406 in assets and $4,518,756 and liabilities. Omtron paid $24.9 million in February 2011 for the North Carolina operations belonging to Townsends Inc. OTTAWA BUS: Webster Capital May Pursue Newbys' Loan Guaranties -------------------------------------------------------------- Webster Capital Finance, Inc., is a Connecticut corporation that provides financing to various business ventures. Daniel Newby and Thomacine Newby are residents of Kansas City, Missouri, who operate Ottawa Bus Service, Inc., a Kansas corporation. On February 19, 2002, Webster and Ottawa Bus entered into a Master Loan and Security Agreement, which provided the terms under which Webster would subsequently provide financing to Ottawa Bus for the purchase of buses and other equipment. On February 26, 2002, the Newbys each executed identical documents entitled, "Continuing Guaranty," in which they agreed to pay any and all of Ottawa Bus's indebtedness in the event of its bankruptcy or default under the Master Loan Agreement. Since that time, Wesbter and Ottawa Bus have entered into numerous loan schedules for the purchase of buses and equipment. On May 15, 2012, Webster filed the case captioned WEBSTER CAPITAL FINANCE, INC., f/k/a CENTER CAPITAL CORPORATION, Plaintiff, v. DANIEL NEWBY, et al., Defendants, Case No. 12-2290-EFM, (D. Kan.), asserting that the Newbys have improperly refused to honor their personal guaranties upon Ottawa Bus's bankruptcy and alleged default under the Master Loan Agreement. Ottawa Bus filed a voluntary petition for Chapter 11 on November 22, 2010. On June 20, 2012, the bankruptcy court confirmed Ottawa Bus's Amended Plan of Reorganization, which identifies Webster as a secured creditor and provides for payment of Ottawa Bus's principal indebtedness, contract interest, and an allowance for costs under the Master Loan Agreement. Both the original and Amended Plan included Section 10.02, which provides, "All secured claimants are prohibited from seeking redress under any personal guaranty from Daniel Newby and/or Thomacine Newby as long as Debtor is not in default under this Plan, and any pending suit or action shall be dismissed without prejudice." The Newbys now argue that WEBSTER CAPITAL FINANCE, INC. v. NEWBY should be consolidated with the Ottawa Bus bankruptcy case, or in the alternative, stayed pending completion of Ottawa Bus's payments to Webster under its Amended Plan. The Newbys also seek dismissal, sanctions, and attorneys' fees, arguing that Webster maliciously filed a frivolous Complaint after the bankruptcy court confirmed the Amended Plan, which prohibits any action to enforce the Newbys' guaranties. Webster opposes each of the Newbys' motions, and has filed a motion to strike their jury demand pursuant to a jury waiver clause in the Newbys' personal guaranties. On February 14, 2013, District Judge Eric F. Melgren denied the Newbys' Motion to Stay or Consolidate, saying Webster is entitled to directly pursue the Newbys' guaranties; and consolidation will not serve judicial economy and justice. The Court also denied, without prejudice, Webster's Motion to Strike the Newbys' Jury Demand. Judge Melgren said there is no evidence before the Court regarding whether the jury waiver provision in the Newbys' personal guaranties was bargained for or that it was mentioned in contract negotiations. Webster failed to carry its burden in showing that the jury waiver was voluntary, he said. Judge Melgren added that the Newbys failed to comply with Fed. R. Civ. P. 11(c)(2) so their motion for sanctions and attorneys' fees must be denied. The Newbys' motion to dismiss the case as frivolous is likewise denied because the bankruptcy court lacks the authority to prohibit Webster from pursuing the Newbys as guarantors, and the Newbys' guaranties expressly contemplate direct enforcement notwithstanding the Ottawa Bus bankruptcy, Judge Melgren said. The Court denied as moot that Newbys' original Motion for Sanctions and Attorneys' Fees and original Motion to Dismiss due to the filing of their amended motions. A copy of the District Court's February 14, 2013 Memorandum and Order is available at http://is.gd/SoKevDfrom Leagle.com. Olathe, Kansas-based Ottawa Bus Service, Inc., dba Crossroad Tours, filed for Chapter 11 bankruptcy (Bankr. D. Kan. Case No. 10-24011) on Nov. 22, 2010. Timothy E. Keck, Esq. -- tkeck@arnoldkeck.com -- at Arnold & Keck, served as the Debtor's counsel. In its petition, the Debtor estimated under $50,000 in assets and under $10 million in debts. OZARKS MEDICAL: S&P Withdraws 'BB-' Rating on 1997 and 1999 Bonds ----------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'BB-' long-term rating on the West Plains Industrial Development Authority, Mo.'s series 1997 and 1999 hospital revenue bonds issued on behalf of Ozarks Medical Center (OMC). The bonds were redeemed on Feb. 11, 2013 with proceeds from bonds privately placed with local banks. OMC is a 114-staffed-bed sole community provider located in West Plains, Mo. PALATIN TECHNOLOGIES: Incurs $1.7-Mil. Net Loss in Dec. 31 Qtr. --------------------------------------------------------------- Palatin Technologies, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $1.7 million on $6,555 of revenues for the three months ended Dec. 31, 2012, compared with a net loss of $2.6 million on $11,492 of revenues for the prior fiscal period. For the six months ended Dec. 31, 2012, the Company had a net loss of $12.1 million on $10,361 of revenues as compared to a net loss of $6.0 million on $38,709 of revenues for the six months ended Dec. 31, 2011. Revenue for the three and six months ended Dec. 31, 2012, and 2011, consisted entirely of reimbursement of development costs and per-employee compensation, earned at the contractual rate. The Company's balance sheet at Dec. 31, 2012, showed $33.6 million in total assets, $2.1 million in total liabilities, and stockholders' equity of $31.5 million. The Company has incurred negative cash flows from operations since its inception, and has expended, and expects to continue to expend in the future, substantial funds to complete its planned product development efforts. The Company has an accumulated deficit of $251.4 million as of Dec. 31, 2012, and incurred a net loss for the three and six months ended Dec. 31, 2012. "The Company anticipates incurring additional losses in the future as a result of spending on its development programs." A copy of the Form 10-Q is available at http://is.gd/t60x9Y About Palatin Technologies Palatin Technologies, Inc., headquartered in Cranbury, New Jersey, is a biopharmaceutical company developing targeted, receptor- specific peptide therapeutics for the treatment of diseases with significant unmet medical need and commercial potential. Palatin's programs are based on molecules that modulate the activity of the melanocortin and natriuretic peptide receptor systems. * * * As reported in the TCR on Sept. 13, 2012, KPMG LLP, in Philadelphia, Pennsylvania, expressed substantial doubt about Palatin's ability to continue as a going concern. The independent auditors noted that he Company has incurred recurring net losses and negative cash flows from operations and will require substantial additional financing to continue to fund its planned development activities. PANDA SHERMAN: S&P Assigns 'B' Rating to $372 Million Debt ---------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'B' senior secured rating to Panda Sherman Power LLC's (Sherman) first-lien $342 million term loan B and $30 million letter-of-credit facility. At the same time, S&P assigned a '3' recovery rating to the debt. The '3' recovery rating indicates meaningful recovery (50% to 70%) of principal in a default scenario. The outlook is stable. Sherman is a special-purpose, bankruptcy-remote operating entity, set up to build the Panda Sherman Power Plant, a 758-megawatt (MW) natural gas-fired facility in Sherman, Texas, about 60 miles north of Dallas. The unit will dispatch into the North sub-region of the Electric Reliability Council of Texas market. Sherman will initially be capitalized with $360 million of equity and $372 million of secured debt. "The stable outlook on the debt ratings reflects our view that the project has sufficient liquidity during the construction phase and that the cash flows, while volatile, will comfortably cover debt service throughout the debt tenor," said Standard & Poor's credit analyst Nora Pickens. A downgrade is possible if S&P's expectation of debt at maturity changes to greater than $400 per kW or if debt service coverage ratios steadily decline below 1.1x. This would likely result from construction delays, lower-than-expected spark spreads, poor operational performance, or higher operating and maintenance costs. An upgrade would require a large and sustainable improvement in merchant market prices that would reduce refinance risk to below $100 per kW. PATRIOT COAL: Balks at Union Bid to Delay Bonus Plans ----------------------------------------------------- BankruptcyData reported that Patriot Coal filed with the U.S. Bankruptcy Court an objection to the emergency motion filed by the United Mine Workers of America 1974 Pension Trust, United Mine Workers of America 1993 Benefit Plan to extend the time to respond to the Debtors' motion for authority to implement compensation plans. The report said the objection asserts, "The Debtors' successful reorganization depends on their employees' investment of extraordinary amounts of time, dedication, patience, and effort in the face of the uncertainty inherent in chapter 11 reorganizations - all while receiving significantly reduced compensation and benefits. The Debtors have already lost a number of key employees and, in the days since the Compensation Plan Motion was filed, the Debtors have learned that yet another key employee and participant in the AIP, a mine superintendent at one of the Debtors' largest mines, Federal No. 2, would be resigning. The Debtors cannot afford to risk broad-based departures at this critical point in their reorganization. Accordingly -- and consistent with (but more modest than) the Debtors' prepetition compensation practices -- Patriot management, with oversight from its board of directors, developed the 2013 AIP and the CERP to motivate and encourage the retention of critical employees and to focus their attention on achieving important business objectives." About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The U.S. Trustee appointed a seven-member creditors committee. Kramer Levin Naftalis & Frankel LLP serves as its counsel. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as its information agent. On Nov. 27, 2012, the New York bankruptcy judge moved Patriot's bankruptcy case to St. Louis. The order formally sending the reorganization to Missouri was signed December 19 by the bankruptcy judge. The New York Judge in a Jan. 23, 2013 order denied motions to transfer the venue to the U.S. Bankruptcy Court for the Southern District of West Virginia. PENSON WORLDWIDE: Claims Bar Date Set for March 11 -------------------------------------------------- All persons and entities holding a claim arising prior to the Petition Date, including any Section 503(b)(9) claims, against Penson Worldwide, Inc., et al., have until March 11 to file proofs of claims while governmental units holding claims against the Debtors that arose prior to the Petition Date are required to file proofs of claim by July 10. About Penson Worldwide Plano, Texas-based Penson Worldwide Inc. and its affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No. 13-10061) on Jan. 11, 2013. Founded in 1995, Penson Worldwide is provider of a range of critical securities and futures processing infrastructure products and services to the global financial services industry. The company's products and services include securities and futures clearing and execution, financing and cash management technology and other related offerings, and it provides tools and services to support trading in multiple markets, asset classes and currencies. Penson was one of the top two clearing brokers overall in the United States. Its foreign-based subsidiaries were some of the largest independent clearing brokers in Canada and Australia and the second largest independent clearing broker in the United Kingdom as of Dec. 31, 2010. In 2012, the company sold its futures division to Knight Capital Group Inc. and its broker-deal subsidiary to Apex Clearing Corp. But the company was unable to successfully streamline is business after the asset sales. Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Young, Conaway, Stargatt & Taylor serve as counsel to the Debtors. Kurtzman Carson Consultants LLC is the claims and notice agent. The company estimated $100 million to $500 million in assets and liabilities in its Chapter 11 petition. The last publicly filed financial statements as of June 30 showed assets of $1.17 billion and liabilities totaling $1.227 billion. PHARMACEUTICAL RESEARCH: Moody's Affirms 'B2' CFR, Outlook Stable ----------------------------------------------------------------- Moody's Investors Service affirmed the B2 Corporate Family and B2- PD Probability of Default Ratings of Pharmaceutical Research Associates, Inc. In addition, Moody's affirmed the existing B1 and Caa1 ratings on PRA's first and second lien term loans, respectively. Concurrently, Moody's assigned a B1 rating to PRA's proposed $12.5 million incremental first lien term loan, a B1 rating to the proposed $45 million delayed draw first lien term loan, and a Caa1 rating to the proposed $12.5 million incremental second lien term loan. The proceeds of the proposed debt offerings will be used along with cash to pay a dividend to shareholders as well as fund a potential acquisition. The rating outlook is stable. Ratings Assigned: Proposed $12.5 million incremental first lien senior secured term loan, due 2017, rated B1 (LGD 3, 33%) Proposed $45 million delayed draw first lien senior secured term loan, due 2017, rated B1 (LGD 3, 33%) Proposed $12.5 million incremental second lien senior secured term loan, due 2019, rated Caa1 (LGD 5, 85%) Ratings Affirmed: Corporate Family Rating, B2 Probability of Default Rating, B2-PD $40 million first lien senior secured revolving credit facility, due 2017, rated B1 (LGD 3, 33%) $300 million first lien senior secured term loan, due 2017, rated B1 (LGD 3, 33%) EUR27 million first lien senior secured term loan, due 2017, rated B1 (LGD 3, 33%) $135 million second lien senior secured term loan, due 2019, rated Caa1 (LGD 5, 85%) The outlook is stable. The rating actions are subject to the conclusion of the transaction, as proposed, and Moody's review of final documentation. Ratings Rationale: The B2 Corporate Family Rating reflects PRA's considerable financial leverage, and its mid-tier scale versus several much larger competitors. The ratings also reflect Moody's view that the highly competitive industry will continue to face pricing pressure and margin compression. The ratings are supported by PRA's strong track record of execution of its growth strategy over the past several years and Moody's expectation of continued revenue and earnings growth, and positive free cash generation. Moody's could upgrade PRA's ratings if the company continues to grow its scale within the CRO industry (i.e., net service revenues approaching $700 million) and maintains adjusted financial leverage below 4.5 times and adjusted free cash flow to debt above 10%. Moody's could downgrade the ratings if PRA experiences an elevated level of contract cancellations or poor new business wins that leads to top-line deterioration. Further, increased pricing pressure or competitive pressures that lead to material erosion in EBITDA margins could also have negative rating implications. Specifically, if Moody's expects adjusted debt/EBITDA to be sustained above 6.0 times or free cash flow to turn negative, the ratings could be downgraded. The principal methodology used in this rating was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Pharmaceutical Research Associates, Inc. is a contract research organization that assists pharmaceutical and biotechnology companies in developing drug compounds, biologics, and drug delivery devices and gaining necessary regulatory approvals. The company is majority owned by Genstar Capital. PRA generated net service revenues of approximately $585 million for the twelve months ended September 30, 2012. PINNACLE AIRLINES: $52-Mil. in Add'l Financing Approved ------------------------------------------------------- The Hon. Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York last month entered an order authorizing Pinnacle Airlines Corp., et al., to: 1) obtain an additional $52 million of postpetition superpriority senior secured multiple draw term loan financing, and for all of the other Debtors to guaranty the borrower's obligations in connection with the DIP Facility, up to the aggregate principal amount of $126,285,000, from Delta Air Lines, Inc. and other institutions selected by Delta; 2) execute, enter into, and deliver that certain Sixth Amendment to Senior Secured Super-Priority Debtor-in-Possession Credit Agreement and any documents, agreements, or instruments executed in connection therewith, including, without limitation, the Credit Agreement as amended prior to the date hereof and by the Sixth DIP Agreement and to perform such other and further acts as may be required in connection with the Sixth Amendment and the DIP Financing Documents; 3) grant superpriority claims to the DIP Lenders payable from, and having recourse to, the collateral, subject to the carve out; 4) limit the Debtors' right to surcharge against collateral; 5) execute, enter into, and deliver the Delta connection agreement amendments and perform such other and further acts as may be required in connection with the Delta connection agreement amendments; and 6) execute, enter into, and deliver the bridge agreement and perform such other and further acts as may be required in connection with the bridge agreement. The Debtors have an immediate need to obtain the additional financing and use collateral in order to permit the Debtors (i) to provide working capital for, and for other general corporate purposes of, the borrower and its subsidiaries, including the payment of expenses of administration in the cases, (ii) to pay the costs and expenses of the DIP Lenders, and (iii) to pay the Longevity Eligible Pilots amounts required to be paid by the borrower and the taxing authorities for employer taxes relating thereto, in each case in accordance with the budget. The Debtors relate that they were unable to obtain additional financing on more favorable terms from sources other than the DIP lenders under the sixth amendment documents and are unable to obtain adequate unsecured credit allowable under Section 503(b)(1) of the Bankruptcy Code as an administrative expense. The Delta Connection Agreement Amendments and Bridge Agreement The Delta connection agreement amendments and the bridge agreement are the result of extensive negotiations between the Debtors, Delta, and the Creditors Committee (and in the case of the Bridge Agreement, ALPA -- Air Line Pilots Association, International). Not only do the Delta connection agreement amendments and the bridge agreement contain a number of terms favorable to the Debtors, nearly doubling the size of their CRJ-900 fleet, entry into the Delta connection agreement amendments and bridge agreement is a condition precedent to the Debtors obtaining necessary funding under the additional financing. The comprehensive agreement, including the Delta connection agreement amendments and bridge agreement, also provides the Debtors with a path towards a successful emergence from Chapter 11 and a viable The Delta connection agreement amendments will provide, among other things, that: -- Delta commits to place and maintain at the Debtors the incremental 40 76-seater deliveries above the total in the Delta Connection fleet as of Dec. 1, 2012 (with the transfer to the Debtors of any 76-seater in the Delta Connection fleet at another Delta Connection carrier to offset on a one-for-one basis the commitment to deliver to and maintain at the Debtors any of such incremental 40 76-seater deliveries); -- the new CRJ-900 aircraft will be subject to the same lease terms and conditions as the 41 CRJ-900 aircraft currently leased from Delta; -- either: (a) Delta and the Debtors shall agree on a schedule for the early termination and return of the 140 CRJ-200 aircraft under the CRJ-200 Agreement; or (b) Delta may provide Pinnacle with 90 days advance written notice with respect to early termination and return of any CRJ-200 leased aircraft under the CRJ-200 Agreement; and -- the Debtors will not need to comply with aircraft return conditions for such CRJ-200 aircraft and shall have no liability to Delta with respect to the early termination and return of such aircraft. About Pinnacle Airlines Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/-- a $1 billion airline holding company with 7,800 employees, is the parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.; and Colgan Air, Inc. Flying as Delta Connection, United Express and US Airways Express, Pinnacle Airlines Corp. operating subsidiaries operate 199 regional jets and 80 turboprops on more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize. Corporate offices are located in Memphis, Tenn., and hub operations are located at 11 major U.S. airports. Pinnacle Airlines Inc. and its affiliates, including Colgan Air, Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012. Judge Robert E. Gerber presides over the case. Lawyers at Davis Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve as the Debtors' counsel. Barclays Capital and Seabury Group LLC serve as the Debtors' financial advisors. Epiq Systems Bankruptcy Solutions serves as the claims and noticing agent. The petition was signed by John Spanjers, executive vice president and chief operating officer. As of Oct. 31, 2012, the Company had total assets of $800.33 million, total liabilities of $912.77 million, and total stockholders' deficit of $112.44 million. Delta Air Lines, Inc., the Debtors' major customer and post- petition lender, is represented by David R. Seligman, Esq., at Kirkland & Ellis LLP. The official committee of unsecured creditors tapped Morrison & Foerster LLP as its counsel, and Imperial Capital, LLC, as financial advisors. The U.S. Bankruptcy Court in New York will hold a hearing March 7 for approval of the explanatory disclosure statement in connection with the reorganization plan of Pinnacle Airlines Corp. PINNACLE AIRLINES: Wins Court Nod to Settle WTC, et al. Claims -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved an agreement, which permits a group of claimants led by World Trade Center Properties LLC to prosecute its insurance claim. The agreement allows the group to prosecute its insurance claim against Pinnacle Airlines Corp. and Colgan Air Inc. in a lawsuit styled World Trade Center Properties, et al., v. American Airlines, Inc., et al. In return, the group agreed to waive the claims it filed against the airlines in their Chapter 11 cases. A full-text copy of the agreement is available for free at http://is.gd/sCj90w About Pinnacle Airlines Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/-- a $1 billion airline holding company with 7,800 employees, is the parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.; and Colgan Air, Inc. Flying as Delta Connection, United Express and US Airways Express, Pinnacle Airlines Corp. operating subsidiaries operate 199 regional jets and 80 turboprops on more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize. Corporate offices are located in Memphis, Tenn., and hub operations are located at 11 major U.S. airports. Pinnacle Airlines Inc. and its affiliates, including Colgan Air, Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012. Judge Robert E. Gerber presides over the case. Lawyers at Davis Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve as the Debtors' counsel. Barclays Capital and Seabury Group LLC serve as the Debtors' financial advisors. Epiq Systems Bankruptcy Solutions serves as the claims and noticing agent. The petition was signed by John Spanjers, executive vice president and chief operating officer. As of Oct. 31, 2012, the Company had total assets of $800.33 million, total liabilities of $912.77 million, and total stockholders' deficit of $112.44 million. Delta Air Lines, Inc., the Debtors' major customer and post- petition lender, is represented by David R. Seligman, Esq., at Kirkland & Ellis LLP. The official committee of unsecured creditors tapped Morrison & Foerster LLP as its counsel, and Imperial Capital, LLC, as financial advisors. The U.S. Bankruptcy Court in New York will hold a hearing March 7 for approval of the explanatory disclosure statement in connection with the reorganization plan of Pinnacle Airlines Corp. POINT CENTER: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Point Center Financial, Inc. 7 Argonaut Aliso Viejo, CA 92656 Bankruptcy Case No.: 13-11495 Chapter 11 Petition Date: February 19, 2013 Court: U.S. Bankruptcy Court Central District of California (Santa Ana) Judge: Theodor Albert Debtor's Counsel: Robert P. Goe, Esq. GOE & FORSYTHE, LLP 18101 Von Karman, Suite 510 Irvine, CA 92612 Tel: (949) 798-2460 Fax: (949) 955-9437 E-mail: kmurphy@goeforlaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $50,000,001 to $100,000,000 The petition was signed by Dan J. Harkey, president. Affiliates that previously sought Chapter 11 protection: Entity Case No. Petition Date ------ -------- ------------- Carson Valley, LLC 10-24665 10/15/10 Island Way Investments I, LLC 10-27150 12/03/10 Island Way Investments II, LLC 10-27154 12/03/10 Summerwind Investors, LLC 08-10852 02/28/08 Point Center Financial's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Saul Brandman Foundation Notes $7,714,409 9595 Wilshire Boulevars, Suite 511 Beverly Hills, CA 90212 Brady Company Judgment $1,416,694 Attn: Theodore R. Cercos, Esq. LINCOLN, GUSTAFSON & CERCOS 225 Broadway, Suite 2000 San Diego, CA 92101 The Phillips Family Trust Notes $1,398,237 61 Golf Ridge Drive Dove Canyon, CA 92679-3801 Dynalectric Company Judgment $835,450 c/o Murry M. Helm, Esq. 550 West "C" Street, Suite 1155 San Diego, CA 92101 Charles Ortloff Notes $707,236 18310 Southview Avenue Los Gatos, CA 95033-8537 Hyon S. Kwon Notes $632,331 13141 Mesa Crest Place San Diego, CA 92129 William C. & Luz S. Eidenmuller Notes $623,259 Family Trust 720 Prospect Avenue Hermosa Beach, CA 90254 Raymond E. & Yolanda V. Notes $535,119 Ponce Rev Estate 28572 Paseo Zorro San Juan Capistrano, CA 92675-5526 Geoffrey C. Siodmak Ira Notes $501,437 #SI121 11888 Rancho Heights Road Pala, CA 92059 Kimberly Randall Notes $482,151 Irrevocable Trust 4/22/ 1140 Parkinson Avenue Palo Alto, CA 94301 Church of the Movement of Notes $435,589 Spiritual Inne 3500 W. Adams Boulevard Los Angeles, CA 90018-1822 Gerald R. Eidenmuller Notes $430,398 Revocable Trust 10641 Rockhurst Avenue Cowan Heights, CA 92705-1413 The R. and K Living Trust Notes $392,837 1232 Blue Gum Lane Newport Beach, CA 92660-5639 The Cachat Family Trust Notes $385,720 786 Highridge Street Riverside, CA 92506-7563 Division 8, Inc. Judgment $384,048 Attn: Kenneth C. Hoyt, Esq. c/o HOYT LAW FIRM 181 Rea Avenue, Suite 2010 El Cajon, CA 92020 Werner R. & Constance A. Poiser Notes $371,076 76403 Fairway Drive Indian Wells, CA 92210 Judy A. Siodmak Ira Notes $348,197 #SI120 11888 Rancho Heights Road Pala, CA 92059 The Glynn Living Trust Notes $337,505 P.O. BOX 2124 Mission Viejo, CA 92690-0124 The Ellis Revocable Trust Notes $333,073 339 Concho Drive Reno, NV 89521 Randall J. Harmat Notes $309,723 145 E. Columbine Avenue Santa Ana, CA 92707-4401 PORTER BANCORP: D. Ellefson Discloses 5% Equity Stake at Dec. 31 ---------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exhange Commission, Daniel M. Ellefson and his affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 395,272 shares of common stock and warrants to purchase 228,261 shares of common stock of Porter Bancorp, Inc., representing 5.10% of the shares outstanding. A copy of the filing is available for free at http://is.gd/O3xACb About Porter Bancorp Porter Bancorp, Inc., is a bank holding company headquartered in Louisville, Kentucky. Through its wholly-owned subsidiary PBI Bank, the Company operates 18 full-service banking offices in twelve counties in Kentucky. For the 12 months ended Dec. 31, 2012, the Company incurred a net loss to common shareholders of $33.43 million on $41.95 million of net interest income, compared with a net loss to common shareholders of $105.15 million on $51.51 million of net interest income during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $1.16 billion in total assets, $1.11 billion in total liabilities and $47.19 million in stockholders' equity. Crowe Horwath, LLP, in Louisville, Kentucky, audited Porter Bancorp's financial statements for 2011. The independent auditors said that the Company has incurred substantial losses in 2011, largely as a result of asset impairments. "In addition, the Company's bank subsidiary is not in compliance with a regulatory enforcement order issued by its primary federal regulator requiring, among other things, increased minimum regulatory capital ratios. Additional significant asset impairments or continued failure to comply with the regulatory enforcement order may result in additional adverse regulatory action." POSEIDON CONCEPTS: In Default of Loan Agreement ----------------------------------------------- Poseidon Concepts Corp. on Feb. 20 provided the following update with respect to its business and operations: As announced on Feb. 14, 2013 the Company has determined that the first, second and third quarter 2012 financial statements must be restated. As a result the Company is currently in default under its loan agreement dated June 29, 2012. The Company is in discussions with its syndicate of lenders regarding short and long term support which is subject to negotiation, credit approval and revised loan terms, which are yet to be determined. In addition, as a result of the requirement to restate the Financial Statements, the Alberta Securities Commission has issued a cease trade order against the Company. The cease trade order prohibits all trading or purchasing in Company securities until the cease trade order has been revoked or varied by the Commission. Headquartered in Calgary, Canada, Poseidon Concepts Corp., formerly Open Range Energy Corp., is an oil and natural gas service and supply company. Poseidon had 170 tanks deployed across North America as of September 2011. Its modular fracturing fluid tanks are deployed at unconventional oil and natural gas plays across North America, from the Eagle Ford in Texas to the Bakken in North Dakota to the Montney in northeast British Columbia. Its products include Atlantis, Poseidon and Triton. POWELL STEEL: Proposes Ciardi as Chapter 11 Counsel --------------------------------------------------- Powell Steel Corporation seeks approval from the U.S. Bankruptcy Court for the Eastern District of Pennsylvania to employ Ciardi Ciardi & Astin, P.C., as counsel. The Debtor is not sufficiently familiar with its rights and duties as to be able to plan and conduct proceedings without the aid of competent counsel. Albert A. Ciardi, III, a partner at the firm, attests that the firm is "disinterested" as defined in 11 U.S.C. Sec. 101. Ciardi received a $35,000 retainer on the day of the bankruptcy filing. Professionals at the firm who are most likely to work on the case and their hourly rates are: Professional Hourly Rate ------------ ----------- Albert A. Ciardi, III $485 Nicole M. Nigrelli $430 Alex Giuliano (Paralegal) $120 About Powell Steel Powell Steel Corporation, located in Lancaster, Pennsylvania, is a progressive structural steel fabricator and erector equipped with state-of-the-art fabrication and welding equipment. Powell has a 67,000 square foot facility capable of fabricating in excess of 300 tons of steel per week. It has 50 employees working in the fabrication facility and 23 employees providing erection services. The business generates $1.2 million per month in revenue. Powell Steel filed a Chapter 11 petition (Bankr. E.D. Pa. Case No. 13-11275) in Philadelphia on Feb. 13, 2013, estimating at least $10 million in assets and liabilities. POWELL STEEL: Seeks to Use Cash Collateral to Pay Employees ----------------------------------------------------------- Powell Steel Corporation asks the Bankruptcy Court for authorization to use cash collateral to pay outstanding and ongoing payroll obligations so operations can continue on an uninterrupted basis. The Debtor furnished a budget for use of cash from Feb. 15 through March 15. The Debtor intends to pay prepetition employee compensation and employee and expenses incurred in the ordinary course of business. The Debtor owes M&T Bank $3.8 million pursuant to loans secured by cash, accounts, inventory and equipment. The Debtor also owes $194,000 to the Pennsylvania Minority Business Development Authority under a loan secured on cash and accounts receivable. The Internal Revenue Service is owed $834,000 and the Commonwealth of Pennsylvania is owed $133,000 for unpaid but withheld payroll taxes. The Debtor believes the lender's interests are adequately protected because the budget indicates that the Debtor can maintain or increase current collateral levels of collateral with continued sales. The Debtor proposes to provide adequate protection in the form of a replacement lien to the extent the lender has a lien prepetition which is not subject to challenge and in the same extent, priority and validity as existed prepetition. The Debtor is seeking to pay 75 employees unpaid compensation accrued prior to the Petition Date. The Debtor's next payroll is scheduled to occur on Friday, Feb. 22, 2013. As of the Petition Date, the Debtor estimates that it owes its employees $16,538 in unpaid, gross wages for one of a two-week pay period and $54,000 for the one week period ending Feb. 15, 2013. The Debtor does not believe that the unpaid compensation payable to any one employee exceeds $10,950. The Debtor is seeking expedited consideration of its motion. About Powell Steel Powell Steel Corporation, located in Lancaster, Pennsylvania, is a progressive structural steel fabricator and erector equipped with state-of-the-art fabrication and welding equipment. Powell has a 67,000 square foot facility capable of fabricating in excess of 300 tons of steel per week. It has 50 employees working in the fabrication facility and 23 employees providing erection services. The business generates $1.2 million per month in revenue. Powell Steel filed a Chapter 11 petition (Bankr. E.D. Pa. Case No. 13-11275) in Philadelphia on Feb. 13, 2013, estimating at least $10 million in assets and liabilities. The Debtor is represented by attorneys at Ciardi Ciardi & Astin, P.C., in Philadelphia. POWELL STEEL: Files Amended List of Top Unsecured Creditors ----------------------------------------------------------- Powell Steel Corporation filed an amended list of unsecured creditors to make adjustments to the amounts owed the creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Payroll Taxes 1 $833,584 Centralized Insolvency Operation P.O. Box 7346 Philadelphia, PA 19101-7346 Infra-Metals-Atlanta Remit -- $659,496 New Millennium -- $241,396 Pennsylvania Department Payroll Taxes $226,580 of Revenue Fisher Realty Co. -- $162,438 Namasco (Kloeckner Metals) -- $63,293 Whitney Bailey Cox & Magnani -- $53,870 Maryland Dept. of Revenue Sales and Use $46,225 Payroll IPFS Corporation -- $34,110 City of Lancaster -- $33,836 BendTec -- $32,085 Eberl Iron Works -- $31,335 Cohen Selias Pallas -- $30,884 Kenilworth Steel -- $30,541 Direct Energy Business -- $26,511 Scully Welding Supply -- $24,923 Penn Manor Real Estate Taxes $19,638 Tipton Crane, LLC -- $19,070 Weinstock Brothers Corp. -- $17,461 Bushwick-Koons -- $17,091 About Powell Steel Powell Steel Corporation, located in Lancaster, Pennsylvania, is a progressive structural steel fabricator and erector equipped with state-of-the-art fabrication and welding equipment. Powell has a 67,000 square foot facility capable of fabricating in excess of 300 tons of steel per week. It has 50 employees working in the fabrication facility and 23 employees providing erection services. The business generates $1.2 million per month in revenue. Powell Steel filed a Chapter 11 petition (Bankr. E.D. Pa. Case No. 13-11275) in Philadelphia on Feb. 13, 2013, estimating at least $10 million in assets and liabilities. The Debtor is represented by attorneys at Ciardi Ciardi & Astin, P.C., in Philadelphia. POWELL STEEL: Section 341(a) Meeting Scheduled for March 12 ----------------------------------------------------------- A meeting of creditors in the bankruptcy case of Powell Steel Corporation will be held on March 12, 2013, at 02:00 p.m. at 833 Chestnut Street, Suite 501, Philadelphia, PA. 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. About Powell Steel Powell Steel Corporation, located in Lancaster, Pennsylvania, is a progressive structural steel fabricator and erector equipped with state-of-the-art fabrication and welding equipment. Powell has a 67,000 square foot facility capable of fabricating in excess of 300 tons of steel per week. It has 50 employees working in the fabrication facility and 23 employees providing erection services. The business generates $1.2 million per month in revenue. Powell Steel filed a Chapter 11 petition (Bankr. E.D. Pa. Case No. 13-11275) in Philadelphia on Feb. 13, 2013, estimating at least $10 million in assets and liabilities. The Debtor is represented by attorneys at Ciardi Ciardi & Astin, P.C., in Philadelphia. PRA INTERNATIONAL: S&P Affirms 'B' Corp. Credit Rating ------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Raleigh, N.C.-based contract research organization (CRO) PRA International. The outlook is stable. S&P also affirmed all issue-level ratings, including the 'B' issue-level rating on the existing first-lien term loan and the 'B-' issue-level rating on the existing second-lien term loan at the debt issuing subsidiary, Pharmaceutical Research Associates. At the same time, S&P assigned the company's proposed $45 million delayed draw first-lien term loan S&P's 'B' issue-level rating, with a recovery rating of '3', indicating its expectation for meaningful (50%-70%) recovery for lenders in the event of a payment default. The new debt consists of a $12.5 million tack-on to each of the company's existing first- and second-lien term loans, and a $45 million delayed draw first-lien term loan. S&P's rating on PRA continues to reflect the company's "highly leveraged" financial risk profile, reflecting leverage that S&P expects to remain above 5x for at least another year and financial sponsor ownership that S&P expects will continue to shape an aggressive financial policy. S&P views PRA's business risk profile as "weak," reflecting the company's position as a midsize player in a fragmented industry, its somewhat concentrated customer base, and the potential earnings volatility inherent in the contract-dependent pharmaceutical contract research organization (CRO) industry. "We expect PRA to generate low-double-digit revenue growth and about 50 bps in EBITDA margins contraction in 2013, reflecting continuing tight pricing and labor conditions," said Standard & Poor's credit analyst Shannan Murphy. S&P expects leverage to decrease to the mid- to high-5x level by the end of 2013 from about 6.3x at transaction close, primarily due to EBITDA growth. Despite the increase in leverage, S&P expects funds from operations (FFO) to total debt to remain in the low double digits. Although financial metrics have steadily improved since the 2007 leveraged buyout, S&P expects PRA to use the substantial flexibility under its credit facility to grow the business through acquisitions and to pay further dividends to its financial sponsor. While S&P expects the company to generate funds from operations to total debt in the low double digits in 2013, S&P expects that dividends and acquisitions will remain the predominant use of excess cash. For this reason, S&P' expects that any deleveraging will come from EBITDA growth, as opposed to debt repayment. For this reason, S&P expects that the highly leveraged financial risk profile will be sustained over the near future. READER'S DIGEST: Wins Interim OK of Loans, First-Day Motions ------------------------------------------------------------ RDA Holding Co., parent company of The Reader's Digest Association, Inc., on Feb. 20 disclosed that it has obtained U.S. Court approval of a variety of motions that will support the Company's operations as it proceeds with a financial restructuring supported by its secured lender and more than 70% of its secured noteholders. U.S. Bankruptcy Judge Robert Drain approved the Company's $105 million debtor-in-possession financing, $11 million of which will be available immediately, on an interim basis under an agreement with a group of the Company's secured creditors. The financing will be used in conjunction with cash generated from operations to support the Company throughout the Chapter 11 process. A hearing to consider final approval of the request will convene next month. "The relief granted is an important initial milestone in our restructuring process," said Robert E. Guth, the Company's President and Chief Executive Officer. "We are very confident that the protections afforded us through this process, when combined with the momentum we already have in our operational transformation, will allow us to create a vibrant and strong Reader's Digest for the future." In addition to the approval to obtain financing, the Company received approval of a variety of motions, including requests to continue paying employees and its network of freelancers without interruption and its request to continue all of its customer programs, including payments to sweepstakes winners. As previously reported, the Company has executed a Restructuring Support Agreement with its secured lender and its secured noteholders. The Agreement will result in, among other things, the Company converting approximately $465 million of secured notes to equity, which will strengthen the Company by significantly deleveraging its balance sheet. It is currently anticipated that the Company will exit Chapter 11 within six months with roughly $100 million of debt, about an 80% reduction in its level of indebtedness. About Reader's Digest RDA is a global media and direct marketing company that educates, entertains and connects consumers around the world with products and services from trusted brands. For more than 90 years, the flagship brand and the world's most read magazine, Reader's Digest, has simplified and enriched consumers' lives by discovering and expertly selecting the most interesting ideas, stories, experiences and products in health, home, family, food, finance and humor. RDA Holding Co. and 30 affiliates (Bankr. S.D.N.Y. Lead Case No. 13-22233) filed Chapter 11 protection on Feb. 17, 2013. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Evercore Group LLC is the investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Reader's Digest, together with its 47 affiliates, first filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09-23529) on August 24, 2009 and exited bankruptcy Feb. 19, 2010. Under the Plan, the Debtors reduced its total debt by 75% from more than $2.2 billion to approximately $555 million. General unsecured creditors were promised a 3.3% to 3.6% recovery. Holders of the Debtors' senior secured debt led by JP Morgan Chase & Co. received equity of the reorganized Debtor. READER'S DIGEST: Updated Chapter 11 Case Summary ------------------------------------------------ Lead Debtor: RDA Holding Co. 44 South Broadway White Plains, NY 10601 Reader's Digest entities that simultaneously filed for Chapter 11 protection on February 17, 2013: Debtor Entity Case No. ------------- -------- RDA Holding Co. 13-22233 The Reader's Digest Association, Inc. 13-22234 Ardee Music Publishing, Inc. 13-22235 Direct Entertainment Media Group, Inc. 13-22236 Pegasus Sales, Inc. 13-22237 Pleasantville Music Publishing, Inc. 13-22238 R.D. Manufacturing Corporation 13-22239 Reiman Manufacturing, LLC 13-22240 RD Publications, Inc. 13-22241 Home Service Publications, Inc. 13-22242 RD Large Edition, Inc. 13-22243 RDA Sub Co. (f/k/a Books Are Fun, Ltd.) 13-22244 Reader's Digest Children's Publishing, Inc. 13-22245 Reader's Digest Consumer Services, Inc. 13-22246 Reader's Digest Entertainment, Inc. 13-22247 Reader's Digest Financial Services, Inc. 13-22248 Reader's Digest Latinoamerica, S.A. 13-22249 WAPLA, LLC 13-22250 Reader's Digest Sales and Services, Inc. 13-22251 Taste of Home Media Group, LLC 13-22252 Reiman Media Group, LLC 13-22253 Taste of Home Productions, Inc. 13-22254 World Wide Country Tours, Inc. 13-22255 W.A. Publications, LLC 13-22256 WRC Media, Inc. 13-22257 Five Reader's Digest entities that sought Chapter 11 protection on Feb. 18, 2013: Debtor Entity Case No. ------------- -------- RDCL, Inc. (f/k/a Compasslearning, Inc.) 13-22258 RDA Digital, LLC 13-22259 RDWR, Inc. (f/k/a Weekly Reader Corporation) 13-22260 Haven Home Media, LLC (f/k/a Reader's Digest Sub Nine, Inc.) 13-22261 Weekly Reader Custom Publishing, Inc. (f/k/a Lifetime Learning Systems, Inc.) 13-22262 World Almanac Education Group, Inc. 13-22263 Bankruptcy Court: U.S. Bankruptcy Court Southern District of New York (White Plains) Bankruptcy Judge: Hon. Robert D. Drain About Debtor: RDA Holding Co., together with The Reader's Digest Association, Inc., and their direct and indirect subsidiaries and affiliates, is a global, multi-brand and multi-platform media and direct marketing company. The Company produces and sells print and digital magazines, books, music, and videos to consumers around the world in multiple languages and many channels, such as direct mail (including catalogs), the Internet, and retail. Debtors' Counsel: Joseph H. Smolinsky, Esq. WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, NY 10153 Tel: (212) 310-8767 Fax: (212) 310-8007 E-mail: Joseph.Smolinsky@weil.com Debtors' Investment Banker: EVERCORE GROUP L.L.C. 55 East 52nd Street New York, NY 10055 Debtors' Claims Agent: EPIQ BANKRUPTCY SOLUTIONS LLC Total Assets: $1,118,400,000 Total Liabilities: $1,184,500,000 The petitions were signed by Paul R. Tomkins, executive vice president and chief financial officer. 5% or More Voting Shareholders as of Jan. 31, 2013: Alden Global Capital 17.77% Point Lobos 13.55% Jefferies High Yield Holdings LLC 9.43% GoldenTree Asset Management LP 9.22% General Electric Capital Corporation 8.96% JP Morgan Chase Bank NA 6.79% Goldman Sachs Asset Management LP 5.69% List of Debtors' 40 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Bank, Indenture Deficiency National Association, claim amount 150 East 42nd Street to be New York, NY 10017 determined Attn: Corporate Trust Services? Reader's Digest Assoc. Administrator Telephone: (917) 260-1544 Facsimile: (917) 260-1545 martin.g.reed@wellsfargo.com Luxor Capital Group Unsecured $10,000,000 1114 Avenue of Americas Term loan 29th Floor New York, NY 10036 Attn: Operations Department Telephone: (212) 763-8000 Facsimile: (212) 763-8001 Ops@luxorcap.com Federal Trade Commission Settlement $8,753,266 Bureau of Consumer Protection 600 Pennsylvania Avenue NW Washington, DC 20580 Attn: James Kohm, Associate Director for Enforcement Telephone: (202) 326-2996 Debrief@ftc.gov Williams Lea Trade Claim $5,970,280 1 Dag Hammerskjold Plaza, 8th Floor New York, NY 10017 Attn: Frank Oliveri, President & COO Telephone: (212) 351-9050 Facsimile: (212) 351-9196 Frank.Olivieri@williamslea.com HCL Technologies Limited Trade Claim $4,366,621 1950 Old Gallows Road Vienna, VA 22182 Attn: Rajiv Khanna, Sr. Account Director Telephone: (203) 895-7493 rkhanna@hcl.in Quad Graphics Trade Claim $3,588,199 N63W 23075 State Hwy. 74 Sussex, WI 53089-2827 Attn: Joel Quadracci, President Telephone: (414) 566-2020 Facsimile: (414) 566-4650 joel.quadracci@qg.com RR Donnelley Receivables Trade Claim $1,615,318 6 Cambridge Drive, Suite 302 Trumbull, CT 06611 Attn: Scott Weiss, Global Accounts Director Telephone: (203) 854-1961 Facsimile: (203) 365-7225 scott.d.weiss@rrd.com Microsoft Licensing GP Trade Claim $984,880 1290 Avenue of the Americas Sixth Floor New York, NY 10104 Attn: Trevor Snow, Corporate Account Manager Telephone: (201) 334-7143 Facsimile: (212) 245-3290 tsnow@microsoft.com Infocrossing Incorporated Trade Claim $884,797 Wipro 2 Christie Heights Street Leonia, NJ 07605 Attn: Nick Letizia, Senior VP & General Counsel Telephone: (201) 840-4717 nick.letizia@wipro.com Simon & Schuster Inc. Trade Claim $614,032 1230 Avenue of the Americas New York, NY 10020 Attn: Dennis Eulau, Chief Operating Officer Telephone: (212) 698-7328 dennis.eulau@simonandschuster.com Daniel M. Lagani Severance $553,846 Dan Meehan Employment Agreement $508,750 Angel.com Trade Claim $410,624 8219 Leesburg Pike Vienna, VA 22182 Attn: David Rennyson, President Telephone: (703) 663-7811 drennyson@angel.com Aegis USA, Inc. Trade Claim $367,938 1100 Gendon Ave, Suite 1250 Los Angeles, CA 90024 Attn: Ashish Chatuvedi Telephone: (632) 885-8000 Ext. 58407 achaturvedi@aegisglobal.com Jones Lang LaSalle Brokerage Trade Claim $345,910 330 Madison Avenue New York, NY 10017 Attn: Mitchell Konsker, Vice Chairman Telephone: (212) 812-5766 mitchell.konsker@am.jll.com Datapoint Media, Inc. Trade Claim $308,047 318 Bear Hill Road, Suite 4 Waltham, MA 02451 Attn: Kevin O'Malley, Co-Founder Telephone: (781) 373-2073 komalley@datapointmedia.com Anetorder, Inc. Trade Claim $304,244 Anet Corporation 820 Frontenac Road Naperville, IL 60563 Attn: Shane Randall, President & CEO Telephone: (630) 579-8800 srandall@anetorder.com Ness USA, Inc. Trade Claim $265,593 160 Technology Drive Canonsburg, PA 15317 Attn: Richard Kilpatrick Telephone: (201) 424-0790 richard.kilpatrick@ness.com American Customer Care Trade Claim $248,341 225 N. Main St. Bristol, CT 06010 Attn: Rodd Furlough Telephone: (800) 660-0130 Facsimile: (800) 267-0846 rfurlough@americancustomercare.com Mark Jannot Severance $279,808 Rich Lee Severance $218,269 MBI Group, Inc. Trade Claim $211,572 48 W 37th Street 9th Floor New York, NY 10018 Attn: Joe Esposito, Owner Telephone: (212) 376-4400 Facsimile: (212) 376-6260 jesposito@mbiny.com Elevation Management, LLC Trade Claim $205,587 23400 Mercantile Road Suite 10 Beachwood, OH 44122 Attn: Denny Young, President Telephone: (216) 696-7776 dyoung@elevationgroup.com The Harry Fox Agency Royalty Claim $177,000 40 Wall Street 6th Floor New York, NY 10005-1344 Attn: Michael Simon, President & CEO Telephone: (212) 834-0100 Facsimile: (646) 487-6779 Professional Trade Claim $172,476 Systems Corp dba Revspring 105 Montgomery Avenue Oaks, PA 19456 Attn: Tim Schriner, President Telephone: (610) 650-3900 KBace Technologies Trade Claim $161,127 6 Trafalgar Square Nashua, NH 03063 Attn: Babul Challa Telephone: (603) 821-7863 bchalla@kbace.com Canon Business Solutions Trade Claim $157,282 1311 Mamaroneck Avenue White Plains, NY 10605 Attn: Michael Paul Pelletier, Major Account Executive Telephone: (914) 286-8963 mpelletier@csa.canon.com Westaff Trade Claim $154,729 3820 State Street Santa Barbara, CA 93105 Attn: D. Stephen Sorenson, CEO Telephone: (800) 882-2200 IBM Trade Claim $140,080 North Castle Drive Armonk, NY 10504 Attn: Brendan King Telephone: (914) 765-5233 bking@us.ibm.com Sesame Workshop Royalty Claim $138,662 1 Lincoln Plaza New York, NY 10023 Attn: Scott Chambers, Senior Vice President, Worldwide Media Distribution Telephone: (212) 875-6782 scott.chambers@sesameworkshop.org Hung Hing Offset Printing Trade Claim $137,307 17-19 Dai Hei Street Tai Do Industrial Estate New Territories, Hong Kong Attn: Sung Chee Keung, Executive Director Telephone: (852) 2664-8682 Facsimile: (852) 2664-2070 Spring Films Ltd Trade Claim $135,000 98 Mortlake Road Richmond Surrey TW9 4AS United Kingdom Attn: Lynette Singer, Director & Executive Producer Telephone: +44 (0) 20.3327.4930 lynette.singer@springfilms.org Robert D Newman Severance $132,600 Federal Express Corp. Trade Claim $127,890 29 Toelles Road Wallingford, CT 06492 Attn: Robert Baldwin, Managing Director Worldwide Services Telephone: (203) 265-0650 Facsimile: (203) 265-0662 rbaldwin@fedex.com Google, Inc. Trade Claim $123,539 1600 Amphitheatre Parkway Mountain View, CA 94043 Attn: Marven Laurino Telephone: (866) 954-0453 Ext. 8963 Facsimile: (650) 963-3574 m.laurino@google.com CH Robinson International Trade Claim $116,389 14701 Charlson Road Eden Prarie, MN 55347 Attn: Jason Luedtke, Director Transportation Telephone: (952) 683-3772 jason.luedtke@chrobinson.com Disney Publishing Worldwide Royalty Claim $112,280 1101 Flower Street Glendale, CA 91201 Attn: Rajmohan Murari, SVP & Group Publisher Telephone: (818) 544-1051 Facsimile: (818) 260-4165 rajmohan.murari@disney.com Outsourced Ad Ops Trade Claim $111,634 451 Broadway Third Floor New York, NY 10013 Attn: Craig Leshen, President Telephone: (212) 226-6788 Brite Media Group LLC Trade Claim $100,398 3 Corporate Drive Cranbury, NJ 08512 Attn: Pete D'Andrea, Senior Vice President Telephone: (609) 642-4940 Shanghai Press and Contract Claim Unknown Publishing Development Company F No. 7, Donghu Road Shanghai, 200031 China READER'S DIGEST: Secured Lenders to Get Full Recovery, Fitch Says ----------------------------------------------------------------- The Readers Digest Association is the latest company to file a second Chapter 11 bankruptcy petition, commonly referred to as a Chapter 22. The terms of a pre-negotiated restructuring agreement would provide full recoveries for holders of secured bank claims and would result in a debt to equity conversion for secured note- holders. RDA Holding, parent company of The Reader's Digest Association, announced on Feb. 17, 2013 that it has reached a consensual agreement on the terms of a financial restructuring with both its secured bank lenders and over 70% of the holders of its secured notes. The company has obtained a $105 million debtor in possession facility (DIP) to provide liquidity during the bankruptcy period and repay its pre-petition secured bank lenders in full by rolling up the pre-petition bank debt into the DIP. Under the agreement, the company would convert $465 million of senior notes to common equity. The company anticipates having approximately $100 million in debt when it emerges from bankruptcy, which would be an 80% debt reduction. The company was identified as one of 37 candidates for a return to bankruptcy court in Fitch's report, Chapter 22 Bankruptcies and Other Repeat Filings, published Aug. 20, 2012. The screen for companies at risk of a second (or third) bankruptcy was based on issuer ratings levels of 'B-' and below. Reader's Digest first Chapter 11 filing was made 3.5 years ago in August 2009. The period between the first and second filing was close to the 34 month average for the 50 repeat filers in Fitch's high yield default index as of August 2012. At the time of the first filing, the company was overleveraged as a result of an earlier going private transaction and was unable to sustain the capital structure as it faced intense competition during the deep recession. Despite significant debt reduction in the first restructuring, the company continued to face challenges and again became unable to sustain its capital structure. Like many print media companies, Reader's Digest struggled to adapt to online media and other forms and is facing chronic decline in readership and advertising in some of its 75 publications. Companies with more than one default within a several-year period provide useful examples of the primary reasons why initial attempts at successful reorganization fail. Key drivers of second defaults are failure to resolve operating cost issues or sufficiently reduce debt. Second defaults are also frequent for issuers in industries that are in a deep cyclical trough or chronic decline. READER'S DIGEST: S&P Cuts CCR to 'D' After Chapter 11 Filing ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on New York, N.Y.-based publisher Reader's Digest Assn. Inc. to 'D' from 'CCC-', and lowered its issue-level rating on Reader's Digest's senior secured notes due 2017 to 'D' from 'CC'. S&P's recovery rating on the senior secured notes remains unchanged at '5', indicating its expectation for modest (10% to 30% range) recovery. The rating action follows the company's announcement that it filed a voluntary Chapter 11 petition under the U.S. Bankruptcy Code on Feb. 17, 2013. The company's international operations are not part of the bankruptcy filing. Additionally, the company has entered into a restructuring support agreement with holders of over 70% of its senior secured notes. The agreement, among other things, provides up to $105 million of new money debtor-in-possession financing to support operations during the in-court restructuring and to repay existing senior secured bank debt. It also allows for the conversion of all the outstanding senior secured notes to equity. The company expects to emerge from bankruptcy within six months with about $100 million of outstanding debt. REALOGY CORP: Incurs $543 Million Net Loss in 2012 -------------------------------------------------- Realogy Holdings Corp. reported a net loss attributable to the Company of $543 million on $4.67 billion of net revenues in 2012, a net loss attributable to the Company of $441 million on $4.09 billion of net revenues in 2011, and a net loss attributable to the Company of $99 million on $4.09 billion of net revenues in 2010. The Company's balance sheet at Dec. 31, 2012, showed $7.44 billion in total assets, $5.92 billion in total liabilities and $1.51 billion in total equity. "Our closed homesale transaction volume drivers outperformed our expectations in the fourth quarter, especially with respect to average sales price," said Anthony E. Hull, Realogy's executive vice president, chief financial officer and treasurer. "We believe that the fourth quarter volume increase was partially aided by tax-related selling, particularly at the high end of the market." Hull continued: "Based on the visibility we have into the coming months from our January closed sales data and open contracts in January and early February, we expect to see an approximately 4% to 5% increase in transaction sides in the first quarter of 2013 with one less business day than we had in the first quarter of 2012. Likewise, we anticipate a combined RFG and NRT average sale price increase of approximately 8% to 9% year-over-year, which would equate to a 14% to 16% volume increase in the first quarter after adjusting out the additional business day in the first quarter of 2012." A copy of the press release is available for free at: http://is.gd/ebIYKZ About Realogy Corp. Realogy Corp. -- http://www.realogy.com/-- a global provider of real estate and relocation services with a diversified business model that includes real estate franchising, brokerage, relocation and title services. Realogy's world-renowned brands and business units include Better Homes and Gardens Real Estate, CENTURY 21, Coldwell Banker, Coldwell Banker Commercial, The Corcoran Group, ERA, Sotheby's International Realty, NRT LLC, Cartus and Title Resource Group. Collectively, Realogy's franchise systems have around 15,000 offices and 270,000 sales associates doing business in 92 countries around the world. Headquartered in Parsippany, N.J., Realogy is owned by affiliates of Apollo Management, L.P., a leading private equity and capital markets investor. Realogy fully supports the principles of the Fair Housing Act. * * * In the Dec. 12, 2012, edition of the TCR, Moody's Investors Service upgraded Realogy Group LLC's Corporate Family and Probability of Default ratings to B3. The B3 Corporate Family rating (CFR) incorporates Moody's view that Realogy's capital structure has made meaningful progress towards being stabilized following the issuance of primary equity, and is therefore more sustainable although still highly leveraged. As reported by the TCR on Oct. 15, 2012, Standard & Poor's Ratings Services raised its corporate credit rating on Realogy Corp. to 'B' from 'CCC' and removed it, along with all related issue-level ratings, from CreditWatch, where it was placed with positive implications Sept. 28, 2012. "The action follows the completion of the company's IPO of its common stock. Concurrent with and in addition to the IPO, Realogy converted $1.9 billion in convertible debt to common stock," S&P said. REGAL ENTERTAINMENT: Acquisition Deal No Impact on Fitch Ratings ---------------------------------------------------------------- The ratings of Regal Entertainment Group and Regal Cinemas Corporation are unaffected following Regal's announced acquisition of Hollywood Theaters, according to Fitch Ratings. The acquisition would add 43 theaters and 513 screens to Regal's portfolio. The transaction is expected to close in the second quarter. According to Regal's announcement, the acquisition price will consist of $191 million in cash, which a portion will be used to repay approximately $157 million of the seller's debt. Regal will also assume approximately $47 million in lease obligations. Fitch expects the acquisition to be funded with the $250 million HoldCo Note offering from Jan. 14, 2013 ('Fitch Rates Regal's Note Offering 'B-'/'RR6'). Including roughly $250 million of proceeds from the January issuance, Fitch estimates liquidity of roughly $360 million in cash (cash balance at Dec. 27, 2012 was $110 million) and $82 million of availability (as of Sept. 27, 2012) under Regal Cinemas' $85 million revolving credit facility due May 2015. The acquisition is consistent with Fitch's expectation that there will be further consolidation in the industry and is factored into current ratings for Regal and its peers. Heightened consolidation is primarily being driven by ease of capital market access and the expected obsolescence of traditional celluloid film. Material debt-funded acquisitions that drove leverage beyond Fitch's long- term threshold of 4.5x for Regal could have a negative impact on ratings. As of Dec. 27, 2012 (pro forma for the January issuance and Hollywood capital and financing lease obligations), Fitch calculates unadjusted gross leverage at 4.2x. Regal disclosed a pre-synergy transaction multiple of 5.9x cash flow as part of its acquisition announcement (implies roughly $40 million of annual cash flow). Inclusive of the incremental debt and $40 million of annual cash flow (assuming cash flow is equal to EBITDA) from Hollywood, Fitch estimates pro forma gross unadjusted leverage at 3.9x. The current ratings and Stable Outlook reflect these considerations: -- Fitch believes movie exhibition will continue to be a key promotion window for the movie studios' biggest/most profitable releases. -- Fitch recognizes that theater attendance is inherently volatile due to the quality of the film slate in any given year. The 2013 slate is promising with many sequels including, The Hunger Games: Catching Fire, Iron Man 3, Star Trek Into Darkness, The Hobbit: The Desolation of Smaug, and Thor: The Dark World. However, due to the strong 2012 performance (+6.5% according to Box Office Mojo), which will be a challenge to match, Fitch's current base case for 2013 is for attendance to decline in the low single digits. -- For the long term, Fitch continues to expect that the movie exhibitor industry will be challenged in growing attendance and any potential attendance declines will offset some of the growth in average ticket prices. The ratings factor in the intermediate/long-term risks associated with increased competition from at-home entertainment media, limited control over revenue trends, the pressure on film distribution windows, and increasing indirect competition from other distribution channels (such as VOD and other OTT services). Regal and its peers rely on the quality, quantity, and timing of movie product, all factors out of management's control. -- Fitch does not anticipate a significant decline in concession revenue per patron, but remains cautious that high-margin concessions (which represent 26% of Regal's total revenues and carry 87% gross margins), may be vulnerable to reduced per- guest concession spending due to economic cyclical factors or a re-acceleration of commodity prices. A slight deterioration in concession margin is factored into the current rating. While Fitch expects increased concession spending per guest, margins are expected to contract due to the lower margin premium menu offerings introduced by Regal and other theater circuits. -- Fitch believes that Regal will continue to focus free cash flow (FCF) deployment toward build-out/expansion of theaters, acquisition of theater assets, and/or for shareholder-friendly activities. Sensitivity/Rating Drivers -- Fitch heavily weighs the prospective challenges facing Regal and its industry peers in arriving at the long-term credit ratings. Significant improvements in the operating environment (e.g. sustainable increases in attendance) and sustained deleveraging could have a positive effect on the rating, though Fitch views this as unlikely. -- Fitch anticipates that Regal, and other movie exhibitors, will continue to consolidate. While not anticipated, a material debt-funded acquisition or return of capital to shareholders that would raise the unadjusted gross leverage beyond 4.5x could have a negative impact on the rating. -- In addition, meaningful, sustained declines in attendance and/or per-guest concession spending which drove leverage beyond 4.5x could pressure the rating as well. Free Cash Flow Fitch estimates FCF (less dividends) for latest 12 months ended Dec. 27, 2012 was roughly negative $30 million. Fitch's FCF calculation deducts both the $155 million special dividend and Regal's regular dividend. In 2013, including its regular dividend payment, Fitch expects FCF to be roughly $50 million to $75 million. The company does not have any pension obligations. There are no significant maturities until 2017 when the term loan facility comes due. Debt Maturities As of Dec. 27, 2012, pro forma for the $250 million Regal issuance in January, gross debt totaled $2.2 billion and was made up of: -- Regal Cinemas' $990 million secured term loans (due 2017); -- Regal Cinemas' $400 million unsecured notes (due 2019); -- Regal's $525 million unsecured notes (due 2018); and -- Regal's $250 million unsecured notes (due 2025). Recovery Regal's Recovery Ratings reflect Fitch's expectation that the enterprise value of the company and, thus, recovery rates for its creditors, will be maximized in a restructuring scenario (as a going concern) rather than a liquidation. Fitch estimates a distressed enterprise valuation of $1.7 billion, using a 5x multiple and including an estimate for Regal's roughly 20% stake in National CineMedia, LLC of approximately $190 million. Based on this enterprise valuation, which is before any administrative claims, overall recovery relative to total current debt outstanding is approximately 75%. The 'RR1' Recovery Rating for the company's credit facilities reflects Fitch's belief that 91%-100% expected recovery is reasonable. While Fitch does not assign Recovery Ratings for the company's operating lease obligations, it is assumed the company rejects only 30% of its remaining $3.2 billion in operating lease commitments due to their significance to the operations in a going-concern scenario and is liable for 15% of those rejected values (at a net present value). Fitch's recovery analysis shows 84% recovery for Regal Cinemas' senior unsecured notes (equal in ranking to the rejected operating leases), which maps to an 'RR2' Recovery Rating. The 'RR6' assigned to Regal's senior unsecured notes reflects the structural subordination of the notes and Fitch's expectation for zero recovery. Fitch currently rates Regal and Regal Cinemas as follows: Regal -- Issuer Default Rating (IDR) 'B+'; -- Senior unsecured notes 'B-/RR6'. Regal Cinemas -- IDR 'B+'; -- Senior secured credit facility 'BB+/RR1'; -- Senior unsecured notes 'BB/RR2'. The Rating Outlook is Stable. REGAL ENTERTAINMENT: Hollywood Buyout No Impact on Moody's B1 CFR ----------------------------------------------------------------- Moody's Investors Service said that Regal Entertainment Group's announced agreement to acquire Hollywood Theaters for $191 million in cash does not impact ratings for either Regal (B1 corporate family rating) or Hollywood (Caa1 corporate family rating). The cash portion of the purchase price includes repayment of Hollywood's $157 million of secured bonds due June 2013. The transaction is credit positive for Hollywood because it would facilitate repayment at par and eliminate uncertainty and potential refinancing risk. Moody's expected Regal to make acquisitions and does not expect the Hollywood acquisition to meaningfully impact its metrics or liquidity profile. Regal raised $250 million of cash with a bond offering in January for either debt reduction or acquisitions. This cash combined with the $109 million of cash as of December 31 provides ample liquidity for the acquisition. Moody's does not anticipate a meaningful impact on credit metrics given the multiple paid. Moody's estimates Regal's leverage for full year 2012 at approximately 5.3 times debt-to-EBITDA (Moody's adjusted, including the capitalization of operating leases at an 8 times multiple). Moody's believes leverage would be comparable after incorporating a full year of the Great Escapes acquisition (closed late November), the January bond issuance, and the acquisition of Hollywood. Regal Entertainment Group, the parent of Regal Cinemas Corporation, operates 6,880 screens in 540 theatres in 38 states and the District of Columbia, primarily in mid-sized metropolitan markets and suburban growth areas of larger metropolitan markets throughout the U.S. The company maintains its headquarters in Knoxville, Tennessee, and its revenue for 2012 was approximately $2.8 billion. Headquartered in Portland, Oregon, Hollywood Theaters, Inc. operates approximately 46 theaters and 530 screens primarily located in the continental United States and in Hawaii and the Pacific Islands. Annual revenue is approximately $150 million, and the company is owned primarily by GTCR. REMY INTERNATIONAL: Moody's Rates New $325MM Sr. Secured Loan B1 ---------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Remy International, Inc.'s new $325 million senior secured term loan. The new term loan is expected to be used to refinance the company's existing senior secured term loan, add cash to the balance sheet, and for general corporate purposes. In a related action, Moody's affirmed Remy's Corporate Family Rating at B1, and Probability of Default Rating at B1-PD. The rating outlook is stable. The following rating was assigned: B1 (LGD3, 46%), to the $325 million senior secured term loan B due 2020 The following ratings were affirmed: Remy International, Inc.: Corporate Family Rating, B1; Probability of Default, B1-PD; The $95 million asset based revolving credit facility is not rated. Ratings Rationale: Remy's B1 Corporate Family Rating reflects the company's relatively strong EBIT margin and credit metrics for the assigned rating balanced by the company's modest size, high customer and regional concentrations, and high reliance on short-term factoring facilities. Remy's EBIT margin approximated 10% for 2012 while EBIT/Interest approximated, 3.5x. Yet, Remy's performance is expected to be challenged over the near-term by the period of missed new bidding opportunities during the company's bankruptcy in 2009. With GM representing about 20% of Remy's revenues, and the top five customer representing about 50% of revenues, Remy's growth prospects are largely limited to a select customer base. About two-thirds of Remy's revenues are generated in North America where a significant portion is exposed to the automotive and commercial vehicle aftermarket. Competitive pricing pressures and soft commercial vehicle demand have adversely impacted Remy's recent performance and are expected to pressure growth and operating profit over the coming quarters. Remy is addressing these challenges with cost reduction actions, new business wins, and maintenance of its technological leadership. Moody's expects these actions to support the assigned rating over the near-term. Weighing on Remy's ratings is its extensive use of uncommitted accounts receivable factoring programs which add liquidity risk to the company's financial profile. The stable outlook incorporates Remy's strong credit metrics for the assigned rating and expectation of continued improvement in global automotive industry conditions while recognizing near-term performance softness. The company's capital structure should support a modest amount of additional leverage including a modest amount of un-renewed factoring programs. Remy is anticipated to have adequate liquidity over the next twelve months driven by cash on hand and expected free cash flow generation. Pursuant to the proposed recapitalization transaction, Remy's cash balances are expected to approximate $147 million. Remy is anticipated to generate positive free cash flow over the next twelve months. While this is consistent with the company's performance over the recent years, the amount of positive free cash flow generation is expected to be challenged by the roll-off of certain platforms with Remy's largest customer, expected softness in the coming quarters in the North American commercial vehicle market, and increasing competition. The successful execution of the strategic actions mentioned will determine Remy's ability to generate free cash flow consistent with recent years. Remy's utilization of factoring arrangements to support its financial flexibility is a limiting consideration on its liquidity profile as the inability to renew these factoring arrangement would materially impact the company's financial flexibility. As of December 31, 2012, gross amounts factored under these facilities was about $183.5 million. The $95 million asset based revolving credit facility was unfunded at December 31, 2012, with borrowing base availability of about $69 million after $2.9 million of issued letters of credit. The asset based revolving credit has a springing fixed charge coverage test of 1.1 to 1 when availability falls below certain levels. Financial covenants under the term loan include a maximum leverage test and a minimum interest coverage test for which there is expected be ample cushion over the next twelve month. Alternate liquidity is limited as essentially all the company's assets secure the asset based revolver and term loan facilities. Developments that could lead to an improved outlook or rating include continued improvement in automotive industry conditions supporting the company's ability to maintain EBIT/Interest of about 3.5x and Debt/EBITDA at about 2.0x on a consistent basis. A further hurdle to an improved outlook or rating is the company's high reliance on short-term factoring lines. Developments that could lead to a lower outlook or ratings include deterioration in automotive industry conditions which are not offset by cost saving actions resulting in EBIT/interest sustained below 2.5x or Debt/EBITDA sustained above 3.5x. Higher usage or the inability to renew accounts receivable factoring lines resulting in reduced liquidity could also result in a lower rating or outlook. The principal methodology used in this rating was the Global Automotive Supplier Industry Methodology published in January 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Remy, headquartered in Pendleton, Indiana, provides alternators, starters and hybrid motors for the heavy duty and light duty original equipment markets, as well as remanufactured alternators and starters to the aftermarket. Revenues in 2012 were $1.1 billion. The company is largely owned by affiliates of Fidelity National Financial, Inc. REMY INTERNATIONAL: S&P Affirms 'B+' CCR; Rates $325MM Loan 'B+' ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its 'B+' corporate credit rating on Remy International Inc. and revised the outlook to positive from stable. At the same time, S&P assigned a 'B+' issue-level rating and a '4' recovery rating, indicating an average recovery (30%-50%) in the event of a default, to Remy's $325 million term loan. "The outlook revision reflects our opinion that Remy's credit metrics continue to improve, and we believe that there is at least a one-third probability we will raise the corporate credit rating within the next year," said Standard & Poor's credit analyst Lawrence Orlowski. S&P believes commercial- and light-vehicle production in North America will be flat, while Europe will be weak in 2013. S&P believes commercial vehicle production in North America could be flat to slightly down in 2013 and fall about 9% in Western Europe. S&P forecasts light vehicle production to be up 1% in North America in 2013 and fall about 9% in Western Europe. The projected weakness in Europe in 2013 stems in part from the ongoing consumer uncertainty in the economy. Standard & Poor's bases its ratings on the assessment of Remy's business risk profile as "weak," reflecting volatile industry demand, fierce competition, and the company's North American business and product concentration. Partly offsetting these factors are the company's leading market positions, fair end- market diversity, and substantial aftermarket business. S&P views the company's financial risk profile as "aggressive." Based on the 12 months ended Dec. 31, 2012, adjusted debt to EBITDA was about 3x. S&P expects the company's leverage to move above 3x due to the increase in the amount of the new term loan versus the existing one. Nevertheless, the company's consistent free operating cash generation and declining leverage to 3x or below in 2014 reflect an improving financial risk profile that could support a higher rating. In the fourth quarter of 2012, revenue was $268.3 million, down 6% compared with $284.7 million in the fourth quarter of 2011 because of weak demand in Europe and softening commercial-vehicle sales. Adjusted EBITDA was $39.7 million, compared with $35.2 million in the prior year. The EBITDA margin was 14.8% in the quarter, compared with 12.4% in the prior year. Remy is the leading manufacturer in North America of commercial- vehicle starters and alternators, and light-vehicle aftermarket starters and alternators. The company reports it holds the No. 3 position in the European aftermarket for remanufactured starters and alternators, the No. 1 position in South Korea for light- vehicle starters, the No. 2 position in South Korea for commercial-vehicle starters, and the No. 3 position in China for light-vehicle alternators. The positive rating outlook reflects S&P's view that there is at least a one-third probability that the company's financials could support a higher rating over the next year. To raise S&P's rating, it would expect to see leverage at or below 3x and the ratio of free operating cash flow to adjusted debt to be about 5% on a sustained basis. This could occur if revenue rose at least 10% in 2013 and gross margins were above 21%. S&P could lower its rating if sales for light and commercial vehicles decline because of weakening economic conditions and, as a result, the company started to use free cash flow. S&P could also lower its rating if leverage moved above 4x, which could happen if gross margins fall below 18% and sales growth declines at least 5% from 2012 levels. RESIDENTIAL CAPITAL: List of Contracts Assigned to Ocwen -------------------------------------------------------- The Court authorized Residential Capital LLC and its affiliates to assume and assign unexpired leases and executory contracts to Ocwen Loan Servicing, LLC. Schedules of the leases and contracts are available for free at: http://bankrupt.com/misc/rescap_lease0213.pdf http://bankrupt.com/misc/rescap_lease0214.pdf On Feb. 15, 2013, ResCap completed the sale of the servicing platform assets to Ocwen Loan Servicing, LLC, the mortgage servicing arm of Ocwen Financial Corporation. The United States Bankruptcy Court, Southern District of Manhattan had approved the sale of the assets last November. The sale of ResCap's originations and capital markets platform to Walter Investment Management Corp., and the sale of a whole loan portfolio to Berkshire Hathaway were recently completed. The three sale transactions, in the aggregate, generated more than $4 billion in proceeds for the benefit of ResCap's creditors and preserved more than 3,800 U.S. jobs. 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). RHYTHM AND HUES: Arranges $17MM Financing From Fox and Universal ---------------------------------------------------------------- Special effects provider Rhythm And Hues, Inc., is seeking approval from the Bankruptcy Court to obtain $17.1 million of DIP financing from key clients Universal City Studios LLC and Twentieth Century Fox, a division of Twentieth Century Fox Film Corporation. The Debtor has obtained approval to access $11 million of the financing and will return to Bankruptcy Court in March to obtain the remaining $7 million. According to the Debtor, while the principal purpose of the loan is to allow it to finish existing projects for Universal and Fox, it will also allow the Debtor to remain in business for approximately the next 75 days and, potentially for additional time as new work is bid and secured. During the next two month, the Debtor intends to continue to market the business to third party buyers with the potential goal of entering into a sale or other financing transaction, allowing R&H to exit its chapter 11 case as a healthier company. The loan from Fox and Universal are provided on favorable terms: the loan bears interest at a fixed rate of 6% per annum and will not mature until the earlier of Dec. 31, 2015 (almost three years from today) and the effective date of a reorganization plan. Default interest will be 9% per annum. The extended repayment period will greatly assist the Debtor in its restructuring efforts. Thus, even if there is no immediate sale opportunity, R&H may be able to emerge promptly from Bankruptcy Court protection with additional third party financing. In January, the lenders advanced $750,000 and $5.25 million on an unsecured basis to help the Debtor fund its payroll. The loan allowed the Debtor to meet obligations and maintain operations through the Feb. 7 closing of a sale to a third-party buyer. But the transaction failed to close and the Debtor ended up seeking bankruptcy protection a week later. Maturity in Three Years The Debtor's projected cash collections, excluding the DIP Loan proceeds, over the next 60 days consist of $5,617,000, which is insufficient to pay projected operating expenses. Even with the reduced staff, the Debtor's projected cost of operations with only the Fox and Universal projects is projected to be $22.05 million through April 26, 2013. The proposed DIP Loan will be in the maximum of $17.086 million to be advanced in four installments: (1) $6 million to be advanced upon entry of an order approving the DIP Loan on an interim basis; (2) $5 million to be advanced on Feb. 19, 2013; (3) $4 million to be advanced on March 18, 2013, but only after entry of an order approving the DIP Loan on a final basis; and (4) $1.586 million to be advanced on April 8, 2013. In addition, there is a loan allowance amount for the lenders' counsel up to $500,000. $50,000 for Committee Counsel Expenses The DIP Loan will be secured by a first priority security interest on substantially all of the Debtor's assets, subject to a carve- out for (a) allowed and unpaid fees and expenses in an amount not to exceed (i) $1 million for the Debtor's restructuring counsel, Greenberg Glusker Fields Claman & Machtinger LLP; (ii) $500,000 for the Debtor's financial consultant, Scouler & Company LLC; (iii) $50,000 for counsel for the Official Committee of Unsecured Creditors, if any; and (iv) $150,000 for the Debtor's broker/ investment banker, and (b) all accrued and unpaid fees that arise pursuant to 28 U.S.C. Sec. 1930. March 12 Final Hearing Following an initial hearing on the DIP financing on Feb. 15, the bankruptcy judge granted interim approval of the loan and allowed the Debtor to borrow as much as $11 million pending final approval. Bankruptcy Judge Neil W. Bason set a hearing for March 12 at 2:00 p.m. to consider final approval of the financing. Objections are due March 8 at 10:00 a.m. Fox and Universal are represented by: Richard L. Wynne, Esq. Lori Sinanyan, Esq. JONES DAY 555 S. Flower Street, 50th Floor Los Angeles, CA 90071 About Rhythm and Hues Rhythm and Hues, Inc., aka Rhythm and Hues Studios Inc., filed its Chapter 11 petition (Bankr. C.D. Cal. Case No. 13-13775) in Los Angeles on Feb. 13, 2013, estimating assets ranging from $10 million to $50 million and liabilities ranging from $50 million to $100 million. Judge Neil W. Bason oversees the case. R&H has provided visual effects and animation for more than 150 feature films and has received Academy Awards for Babe and the Golden Compass, an Academy Award nomination for The Chronicles of Narnia and Life of Pi. R&H has a 135,000 square-foot facility in El Segundo, California. It has more than 460 employees. The Debtor is represented by Brian L. Davidoff, Esq., C. John M Melissinos, Esq., and Claire E. Shin, Esq., at Greenberg Glusker, in Los Angeles, California. The petition was signed by John Patrick Hughes, president and CFO. RHYTHM AND HUES: Former Employee Barcelo Commences Class Suit ------------------------------------------------------------- Anthony Barcelo, one of 250 individuals laid off from Hollywood visual effects company Rhythm and Hues, Inc., has commenced a class-action lawsuit via an adversary proceeding filed in Bankruptcy Court alleging WARN Act violations. According to the lawsuit, Barcelo, et al., were terminated without cause, as part of, or as the result of, mass layoffs or plant closings ordered by the Debtor on or about Feb. 11, 2013, and within 30 days of that date, and who were not provided 60 days advance written notice of their terminations, as required by the Worker Adjustment and Retraining Notification Act ("WARN Act"), 29 U.S.C. Sec. 2101 et seq., and the California Labor Code Sec. 1400 et seq. ("CAL WARN Act"). They were not paid their full accrued paid time off under California Labor Code Sec. 201 et seq. The plaintiffs are represented by: Scott E. Blakeley, Esq. Ronald A. Clifford, Esq. BLAKELEY & BLAKELEY LLP 2 Park Plaza, Suite 400 Irvine, CA 92614 Telephone: (949) 260-0611 Facsimile: (949) 260-0613 E-mail: seb@blakeleyllp.com RClifford@blakeleyllp.com - and - Jack A. Raisner, Esq. Rene S. Roupinian, Esq. OUTTEN & GOLDEN LLP 3 Park Avenue, 29th Floor New York, NY 10016 Telephone: (212) 245-1000 E-mail: jar@outtengolden.com rsr@outtengolden.com About Rhythm and Hues Rhythm and Hues, Inc., aka Rhythm and Hues Studios Inc., filed its Chapter 11 petition (Bankr. C.D. Cal. Case No. 13-13775) in Los Angeles on Feb. 13, 2013, estimating assets ranging from $10 million to $50 million and liabilities ranging from $50 million to $100 million. Judge Neil W. Bason oversees the case. R&H has provided visual effects and animation for more than 150 feature films and has received Academy Awards for Babe and the Golden Compass, an Academy Award nomination for The Chronicles of Narnia and Life of Pi. R&H has a 135,000 square-foot facility in El Segundo, California. It has more than 460 employees. The Debtor is represented by Brian L. Davidoff, Esq., C. John M Melissinos, Esq., and Claire E. Shin, Esq., at Greenberg Glusker, in Los Angeles, California. The petition was signed by John Patrick Hughes, president and CFO. Key clients Universal City Studios LLC and Twentieth Century Fox, a division of Twentieth Century Fox Film Corporation, are providing DIP financing. They are represented by Jones Day's Richard L. Wynne, Esq., and Lori Sinanyan, Esq. RHYTHM AND HUES: Ex-Employee Capizzi Files Class Suit ----------------------------------------------------- Thomas C. Capizzi, on behalf of himself and all other persons similarly situated, launched a class action on behalf of Rhythm and Hues, Inc., employees, seeking damages in the amount of 60 days' pay and ERISA benefits by reason of the Debtor's violation of the WARN Act. Mr. Capizzi was terminated as part of, or as a result of, a mass layoff ordered by the Debtor on or about Feb. 10, 2013. The Debtor violated the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Sec. 2101 - 2109. and its California counterpart California Labor Code Sec. 1400 - 1408 by failing to give the employees at least 60 days' advance notice of termination. Capizzi is represented by: David M. Reeder, Esq. REEDER LAW CORPORATION 1880 Century Park East, Suite 1200 Los Angeles, CA 90067 Tel: (310) 557-8911 Fax: (310) 557-0380 E-mail: david@reederlaw.com - and - Stuart J. Miller, Esq. LANKENAU & MILLER, LLP 132 Nassau Street, Suite 423 New York, NY 10038 Tel: (212) 581-5005 F: (212) 581-2122 - and - Mary E. Olsen, Esq. M. Vance McCrary, Esq. David C. Tufts, Esq. THE GARDNER FIRM, P.C. 210 South Washington Avenue Mobile, AL 36602 Tel: (251) 433-8100 Fax: (251) 433-8181 About Rhythm and Hues Rhythm and Hues, Inc., aka Rhythm and Hues Studios Inc., filed its Chapter 11 petition (Bankr. C.D. Cal. Case No. 13-13775) in Los Angeles on Feb. 13, 2013, estimating assets ranging from $10 million to $50 million and liabilities ranging from $50 million to $100 million. Judge Neil W. Bason oversees the case. R&H has provided visual effects and animation for more than 150 feature films and has received Academy Awards for Babe and the Golden Compass, an Academy Award nomination for The Chronicles of Narnia and Life of Pi. R&H has a 135,000 square-foot facility in El Segundo, California. It has more than 460 employees. The Debtor is represented by Brian L. Davidoff, Esq., C. John M Melissinos, Esq., and Claire E. Shin, Esq., at Greenberg Glusker, in Los Angeles, California. The petition was signed by John Patrick Hughes, president and CFO. Key clients Universal City Studios LLC and Twentieth Century Fox, a division of Twentieth Century Fox Film Corporation, are providing DIP financing. They are represented by Jones Day's Richard L. Wynne, Esq., and Lori Sinanyan, Esq. ROTHSTEIN ROSENFELDT: Investor Wants TD Bank Suit in Fla. Court --------------------------------------------------------------- Carolina Bolado of BankruptcyLaw360 reported that the head of the largest feeder fund for Scott Rothstein's Ponzi scheme on Tuesday called TD Bank NA's removal of his state court action to bankruptcy court an attempt to flee a judge already disposed to allowing punitive damages against the bank for its role in the $1.2 billion scheme. The report related that in a hearing before U.S. Bankruptcy Judge Raymond Ray, attorneys for George Levin and his wife Gayla Sue Levin argued that their suits alleging TD Bank was complicit in the scheme belong in Florida state court. About Rothstein Rosenfeldt Scott Rothstein, co-founder of law firm Rothstein Rosenfeldt Adler PA -- http://www.rra-law.com/-- has been suspected of running a $1.2 billion Ponzi scheme. U.S. authorities claimed in a civil forfeiture lawsuit filed November 9, 2009, that Mr. Rothstein, the firm's former chief executive officer, sold investments in non- existent legal settlements. Mr. Rothstein pleaded guilty to five counts of conspiracy and wire fraud on January 27, 2010. Creditors of Rothstein Rosenfeldt Adler signed a petition sending the Florida law firm to bankruptcy (Bankr. S.D. Fla. Case No. 09-34791). The petitioners include Bonnie Barnett, who says she lost $500,000 in legal settlement investments; Aran Development, Inc., which said it lost $345,000 in investments; and trade creditor Universal Legal, identified as a recruitment firm, which said it is owed $7,800. The creditors alleged being owed money invested in lawsuit settlements. Herbert M. Stettin, the state-court appointed receiver for Rothstein Rosenfeldt, was officially carried over as the Chapter 11 trustee in the involuntary bankruptcy case. On June 10, 2010, Mr. Rothstein was sentenced to 50 years in prison. The official committee of unsecured creditors appointed in the case filed a bankruptcy plan and disclosure statement on Aug. 17. The plan was filed and signed by the Committee attorney, Michael Goldberg of Akerman Senterfitt, and not by the court-appointed trustee Herbert Stettin. The plan calls for the creation of a liquidating trust and four classes of claimants. A date for confirmation of the plan was left blank. SALON MEDIA: Incurs $806,000 Net Loss in Dec. 31 Quarter -------------------------------------------------------- Salon Media Group, Inc., reported a net loss of $806,000 on $1.0 million of revenue for the three months ended Dec. 31, 2012, compared with a net loss of $997,000 on $943,000 of revenue for the prior fiscal period. For the nine months ended Dec. 31, 2012, the Company reported a net loss of $3.0 million on $2.7 million of revenue, compared with a net loss of $2.5 million on $2.7 million of revenue for the nie months ended Dec. 31, 2011. The Company's balance sheet at Dec. 31, 2012, showed $1.4 million in total assets, $17.0 million in total liabilities, and a stockholders' deficit of $15.6 million. A copy of the Form 10-Q is available at http://is.gd/zqBNg6 About Salon Media San Francisco, Calif.-based Salon Media Group, Inc., operates the news site, Salon.com. Salon.com covers breaking news, politics, culture, technology and entertainment through investigative reporting, fearless commentary and criticism, and provocative personal essays. Salon.com has bureaus in San Francisco and New York City. * * * As reported in the TCR on July 3, 2012, Burr Pilger Mayer, Inc., in San Francisco, California, expressed substantial doubt about Salon Media's ability to continue as a goinbg concern, citing recurring losses, negative cash flows from operations and accumulated deficit. SCHOOL SPECIALTY: Auction Scheduled for March 25 ------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that School Specialty Inc. will hold an auction March 25 to learn if there is a better offer than selling the business to Bayside Financial LLC in exchange for $95 million in secured debt. The Debtors have signed an asset purchase agreement dated Jan. 28, 2013, with Bayside School Specialty LLC, a company formed by prepetition term loan lenders. Absent higher and better offers, Bayside will purchase the assets for $95 million in the form of a credit bid in an amount of the outstanding obligation under the prepetition term loan and the DIP loans. The report notes that whether Bayside succeeds in buying School Specialty remains to be seen. Holders of subordinated debentures are working on a refinancing to pay off the Bayside debt, thus giving more time to find a buyer or arrange an alternative transaction. According to the report, the bankruptcy court in Delaware gave preliminary approval on Feb. 15 to auction and sale procedures. Bids are first due on March 19. A hearing to approve auction results will take place March 27. The report notes the court made the auction approval "preliminary" in case debenture holders are able to refinance the Bayside debt, thus removing the need for a quick sale. The creditors' committee said in a court filing last week there is "no doubt" the company is worth more than secured debt. The committee wants the court to slow down the sale process. In addition, the committee filed papers last week seeking the ability to file a Chapter 11 plan. The committee wants the hearing on filing a plan to be held on Feb. 25 when financing for the reorganization comes up for approval. Loans Requiring Quick Sale Jacqueline Palank at Daily Bankruptcy Review reports creditors who challenged School Specialty's need for a speedy sale are now targeting the loans that condition the education supply company's access to cash on its upcoming auction. The Debtors have arranged $50 million of DIP financing from Bayside Finance LLC, the agent for the prepetition term loan lenders. The loan consists 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. The Debtors said the DIP facilities are the best and only viable financing options available to the Debtors. 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 Steering Committee of Convertible Noteholders of School Specialty, Inc., holding approximately 99% of the $157.5 million face amount of the unsecured 3.75% Convertible Subordinated Debentures due 2026, has conveyed objections and said that it can provide alternative financing on a non-priming basis to the Debtors. 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% 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. SCOTTSDALE VENETIAN: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Scottsdale Venetian Village, LLC 7595 E. McDonald Drive, #120 Scottsdale, AZ 85250 Bankruptcy Case No.: 13-02150 Chapter 11 Petition Date: February 19, 2013 Court: U.S. Bankruptcy Court District of Arizona (Phoenix) Judge: George B. Nielsen, Jr. Debtor's Counsel: John J. Hebert, Esq. POLSINELLI SHUGHART, P.C. One East Washington Street City Scape Building, Suite 1200 Phoenix, AZ 85004 Tel: (602) 650-2011 Fax: (602) 391-2546 E-mail: jhebert@polsinelli.com - and ? Wesley Denton Ray, Esq. POLSINELLI SHUGHART, P.C. One East Washington Street City Scape Building, Suite 1200 Phoenix, AZ 85004 Tel: (602) 650-2005 Fax: (602) 926-2751 E-mail: wray@polsinelli.com Estimated Assets: $10,000,001 to $50,000,000 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 Ceasar Perez, manager. SEAFRANCE SA: Eurotunnel to Fight Antitrust Review of Ship Buy -------------------------------------------------------------- Stewart Bishop of BankruptcyLaw360 reported that Groupe Eurotunnel SA on Tuesday said it will challenge a U.K. antitrust regulator's stance that its EUR65 million (US$86 million) purchase of three ships from collapsed ferry company SeaFrance SA could lead to higher prices in the market for transport across the English Channel. The report related that the Competition Commission said earlier Tuesday that by adding ferry services to Eurotunnel's existing Channel Tunnel business, the company would boost its already high share of the cross-Channel transport market, restricting competition. SeaFrance is the operator of the undersea rail link between Britain and continental Europe. The Commercial Court in Paris has ordered the full liquidation of SeaFrance on the Jan. 9, 2012. As a result, the company is no longer able to trade. SEARS HOLDINGS: B. Berkowitz Reports 17% Equity Stake at Dec. 31 ---------------------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, Bruce R. Berkowitz and his affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 18,146,573 shares of common stock of Sears Holdings Corporation representing 17.1% of the shares outstanding. A copy of the regulatory filing is available for free at http://is.gd/M6bIjM About Sears Hoffman Estates, Illinois-based Sears Holdings Corporation (Nasdaq: SHLD) -- http://www.searsholdings.com/-- operates full- line and specialty retail stores in the United States and Canada. Sears Holdings operates through its subsidiaries, including Sears, Roebuck and Co. and Kmart Corporation. Sears Holdings also owns a 94% stake in Sears Canada and an 80.1% stake in Orchard Supply Hardware. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has the Country Living collection, which is offered by Sears and Kmart. Kmart Corporation and 37 of its U.S. subsidiaries filed voluntary Chapter 11 petitions (Bankr. N.D. Ill. Lead Case No. 02-02474) on Jan. 22, 2002. Kmart emerged from chapter 11 protection on May 6, 2003, pursuant to the terms of an Amended Joint Plan of Reorganization. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. Kmart completed its merger with Sears on March 24, 2005. The Company's balance sheet at Oct. 27, 2012, showed $21.80 billion in total assets, $17.90 billion in total liabilities and $3.90 billion in total equity. Negative Outlook Standard & Poor's Ratings Services in January 2012 lowered its corporate credit rating on Hoffman Estates, Ill.-based Sears Holdings Corp. to 'CCC+' from 'B'. "We removed the rating from CreditWatch, where we had placed it with negative implications on Dec. 28, 2011. We are also lowering the short-term and commercial paper rating to 'C' from 'B-2'. The rating outlook is negative," S&P said. "The corporate credit rating reflects our projection that Sears' EBITDA will be negative in 2012, given our expectations for continued sales and margin pressure," said Standard & Poor's credit analyst Ana Lai. She added, "We further expect that liquidity could be constrained in 2013 absent a turnaround or substantial asset sales to fund operating losses." Moody's Investors Service in January 2012 lowered Sears Holdings Family and Probability of Default Ratings to B3 from B1. The outlook remains negative. At the same time Moody's affirmed Sears' Speculative Grade Liquidity Rating at SGL-2. The rating action reflects Moody's expectations that Sears will report a significant operating loss in fiscal 2011. Moody's added that the rating action also reflects the company's persistent negative trends in sales, which continue to significantly underperform peers. As reported by the TCR on Dec. 7, 2012, Fitch Ratings has affirmed its long-term Issuer Default Ratings (IDR) on Sears Holdings Corporation (Holdings) and its various subsidiary entities (collectively, Sears) at 'CCC' citing that The magnitude of Sears' decline in profitability and lack of visibility to turn operations around remains a major concern. SECUREALERT INC: Incurs $562,000 Net Loss in Fiscal 2013 Q1 ----------------------------------------------------------- SecureAlert, Inc., reported a net loss of $562,043 on $6.1 million of revenues for the three months ended Dec. 31, 2012, compared with a net loss of $1.6 million on $4.3 million of revenues for the three months ended Dec. 31, 2011. The Company's balance sheet at Dec. 31, 2012, showed $28.4 million in total assets, $23.4 million in total liabilities, and stockholders' equity of $5.0 million. A copy of the Form 10-Q is available at http://is.gd/aqqkl8 Sandy, Utah-based SecureAlert, Inc., markets and deploys offender management programs, combining patented GPS tracking technologies, fulltime 24/7/365 intervention-based monitoring capabilities and case management services. * * * As reported in the TCR on Hansen, Barnett & Maxwell, P.C., in Salt Lake City, Utah, expressed substantial doubt about SecureAlert's ability to continue as a going concern, citing losses, negative cash flows from operating activities, notes payable in default and accumulated deficit. SPEEDY CASH: Higher Debt Service Cues Moody's to Cut CFR to Caa1 ---------------------------------------------------------------- Moody's Investors Service downgraded the Corporate Family Rating of Speedy Cash Holdings Corp. to Caa1 from B3. Subsequently, Moody's assigned a CFR of Caa1 to Speedy Group Holdings Corp. a new holding company formed to issue $125 million of Senior Unsecured Notes. Concurrently, Moody's will withdraw the CFR of Speedy Cash Holdings Corp. In addition, Moody's assigned a Caa3 rating to the Senior Unsecured Notes issued by Speedy Cash and downgraded to Caa1 from B3 the rating on Senior Secured Notes issued by Speedy Cash Intermediate Holdings Corp. The outlook is stable. The assignment of the Caa1 CFR to Speedy Cash as well the downgrade of the Senior Secured Notes to Caa1 are based on the company's aggressive capital practices. Proceeds from the $125 million Senior Unsecured Notes issuance will be used to pay a distribution to the company's equity holders. The new Senior Unsecured Notes issuance results in a significant increase in debt service and accompanying corporate leverage. The increased debt service will divert excess cash flow that could otherwise be used to support growth. The two notch differential between the CFR and Senior Unsecured Notes ratings reflects the position of the Caa3 Senior Unsecured Notes in Speedy Cash's capital structure, as well as the limited unencumbered assets to support the unsecured debt. The Senior Unsecured Notes are structurally subordinated to the Caa1-rated Senior Secured Notes, which are guaranteed by the Company's operating subsidiaries. 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 due to a deterioration of Speedy Cash's profitability, leverage, and/or liquidity position beyond anticipated tolerances. The principal methodology used in this rating was Finance Company Global Rating Methodology published in March 2012. Speedy Cash, based in Wichita, Kansas, is a financial services retailer serving the subprime consumer sector with operations in the US, UK and Canada. SPEEDY CASH: Moody's Downgrades Senior Secured Notes to Caa1 ------------------------------------------------------------ Michael Bathon, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Speedy Cash Holdings Corp., a financial-services retailer serving the subprime consumer sector with operations in the U.S., U.K. and Canada, had its corporate family rating downgraded by Moody's Investors Service Inc. to Caa1 from B3. The agency rates the company's $440 million in senior secured notes at Caa1, lowered from B3. The $125 million senior unsecured notes are rated Caa3. The outlook is stable. The rating difference between the corporate family rating and the senior unsecured notes "reflects the position of the Caa3 senior unsecured notes in Speedy Cash's capital structure, as well as the limited unencumbered assets to support the unsecured debt," Moody's said in a statement Feb. 19. The ratings for the Wichita, Kansas-based company could be upgraded if "the company meaningfully decreases its leverage, improves interest coverage levels and adopts a more conservative financial policy," or downgraded again if there is "deterioration of Speedy Cash's profitability, leverage, and/or liquidity position beyond anticipated tolerances." SPEEDY GROUP: S&P Assigns 'B' ICR; Rates $125MM Notes 'CCC+ ----------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'B' issuer credit rating to Speedy Group Holdings Corp. At the same time, S&P assigned the 'CCC+' issue rating and '6' recovery rating to Speedy Group's $125 million senior unsecured notes. The outlook on the issuer credit rating is stable. The ratings on Speedy Cash Holdings Corp. and its newly formed holding company, Speedy Group, are the same because Speedy Group has no assets except its investment in Speedy Cash. "We view the additional debt as a negative factor for the rating on Speedy Group," said Standard & Poor's credit analyst Igor Koyfman. However, after accounting for Speedy Group's newly issued $125 million senior unsecured notes, S&P expects the company's debt to adjusted EBITDA and adjusted EBITDA to interest expense will be 4.0x-4.5x and 2.0x-2.5x, respectively, in 2013, which S&P believes is commensurate with the issuer credit rating. (S&P adjusts EBITDA for operating leases and nonrecurring items.) The proceeds of the senior unsecured notes were distributed to the company's shareholders. "The stable outlook reflects our expectation that Speedy Group will maintain cash flow coverage ratios commensurate with the rating," said Mr. Koyfman. "We also expect that consumer demand for Speedy Cash's products will remain steady." S&P could lower the rating if Speedy Group's credit measures deteriorate. This could occur if adverse legislative or regulatory actions lead to financial underperformance or if a large debt-funded acquisition does not produce proportionate EBITDA. Specifically, S&P could lower the rating if its expectation for debt to adjusted EBITDA exceeds 5.0x or if the adjusted EBITDA to interest expense declines to less than 2.0x. S&P could raise the rating if Speedy Group establishes a strong financial track record over the next few years and improves its product and geographic diversification. However, S&P don't believe that an upgrade is likely, given the company's aggressive growth strategy and recent shareholder returns. SPIRIT REALTY: TPG-Axon Discloses 7% Equity Stake at Dec. 31 ------------------------------------------------------------ In a Schedule 13G filing with the U.S. Securities and Exchange Commission, TPG-Axon Management LP and its affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 6,568,408 shares of common stock of Spirit Realty Capital, Inc., representing 7.7% of the shares outstanding. A copy of the filing is available for free at http://is.gd/0QsjsK About Spirit Realty Spirit Finance Corporation (now known as Spirit Realty Capital, Inc.) headquartered in Phoenix, Arizona, is a REIT that acquires single-tenant, operationally essential real estate throughout United States to be leased on a long-term, triple-net basis to retail, distribution and service-oriented companies. The Company's balance sheet at Sept. 30, 2012, showed $3.20 billion in total assets, $1.98 billion in total liabilities and $1.22 billion in total stockholders' equity. * * * As reported by the TCR on Jan. 30, 2013, Standard & Poor's Ratings Services placed its 'B' corporate credit rating on Spirit Realty Capital Inc. (Spirit) on CreditWatch with positive implications. "The CreditWatch placement follows the announcement that Spirit will merge with Cole Credit Property Trust II (unrated), a nontraded REIT, in a stock-for-stock exchange," said credit analyst Elizabeth Campbell. "The merged company, which will retain the name Spirit, will become the second-largest publicly traded triple-net-lease REIT in the U.S. with a pro forma enterprise value of approximately $7.1 billion." In the Sept. 15, 2011, edition of the TCR, Moody's Investors Service affirmed the corporate family rating of Spirit Finance Corporation at Caa1. "This rating action reflects Spirit's consistent compliance with its term loan covenants throughout the downturn (despite relatively thin cushion at certain times), as well as the recent debt paydown which, in Moody's view, will help Spirit remain in compliance within the stated covenant limits going forward." SPIRIT REALTY: James Dondero Holds 5% Equity Stake at Dec. 31 ------------------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, James D. Dondero and his affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 4,385,584 shares of common stock of Spirit Realty Capital, Inc., representing 5.2% of the shares outstanding. A copy of the filing is available at: http://is.gd/49bZY9 About Spirit Realty Spirit Finance Corporation (now known as Spirit Realty Capital, Inc.) headquartered in Phoenix, Arizona, is a REIT that acquires single-tenant, operationally essential real estate throughout United States to be leased on a long-term, triple-net basis to retail, distribution and service-oriented companies. The Company's balance sheet at Sept. 30, 2012, showed $3.20 billion in total assets, $1.98 billion in total liabilities and $1.22 billion in total stockholders' equity. * * * As reported by the TCR on Jan. 30, 2013, Standard & Poor's Ratings Services placed its 'B' corporate credit rating on Spirit Realty Capital Inc. (Spirit) on CreditWatch with positive implications. "The CreditWatch placement follows the announcement that Spirit will merge with Cole Credit Property Trust II (unrated), a nontraded REIT, in a stock-for-stock exchange," said credit analyst Elizabeth Campbell. "The merged company, which will retain the name Spirit, will become the second-largest publicly traded triple-net-lease REIT in the U.S. with a pro forma enterprise value of approximately $7.1 billion." In the Sept. 15, 2011, edition of the TCR, Moody's Investors Service affirmed the corporate family rating of Spirit Finance Corporation at Caa1. "This rating action reflects Spirit's consistent compliance with its term loan covenants throughout the downturn (despite relatively thin cushion at certain times), as well as the recent debt paydown which, in Moody's view, will help Spirit remain in compliance within the stated covenant limits going forward." STANFORD INT'L BANK: Investors Sue Antigua, Caribbean Central Bank ------------------------------------------------------------------ Laurel Brubaker Calkins, writing for Bloomberg News, reported that R. Allen Stanford's receiver and investors' committee sued Antigua, the Eastern Caribbean Central Bank and 23 former Stanford Financial Group Co. executives over allegations they aided the financier's $7 billion fraud. Bloomberg said the Official Stanford Investors Committee seeks repayment of at least $90 million in documented loans Stanford made to the dual-island nation of Antigua and Barbuda and accuses its elected officials of having been "Stanford's partners in crime." The nation's leaders shielded Stanford's scheme and traded choice real estate for as much as $230 million in loans that haven't been repaid, according to the lawsuit. "Antigua knowingly provided necessary assistance to Stanford's $7 billion Ponzi scheme and, in exchange, received millions of dollars in loans whose repayment terms Stanford did not enforce,'' the committee said in a complaint filed in Dallas federal court on Feb. 15, according to Bloomberg. "For well over a decade, Antigua was a prime participant in, and beneficiary of, the Stanford Ponzi scheme, and actively protected and shielded Stanford's criminal enterprise from real regulatory scrutiny." Bloomberg recalled that Stanford, 62, was convicted in March of masterminding a Ponzi scheme that defrauded investors through the sale of bogus certificates of deposit at his Antigua-based Stanford International Bank Ltd. He is serving a 110-year sentence in a Florida federal prison as he appeals his verdict and sentence. The investors on Feb. 15 separately sued the Eastern Caribbean Central Bank, which nationalized Stanford's other island financial institution, the Bank of Antigua, after the U.S. Securities and Exchange Commission seized Stanford's enterprise on suspicion of fraud in February 2009, according to Bloomberg. The ECCB in turn parceled out ownership in the bank to the government of Antigua and to other Caribbean banks in what the investors called "a second act of brazen thievery." The head of ECCB's monetary council at the time was Antiguan Minister of Finance Errol Cort, who was both King's supervisor and one of Stanford's personal attorneys, according to court papers. The cases are The Official Stanford Investors Committee v. Antigua and Barbuda, 3:13-cv-0760; The Official Stanford Investors Committee v. Bank of Antigua, 3:13-cv-0762; Janvey v. Alvarado, 3:13-cv-0775. All are in U.S. District Court, Northern District of Texas (Dallas). The main criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston). About Stanford International Bank Domiciled in Antigua, Stanford International Bank Limited -- http://www.stanfordinternationalbank.com/-- is a member of Stanford Private Wealth Management, a global financial services network with US$51 billion in deposits and assets under management or advisement. Stanford Private Wealth Management serves more than 70,000 clients in 140 countries. On Feb. 16, 2009, the United States District Court for the Northern District of Texas, Dallas Division, signed an order appointing Ralph Janvey as receiver for all the assets and records of Stanford International Bank, Ltd., Stanford Group Company, Stanford Capital Management, LLC, Robert Allen Stanford, James M. Davis and Laura Pendergest-Holt and of all entities they own or control. The February 16 order, as amended March 12, 2009, directs the Receiver to, among other things, take control and possession of and to operate the Receivership Estate, and to perform all acts necessary to conserve, hold, manage and preserve the value of the Receivership Estate. STATION CASINOS: S&P Assigns 'CCC+' Rating to $500MM Sr. Notes -------------------------------------------------------------- Standard & Poor's Ratings Services assigned Las Vegas-based Station Casinos LLC's proposed $500 million senior notes its 'CCC+' issue-level rating, with a recovery rating of '6', indicating S&P's expectation for negligible (0% to 10%) recovery for lenders in the event of a payment default. The company plans to use proceeds from the notes issuance in conjunction with its proposed $1.975 billion senior secured credit facility to refinance its existing debt. On Feb. 15, 2013, S&P assigned the proposed senior secured credit facility its 'B' issue-level rating with a recovery rating of '3', indicating S&P's expectation for meaningful (50% to 70%) recovery for lenders in the event of a payment default. Also on Feb. 15, 2013, S&P revised its rating outlook on Station Casinos LLC to positive from stable and affirmed S&P's 'B' corporate credit rating. The revision of the rating outlook to positive from stable reflects S&P's expectation for an improving financial risk profile from the proposed transactions because they eliminate the intermediate term refinancing risk associated with Station's previous capital structure. Additionally, S&P believes EBITDA growth and debt repayment over the next two years could result in a reduction in adjusted debt to EBITDA to below 6x by the end of 2014, which would be in line with a one notch higher rating, in S&P's view. RATINGS LIST Station Casinos LLC Corporate Credit Rating B/Positive/-- New Rating Station Casinos LLC $500M senior notes due 2021 CCC+ Recovery Rating 6 STEVE & BARRY'S: Cerberus Rips Ruling in Malpractice Case --------------------------------------------------------- Eric Hornbeck of BankruptcyLaw360 reported that a Cerberus Capital Management LP affiliate told a New York state appeals court Tuesday that a lower court didn't need expert testimony to find that Paul Hastings LLP mismanaged the private equity firm's bid to acquire the assets of bankrupt retailer Steve & Barry's. The report related that Stuart L. Shapiro of Shapiro Forman Allen & Sava LLP, who represents Cerberus affiliate Ableco Finance LLC, told a five-judge appellate panel during a hearing that Judge Shirley Werner Kornreich should have granted Ableco summary judgment in the legal malpractice case. About Steve & Barry's Headquartered in Port Washington, New York, Steve and Barry's LLC -- http://www.steveandbarrys.com/-- is a national casual apparel retailer that offers high quality merchandise at low prices for men, women and children. Founded in 1985, the company operates 276 anchor and junior anchor shopping center and mall-based locations throughout the U.S. The discount clothing chain's brands include the BITTEN(TM) collection, the first-ever apparel line created by actress and global fashion icon Sarah Jessica Parker, and the STARBURY(TM) collection of athletic and lifestyle apparel and sneakers created with NBA (R) star Stephon Marbury. Steve & Barry's LLC, and 63 affiliates filed separate voluntary petitions under Chapter 11 protection on July 9, 2008 (Bankr. S.D.N.Y. Lead Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Diana G. Adams, United States Trustee for Region 2, has appointed seven members to the Official Committee of Unsecured Creditors in the Debtors' Chapter 11 cases. On Aug. 22, 2008, the Debtors obtained permission from the Court to sell substantially all of their assets for $168 million to a joint venture by Bay Harbour Management and York Capital, BHY S&B Holdings, LLC. Under the terms of the purchase agreement, majority of the Debtors' 276 stores will remain open. Pursuant to the Purchase Agreement, the Court authorized 51 Debtors to change their corporate names. Lead Debtor Steve & Barry's Manhattan LLC (Case No. 08-12579) has been changed to Stone Barn Manhattan LLC. Parent company Steve & Barry's LLC (Case No. 08-12615) is now known as Steel Bolt LLC. When the Debtors filed for bankruptcy, they disclosed $693,492,000 in total assets and $638,086,000 in total debts. SUNGARD DATA: S&P Assigns 'BB' Rating to $2BB Term Loan Due 2020 ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'BB' rating to U.S. software and technology services company SunGard Data Systems Inc.'s proposed issuance of a $2 billion term loan maturing 2020. The recovery rating is '1', indicating S&P's expectation of very high (90% to 100%) recovery in the event of a payment default. Issue proceeds will be used to refinance existing debt. S&P's 'B+' corporate credit rating and other ratings on Wayne, Pa.-based SunGard are unchanged. The ratings on SunGard reflect Standard & Poor's Ratings Services' expectation that the company's "satisfactory" business risk profile and significant base of recurring revenues will continue to support its "highly leveraged" financial risk profile. The ratings also reflect SunGard's adequate liquidity, healthy cash flow generation, and strong position in the fragmented market for investment-support processing software. S&P's stable outlook reflects SunGard's strong market position in diversified market segments and consistent operating performance. S&P's view that the company's private-equity ownership structure is likely to prevent sustained debt reduction currently limits any potential for an upgrade. The company's defensible market positions and high recurring revenue base lessen the potential for credit deterioration. However, sustained leverage in excess of 7x because of acquisitions or shareholder-friendly initiatives could lead to lower ratings. RATINGS LIST SunGard Data Systems Inc. Corporate Credit Rating B+/Stable/-- New Rating SunGard Data Systems Inc. $2 Bil. Sr. Secured Due 2020 BB Recovery Rating 1 T&T ENERGY: Coal Miner Files for Bankruptcy in Kentucky ------------------------------------------------------- Michael Bathon, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that T&T Energy LLC, a Kentucky-based coal miner, sought bankruptcy protection from creditors (Bankr. E.D. Ky. Case No. 13-60231) without citing a reason. The company disclosed debt of about $17 million and assets of about $8.5 million in Chapter 11 documents filed Feb. 19 in U.S. Bankruptcy Court in its hometown of London, Kentucky. The company operates in two active mines and has two new mines and one abandoned mine, all in Kentucky, according to information on data comparison and search engine website findthedata.org. The company had sales of $26.1 million for fiscal 2012, down about 31% from the previous year, court papers show. THOMPSON CREEK: Kevin Douglas Reports 7% Equity Stake at Dec. 31 ---------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Kevin Douglas and his affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 12,011,855 shares of common stock of Thompson Creek Metals Company Inc. representing 7.1% of the shares outstanding. Mr. Douglas previously reported beneficial ownership of 8,500,000 common shares or a 5% equity stake as of Sept. 12, 2012. A copy of the amended filing is available for free at http://is.gd/pHeXA6 About Thompson Creek Metals Thompson Creek Metals Company Inc. is a growing, diversified North American mining company. The Company produces molybdenum at its 100%-owned Thompson Creek Mine in Idaho and Langeloth Metallurgical Facility in Pennsylvania and its 75%-owned Endako Mine in northern British Columbia. The Company is also in the process of constructing the Mt. Milligan copper-gold mine in central British Columbia, which is expected to commence production in 2013. The Company's development projects include the Berg copper-molybdenum-silver property and the Davidson molybdenum property, both located in central British Columbia. Its principal executive office is in Denver, Colorado and its Canadian administrative office is in Vancouver, British Columbia. More information is available at http://www.thompsoncreekmetals.com * * * As reported by the TCR on Aug. 14, 2012, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Denver- based molybdenum miner Thompson Creek Metals Co. to 'CCC+' from 'B-'. "These rating actions follow Thompson Creek's announcement of weaker production and higher cost expectations through next year," said Standard & Poor's credit analyst Donald Marleau. In the May 9, 2012, edition of the TCR, Moody's Investors Service downgraded Thompson Creek Metals Company Inc.'s Corporate Family Rating (CFR) and probability of default rating to Caa1 from B3. Thompson Creek's Caa1 CFR reflects its concentration in molybdenum, relatively small size, heavy reliance currently on two mines, and the need for favorable volume and price trends in order to meet its increasingly aggressive capital expenditure requirements over the next several years. THQ INC: Deal for Take-Two to Take Over WWE Games Approved ---------------------------------------------------------- Michael Bathon, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that THQ Inc., the now broken-up video-game maker, won court approval of a deal terminating its contracts to produce games based on the World Wrestling Entertainment Inc. and also allows Take-Two Interactive Software Inc. to take over development and production of future games for the series. According to the report, U.S. Bankruptcy Judge Mary F. Walrath approved the deal at a hearing Feb. 19 in Wilmington, Delaware, court filings show. THQ's agreement with the maker of the "Grand Theft Auto" video-game franchise, WWE and Yuke's Co., a Japanese- based game-developer that was contracted by THQ to help produce the wrestling video-games, will save the company millions of dollars by reducing claims against the bankrupt video-game maker, according to court documents. The report relates that without the agreement, WWE and Yuke's claims "would certainly exceed $30 million and might exceed $60 million," THQ lawyers said in court papers filed last week. The report relates that under the accord, the WWE and Yuke's contracts will be terminated and the companies will be allowed to enter into new agreements with Take-Two, which will hire THQ's employees who work on the wrestling games, according to court documents. WWE agreed to waive its pre-bankruptcy claims of about $45 million and any claims for annual royalty advances of about $7.5 million for the licensing contract that would have run through 2017. THQ will pay WWE $650,000 in royalty payments for the WWE games sold while under bankruptcy protection. THQ owns about 14 percent of Yuke's equity and has agreed to give the Japanese developer back the 1.55 million shares, about $4.5 million in value, in exchange for a release of Yuke's pre- bankruptcy claims of about $15 million to $20 million. Yuke's will also get a $250,000 royalty payment. 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. 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. Before bankruptcy, Clearlake signed a contract to buy Agoura THQ for a price said to be worth $60 million. After a 22-hour auction with 10 bidders, the top offers brought a combined $72 million from several buyers who will split up the company. Judge Walrath approved the sales in January 2013. Some of the assets didn't sell, including properties the company said could be worth about $29 million. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed five persons to serve in the Official Committee of Unsecured Creditors. The Committee tapped Houlihan Lokey Capital as its financial advisor and investment banker, Landis Rath & Cobb as co-counsel and Andrews Kurth as counsel. THQ INC: Shareholder Official Committee of Equity Holders --------------------------------------------------------- Sami Onur, a shareholder in the THQ Inc., et al.'s Chapter 11 cases, asks the U.S. Bankruptcy Court for the District of Delaware to appoint an official committee of equity interest holders. The shareholder relates that the investors "shareholders" would like the Court to postpone the auction and liquidation of the Company for four weeks until they have the opportunity to more fully develop a detailed plan that will allow the Company to emerge from bankruptcy intact. 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. 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. Before bankruptcy, Clearlake signed a contract to buy Agoura THQ for a price said to be worth $60 million. After a 22-hour auction with 10 bidders, the top offers brought a combined $72 million from several buyers who will split up the company. Judge Walrath approved the sales in January 2013. Some of the assets didn't sell, including properties the company said could be worth about $29 million. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed five persons to serve in the Official Committee of Unsecured Creditors. The Committee tapped Houlihan Lokey Capital as its financial advisor and investment banker, Landis Rath & Cobb as co-counsel and Andrews Kurth as counsel. TRANS NATIONAL COMMS: Wins Court Approval of Sale Procedures ------------------------------------------------------------ Michael Bathon, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Trans National Communications International Inc., a Boston-based reseller of telecommunications services, won court approval of guidelines that will govern the sale of virtually all its assets. The report relates that U.S. Bankruptcy Judge William C. Hillman granted the company's request and scheduled a hearing to approve a sale for March 13, according to papers filed Feb. 15 in bankruptcy court in Boston. TNCI set a March 5 deadline for competing offers to be submitted and will hold a March 11 auction if it receives more than one acceptable bid. TNCI, the report discloses, reached an agreement with Blue Casa Telephone LLC to serve as its "stalking-horse" or lead bidder for substantially all its assets with an offer of about $14 million, court documents show. About Trans National Communications Boston, Massachusetts-based phone and data communication services provider Trans National Communications filed for Chapter 11 bankruptcy protection (Bankr. D. Mass. Case No. 11-19595) on Oct. 9, 2011, estimating $1 million to $10 million in assets and $10 million to $50 million in debts. Judge William C. Hillman oversees the case. Harold B. Murphy, Esq. and Christopher M. Condon, Esq., at Murphy & King, serve as the Debtor's counsel. Verdolino & Lowey, P.C., serves as the Debtor's financial advisors. Mintz Levin Cohn Ferris Glovsky and Popeo PC serves as the Debtor's special telecommunications counsel. The Staten Group and Bruce E. Rogoff, as chief restructuring officer and advisor. Anthony L. Gray, Esq., at Pollack & Flanders, LLP; and Kenneth M. Misken, Esq., at Miles & Stockbridge, P.C., represent the Official Committee of Unsecured Creditors. TRIAD GUARANTY: William Ratliff Discloses 20.5% Equity Stake ------------------------------------------------------------ In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, William T. Ratliff, III, and his affiliates disclosed that, at calendar year 2012, they beneficially own 3,143,444 shares of common stock of Triad Guaranty, Inc., representing 20.5% of the shares outstanding. Mr. Ratliff previously reported beneficial ownership of 3,133,444 common shares or a 20.4% equity stake as of Feb. 13, 2012. A copy of the amended filing is available for free at http://is.gd/D5sgcR About Triad Guaranty Winston-Salem, N.C-based Triad Guaranty Inc. (OTC BB: TGIC) -- http://www.triadguaranty.com/-- is a holding company that historically provided private mortgage insurance coverage in the United States through its wholly-owned subsidiary, Triad Guaranty Insurance Corporation. TGIC is a nationwide mortgage insurer pursuing a run-off of its existing in-force book of business. Going Concern/Bankruptcy Warning "The Company has prepared its financial statements on a going concern basis under GAAP, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. However, there is substantial doubt as to the Company's ability to continue as a going concern. This uncertainty is based on, among other things, Triad's current non- compliance with a provision of the second Corrective Order, the possible failure of Triad to comply with other provisions of the Corrective Orders, and the Company's ability to generate enough income over the term of the remaining run-off to overcome its $802.8 million deficit in assets at September 30, 2012." The positive impact on statutory surplus resulting from the second Corrective Order has resulted in Triad reporting a policyholders' surplus in its SAP financial statements of $224.1 million at Sept. 30, 2012, as opposed to a deficiency in policyholders' surplus of $834.5 million on the same date had the second Corrective Order not been implemented. While the implementation of the second Corrective Order has deferred the institution of an involuntary receivership proceeding, no assurance can be given that the Department will not seek receivership of Triad in the future and there continues to be substantial doubt about the Company's ability to continue as a going concern. The Department may seek receivership of Triad based on Triad's current non-compliance with a provision of the second Corrective Order or for any other violation of the Illinois Insurance Code. Moreover, if the Department determines that Triad is insolvent under applicable law, it would be required to institute a receivership proceeding over Triad. In addition, the Department retains the inherent authority to institute such proceedings against Triad for any reason and Triad has previously agreed not to contest the taking of any such actions. As of Nov. 14, 2012, the Department has not issued any final decision or order as a result of the public hearing and Triad's request to amend the second Corrective Order. Because the subject matter of the hearing specifically included an assessment of whether the Department should implement a different regulatory approach with respect to Triad, including institution of receivership proceedings for the conservation, rehabilitation or liquidation of Triad, the Company believes institution of such a proceeding could be imminent. If this should occur, among other things, TGI could lose control of Triad and could be forced to deconsolidate its financial statements. Any such actions would likely lead TGI to institute a proceeding seeking relief from creditors under U.S. bankruptcy laws, or take other steps to wind up its business and liquidate. See Item 1A, "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 for more information. As reported by the TCR on Dec. 12, 2012, the Illinois Department of Insurance has issued an Administrative Order recommending that Triad Guaranty Insurance Corporation be placed in rehabilitation. Upon entry of the Order of Rehabilitation by the Court, the Director of the Illinois Department of Insurance will be vested with possession and control over all of the assets and liabilities of Triad and Triad Guaranty Inc. will cease to have any oversight or management authority over Triad or its business and affairs. TRINITY COAL: Creditors Force Essar Mining Companies to Ch. 11 -------------------------------------------------------------- Credit Agricole Corporate & Investment Bank, ING Capital LLC and Natixis, New York Branch have submitted documents to the U.S. Bankruptcy Court for the Eastern District of Kentucky to force Trinity Coal Corporation and 15 affiliates, including Frasure Creek Mining LLC, to Chapter 11 bankruptcy and have a trustee replace management of the coal mining company. The three entities say they are owed a total of $104 million on account loans provided to Trinity, a wholly owned subsidiary of privately held multinational conglomerate Essar Global Limited. Credit Agricole, as administrative agent, issued a notice of acceleration and demand for payment on Feb. 11, 2013 as a result of Trinity's defaults. The lenders sent Trinity Coal to Chapter 11 after the company's management refused to develop a comprehensive restructuring plan or even cooperate with lenders despite defaults and its state of serious distress. Credit Agricole is seeking joint administration of the involuntary Chapter 11 cases. A hearing was scheduled for Feb. 20, 2013 at 9:30 a.m. Rapid Deterioration The lenders claim that Trinity's business operations and financial condition have been in steady decline. Trinity has been in default under the Credit Agreement since August 2011, and ceased making its scheduled quarterly principal and accrued interest payments to Credit Agricole in June 2012. Taft A. McKinstry, Esq., at Fowler Bell PLLC, counsel to the petitioning creditors, relates that as of Dec. 31, 2012, Trinity had over $33 million of trade accounts payable, with nearly all 96% over 60 days past due. Despite representations by Trinity that Essar would inject needed capital, Trinity continued to cannibalize its inventory and accounts receivables, and has not reduced its liabilities to its creditors. Instead, Trinity's accounts payable have continued to rise by $10 million over the past 14 months and the value of its inventory and accounts receivable has been vastly depleted. Trinity's failure to pay its creditors has resulted in over 50 lawsuits being filed against Trinity, according to the lenders. The lenders said they asked -- but Trinity refused -- to retain counsel or restructuring advisors to provide sound advice concerning its creditors and a comprehensive restructuring. Three of Trinity's largest trade creditors -- Austin Powder Company, Whayne Supply Company and Cecil I. Walker Machinery Co. -- are owed almost $20 million. On Feb. 14, 2013, Austin Powder, Whayne, and Walker filed an involuntary petition for relief under Chapter 11 (Bankr. E.D. Ky. Case No. 13-50335) against Frasure Creek Mining, LLC. On Feb. 19, 2013, Credit Agricole, ING Capital and Natixis joined as petitioning creditors. Mismanagement Mr. McKinstry notes that Essar controls the management of Trinity by virtue of its selection and oversight of Trinity's officers and board of directors. In mid-2011, Trinity's entire executive management team, led by Chief Executive Officer Ken Woodring, all resigned. Since then, Trinity's management and board of directors have been constant state of turnover. Since 2011, Trinity has had five CEOs, three CFOs, six COOs, and three general counsels. "The high rate of turnover in Trinity's management suggests that Essar is interfering with Trinity's management's ability to exercise control and restructure Trinity," the lenders aver. Acting General Counsel Jonathan Levy abruptly resigned from his post in January 2013. On Jan. 25, Mr. Levy sent an e-mail to a contractor, stating "I honestly believe the whole thing [Trinity] is going to collapse. [CFO] Rakesh [Kapur] has no idea what he is doing and Vijay [Modi] is useless." According to Credit Agricole, on several occasions Trinity's current management has presented materially misleading cash forecasts for Trinity. The forecasts showed tens of millions of dollars of cash infusions from July 2012 through January 2013, but only $3 million was actually injected into Trinity in December 2012. As of Feb. 8, 2013, approximately $1.7 million of Trinity's total receivables of $2.5 million are due from Essar Steel Algoma Inc, which is an "insider" affiliate -- a further evidence of a conflict between Essar and Trinity, the lenders point out. About Trinity Coal Trinity Coal Corp. is a coal mining company that owns coal deposits located in the Appalachian region of the eastern United States, specifically, in Breathitt, Floyd, Knott Magoffin, and Perry Counties in eastern Kentucky and in Boone, Fayette, Mingo, McDowell and Wyoming Counties in West Virginia. Trinity's coal mining operations are organized into six distinct coal mining complexes. Three complexes are located in Kentucky and are referred to as Prater Branch Resources, Little Elk Mining and Levisa Fork. The Kentucky Operations produced compliance and low sulfur steam coal. Three complexes are located in West Virginia and are referred to as Deep Water Resources, North Springs Resources and Falcon Resources. TRINITY COAL: Creditors Want Trustee, Offer $15MM for Wind-Down --------------------------------------------------------------- Creditors who signed the involuntary Chapter 11 petition for Frasure Creek Mining, LLC, Trinity Coal Corporation and other affiliates ask the bankruptcy court to order the appointment of a Chapter 11 trustee for the Debtors during the "gap" period prior to entry of an order for relief in the alleged debtors' involuntary cases and on a permanent basis. Credit Agricole Corporate & Investment Bank, ING Capital LLC and Natixis, New York Branch, owed $104 million on defaulted loans, say there's cause for appointment of a Chapter 11 trustee due to the gross mismanagement, dishonesty, and failure to fulfill fiduciary responsibilities by current management of the Debtors. "Since 2011, Trinity has been in a state of serious financial distress. The gross mismanagement of Trinity's affairs by its current management has put Trinity in a precarious financial situation. Trinity has failed to pay its creditors, many of whom have now taken legal action against Trinity by filing lawsuits to collect past due amounts. Certain of Trinity's creditors have also commenced an involuntary petition for relief under Chapter 11 of the Bankruptcy Code against Frasure Creek Mining, LLC. Trinity's liabilities continue to grow, with Trinity's accounts payable growing by approximately $10 million to $31,948,148.59, from December 2011 to February 4, 2013," explains Taft A. McKinstry, Esq., at Fowler Bell PLLC, counsel to the petitioning creditors. "Trinity's failure to resolve its defaulted obligations owed to one of its secured creditors puts Trinity at risk of losing certain of its heavy equipment that is necessary for it to continue its mining operations and complete reclamation activities required by law. Trinity also faces additional funded liability of up to $49 million under the Credit Agreement if the letters of credit securing its surety bonds are drawn by Trinity's sureties. The continuous turnover among Trinity's officers and the failure of Trinity's management to retain restructuring advisors to develop a comprehensive restructuring plan have caused Credit Agricole to lose all confidence in Trinity's current management." $15 Million for Wind Down The lenders say that should a trustee be appointed, Credit Agricole and ING have secured commitments for approximately $15 million in new postpetition financing for Trinity to aid in an orderly liquidation of Trinity's assets that maximizes potential recoveries for all its creditor constituencies. In addition, in the event a trustee is appointed, each of the Lenders have also committed to a postpetition extension of Trinity's approximately $49 million in outstanding, unfunded Letters of Credit. Given all of the gross missteps committed by Essar and Trinity's current management, however, the Lenders are not willing to commit to the Postpetition Financing and the L/C Rollup unless an independent fiduciary is given complete control over Trinity's management. About Trinity Coal Trinity Coal Corp. is a coal mining company that owns coal deposits located in the Appalachian region of the eastern United States, specifically, in Breathitt, Floyd, Knott Magoffin, and Perry Counties in eastern Kentucky and in Boone, Fayette, Mingo, McDowell and Wyoming Counties in West Virginia. Trinity's coal mining operations are organized into six distinct coal mining complexes. Three complexes are located in Kentucky and are referred to as Prater Branch Resources, Little Elk Mining and Levisa Fork. The Kentucky Operations produced compliance and low sulfur steam coal. Three complexes are located in West Virginia and are referred to as Deep Water Resources, North Springs Resources and Falcon Resources. Trinity is a wholly owned subsidiary of privately held multinational conglomerate Essar Global Limited. Credit Agricole Corporate & Investment Bank, ING Capital LLC and Natixis, New York Branch filed an involuntary petition for relief under Chapter 11 against Trinity Coal Corporation and 15 affiliates (Bankr. E.D. Ky. Lead Case No. 13-50364). The three entities say they are owed a total of $104 million on account loans provided to Trinity. On Feb. 14, 2013, Austin Powder Company, Whayne Supply Company and Cecil I. Walker Machinery Co. filed an involuntary petition for relief under Chapter 11 (Bankr. E.D. Ky. Case No. 13-50335) against Frasure Creek Mining, LLC. On Feb. 19, 2013, Credit Agricole, ING Capital and Natixis joined as petitioning creditors. TRINITY COAL: Involuntary Chapter 11 Case Summary ------------------------------------------------- Entities subject to Involuntary Chapter 11 Petition: Involuntary Debtor Case No. ------------------ -------- Trinity Coal Corporation 13-50364 4978 Teays Valley Road Scott Depot, WV 25560 Frasure Creek Mining LLC 13-50370 Trinity Parent Corporation 13-50372 Trinity Coal Marketing, LLC 13-50373 Little Elk Mining Company, LLC 13-50374 Trinity Coal Partners, LLC 13-50375 Hughes Creek Terminal, LLC 13-50376 Bear Fork Resources, LLC 13-50377 Banner Coal Terminal, LLC 13-50378 Falcon Resources, LLC 13-50379 Prater Branch Resources, LLC 13-50380 Deep Water Resources, LLC 13-50381 North Springs Resources, LLC 13-50382 Levisa Fork Resources, LLC 13-50383 Trinity RMG Holdings, LLC 13-50384 RMG, Inc. 13-50385 Involuntary Petition Date: February 19, 2013 Bankruptcy Court: United States Bankruptcy Court Eastern District of Kentucky (Lexington) Counsel to Petitioning Creditors: Arsalan Muhammad, Esq. Charles A Beckham, Jr., Esq. Christopher L. Castillo, Esq. HAYNES AND BOONE, LLP 1221 McKinney, Suite 2100 Houston, TX 77010 Tel: 713-547-2000 Email: arsalan.muhammad@haynesboone.com Charles.Beckham@haynesboone.com christopher.castillo@haynesboone.com - and - Taft A. McKinstry, Esq. 300 West Vine Street, Suite 600 Lexington, KY 40507 Tel: (859) 252-6700 E-mail: bankruptcy@fowlerlaw.com Petitioning Creditors Claim Amount --------------------- ------------ Credit Agricole Corporate & Investment Bank $73,235,128 1301 Avenue of the Americas New York, NY 10019 ING Capital LLC $18,281,317 1325 Avenue of the Americas New York, NY 10019 Natixis, New York Branch $12,824,722 1251 Avenue of the Americas New York, NY 10019 ------------ $104,341,167 According to the involuntary Chapter 11 petition, ING Capital also hired the law firm of Patton Boggs LLP in Dallas while Natixis retained Reed Smith of New York. US POSTAL: Congress Urged to Act Swiftly to Restore Stability ------------------------------------------------------------- Quad/Graphics Chairman, President & CEO Joel Quadracci urges Congress to move swiftly to put the U.S. Postal Service (USPS) on a path to sustainability, noting that the $65 billion Postal Service is at the core of a $1.3 trillion mailing industry that provides family-supporting jobs for 8.4 million Americans, nearly 200,000 of whom live and work in Wisconsin. Mr. Quadracci shared his insights on the importance of the U.S. Postal Service to private industry and the U.S. economy at the Senate Homeland Security and Governmental Affairs Committee's hearing on "Solutions to the Crisis Facing the U.S. Postal Service" on February 13. He was the only printer and member of private industry invited to testify. "The Postal Service is the backbone for a large portion of the private sector and plays an integral role in our economy, extending across every type of mailer and the printing, paper and technology industries that supply them," Mr. Quadracci said in written testimony provided in advance of the hearing. "These businesses support services in a marketplace that include cost- effective advertising, magazines, catalogs, e-commerce and prescription drug fulfillment, as well as what is still a huge amount of statements, bills and greeting cards, and an expanding package delivery segment." Mr. Quadracci believes ensuring the viability of the USPS is not a partisan issue and that Congress has the ability to not only save a proud American institution, but also support and promote a vibrant private sector. The businessman's home state of Wisconsin is in a unique position with respect to meaningful postal reform as both its senators serve on the Homeland Security and Government Affairs Committee. In fact, Senator Tammy Baldwin (D-Wisconsin) met directly with Mr. Quadracci following the hearing to better understand the importance of the Postal Service to the Wisconsin business community and the U.S. economy as a whole. During his oral testimony, Mr. Quadracci said that while print is changing and will continue to evolve in our multichannel world, it is still an effective marketing and communications medium -- and one that connects and integrates well with other media channels. However, as marketers lose confidence in the long-term sustainability of the Postal Service, they may choose to redirect their marketing spend to other channels. "The uncertainty is there and they're not sure what to do," he said of marketers who are seeking the best channels for maximizing response rates and revenues. If postage costs begin to outweigh the benefits from increased response, for example, marketers may move away from printed mailings to other media channels, he explained. "The competition is real and it is out there," Mr. Quadracci told the committee. Among the core elements of postal reform Mr. Quadracci would like Congress to implement are: -- Ensuring the USPS has the authority to streamline its operations. The USPS has infrastructure and capacity to handle and process 300 billion pieces of mail annually. According to USPS estimates, mail volume will only be 153 billion pieces in 2013. It's important that the USPS be able to right-size its operations, Mr. Quadracci said. -- Lengthening the amount of time the USPS has to pre-fund healthcare benefits for retirees. The current 10-year amortization schedule has resulted in unaffordable $5.5 billion annual payments on which the USPS has already defaulted twice. Extending payments over a longer period of time would relieve some short-term financial pressure while still enabling the USPS to meet its retiree benefit obligations long-term. -- Providing the USPS the flexibility to manage escalating healthcare costs without disadvantaging employees or retirees. Mr. Quadracci shared that it is possible to improve the quality of healthcare while reducing costs. "Too much of healthcare talk has been about who pays for what as opposed to how do you pull the costs out. There are ways to pull out costs," Mr. Quadracci said, citing Quad/Graphics' own success with focusing on preventive care through its 23-year-old QuadMed subsidiary. -- Addressing volume declines by maintaining the postage rate caps and pricing flexibility the USPS needs to develop new products and services and, ultimately, attract more business. Mr. Quadracci noted that the USPS' use of pricing incentives to promote QR-coded mail works. He cited the example of a client who used a QR code on a mailer to link shoppers to a product demonstration video. The client saw an approximate 20 percent increase in sales of the featured product. Acknowledging that postal reform is a complex issue, Quadracci nonetheless urged the committee to move forward as fast as possible to solidify the USPS' future. The long-term success of the USPS is critically important for the United States, he said. About Quad/Graphics Quad/Graphics -- http://www.QG.com-- is a global provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail ad inserts, direct mail, books, directories, and commercial and specialty products, including in-store solutions. Headquartered in Sussex, Wis. (just west of Milwaukee), the Company has print-production facilities as well as other support locations throughout North America, Latin America and Europe. About U.S. Postal Service A self-supporting government enterprise, the U.S. Postal Service is the only delivery service that reaches every address in the nation, 151 million residences, businesses and Post Office Boxes. The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations. With 32,000 retail locations and the most frequently visited website in the federal government, usps.com, the Postal Service has annual revenue of more than $65 billion and delivers nearly 40 % of the world's mail. If it were a private sector company, the U.S. Postal Service would rank 35th in the 2011 Fortune 500. In 2011, the U.S. Postal Service was ranked number one in overall service performance, out of the top 20 wealthiest nations in the world, Oxford Strategic Consulting. Black Enterprise and Hispanic Business magazines ranked the Postal Service as a leader in workforce diversity. The Postal Service has been named the Most Trusted Government Agency for six years and the sixth Most Trusted Business in the nation by the Ponemon Institute. The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations. The U.S. Postal Service ended the first three months of its 2012 fiscal year (Oct. 1 - Dec. 31, 2011) with a net loss of $3.3 billion. Management expects large losses to continue until the Postal Service has implemented its network re-design and down- sizing and has restructured its healthcare program. Additionally, the return to financial stability requires legislation which gives the Postal Service typical commercial freedoms, including delivery flexibility, returns over $10 billion of amounts overpaid to the Federal Government and resolves the need to prefund retiree healthcare at rates not assessed any other entity in the United States. To return to profitability, CEO Patrick Donahoe has advanced a plan to reduce annual costs by $20 billion by 2015. The plan includes continued aggressive actions to generate additional revenue and reduce operating expenses. To reach the goal, the Postal Service also needs changes in the law. "Passage of legislation is urgently needed that provides the Postal Service with the speed and flexibility needed to cut costs that are not under our control, including employee health care costs," Donahoe said in February 2012 "The changes will give the Postal Service a bright future and provide the nation with affordable and reliable delivery for generations to come." US POSTAL: CAGW Balks at Plan to Develop Clothing Line ------------------------------------------------------ On February 20, 2013, in response to the United States Postal Service's (USPS) announcement that it plans to develop a line of "smart" clothing, CAGW excoriated postal management for its misguided attempt to step into non-postal, commercial markets when the organization is facing bankruptcy and is on the verge of needing a taxpayer bailout. In its announcement, USPS executives confirmed that they have entered into a licensing agreement with the Cleveland-based Wahconah Group to market a line of men's fashion called "Rain Heat & Snow," which will use technology to create "smart apparel," also known as "wearable electronics." Last week, CAGW commended USPS management for making a tough decision to drop back to a five-delivery service for first-class mail in order to save $2 billion annually. This week, CAGW is lambasting the same management team for taking its eye off the ball and engaging in some Tron-like fantasy in which a nearly bankrupt entity launches an artificially-intelligent clothing line. Not only is fashion, high-tech or not, explicitly not a postal product, the apparel sector is mature, highly competitive, and well-served by some of most popular, profitable, and competitive companies on the planet. "It is absurd for USPS managers to believe that the organization should try to compete with some of the most nimble, innovative, cutting edge companies in the world," said CAGW President Tom Schatz. "Maybe they are not aware that Nike, Reebok, Champion, Columbia, The North Face, Patagonia, and many others are already well ahead in the manufacturing of high-tech clothing. There is nothing remotely postal-related about the development of a clothing line. This effort should be dropped and postal management should refocus all of its energy on the daunting task ahead of moving the USPS's aging superstructure toward solvency. Instead of dabbling in high-tech wearables, the USPS ought to be worried about high-tech mail delivery. With losses of $8.5 billion in fiscal year (FY) 2010, $5.1 billion in FY 2011, and $15.6 billion in FY 2012, the USPS teeters on the brink of financial ruin." "This is nothing more than an attempt to find some 'make-work' projects for the USPS hundreds of thousands of excess USPS employees. The project will certainly create jobs in the writers' rooms of late night comedians who need material for their monologues," Schatz concluded. Citizens Against Government Waste -- http://www.cagw.org-- is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government. About U.S. Postal Service A self-supporting government enterprise, the U.S. Postal Service is the only delivery service that reaches every address in the nation, 151 million residences, businesses and Post Office Boxes. The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations. With 32,000 retail locations and the most frequently visited website in the federal government, usps.com, the Postal Service has annual revenue of more than $65 billion and delivers nearly 40 % of the world's mail. If it were a private sector company, the U.S. Postal Service would rank 35th in the 2011 Fortune 500. In 2011, the U.S. Postal Service was ranked number one in overall service performance, out of the top 20 wealthiest nations in the world, Oxford Strategic Consulting. Black Enterprise and Hispanic Business magazines ranked the Postal Service as a leader in workforce diversity. The Postal Service has been named the Most Trusted Government Agency for six years and the sixth Most Trusted Business in the nation by the Ponemon Institute. The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations. The U.S. Postal Service ended the first three months of its 2012 fiscal year (Oct. 1 - Dec. 31, 2011) with a net loss of $3.3 billion. Management expects large losses to continue until the Postal Service has implemented its network re-design and down- sizing and has restructured its healthcare program. Additionally, the return to financial stability requires legislation which gives the Postal Service typical commercial freedoms, including delivery flexibility, returns over $10 billion of amounts overpaid to the Federal Government and resolves the need to prefund retiree healthcare at rates not assessed any other entity in the United States. To return to profitability, CEO Patrick Donahoe has advanced a plan to reduce annual costs by $20 billion by 2015. The plan includes continued aggressive actions to generate additional revenue and reduce operating expenses. To reach the goal, the Postal Service also needs changes in the law. "Passage of legislation is urgently needed that provides the Postal Service with the speed and flexibility needed to cut costs that are not under our control, including employee health care costs," Donahoe said in February 2012 "The changes will give the Postal Service a bright future and provide the nation with affordable and reliable delivery for generations to come." USEC INC: Van Eck Discloses 5.6% Equity Stake as of Dec. 31 ----------------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, Van Eck Associates Corporation disclosed that, as of Dec. 31, 2012, it beneficially owns 6,952,042 common shares of USEC Inc. representing 5.6% of the shares outstanding. A copy of the filing is available for free at http://is.gd/D5u9Kw About USEC Inc. Headquartered in Bethesda, Maryland, USEC Inc. (NYSE: USU) -- http://www.usec.com/-- supplies enriched uranium fuel for commercial nuclear power plants. The Company reported a net loss of $540.70 million in 2011, compared with net income of $7.50 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $3.76 billion in total assets, $3.11 billion in total liabilities, and $652.2 million in stockholders' equity. Bankruptcy Warning "A delisting of our common stock by the NYSE and the failure of our common stock to be listed on another national exchange could have significant adverse consequences. A delisting would likely have a negative effect on the price of our common stock and would impair shareholders' ability to sell or purchase our common stock. As of September 30, 2012, we had $530 million of convertible notes outstanding. A "fundamental change" is triggered under the terms of our convertible notes if our shares of common stock are not listed for trading on any of the NYSE, the American Stock Exchange, the NASDAQ Global Market or the NASDAQ Global Select Market. Our receipt of a NYSE continued listing standards notification ... did not trigger a fundamental change. If a fundamental change occurs under the convertible notes, the holders of the notes can require us to repurchase the notes in full for cash. We do not have adequate cash to repurchase the notes. In addition, the occurrence of a fundamental change under the convertible notes that permits the holders of the convertible notes to require a repurchase for cash is an event of default under our credit facility. Accordingly, our inability to maintain the continued listing of our common stock on the NYSE or another national exchange would have a material adverse effect on our liquidity and financial condition and would likely require us to file for bankruptcy protection," according to the Company's quarterly report for the period ended Sept. 30, 2012. * * * USEC Inc. carries 'Caa1' corporate and probability of default ratings, with "developing" outlook, from Moody's. As reported by the TCR on Aug. 17, 2012, Standard & Poor's Ratings Services lowered its ratings on Bethesda, Md.-based USEC Inc., including the corporate credit rating to 'CCC' from 'CCC+'. "The downgrade reflects our assessment of USEC's long-term viability after the company publicly stated that it will be difficult to continue enrichment operations at the Paducah Gaseous Diffusion Plant after a one-year multiparty agreement to extend operations expires in May 2013," said Standard & Poor's credit analyst Maurice S. Austin. USG CORP: Prem Watsa Discloses 7.6% Equity Stake at Dec. 31 ----------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Prem Watsa and his affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 8,814,730 shares of common stock of USG Corporation representing 7.6% of the shares outstanding. A copy of the filing is available for free at: http://is.gd/0KLoE4 About USG Corporation Based in Chicago, Ill., USG Corporation -- http://www.usg.com/-- through its subsidiaries, manufactures and distributes building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The company filed for Chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). When the Debtors filed for protection from their creditors, they disclosed $3.252 billion in assets and $2.739 billion in liabilities. The Debtors emerged from bankruptcy protection on June 20, 2006. For the 12 months ended Dec. 31, 2012, the Company incurred a net loss of $125 million on $3.22 billion of net sales, as compared with a net loss of $390 million on $2.91 billion of net sales during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $3.72 billion in total assets, $3.70 billion in total liabilities and $19 million in total stockholders' equity including noncontrolling interest. * * * As reported by the TCR on Aug. 15, 2011, Standard & Poor's Ratings Services lowered its corporate credit rating on USG Corp. to 'B' from 'B+'. "The downgrade reflects our expectation that USG's operating results and cash flow are likely to be strained over the next year due to the ongoing depressed level of housing starts and still- weak commercial construction activity," said Standard & Poor's credit analyst Thomas Nadramia. "It is now more likely, in our view, that any meaningful recovery in housing starts may be deferred until late 2012 or into 2013. As a result, the risk that USG's liquidity in the next 12 to 24 months will continue to erode (and be less than we incorporated into our prior ratings) has increased. The ratings previously incorporated a greater improvement in housing starts, which would have enabled USG to reduce its negative operating cash flow in 2012 and achieve breakeven cash flow or better by 2013." In the Sept. 11, 2012, edition of the TCR, Fitch Ratings has affirmed USG Corporation's (NYSE: USG) ratings, including the company's Issuer Default Rating (IDR) at 'B-'. The Rating Outlook has been revised to Stable from Negative. The ratings for USG reflect the company's leading market position in all of its businesses, strong brand recognition, its large manufacturing network and sizeable gypsum reserves. Risks include the cyclicality of the company's end-markets, excess capacity currently in place in the U.S. wallboard industry, volatility of wallboard pricing and shipments and the company's high leverage. As reported by the TCR on Dec. 5, 2012, Moody's Investors Service affirmed USG Corporation's Caa1 Corporate Family Rating and Caa1 Probability of Default Rating. USG's Caa1 Corporate Family Rating reflects its high debt leverage characteristics, despite Moody's expectation of improving operating performance. UTSTARCOM INC: Artis Capital Lowers Stake to 1% at Dec. 31 ---------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Artis Capital Management, L.P., disclosed that, as of Dec. 31, 2012, it beneficially owns 2,118,911 shares of common stock of UTStarcom Holdings Corp. representing 1.8% based on 117,068,276 Shares of Common Stock outstanding, as reported in the Company's Ex 99.A to Form SC TO I/A filed with the Securities and Exchange Commission on Jan. 10, 2013. Artis Capital previously reported beneficial ownership of 9,935,518 common shares or a 6.4% equity stake as of Dec. 31, 2011. A copy of the amended filing is available at http://is.gd/autpQB 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. VEYANCE TECHNOLOGIES: S&P Assigns 'B' CCR; Outlook Stable --------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B' corporate credit rating to Fairlawn, Ohio-based Veyance Technologies Inc. The outlook is stable. At the same time, S&P assigned a 'B' issue-level rating (the same as the corporate credit rating) to the company's proposed senior secured debt, which includes a $75 million revolver and $1.125 billion term loan. The recovery rating is '3', indicating S&P's expectation of meaningful (50% to 70%) recovery in a payment default scenario. S&P also assigned ratings to the company's existing credit facilities. S&P rated the $925 million first-lien debt, which includes a $75 million revolver, 'B+' (one notch higher than the corporate credit rating). The recovery rating is '2', indicating S&P's expectation of substantial (70%-90%) recovery in the event of a payment default scenario. S&P rated the company's $360 million second-lien term loan 'B-' (one notch lower than the corporate credit rating). The recovery rating on this debt is '5', indicating S&P's expectation of modest (10%-30%) recovery. The ratings on Veyance reflect S&P's assessment of the company's business risk profile as "weak," characterized by its presence in competitive and cyclical markets modestly offset by its leading market position, and financial risk profile as "highly leveraged." The company is a global manufacturer of rubber and thermoplastic products serving mining, industrial, agricultural, and other end markets. "We expect Veyance's revenues to grow modestly in 2013 as demand from energy and international markets offsets softness in mining," said Standard & Poor's credit analyst Sarah Wyeth. S&P also expects the company's recent price increases and cost reductions to continue to support a low-double-digit EBITDA margin. This should result in total debt to EBITDA of 5x-6x, within S&P's expectation for the rating. Risks to S&P's forecast include the volatility of raw material prices and the company's ability to pass on these costs in an economic slowdown. Veyance competes in the highly competitive and cyclical rubber products industry. S&P believes the company will maintain its leading market positions--the company is No. 1 or No. 2 in the majority of its revenues--and good geographic diversity, with about half of its revenues outside of the U.S. The company's ability to use the Goodyear brand for the foreseeable future supports credit quality. Offsetting these positive characteristics are Veyance's exposure to raw material costs, specifically rubber, and its concentration of revenues in mining markets (more than 30% of revenues). However, with the gradual economic recovery and improving demand in some markets, the company has successfully raised prices and achieved margins of about 13% in 2012, up from 8% in 2008. S&P believes cost reductions taken during the downturn will continue to support margins of more than 10%, and that margins should be less volatile than in the past due to the company's improved ability to pass on raw material price increases. In 2013, S&P expects the company to invest in capital projects to expand its conveyer belt capacity. This should result in about $50 million in free cash flow. Weaker profitability and working capital investment have resulted in volatile free cash flow in the past and present some risk to our forecast. Veyance has a highly leveraged financial risk profile. As of Sept. 30, 2012, total debt to EBITDA was about 5x, and funds from operations (FFO) to total debt was about 12%, compared with S&P's expectations of 5x-6x and 10%, respectively, for the rating. S&P expect credit measures to improve modestly in 2013 as the company uses free cash flow to reduce debt. S&P do not assume large debt- financed acquisitions in its rating analysis. The stable outlooks reflects the company's recent success in passing on raw material prices and reducing costs, improving EBITDA margin to about 13%, which S&P expects to continue. Although the relatively new pricing strategy is untested in a recessionary environment, S&P expects stable demand in some end markets to support the current level of profitability over the next one to two years. As a result, the company likely will be able to generate positive free cash flow and gradually reduce leverage over the next 12-18 months. S&P could lower the ratings if leverage rises to more than 7x and S&P expects it to remain at this level for a prolonged period. This could occur if, for instance, a global economic downturn results in revenues declining 5% and margins declining to 8% due to higher overhead costs and pricing pressure. If the company reduces leverage to less than 5x, establishes a longer track record of double-digit margins and positive free cash flow, and adopts a financial policy in line with a higher rating, S&P could raise the ratings. VIRGINIA GOLF: Case Summary & 8 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Virginia Golf, LLC 11700 Hogans Alley Chester, VA 23836 Bankruptcy Case No.: 13-30814 Chapter 11 Petition Date: February 18, 2013 Court: U.S. Bankruptcy Court Eastern District of Virginia (Richmond) Judge: Douglas O. Tice, Jr. Debtor's Counsel: James E. Kane, Esq. KANE & PAPA, P.C. 1313 East Cary Street P.O. Box 508 Richmond, VA 23218-0508 Tel: (804) 225-9500 Fax: (804) 225-9598 E-mail: jkane@kaneandpapa.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its eight largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/vaeb13-30814.pdf The petition was signed by Ronald K. Kelley, managing member. W3 CO.: Moody's Rates New $330 Million Credit Facility 'B1' ----------------------------------------------------------- Moody's Investors Service affirmed the B2 Corporate Family Rating of W3 Co., a holding company of Total Safety U.S., Inc. and upgraded its Probability of Default Rating to B2-PD from B3-PD. Concurrently, Moody's assigned B1 ratings to the company's proposed $330 million first lien credit facilities and a Caa1 rating to the proposed $115 million second lien term loan. The outlook remains stable. Proceeds from the proposed credit facilities will be used to repay $272 million of existing first lien debt and a $52 million Holdco PIK note held by shareholders, as well as fund a $26 million dividend to shareholders and $22 million in earnout payments. The recapitalization will increase Total Safety's leverage by close to 1.5 times Debt/EBITDA to 6.5 times on a pro forma basis as of September 30, 2012. However the company's earnings stability, improved liquidity and largely unchanged interest coverage in the upper 1 times (EBITDA-CapEx)/interest expense support the B2 rating. Affirmations and revisions: Issuer: W3 Co. Corporate Family Rating, Affirmed at B2 Probability of Default Rating, Upgraded to B2-PD from B3-PD Assignments: Issuer: W3 Co. $60 Million First Lien Revolving Credit Facility due 2018, Assigned B1 (LGD3 -- 37%) $270 Million First Lien Term Loan due 2020, Assigned B1 (LGD3 -- 37%) $115 Million Second Lien Term Loan due 2020, Assigned Caa1 (LGD5 -- 87%) The ratings are subject to the conclusion of the proposed transaction and Moody's review of final documentation. Upon completion of the recapitalization, the ratings on the existing credit facilities will be withdrawn. Ratings Rationale: The B2 Corporate Family Rating is constrained by the Total Safety's high leverage, small size relative to rated services industry peers, end market concentration, acquisitive financial philosophy and event risk associated with private equity ownership. Including the impact of the 2013 dividend recapitalization, Moody's expects the company's leverage to reach mid-5 times debt/EBITDA by the end of 2013 and coverage to be in the upper 1 times (EBITDA-CapEx)/interest expense range. Total Safety's relatively weak credit metrics are offset by its good market position and relative earnings stability as a result of low exposure to the volatile upstream energy market, the non- discretionary demand for industrial safety solutions and the trend towards continued safety services outsourcing. The stable outlook incorporates Moody's expectation that continued organic growth will translate into improved credit metrics, with leverage declining towards 5.5 times and coverage in the upper 1 times range by the end of 2013. The stable outlook also anticipates that the company will maintain an adequate liquidity position, including positive free cash flow and full availability on the proposed $60 million revolver. The ratings could be downgraded if Moody's expects leverage to remain above 5.5 times, free cash flow to be breakeven-to- negative, or liquidity to deteriorate meaningfully. The loss of major customer contracts or a more aggressive financial policy, including an accelerating pace or expanding size of debt-funded acquisitions, could also have negative rating implications. The ratings could be upgraded if Total Safety continues to increase and diversify its revenue base, improve EBITDA generation, expand its free cash flow cushion, and improve liquidity. An upgrade would require expectations for leverage to be sustained below 4.5 times, coverage sustained above 2.5 times, and free cash flow in excess of 10% of debt. The principal methodology used in this rating was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. W3 Co. is a holding company controlling Total Safety U.S., Inc. a global provider of industrial safety services and equipment primarily for the upstream and downstream energy, petrochemical, chemical and other end markets. Approximately half of Total Safety's revenue is derived from rentals and sales of safety- related equipment, such as respiratory, gas detection, and communications. The remaining half is comprised of services including client equipment maintenance, safety inspection and compliance, industrial hygiene, turnaround safety support, fire protection and safety training. Total Safety was acquired by affiliates of Warburg Pincus in late 2011 from DLJ Merchant Banking Partners for approximately $485 million. The company reported revenues of $420 million for the twelve months ended December 31, 2012. WARNER MUSIC: Incurs $80 Million Net Loss in Fiscal Q1 ------------------------------------------------------ Warner Music Group Corp. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss attributable to the Company of $80 million on $769 million of revenue for the three months ended Dec. 31, 2012, as compared with a net loss attributable to the Company of $26 million on $775 million of revenue for the same period during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $5.19 billion in total assets, $4.33 billion in total liabilities and $864 million in total equity. "We are pleased with the start we've had to our fiscal year," said Stephen Cooper, Warner Music Group's CEO. "We continue to make progress throughout our organization, while maintaining our focus on long-term artist development, innovation and growth and carefully managing costs.' "Digital revenue, OIBDA and OIBDA margin all showed solid growth," added Brian Roberts, Warner Music Group's Executive Vice President and CFO. "Even with $132 million in cash outflows in the quarter associated with our refinancing, we had $189 million of cash on our balance sheet as of December 31, 2012." A copy of the Form 10-Q is available for free at: http://is.gd/cE04dX About Warner Music Group Based in New York, Warner Music Group Corp. (NYSE: WMG) -- http://www.wmg.com/-- was formed by a private equity consortium of investors on Nov. 21, 2003. The Company is the direct parent of WMG Holdings Corp., which is the direct parent of WMG Acquisition Corp. WMG Acquisition Corp. is one of the world's major music-based content companies and the successor to substantially all of the interests of the recorded music and music publishing businesses of Time Warner Inc. The Company classifies its business interests into two fundamental operations: Recorded Music and Music Publishing. The Company's Recorded Music business primarily consists of the discovery and development of artists and the related marketing, distribution and licensing of recorded music produced by such artists. The Company's Music Publishing operations include Warner/Chappell, its global Music Publishing company, headquartered in New York with operations in over 50 countries through various subsidiaries, affiliates and non-affiliated licensees. In May 2011, Warner Music Group Corp. and Access Industries, the U.S.-based industrial group, announced the execution of a definitive merger agreement under which Access Industries will acquire WMG in an all-cash transaction valued at $3.3 billion. The purchase includes WMG's entire recorded music and music publishing businesses. On July 20, 2011, the Company notified the New York Stock Exchange, Inc., of its intent to remove the Company's common stock from listing on the NYSE and requested that the NYSE file with the SEC an application on Form 25 to report the delisting of the Company's common stock from the NYSE. On July 21, 2011, in accordance with the Company's request, the NYSE filed the Form 25 with the SEC in order to provide notification of that delisting and to effect the deregistration of the Company's common stock under Section 12(b) of the Securities Exchange Act of 1934, as amended. On August 2, 2011, the Company filed a Form 15 with the SEC in order to provide notification of a suspension of its duty to file reports under Section 15(d) of the Exchange Act. The Company continues to file reports with the SEC pursuant to the Exchange Act in accordance with certain covenants contained in the instruments governing the Company's outstanding indebtedness. Warner Music incurred a net loss attributable to the Company of $112 million for the fiscal year ended Sept. 30, 2012, compared with a net loss attributable to the Company of $31 million for the period from July 20, 2011, through Sept. 30, 2011. * * * As reported by the TCR on Feb. 13, 2013, Standard & Poor's Ratings Services placed its ratings on New York City-based recorded music and music publishing company Warner Music Group (WMG) on CreditWatch with negative implications. This action follows the company's announcement that it has entered into a definitive agreement to acquire U.K.-based Parlophone Label Group for about $765 million in cash. WEB.COM GROUP: Moody's Lowers Rating on 1st Lien Debt to 'B1' ------------------------------------------------------------- Moody's Investors Service affirmed Web.com's B1 corporate family rating and revised the rating for Web.com's first lien credit facility to B1 from Ba3. The ratings action was prompted by Web.com's plan to upsize its existing first lien credit facilities and repay the remaining $32 million of outstanding second lien term loan and pay transaction fees and expenses using the proceeds from the upsized first lien term loan, cash on hand and additional drawings under the expanded revolver. At the close of the proposed transaction the company's funded debt will comprise first lien debt only. The ratings outlook remains stable. The proposed refinancing modestly improves Web.com's liquidity as the company expects to realize approximately $7 to $8 million in annual interest saving. Moody's has taken the following ratings actions: Issuer: Web.com Group, Inc. Corporate Family Rating -- Affirmed, B1 Probability of Default Rating -- Revised to B2-PD, from B1-PD $70 million (originally $60 million) 1st lien revolving credit facility due 2016 -- Revised to B1 (LGD3, 34%), from Ba3 (LGD3, 41%) $660 million (upsized from $628 million) senior 1st lien term loan due 2018 -- Revised to B1 (LGD3, 34%), from Ba3 (LGD3, 41%) $32 million outstanding senior 2nd lien secured term loan due 2019 -- B3, To be withdrawn Speculative grade liquidity rating -- Affirmed, SGL- 2 Outlook Action Outlook: Stable These ratings are subject to Moody's review of final documentation following completion of the proposed refinancing. Ratings Rationale: Moody's revised Web.com's first lien debt ratings to B1 from Ba3 due to the elimination of the junior debt tranche through refinancing completed in 4Q 2012 and the proposed transaction. The probability of default rating was lowered to B2-PD from B1-PD, reflecting the changes in the capital structure and in accordance with Moody's Loss Given Default methodology. The interest savings realized through the refinancing completed in 4Q 2012 and the currently proposed refinancing will collectively lower Web.com's annual interest expense by about $15 million, increasing the company's flexibility to invest in sales and marketing to accelerate revenue growth. The B1 CFR reflects Web.com's high financial leverage and its highly competitive market for internet services to small and medium size businesses. The industry is characterized by relatively few barriers to entry, modest pricing power, low average revenues per user (ARPU), and a fragmented and evolving market in which a strong competitor (Go Daddy, CFR B1) has the leading market share. The B1 rating also incorporates Web.com's track record of acquisitive growth and high financial risk tolerance to consummate acquisitions. However, the rating considers Web.com's stronger competitive position and enhanced scale through consolidation over the past few years. The rating benefits from management's good business execution in integrating Network Solutions acquisition, achieving targeted cost synergies and growing the subscriber base and average revenue per users, while maintaining high subscriber retention rates. Web.com's credit profile is supported by the company's good organic growth prospects, strong free cash flow relative to debt (about 15% of total debt) and management's progress in reducing leverage toward its target of 3.0x. Moody's expects Web.com to maintain good liquidity primarily consisting of its cash and free cash flow. The stable outlook is based on Moody's expectations that Web.com's revenues should grow at the high single digit percentage rates in the next 12 to 18 months and debt leverage should continue to decline through EBITDA growth and accelerated debt repayment. Moody's could upgrade Web.com's ratings if the company generates sustained organic growth in revenue and cash flow from operations and maintains conservative financial policies. Web.com's ratings could be raised if Moody's believes that the company could sustain financial leverage of less than 3.5x (Moody's adjusted Total Debt/(CFO + Interest Expense)) and free cash flow in excess of 15% of total debt, incorporating potential for acquisitions. Moody's could downgrade Web.com's ratings if revenue growth decelerates materially, weak business execution or increasing competitive challenges cause debt leverage to exceed 4.5x (Moody's adjusted, Total Debt/(CFO + Interest Expense)) and free cash flow weakens to the low single digit percentages of total debt. Additionally, changes in financial policies that result in weakening of the balance sheet could trigger a downgrade. The principal methodology used in this rating was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Jacksonville, FL, Web.com provides internet services and online marketing solutions to small businesses. The Company reported revenues of $408 million for the fiscal year ended 2012. WESTERN BIOMASS: District Court to Hear Midwest Lawsuit ------------------------------------------------------- IN THE MATTER OF: WESTERN BIOMASS ENERGY, LLC, Chapter 11, Debtor, Senior District Judge Lyle E. Strom on February 14, 2013, entered a ruling withdrawing the reference in the adversary proceeding entitled MIDWEST RENEWABLE ENERGY, LLC, a Nebraska limited liability company, Plaintiff, v. WESTERN BIOMASS ENERGY, LLC; KL PROCESS DESIGN GROUP, LLC; KL ENERGY CORP.; and RANDALL P. KRAMER, Defendants, Nos. 12-21085 (D. Wyo.), A12-4097-TLS, 7:11CV5009, (D. Neb.), as to defendants KL Process Design Group, KL Energy Corp., and Randall P. Kramer, from the bankruptcy court pursuant to NELR 76.1(b)(1). The ruling was entered on the report and recommendation of Chief Bankruptcy Judge Thomas L. Saladina. The Plaintiff's counsel is directed to initiate a conference call with Magistrate Judge Thomas D. Thalken on Thursday, February 28, 2013, at 10:30 a.m., at Telephone number: (402) 661-7343. At the conference call, the Plaintiff and the remaining Defendants will advise the Court how they intend to proceed with the action. A copy of Judge Strom's February 15, 2013 Order is available at http://is.gd/bvhx3nfrom Leagle.com. About Western Biomass Rapid City, South Dakota-based Western Biomass Energy, LLC, filed for Chapter 11 bankruptcy (Bankr. D. Wyo. Case No. 12-21085) in Cheyenne on Oct. 31, 2012. Stephen R. Winship, Esq., at Winship & Winship, PC, in Casper, Wyoming, serves as the Debtor's counsel. The Debtor scheduled $2,885,146 in assets and $35,367,502 in liabilities. 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/wyb12-21085.pdf The petition was signed by Thomas Bolan, manager. YRC WORLDWIDE: J. Altman Discloses 12% Equity Stake at Dec. 31 -------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Jeffrey Altman and his affiliates disclosed that, as of Dec. 31, 2012, they beneficially own (a) 123,741 shares of Common Stock, (b) 818,406 shares of Common Stock issuable upon conversion of $15,173,478 in aggregate principal amount of Series B Notes, and (c) 225,558 shares of Common Stock issuable either as Make-Whole shares or upon conversion of the PIK Notes, of YRC Worldwide Inc. representing 12.19% of the shares outstanding. Mr. Altman previously reported beneficial ownership of 15.3% equity stake as of Dec. 31, 2011. A copy of the amended filing is available for free at http://is.gd/HGa6km About YRC Worldwide Headquartered in Overland Park, Kan., YRC Worldwide Inc. (NASDAQ: YRCW) -- http://www.yrcw.com/-- is a holding company that offers its customers a wide range of transportation services. These services include global, national and regional transportation as well as logistics. After auditing the 2011 results, the Company's independent auditors expressed substantial doubt about the Company's ability to continue as a going concern. KPMG LLP, in Kansas City, Missouri, noted that the Company has experienced recurring net losses from continuing operations and operating cash flow deficits and forecasts that it will not be able to comply with certain debt covenants through 2012. For the year ended Dec. 31, 2012, the Company incurred a net loss of $136.5 million on $4.85 billion of operating revenue, as compared with a net loss of $354.4 million on $4.86 billion of operating revenue during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $2.22 billion in total assets, $2.85 billion in total liabilities and a $629.1 million total shareholders' deficit. * * * As reported in the Aug. 2, 2011 edition of the TCR, Moody's Investors Service revised YRC Worldwide Inc.'s Probability of Default Rating ("PDR") to Caa2\LD ("Limited Default") from Caa3 in recognition of the agreed debt restructuring which will result in losses for certain existing debt holders. In a related action Moody's has raised YRCW's Corporate Family Rating to Caa3 from Ca to reflect modest but critical improvements in the company's credit profile that should result from its recently-completed financial restructuring. The positioning of YRCW's PDR at Caa2\LD reflects the completion of an offer to exchange a substantial majority of the company's outstanding credit facility debt for new senior secured credit facilities, convertible unsecured notes, and preferred equity, which was completed on July 22, 2011. In August 2011, Standard & Poor's Ratings Services raised its corporate credit rating on YRC Worldwide Inc. to 'CCC' from 'SD' (selective default), after YRC completed a financial restructuring. Outlook is stable. "The ratings on Overland Park, Kan.-based YRCW reflect its participation in the competitive, capital-intensive, and cyclical trucking industry," said Ms. Ogbara, "as well as its meaningful off-balance-sheet contingent obligations related to multiemployer pension plans." "YRCW's substantial market position in the less- than-truckload (LTL) sector, which has fairly high barriers to entry, partially offsets these risk factors. We categorize YRCW's business profile as vulnerable, financial profile as highly leveraged, and liquidity as less than adequate." YRC WORLDWIDE: Whitebox Advisors Discloses 7% Stake at Dec. 31 -------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Whitebox Advisors, LLC, and its affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 647,084 shares of common stock of YRC Worldwide Incorporated representing 7.1% of the shares outstanding. Whitebox previously reported beneficial ownership of 471,725 common shares or a 6.6% equity stake as of Dec. 31, 2011. A copy of the amended filing is available for free at http://is.gd/u1LKvG About YRC Worldwide Headquartered in Overland Park, Kan., YRC Worldwide Inc. (NASDAQ: YRCW) -- http://www.yrcw.com/-- is a holding company that offers its customers a wide range of transportation services. These services include global, national and regional transportation as well as logistics. After auditing the 2011 results, the Company's independent auditors expressed substantial doubt about the Company's ability to continue as a going concern. KPMG LLP, in Kansas City, Missouri, noted that the Company has experienced recurring net losses from continuing operations and operating cash flow deficits and forecasts that it will not be able to comply with certain debt covenants through 2012. For the year ended Dec. 31, 2012, the Company incurred a net loss of $136.5 million on $4.85 billion of operating revenue, as compared with a net loss of $354.4 million on $4.86 billion of operating revenue during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $2.22 billion in total assets, $2.85 billion in total liabilities and a $629.1 million total shareholders' deficit. * * * As reported in the Aug. 2, 2011 edition of the TCR, Moody's Investors Service revised YRC Worldwide Inc.'s Probability of Default Rating ("PDR") to Caa2\LD ("Limited Default") from Caa3 in recognition of the agreed debt restructuring which will result in losses for certain existing debt holders. In a related action Moody's has raised YRCW's Corporate Family Rating to Caa3 from Ca to reflect modest but critical improvements in the company's credit profile that should result from its recently-completed financial restructuring. The positioning of YRCW's PDR at Caa2\LD reflects the completion of an offer to exchange a substantial majority of the company's outstanding credit facility debt for new senior secured credit facilities, convertible unsecured notes, and preferred equity, which was completed on July 22, 2011. In August 2011, Standard & Poor's Ratings Services raised its corporate credit rating on YRC Worldwide Inc. to 'CCC' from 'SD' (selective default), after YRC completed a financial restructuring. Outlook is stable. "The ratings on Overland Park, Kan.-based YRCW reflect its participation in the competitive, capital-intensive, and cyclical trucking industry," said Ms. Ogbara, "as well as its meaningful off-balance-sheet contingent obligations related to multiemployer pension plans." "YRCW's substantial market position in the less- than-truckload (LTL) sector, which has fairly high barriers to entry, partially offsets these risk factors. We categorize YRCW's business profile as vulnerable, financial profile as highly leveraged, and liquidity as less than adequate." YRC WORLDWIDE: Catalyst Fund Lowers Stake to 3% at Dec. 31 ---------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Catalyst Fund Limited Partnership II and its affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 272,834 shares of common stock of YRC Worldwide Inc. representing 3.1% of the shares outstanding. Limited Fund previously reported beneficial ownership of 205,039,063 common shares or a 10.1% equity stake ast Sept. 16, 2011. A copy of the amended filing is available for free at http://is.gd/uQI1bp About YRC Worldwide Headquartered in Overland Park, Kan., YRC Worldwide Inc. (NASDAQ: YRCW) -- http://www.yrcw.com/-- is a holding company that offers its customers a wide range of transportation services. These services include global, national and regional transportation as well as logistics. After auditing the 2011 results, the Company's independent auditors expressed substantial doubt about the Company's ability to continue as a going concern. KPMG LLP, in Kansas City, Missouri, noted that the Company has experienced recurring net losses from continuing operations and operating cash flow deficits and forecasts that it will not be able to comply with certain debt covenants through 2012. For the year ended Dec. 31, 2012, the Company incurred a net loss of $136.5 million on $4.85 billion of operating revenue, as compared with a net loss of $354.4 million on $4.86 billion of operating revenue during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $2.22 billion in total assets, $2.85 billion in total liabilities and a $629.1 million total shareholders' deficit. * * * As reported in the Aug. 2, 2011 edition of the TCR, Moody's Investors Service revised YRC Worldwide Inc.'s Probability of Default Rating ("PDR") to Caa2\LD ("Limited Default") from Caa3 in recognition of the agreed debt restructuring which will result in losses for certain existing debt holders. In a related action Moody's has raised YRCW's Corporate Family Rating to Caa3 from Ca to reflect modest but critical improvements in the company's credit profile that should result from its recently-completed financial restructuring. The positioning of YRCW's PDR at Caa2\LD reflects the completion of an offer to exchange a substantial majority of the company's outstanding credit facility debt for new senior secured credit facilities, convertible unsecured notes, and preferred equity, which was completed on July 22, 2011. In August 2011, Standard & Poor's Ratings Services raised its corporate credit rating on YRC Worldwide Inc. to 'CCC' from 'SD' (selective default), after YRC completed a financial restructuring. Outlook is stable. "The ratings on Overland Park, Kan.-based YRCW reflect its participation in the competitive, capital-intensive, and cyclical trucking industry," said Ms. Ogbara, "as well as its meaningful off-balance-sheet contingent obligations related to multiemployer pension plans." "YRCW's substantial market position in the less- than-truckload (LTL) sector, which has fairly high barriers to entry, partially offsets these risk factors. We categorize YRCW's business profile as vulnerable, financial profile as highly leveraged, and liquidity as less than adequate." ZF MICRO: Restarts Production of ZFx86 Microchip After Bankruptcy ---------------------------------------------------------------- David Feldman, CEO of ZF Micro Solutions, on Feb. 20 issued the following statement: "We are pleased to announce that the ZFx86 FailSafe(R) MicroSystem-on-Chip for industrial embedded control is again in production after ZF's bankruptcy, caused by a battle with out-of- state Venture Capital firms we believe were using California Courts illegally attempting to misappropriate our technology and assets, was dismissed. "Demand for our unique processor is building rapidly and orders are being accepted on a first come first served basis with initial availability expected in May. "The under 1-watt FailSafe ZFx86 is an alternative for applications where 16 or 32-bit microcontrollers are used but it has the advantage that it includes a 100MHz 486DX4 core with FPU and patented fail-safe system recovery mechanism that can restore operation even after system software failure. It boots and is a functional system on application of power and runs all software designed to run on 186/286/386/486 cores." The ZFx86 - FailSafe(R) ZFx86-based designs can be completed in record time because of the included PC BIOS, DR-DOS license and open source board-level reference designs available. The ZF-Logic module is a set of built-in embedded control functions that use dedicated IO to simplify control of external devices. The internal Boot-Up-ROM is a built-in prototype debug tool residing in ROM memory. On power-up, it performs basic initialization and tests the internal Static RAM that is used as an 8K scratch pad area. It assures system access even if all other software has been corrupted. After initialization, all of the following components are active: North Bridge, South Bridge, ISA Bus, Internal Static RAM, IRQ controller, Timer (8259), and COM1. The ZFx86 has been used in hundreds of applications including industrial control, point-of sale, security systems, and human machine interface devices. Sample quantities of the ZFx86 in a 388BGA package are available now for design prototyping. ZFx86 pricing ranges from $18 to $48 depending on quantity and temperature range requirements. About ZF Micro ZF is a privately held semiconductor company focused on long-term embedded control applications. Headquarters are in Palo Alto, California. * Consumer Spending to Remain Restrained, Economist Says -------------------------------------------------------- Sudeep Reddy, writing for The Wall Street Journal, reported that a White House top economist said consumer spending could remain modest as the economy recovers from the recession, even with steady improvement in the housing market. "The economy is going through a lot of healing," Alan Krueger, chairman of the White House Council of Economic Advisers, said in an interview with Wall Street Journal reporters and editors. Americans lost $16 trillion in total wealth from the end 2007, when the U.S. recession started, until early 2009, according to Mr. Krueger. That amounted to about one-fourth of total U.S. wealth, WSJ said. It has since regained $13.5 trillion of that wealth, mostly owing to a rebound in the stock market and recent house price improvements, WSJ added. "If you destroy that much wealth, people need to rebuild their retirement positions and they need to save for their children's educations," Mr. Kruger said. "That is a big challenge for consumption going forward." He said the U.S. needs to invest more in research and development, to boost innovation, and also encourage start-up businesses, which could be one benefit from an overhaul of immigration policies. WSJ also related that Mr. Krueger warned that the recovery could be set back by the across-the-board federal spending cuts set to begin on March 1, cutting defense and non-defense programs. The Congressional Budget Office estimates that if the full cuts take effect economic growth would be 0.6 percentage point slower this year, leading to 750,000 fewer jobs in the economy than would exist otherwise. * Derivatives Can Add to Company's Market Value, Research Shows --------------------------------------------------------------- Financial derivatives have been in the doghouse of public opinion ever since the financial meltdown of 2008, when Warren Buffett famously described them as "weapons of mass financial destruction." Today, a battle is still underway in Washington over how -- or whether -- to rein them in. But corporations and finance experts have long debated a more basic question: Does hedging actually increase the market value of corporations? Every business exposes itself to a long list of risks. Abrupt changes in consumer demand for smartphones, for example, drastically reduced the outlook for once-dominant firms such as Nokia and BlackBerry. A sudden drop in the value of the dollar can sharply improve prospects of U.S. exporters at the expense of foreign rivals. Changes in oil prices have a big impact on airlines, trucking, and other oil-consuming industries. Yet hedging by itself isn't inherently profitable: Some firms reap gains, while others pay for insurance they don't use. The overall effect over time is likely to be a wash. As a result, the traditional view in corporate finance is that hedging adds nothing to overall shareholder value, especially at publicly traded firms. These firms tend to be owned by diversified investors, and investors can hedge for themselves by holding a diverse portfolio of stocks. Does that mean derivatives and other forms of hedging are a waste of money? Not necessarily. New research, coauthored by Francisco Perez-Gonzalez, an assistant professor of finance at the Stanford Graduate School of Business, shows that hedging has indirect benefits that can increase a firm's overall value. It has always been difficult to estimate the effects of hedging on firm value. Companies that decide to hedge are often different from companies that don't hedge, making it difficult to interpret the effect of derivatives from differences in company valuations. Financial economists don't have the luxury of setting up random experiments between comparable companies that do and don't hedge. "We cannot randomly and unexpectedly induce large publicly traded firms to hedge, or to drop an existing risk-management program, just to observe the consequences," says Mr. Perez-Gonzalez. To get around that problem, he and Hayong Yun at the University of Notre Dame took a novel approach. They created a "natural experiment" by examining what had happened to weather-sensitive firms -- mainly natural gas and electricity providers -- after the introduction of weather derivatives for hedging against unusual swings in temperature. Weather-derivatives first surfaced in 1997, and the Chicago Mercantile Exchange began trading options tied to unusual hot and cold spells in 1999. The contracts work like any other type of insurance: You pay for it in good times, and it only pays off if the unwanted problem arrives. For utilities, especially in some areas of the country, exceptionally hot or cold weather can dramatically affect their business costs and revenue. Messrs. Perez-Gonzalez and Yun call their study a "natural experiment" because the sudden availability of new weather derivatives created a natural control group within a given industry. That made it possible to isolate the impact of derivatives by comparing companies with large weather risk before and after the new hedging tools became available. Not surprisingly, the researchers found that weather-sensitive utilities embraced the new derivatives more frequently than those that faced less risk. More surprisingly, the researchers found that weather-sensitive firms increased their value -- as measured in ratio of market value to book value -- by at least six percent. But why? If hedging is ultimately a wash, sometimes paying off and sometimes not, how did the firms as a group end up ahead? Messrs. Perez-Gonzalez and Yun think they have the answer: The companies that reduced their exposure to weather risk were able to make more productive use of their capital and reap higher rewards for investors. The researchers found that companies became more financially aggressive after using the derivatives, apparently because they didn't have to reserve as much money for unpredictable weather shocks. The companies increased their leverage and their capital expenditures as weather derivatives were introduced. That, in turn, led to higher market valuations. "Allowing firms to focus on the risks they are in business to take, while hedging against risks that they are not in business to take, can add value," says Mr. Perez-Gonzalez. "The goal of the hedging strategy should be to maximize the firm cash-flows. Our evidence shows that firms increased their cash-flows by using their balance sheets more aggressively and by investing more." The same lessons should apply to many other kinds of hedging, such as against swings in foreign exchange rates, oil prices, or interest rates. If the risk of such fluctuations limits management's ability to concentrate on the main business, Mr. Perez-Gonzalez says, companies have a case for managing the risks. The study doesn't settle all the questions about the impact of derivatives. Banks and Wall Street firms thought credit-default swaps could reduce, if not eliminate, their risk on subprime mortgages. But when the entire financial industry became over- confident, the total risk exposure became far higher than it would have been if no one had hedged in the first place. "Derivatives can exacerbate both firm and systemic risk exposures," Messrs. Perez-Gonzalez and Yun acknowledged in their paper. "Not surprisingly, financial derivatives have played a central role in recent financial crises." Messrs. Perez-Gonzalez cautions that there is a fine line between hedging and speculating. "Most nonfinancial corporations have no expertise in predicting the direction of foreign exchange rates or commodity prices, for example, but many risk managers attempt to take a view, and those bets frequently turn out to be costly. A hedge should seek to reduce risk exposure; it should not be a gamble on the direction of the market." * Financial Crisis Cost Tops $22 Trillion, GAO Report Says ---------------------------------------------------------- Eleazar David Melendez, writing for the Huffington Post, reported that the 2008 financial crisis cost the U.S. economy more than $22 trillion, a study by the Government Accountability Office published Thursday said. The financial reform law that aims to prevent another crisis, by contrast, will cost a fraction of that, the GAO study added. "The 2007-2009 financial crisis, like past financial crises, was associated with not only a steep decline in output but also the most severe economic downturn since the Great Depression of the 1930s," the GAO wrote in the report, according to the report. The agency said the financial crisis toll on economic output may be as much as $13 trillion -- an entire year's gross domestic product. The office said paper wealth lost by U.S. homeowners totalled $9.1 billion. Additionally, the GAO noted, economic losses associated with increased mortgage foreclosures and higher unemployment since 2008 need to be considered as additional costs. The report, five years after the collapse of mortgage-focused hedge funds in late-2007 set off a yearlong banking panic and a deep recession, was published as part of a cost-benefit analysis of the Dodd-Frank financial reform law of 2010, the report said. The GAO tried to determine if the benefits of preventing a future economic meltdown exceeded the costs of implementing that law. "If the cost of a future crisis is expected to be in the trillions of dollars, then the act likely would need to reduce the probability of a future financial crisis by only a small% for its expected benefit to equal the act's expected cost," the GAO concluded, according to the report. Federal agencies have spent some $1.1 billion in implementing the law, the report found, the Huffington Post related. Financial companies, and therefore the wider economy, will shoulder some costs, although the GAO noted "no comprehensive data are readily available on the costs that the financial services industry is incurring to comply with the Dodd-Frank Act." * Mortgage Bill Faces Tough Road in Congress -------------------------------------------- Andrew Miga, writing for the Associated Press, reported that a sharply divided Congress isn't likely to jump at President Barack Obama's challenge for quick passage of a mortgage refinancing bill that supporters say could help millions of homeowners save big each year and boost the economy. The AP report said Obama praised the legislation in his State of the Union speech last week, saying the proposal would help more homeowners with mortgages backed by Fannie Mae and Freddie Mac take advantage of low interest rates and refinance their loans. Even with mortgage rates near a 50-year low, Obama said, too many families that have never missed a payment and want to refinance are being turned down. "That's holding our entire economy back, and we need to fix it," the president said, according to AP. "Right now, there's a bill in this Congress that would give every responsible homeowner in America the chance to save $3,000 a year by refinancing at today's rates. Democrats and Republicans have supported it before." The economy's slow recovery from the recession gives the idea urgency, Obama said, AP further cited. "Send me that bill," he told members of Congress listening to his speech in the House chamber. AP said the proposal is part of a push by Democrats and the White House to help homeowners take advantage of low interest rates as a way to help the housing market recover and to give the economy a shot in the arm. While the bill could gain traction in the Democratic-controlled Senate, it faces a rough road in the GOP-run House, where many Republicans favor scaling back the government's role in the housing market as a way of aiding the economy. Similar versions of the measure died in the House and Senate's lame duck sessions last year. AP related that the legislation aims to aid borrowers who are current on their loans backed by Fannie Mae and Freddie Mac, but who are not able to refinance because their home values have declined too much. Nearly 12 million homeowners have Fannie Mae and Freddie Mac loans and stand to benefit refinancing, the two senators who proposed the legislation said. The bill also would reduce up-front fees that borrowers pay on refinances and eliminate appraisal costs for all borrowers, which, according to the legislators, would expand the Obama administration's Home Affordable Refinancing Program, which saves an average homeowner about $2,500 per year. * Renter Default Risk Down in 4Q, CoreLogic Report Shows -------------------------------------------------------- CoreLogic(R) on Feb. 20 released its fourth quarter 2012 CoreLogic SafeRent (R), Renter Applicant Risk (RAR) Index Report, formerly known as the Multifamily Applicant Risk (MAR) Index Report. Published quarterly, the RAR Index Report provides market-based benchmarks for evaluating credit quality and risk of default for renters applying for apartment homes in multifamily housing units. The index also includes data from single-family rentals. Using a mean of 100, an index value above 100 indicates decreased risk, and a value below 100 indicates increased risk. According to the data, the risk of default among renters nationwide decreased year over year in the fourth quarter of 2012 with an index value of 103 compared to the fourth quarter of 2011 with an index value of 101. On a quarter-over-quarter basis, the risk of default increased in the fourth quarter 2012 compared to the third quarter of 2012 when the index value was 106. The increased risk from the third quarter to the fourth quarter of 2012 reflects a riskier applicant pool that is typical in seasonally slower periods of applicant traffic (See Figure 1). Renter Trends -- Lower-priced rentals see more significant decreases in rent amounts: Average rent amounts for Class A properties, defined as those with rents greater than $1100, increased 0.3 percent year over year. At the same time, rent amounts for Class B properties, defined as those between $750 and $1100, remained unchanged from one year ago, while rent amounts for Class C properties, defined as less than $750, decreased 0.9 percent year over year. -- Dual applicants increase: In the fourth quarter of 2012, the number of transactions with two applicants increased across property class. On a year-over-year basis, dual-applicant transactions increased 3.9 percent for Class A properties, increased 2.8 percent for Class B properties and increased 0.3 percent for Class C properties. -- Applicant income rises: Applicant income in the fourth quarter of 2012 increased an average of 1.7 percent among all property classes year over year and also increased over the previous quarter by .5 percent. -- Fewer applicants declined: Compared to a year ago, property managers denied fewer applicants in the fourth quarter of 2012. Class A property managers denied 5 percent fewer applicants, Class B managers denied 1.3 percent fewer and Class C managers denied 0.6 percent fewer applicants. Regional Renter Applicant Risk Index Data Regionally, the Northeast and West had the highest RAR index value in the fourth quarter of 2012, both at 110, reflecting decreased default risk. The Midwest had the lowest RAR index value at 98, reflecting increased risk, with a five-point decline from the previous quarter when the value was 103. The increased risk in the Midwest is reflective of increased risk seen in two Midwest Core Based Statistical Areas. The three CBSAs with the largest year-over-year increases in applicant risk were Chicago-Joliet-Naperville, Ill.-Ind.-Wis. (three-point value decline); Cleveland-Elyria-Mentor, Ohio (two- point value decline); and Dallas-Fort Worth-Arlington, Texas (one- point value decline). The CBSAs with the largest year-over-year declines in applicant risk were Denver-Aurora-Broomfield, Colo.; New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa.; and San Diego-Carlsbad-San Marcos, Calif., all with a four-point value increase (see Figure 3). NOTE: CBSAs are selected from the Top 50 CBSAs based on population and applicant volume. * The CBSAs referred to within the Renter Applicant Risk Index Report may differ from the CBSAs referenced in other CoreLogic data reports. CBSAs are defined by the Office of Management and Budget (OMB) and CoreLogic may provide data either for the overall CBSA or a Metropolitan Division of a CBSA, depending upon the report. The particular CBSA used is identified in the report. Methodology The SafeRent Renter Applicant Risk (RAR) Index Report is published quarterly by CoreLogic. The RAR Index is calculated exclusively from applicant-traffic credit quality scores from the CoreLogic SafeRent statistical lease screening model, Registry ScorePLUS(R) and is based on an analysis of 39,000 properties representing nearly 6 million apartment homes and single-family rentals. The index provides a benchmark trend of national and regional traffic credit quality scores. The index value indicates the relative risk of an applicant pool fulfilling lease obligations. A risk index value of 100 indicates that market conditions are equal to the national mean for the Index's base period of 2004. A risk index value greater than 100 indicates market conditions with reduced average risk of default relative to the index's base period mean. A value less than 100 indicates market conditions with increased average risk of default relative to the index's base period mean. Registry ScorePLUS is the multifamily industry's only screening model that is both empirically derived and statistically validated. The statistical screening model was developed from historical resident lease performance data to specifically evaluate the potential risk of a resident's future lease performance. The model generates scores for each applicant indicating the relative risk of the applicant not fulfilling lease obligations. About CoreLogic CoreLogic -- http://www.corelogic.com-- is a property information, analytics and services provider in the United States and Australia. The company's combined data from public, contributory, and proprietary sources includes over 3.3 billion records spanning more than 40 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, transportation and government. Headquartered in Irvine, Calif., CoreLogic operates in seven countries. * States' Foreclosure Pace Affects Home Prices ---------------------------------------------- Julie Schmit, writing for USA TODAY, reported that, although affected by other factors, home price data generally show stronger price increases in states where courts don't have to approve foreclosures than in states where they do. Foreclosures, the report noted, are completed faster where court approval is necessary. The report also noted that last year, home values tracked by Zillow, a web-based real estate tracker, rose an average 5.4% in the 24 states where foreclosures don't go through the courts, according to Zillow. Where they do, the average increase was 3.2%, the report sad. Asking prices, a leading indicator of price trends, show a similar pattern, the report added. In January, asking prices in non- judicial states were up an average of 7.3% year-over-year vs. 3.1% for judicial foreclosure states, show data from real estate website Trulia. Non-judicial foreclosure states have tended to clear out distressed home inventory quicker, which is helping prices, John Burns, CEO of John Burns Real Estate Consulting, told USA Today. USA Today said in Florida, New York and New Jersey -- all judicial foreclosure states -- the average loan in foreclosure was past due for more than 31 months before the process was completed, according to December data from Lender Processing Services. In California, Arizona and Nevada -- all non-judicial foreclosure states -- that average was fewer than 22 months, LPS data show. * Golden State Group Reacts to LA Times Student Loan Article ------------------------------------------------------------ One of the many different forms of debt that a consumer can take on in life is student loan debt. Unlike many other forms of debt, however, student loan debt cannot be discharged in bankruptcy absent relatively rare circumstances. As such, the San Diego bankruptcy lawyers at the Golden State Law Group are reacting to a recent story that appeared in the Los Angeles Times regarding a study pinpointing the percentage of household debt across the United States attributable to student loan debt with deep concern. As such, the firm is offering consumers a free initial consultation to troubled consumers in order to review their financial situations. Specifically, the attorneys at the firm are reacting with concern to a story that ran in the Los Angeles Times on Tuesday, February 12, 2013 that was entitled, "Student loan debt -- a bit of good news" and it concerned a study that was recently completed by economists at Wells Fargo Bank. The 'good' news was that the economists who performed the study stated that they did not believe that the student loan debt as it's currently constituted represented a 'bubble' akin to the mortgage bubble of recent years. However, the San Diego bankruptcy lawyers at the Golden State Law Group noticed the fact that appeared in the story that related to the percentage of overall household debt in the United States that was tied to student loans presently as compared to 10 years ago. According to the portion of the study that was quoted in the article, approximately 8.5 percent of all household debt in the United States is currently labeled as student loan debt. That compares to just 3.3 percent 10 years ago. This rise has occurred at the same time that other forms of debt have fallen, according to the article. For instance, mortgage debt has dropped by more than 13 percent since the end of 2008 and credit card debt is down by 23 percent since that time. In terms of raw numbers, the amount of student loan debt owed in the United States is approaching $1 trillion. About the Golden State Law Group The Golden State Law Group -- http://www.goldenstatelawgroup.com/ -- is a law firm in San Diego, California that's comprised of a team of San Diego bankruptcy attorneys who provide legal help to consumers and businesses. Specifically, the attorneys at the firm provide help to consumers in the legal areas of student loan debt problems, medical bill issues, consumer bankruptcy, business bankruptcy, tax debt issues and personal injury cases. * Courtney Pozmantier Joins Greenberg Glusker's Bankruptcy Group ---------------------------------------------------------------- Greenberg Glusker on Feb. 20 announced the addition of three new attorneys to the Firm. Real estate attorney Lydia W. Wu joins the Real Estate Group as Of Counsel and brings a wealth of experience in representing individual and institutional investors in real estate financings, acquisitions/dispositions, development and leases. Associate Courtney E. Pozmantier, whose practice focuses on bankruptcy, restructuring and commercial law, joins the Bankruptcy/Insolvency Group. Associate Harrison J. Reynolds joins the Entertainment Group where his practice emphasis includes entertainment transactions in film and television. "The Firm's growth momentum continues early in 2013 with the addition of these talented professionals who are an ideal fit with the Firm's core competencies," said Greenberg Glusker Managing Partner Stephen Smith. "Lydia's real estate deal portfolio is impressive for its breadth and depth of sophisticated transactions in California and across the nation. Courtney has been involved in numerous complex restructurings during the economic downturn. Harrison is a valuable addition to our bench strength in leading deals shaping the next generation of the entertainment industry." Wu and Reynolds joined the firm in January and Pozmantier in February. Lydia Wu In her real estate practice, Ms. Wu negotiates and closes both multi-state and multi-property transactions for institutional investors and local, single-property projects for individuals, emerging companies and regional clients involving office, shopping center/retail, industrial/warehouse, multifamily, resort/hotel, senior housing and mixed-use properties. She has an extensive background in steering and closing sophisticated financings on behalf of institutional lenders, investors and borrowers. Her experience working with developers, purchasers/sellers, and landlord/tenants includes representing insurance companies, hospitality providers, energy providers, restaurants, oil companies and other industrial clients. Ms. Wu, who is a member of the American College of Mortgage Attorneys, previously was a partner with Ballard Spahr LLP and Baker Hostetler LLP, and began her career at Morrison & Foerster LLP. She is a graduate of University of California, Irvine, the Westminster Theological Seminary, and the University of Southern California Law School. Courtney E. Pozmantier Ms. Pozmantier represents chapter 11 debtors, secured creditors, creditors' committees, unsecured creditors and asset purchasers in many large chapter 11 cases across the country. She also represents lenders, borrowers and purchasers in out-of-court workouts, restructurings, financing transactions, ABCs and distressed entertainment transactions. An alumna of University of California, Los Angeles and New York University School of Law, Pozmantier has represented parties involved in chapter 11 cases involving the Freemark Abbey, Byron and Arrowood wineries, Sexy Hair Concepts, LLC and Brotman Medical Center. She previously served as an associate at the bankruptcy boutique law firm Klee, Tuchin, Bogdanoff & Stern, LLP. Harrison Reynolds Mr. Reynolds is a former Greenberg Glusker summer associate and joins the Firm following his graduation from Stanford Law School last year. His experience includes managing several platinum- selling musical artists, including Imagine Dragons. Reynolds has drafted and helped to negotiate deals for performers in films, musical performance agreements for television, as well as various real estate and employment agreements. * Dallas Bankruptcy Expert Jeffery Erler Joins Gruber Hurst ----------------------------------------------------------- Noted Dallas bankruptcy attorney Jeffrey R. Erler has joined the Dallas litigation firm of Gruber Hurst Johansen Hail Shank LLP as a Partner and practice leader for the firm's bankruptcy and financial restructuring section, the firm said in a press statement dated Feb. 8, 2013. During the past 20 years Mr. Erler has represented major banks, asset-based lenders, trustees, creditors' committees, creditors and debtors in bankruptcy reorganizations, liquidations, and litigation across a variety of industries. He has also served clients in receiverships, out-of-court workouts, personal property reorganization and sales, and real estate foreclosures. He joins Gruber Hurst from the Dallas office of Bell Nunnally & Martin LLP. "We're very fortunate to have Jeff bring his legal expertise to the firm," says Mark Johansen, one of Gruber Hurst's founding partners. "The list of clients he's represented, and the scale and issues involved in those matters, is truly impressive." Mr. Erler was named to the list of Texas' "Rising Stars" of the state's top young attorneys a total of six times between 2004 and 2011, and was selected for inclusion to the list of "Texas Super Lawyers" in 2012. He earned his law degree from Southern Methodist University's Dedman School of Law in 1996, and received his undergraduate degree from Texas A&M University in 1993. Mr. Erler is a frequent speaker for the National Business Institute and other organizations on topics related to creditor representation, such as insolvency actions, litigation and collection efforts. A member of the Dallas Bar Association and American Bar Association, he is also active in the American Bankruptcy Institute, the Aircraft Owners and Pilots Association and serves on the Foundation Board of Directors of Lovers Lane United Methodist Church in Dallas. Gruber Hurst Johansen Hail Shank LLP focuses on the business needs of its clients in trying complex commercial litigation in courtrooms across Texas. The firm's experience includes matters involving securities, financial services, employment, intellectual property, technology, products liability and other commercial cases. Clients include leading companies ? large and small ? and individuals in the fields of private equity, real estate, manufacturing, professional services, energy and retail. Visit the firm's website at http://www.ghjhlaw.com. For more information, contact Barry Pound at 214-559-4630 or barry@androvett.com * Thompson Hine Lawyers Named to Georgia Trend's 2012 Legal Elite ----------------------------------------------------------------- Three partners from Thompson Hine LLP were recently selected for inclusion in Georgia Trend's 2012 Legal Elite. The listing was compiled based on votes from attorneys who practice in Georgia and are members of the State Bar of Georgia. The Thompson Hine lawyers selected represent three of the firm's practices: Business Restructuring, Creditors' Rights & Bankruptcy, Environmental and Intellectual Property. Those recognized are: Elizabeth B. Davis (Environmental) - Ms. Davis focuses her practice on regulatory compliance, permitting, enforcement defense and litigation. She also addresses the environmental aspects of corporate and real estate transactions, as well as occupational safety and health compliance and zoning and land use issues. Ms. Davis has extensive experience with counseling and litigation in all aspects of federal and state laws related to the environment, including hazardous waste, underground storage tanks, water, air and pesticides. John F. Isbell (Business Restructuring, Creditors' Rights & Bankruptcy) - Mr. Isbell concentrates his practice in the areas of bankruptcy and insolvency law, including insolvency-related commercial litigation in state and federal courts. He represents secured lenders, debtors/borrowers, official committees of unsecured creditors, landlords and other parties in interest in matters including bankruptcy cases, receivership litigation, workouts, restructurings, and state court foreclosures and confirmation proceedings. Ash D. Patel (Intellectual Property) - Mr. Patel focuses his practice on patent, trademark, unfair competition, false advertising and copyright litigation. He also counsels clients on the procurement of patents, trademarks and copyright registrations. Mr. Patel's practice further includes the issuance of opinions of counsel, management of global patent and trademark portfolios, assessment and evaluation of intellectual property portfolios for acquisition or sale, and negotiation and preparation of intellectual property agreements. About Thompson Hine LLP Established in 1911, Thompson Hine -- http://www.ThompsonHine.com -- is a business law firm dedicated to providing superior client service. The firm has been recognized for more than ten consecutive years as one of the top law firms in the country for client service excellence in The BTI Client Service A-Team: Survey of Law Firm Client Service Performance, and for six years has ranked as one of the top 30 law firms in the United States for client service. With offices in Atlanta, Cincinnati, Cleveland, Columbus, Dayton, New York and Washington, D.C., Thompson Hine serves premier businesses worldwide. * Recent Small-Dollar & Individual Chapter 11 Filings ----------------------------------------------------- In re Steven Lefkowitz Bankr. D. Ariz. Case No. 13-01958 Chapter 11 Petition filed February 13, 2013 In re 19271 Sherman Way, LLC Bankr. C.D. Cal. Case No. 13-13732 Chapter 11 Petition filed February 13, 2013 See http://bankrupt.com/misc/cacb13-13732.pdf represented by: Raymond H. Aver, Esq. LAW OFFICES OF RAYMOND H. AVER, APC E-mail: ray@averlaw.com In re Home Theater Rooms, Inc. Bankr. M.D. Fla. Case No. 13-00814 Chapter 11 Petition filed February 13, 2013 See http://bankrupt.com/misc/flmb13-00814.pdf represented by: Scott W. Spradley, Esq. Law Offices of Scott W. Spradley, P.A. E-mail: scott.spradley@flaglerbeachlaw.com In re David Hirschauer Bankr. M.D. Fla. Case No. 13-01774 Chapter 11 Petition filed February 13, 2013 In re Robert Grete Bankr. N.D. Fla. Case No. 13-30161 Chapter 11 Petition filed February 13, 2013 In re B. SHOPGIRL, LLC Bankr. E.D. La. Case No. 13-10295 Chapter 11 Petition filed February 13, 2013 See http://bankrupt.com/misc/laeb13-10295.pdf represented by: Robert L. Marrero, Esq. ROBERT MARRERO, LLC E-mail: marrero1035@bellsouth.net In re Crusade for Christ Deliverance Center Inc. aka Crusade for Christ Deliverance Center ICS Crusade for Christ World Ministries Bankr. W.D. La. Case No. 13-10346 Chapter 11 Petition filed February 13, 2013 See http://bankrupt.com/misc/lawb13-10346.pdf Filed as Pro Se In re Ann Gill Bankr. D. Minn. Case No. 13-40670 Chapter 11 Petition filed February 13, 2013 In re Felix Figueroa Bankr. D. Nev. Case No. 13-11064 Chapter 11 Petition filed February 13, 2013 In re Randy Rathburn Bankr. D. Nev. Case No. 13-50251 Chapter 11 Petition filed February 13, 2013 In re 3 Sons Pizzeria Corporation dba Scardino's Pizzeria fka Scardino's Pizza Restaurant, Inc. Bankr. D. N.J. Case No. 13-12826 Chapter 11 Petition filed February 13, 2013 See http://bankrupt.com/misc/njb13-12826.pdf represented by: John W. Sywilok, Esq. JOHN W. SYWILOK, LLC E-mail: sywilokattorney@sywilok.com In re Claire Pires Bankr. E.D.N.Y. Case No. 13-40792 Chapter 11 Petition filed February 13, 2013 In re FMB, Inc. dba Bagels & A Hole Lot More Bankr. E.D.N.Y. Case No. 13-70699 Chapter 11 Petition filed February 13, 2013 See http://bankrupt.com/misc/nyeb13-70699.pdf represented by: Michael G. McAuliffe, Esq. E-mail: mgmlaw@optonline.net In re Ninamarie Crisafulli Bankr. N.D.N.Y. Case No. 13-10333 Chapter 11 Petition filed February 13, 2013 In re New Hope Christian Church Bankr. M.D.N.C. Case No. 13-80204 Chapter 11 Petition filed February 13, 2013 See http://bankrupt.com/misc/ncmb13-80204.pdf represented by: Florence A. Bowens, Esq. E-mail: FBOWENSlaw@aol.com In re S.E., Carnel Bankr. D. P.R. Case No. 13-01074 Chapter 11 Petition filed February 13, 2013 In re Simon Chavez Bankr. W.D. Tex. Case No. 13-30246 Chapter 11 Petition filed February 13, 2013 In re Hun Kwon Bankr. C.D. Cal. Case No. 13-11410 Chapter 11 Petition filed February 14, 2013 In re Robert Hindin Bankr. C.D. Cal. Case No. 13-11008 Chapter 11 Petition filed February 14, 2013 In re Titan Group International, Inc. Bankr. N.D. Cal. Case No. 13-40872 Chapter 11 Petition filed February 14, 2013 See http://bankrupt.com/misc/canb13-40872.pdf represented by: Matthew D. Metzger, Esq. Belvedere Legal, APC E-mail: mmetzger@belvederelegal.com In re Kenneth Brown Bankr. S.D. Fla. Case No. 13-13343 Chapter 11 Petition filed February 14, 2013 In re Louis Litvin Bankr. S.D. Fla. Case No. 13-13340 Chapter 11 Petition filed February 14, 2013 In re Marcelo De Carvalho Bankr. S.D. Fla. Case No. 13-13353 Chapter 11 Petition filed February 14, 2013 In re Douglas Himmelfarb Bankr. D. Hawaii Case No. 13-00229 Chapter 11 Petition filed February 14, 2013 In re Central Food Market, Inc. Bankr. D. Mass. Case No. 13-10817 Chapter 11 Petition filed February 14, 2013 See http://bankrupt.com/misc/mab13-10817.pdf represented by: James Hoyt, Esq. Mickelson Barnet, P.C. E-mail: jhoyt@mickelsonbarnet.com In re AJN Operating LLC Bankr. D. Minn. Case No. 13-30646 Chapter 11 Petition filed February 14, 2013 See http://bankrupt.com/misc/mnb13-30646.pdf represented by: John D. Lamey, III, Esq. Lamey Law Firm, P.A. E-mail: bankrupt@lameylaw.com In re Just Kidding Around Daycare and Preschool, Inc. Bankr. D. Minn. Case No. 13-30644 Chapter 11 Petition filed February 14, 2013 See http://bankrupt.com/misc/mnb13-30644.pdf represented by: John D. Lamey, III, Esq. Lamey Law Firm, P.A. E-mail: bankrupt@lameylaw.com In re Frederick Baybutt Bankr. D.N.H. Case No. 13-10344 Chapter 11 Petition filed February 14, 2013 In re Gator Enterprises, Inc. Bankr. E.D.N.Y. Case No. 13-40808 Chapter 11 Petition filed February 14, 2013 See http://bankrupt.com/misc/nyeb13-40808.pdf represented by: Debra Purcell Regis, Esq. Law Office of Debra Purcell-Regis In re Route Nine Properties, Inc. aka Double Vision Nightclub Bankr. N.D.N.Y. Case No. 13-10342 Chapter 11 Petition filed February 14, 2013 See http://bankrupt.com/misc/nynb13-10342.pdf represented by: Barbara A Whipple, Esq. E-mail: attybwhipple@gmail.com In re Carissa Corp. dba Valley Oil Bankr. S.D.N.Y. Case No. 13-35314 Chapter 11 Petition filed February 14, 2013 See http://bankrupt.com/misc/nysb13-35314.pdf represented by: Andrea B. Malin, Esq. Genova & Malin, Attorneys E-mail: genmallaw@optonline.net In re James Burns Bankr. E.D.N.C. Case No. 13-00967 Chapter 11 Petition filed February 14, 2013 In re Virginia Systems, Inc. Bankr. E.D. Va. Case No. 13-10688 Chapter 11 Petition filed February 14, 2013 See http://bankrupt.com/misc/vaeb13-10688.pdf represented by: Raymond Pring, Jr., Esq. The Law Office of Raymond R. Pring, Jr. E-mail: rpring@pringlaw.com In re Patrick Sweeney Bankr. W.D. Wis. Case No. 13-10621 Chapter 11 Petition filed February 14, 2013 In re Westpark One, LLC Bankr. D. Ariz. Case No. 13-02107 Chapter 11 Petition filed February 15, 2013 See http://bankrupt.com/misc/azb13-02107.pdf represented by: Paul Sala, Esq. ALLEN, SALA & BAYNE, PLC E-mail: psala@asbazlaw.com In re The Keys Limited Company, LLC dba The Keys Pearl Redline Sports Grill Bankr. D. Ariz. Case No. 13-02111 Chapter 11 Petition filed February 15, 2013 See http://bankrupt.com/misc/azb13-02111.pdf represented by: Eric Slocum Sparks, Esq. ERIC SLOCUM SPARKS, P.C. E-mail: law@ericslocumsparkspc.com In re Fernando Pascua Bankr. N.D. Cal. Case No. 13-50870 Chapter 11 Petition filed February 15, 2013 In re Front Avenue Properties, LLC Bankr. D. Conn. Case No. 13-30292 Chapter 11 Petition filed February 15, 2013 See http://bankrupt.com/misc/ctb13-30292.pdf Filed as Pro Se In re Lamar Waters Bankr. M.D. Fla. Case No. 13-00866 Chapter 11 Petition filed February 15, 2013 In re Edward Henry Bankr. M.D. Fla. Case No. 13-01872 Chapter 11 Petition filed February 15, 2013 In re AAA Pest Protection, Inc. dba AAA Pest Control, Inc. Bankr. S.D. Fla. Case No. 13-13460 Chapter 11 Petition filed February 15, 2013 See http://bankrupt.com/misc/flsb13-13460.pdf represented by: Aaron A. Wernick, Esq. FURR & COHEN E-mail: awernick@furrcohen.com In re William Robles Bankr. S.D. Fla. Case No. 13-13476 Chapter 11 Petition filed February 15, 2013 In re Jorge Arteaga Bankr. N.D. Ill. Case No. 13-05676 Chapter 11 Petition filed February 15, 2013 In re Jorge Arteaga Bankr. N.D. Ill. Case No. 13-05676 Chapter 11 Petition filed February 15, 2013 See http://bankrupt.com/misc/ilnb13-05676.pdf Filed as Pro Se In re Kil Lee Bankr. N.D. Ill. Case No. 13-05723 Chapter 11 Petition filed February 15, 2013 In re JS2 Properties Bankr. D. Minn. Case No. 13-30678 Chapter 11 Petition filed February 15, 2013 See http://bankrupt.com/misc/mnb13-30678.pdf represented by: Paul V. Sween, Esq. ADAMS, RIZZI & SWEEN, P.A. E-mail: psween@adamsrizzisween.com In re Richard Griffith Bankr. N.D. Miss. Case No. 13-10548 Chapter 11 Petition filed February 15, 2013 In re 05-023 Carmencita Business Trust Bankr. D. Nev. Case No. 13-11150 Chapter 11 Petition filed February 15, 2013 See http://bankrupt.com/misc/nvb13-11150.pdf represented by: Timothy P. Thomas, Esq. LAW OFFICES OF TIMOTHY P. THOMAS, LLC E-mail: tthomas@tthomaslaw.com In re Airborne Veterans Services, Inc. Bankr. D. Nev. Case No. 13-11176 Chapter 11 Petition filed February 15, 2013 See http://bankrupt.com/misc/nvb13-11176.pdf represented by: Arun Gupta, Esq. E-mail: attorney@theguptalawfirm.com In re JVK Foods, Inc. dba Sorrento's Restaurant & Pizzeria Bankr. D. N.J. Case No. 13-13073 Chapter 11 Petition filed February 15, 2013 See http://bankrupt.com/misc/njb13-13073.pdf represented by: John W. Sywilok, Esq. JOHN W. SYWILOK, LLC E-mail: sywilokattorney@sywilok.com In re Middletown Ventures, LLC Bankr. E.D.N.Y. Case No. 13-40821 Chapter 11 Petition filed February 15, 2013 See http://bankrupt.com/misc/nyeb13-40821.pdf represented by: Richard S. Feinsilver, Esq. E-mail: feinlawny@yahoo.com In re James Campbell Bankr. S.D.N.Y. Case No. 13-22228 Chapter 11 Petition filed February 15, 2013 In re Biltmore Terrace Development, LLC Bankr. W.D.N.C. Case No. 13-10089 Chapter 11 Petition filed February 15, 2013 See http://bankrupt.com/misc/ncwb13-10089.pdf represented by: Robert M. Pitts, Esq. PITTS, HAY & HUGENSCHMIDT, P.A. E-mail: pittsatty@phhlawfirm.com In re S.S.G. S.E. aka VORS Development, LLC Bankr. D. P.R. Case No. 13-01118 Chapter 11 Petition filed February 15, 2013 See http://bankrupt.com/misc/prb13-01118.pdf represented by: Isabel M. Fullana, Esq. GARCIA ARREGUI & FULLANA, PSC E-mail: isabelfullana@gmail.com In re James Bride Bankr. W.D. Wash. Case No. 13-11291 Chapter 11 Petition filed February 15, 2013 In re Justin Serface Bankr. W.D. Wash. Case No. 13-40942 Chapter 11 Petition filed February 15, 2013 In re Resmars Enterprises, LLC Bankr. N.D. Cal. Case No. 13-30353 Chapter 11 Petition filed February 16, 2013 See http://bankrupt.com/misc/canb13-30353.pdf represented by: Sydney Jay Hall, Esq. Law Offices of Sydney Jay Hall E-mail: sydneyhalllawoffice@yahoo.com In re Curt Schlager Bankr. M.D. Fla. Case No. 13-01919 Chapter 11 Petition filed February 16, 2013 In re Phoenix Services Group, LLC Bankr. E.D. Va. Case No. 13-10715 Chapter 11 Petition filed February 16, 2013 See http://bankrupt.com/misc/vaeb13-10715.pdf represented by: Richard G. Hall, Esq. E-mail: richard.hall33@verizon.net In re Parties Plus, LLC Bankr. D. Ariz. Case No. 13-02122 Chapter 11 Petition filed February 17, 2013 See http://bankrupt.com/misc/azb13-02122.pdf represented by: Charles R. Hyde, Esq. Law Offices of C.R. Hyde E-mail: crhyde@gmail.com In re Michael Tutt Bankr. C.D. Cal. Case No. 13-10394 Chapter 11 Petition filed February 18, 2013 In re Raymond Smith Bankr. N.D. Cal. Case No. 13-40918 Chapter 11 Petition filed February 18, 2013 In re Centro Cristiano Restauracion En Cristo, Inc. Bankr. M.D. Fla. Case No. 13-00896 Chapter 11 Petition filed February 18, 2013 See http://bankrupt.com/misc/flmb13-00896.pdf represented by: Taylor J. King, Esq. Law Offices of Mickler & Mickler E-mail: court@planlaw.com In re Ismet Gjeloshi Bankr. M.D. Fla. Case No. 13-01938 Chapter 11 Petition filed February 18, 2013 In re JNDE Enterprises, Inc. Bankr. M.D. Fla. Case No. 13-01929 Chapter 11 Petition filed February 18, 2013 See http://bankrupt.com/misc/flmb13-01929.pdf represented by: William J Rinaldo, Esq. The Rinaldo Law Firm, PA E-mail: william.rinaldo@rinaldo-law.com In re William Clark Bankr. M.D. Fla. Case No. 13-00903 Chapter 11 Petition filed February 18, 2013 In re Keith Graversen Bankr. S.D. Ga. Case No. 13-20171 Chapter 11 Petition filed February 18, 2013 In re River Street Plaza East Commercial Association Bankr. N.D. Ill. Case No. 13-06078 Chapter 11 Petition filed February 18, 2013 See http://bankrupt.com/misc/ilnb13-06078p.pdf See http://bankrupt.com/misc/ilnb13-06078c.pdf represented by: Matthew Johns, Esq. Thompson Coburn LLP E-mail: mjohns@thompsoncoburn.com In re Infocus Office Systems, Inc. Bankr. D. Md. Case No. 13-12748 Chapter 11 Petition filed February 18, 2013 See http://bankrupt.com/misc/mdb13-12748.pdf represented by: Tabitha Renee Brown, Esq. Law Offices of Tabitha R. Brown E-mail: tbrown@tabitharbrown.com In re Yanic Hardie Bankr. D. Md. Case No. 13-12715 Chapter 11 Petition filed February 18, 2013 In re Dainforth French Bankr. E.D. Mich. Case No. 13-42837 Chapter 11 Petition filed February 18, 2013 In re NGPCP/BRYS Centre, LLC Bankr. E.D. Mich. Case No. 13-42821 Chapter 11 Petition filed February 18, 2013 See http://bankrupt.com/misc/mieb13-42821.pdf represented by: Basil T. Simon, Esq. Stephen P. Stella, Esq. Simon, Stella & Zingas, P.C. E-mail: bsimon@sszpc.com attorneystella@sszpc.com In re Weir & Weir, LLC Bankr. E.D. Mich. Case No. 13-42892 Chapter 11 Petition filed February 18, 2013 See http://bankrupt.com/misc/mieb13-42892p.pdf See http://bankrupt.com/misc/mieb13-42892c.pdf represented by: William R. Orlow, Esq. B.O.C. Law Group, P.C. E-mail: bocecf@boclaw.com In re R. Johansen Bankr. S.D. Miss. Case No. 13-50295 Chapter 11 Petition filed February 18, 2013 In re Tom Smith Trade in Center, LLC dba The Trade-in Center Bankr. E.D.N.C. Case No. 13-01045 Chapter 11 Petition filed February 18, 2013 See http://bankrupt.com/misc/nceb13-01045.pdf represented by: J.M. Cook, Esq. E-mail: J.M.Cook@jmcookesq.com In re Keith Babb Bankr. D.N.H. Case No. 13-10362 Chapter 11 Petition filed February 18, 2013 In re Heleda Corp. Bankr. E.D. Pa. Case No. 13-11404 Chapter 11 Petition filed February 18, 2013 See http://bankrupt.com/misc/paeb13-11404.pdf represented by: Hae Yeon Baik, Esq. Baik & Associates PC E-mail: haeyeon.baik@verizon.net In re Segunda Iglesia Bautista De Cidra Inc Bankr. D.P.R. Case No. 13-01164 Chapter 11 Petition filed February 18, 2013 See http://bankrupt.com/misc/prb13-01164.pdf represented by: Luis D Flores Gonzalez, Esq. Luis D Flores Gonzalez Law Office E-mail: ldfglaw@coqui.net In re Alfonso Tellez Bankr. D. Ariz. Case No. 13-02238 Chapter 11 Petition filed February 19, 2013 In re Scrub N Clean LLC Bankr. D. Ariz. Case No. 13-02239 Chapter 11 Petition filed February 19, 2013 See http://bankrupt.com/misc/azb13-02239.pdf represented by: Jason Chandler Farrington, Esq. FARRINGTON HARDY, PLC E-mail: jason@farringtonhardy.com In re Shakocat, Inc. aka Aquatic Physical Therapy Rehabilitation Therapy Center Bankr. C.D. Cal. Case No. 13-11094 Chapter 11 Petition filed February 19, 2013 See http://bankrupt.com/misc/cacb13-11094.pdf represented by: Neil C. Evans, Esq. LAW OFFICES OF NEIL C. EVANS In re Harold Lapidus Trust No.1 U/D/T 9/8/82 Bankr. C.D. Cal. Case No. 13-14134 Chapter 11 Petition filed February 19, 2013 See http://bankrupt.com/misc/cacb13-14134.pdf represented by: Michael H. Lapidus, Esq. In re Gale Young Bankr. C.D. Cal. Case No. 13-14166 Chapter 11 Petition filed February 19, 2013 In re Dwight Smith Bankr. C.D. Cal. Case No. 13-14263 Chapter 11 Petition filed February 19, 2013 In re 4420 NE 20th Avenue, LLC Bankr. S.D. Fla. Case No. 13-13618 Chapter 11 Petition filed February 19, 2013 See http://bankrupt.com/misc/flsb13-13618.pdf represented by: Mark N. Hirsch, Esq. TEMPLER AND HIRSCH In re James Newman Bankr. N.D. Ga. Case No. 13-53426 Chapter 11 Petition filed February 19, 2013 In re Thomas Ricks Bankr. D. Idaho Case No. 13-00264 Chapter 11 Petition filed February 19, 2013 In re Howell Green Bankr. N.D. Ill. Case No. 13-01292 Chapter 11 Petition filed February 19, 2013 In re Leon Stiles Bankr. N.D. Ill. Case No. 13-06109 Chapter 11 Petition filed February 19, 2013 In re Sunterra Development Corporation Bankr. N.D. Ind. Case No. 13-30265 Chapter 11 Petition filed February 19, 2013 See http://bankrupt.com/misc/innb13-30265.pdf represented by: Michael S. Bergerson(ACK), Esq. LAW OFFICES OF MICHAEL S. BERGERSON E-mail: teambergy@comcast.net In re Richard Green Co., Inc. Bankr. S.D. Ind. Case No. 13-01293 Chapter 11 Petition filed February 19, 2013 See http://bankrupt.com/misc/insb13-01293.pdf represented by: David R. Krebs, Esq. HOSTETLER & KOWALIK, P.C. E-mail: dkrebs@hklawfirm.com In re M & M Masonry Bankr. S.D. Iowa Case No. 13-00381 Chapter 11 Petition filed February 19, 2013 See http://bankrupt.com/misc/iasb13-00381p.pdf See http://bankrupt.com/misc/iasb13-00381c.pdf represented by: Bradley R. Kruse, Esq. BROWN WINICK GRAVES GROSS BASKERVILLE & SCHOENEBAUM PLC E-mail: brk@brownwinick.com In re Kirby Joy Bankr. W.D. Mo. Case No. 13-60230 Chapter 11 Petition filed February 19, 2013 In re Randall Nelsen Bankr. D. Nebr. Case No. 13-40281 Chapter 11 Petition filed February 19, 2013 In re Mario Pulido Bankr. D. Nev. Case No. 13-11197 Chapter 11 Petition filed February 19, 2013 In re Kuzina Express, LLC Bankr. D. N.J. Case No. 13-13209 Chapter 11 Petition filed February 19, 2013 See http://bankrupt.com/misc/njb13-13209.pdf represented by: Elissa Westbrook Smith, Esq. MCDOWELL POSTERNOCK LAW, P.C. E-mail: esmith@mcdowellposternocklaw.com In re Bayside Boys, Inc. dba Plum Restaurant Bankr. E.D.N.Y. Case No. 13-40881 Chapter 11 Petition filed February 19, 2013 See http://bankrupt.com/misc/nyeb13-40881.pdf represented by: Angelo R. Picerno, Esq. PICERNO & ASSOCIATES, PLLC E-mail: angelopicerno@hotmail.com In re Rudolph Binder Bankr. M.D.N.C. Case No. 13-10219 Chapter 11 Petition filed February 19, 2013 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. 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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. 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