/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/130320.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, March 20, 2013, Vol. 17, No. 78 Headlines 6371-77 VNB: Case Summary & 15 Largest Unsecured Creditors 710 LONG RIDGE: Union Wants Case Moved to Connecticut ADEPT TECHNOLOGIES: Has Interim Nod to Use Cash Collateral AFFYMAX INC: To Reduce Workforce Amid Product Investigation AMBER HOTEL: Case Summary & 23 Largest Unsecured Creditors AMERICAN AIRLINES: Execs Defend Merger at Senate Panel Hearing AMERICAN AIRLINES: JetBlue Seeks to Expand Ties With AMR AMERICAN AIRLINES: Promotes Bev Goulet as SR. VP & CIO AMERICAN AIRLINES: Files Rule 2015.3 Report for Dec. 31 AMERICAN AIRLINES: U.S. Trustee Objects to Hikes and Bonuses AMERICAN PETROLEUM: Moody's Rates $280MM Debt Facility '(P)B2' AMERICAN SUZUKI: Confirms Modified Chapter 11 Plan B K HILL: Case Summary & 20 Largest Unsecured Creditors BAY HARBOR: Voluntary Chapter 11 Case Summary BEN ENNIS: Court Okays Disclosures Explaining Liquidation Plan BIOLITEC INC: Files Schedules of Assets & Liabilities BIOZONE PHARMACEUTICALS: Delays Form 10-K for 2012 CASCADE AG: Nears Plan; In Talks With Whyte's Food for Funding CASCADE AG: Files Amended Schedules of Assets & Liabilities CENTERPOINT ENERGY: Fitch Keeps 'BB+' Rating Following Jt. Venture CENTRAL EUROPEAN: "Favorably Inclined" to Roust Proposal CENTURYLINK INC: Fitch Rates New $500MM Sr. Unsecured Notes 'BB+' CENTURYLINK INC: Moody's Rates New Series V Notes 'Ba2' CENTURYLINK INC: S&P Assigns 'BB' Rating to $500MM Senior Notes CHAMPION INDUSTRIES: Likely to Default on Debt Covenants CHARLES SCHWAB: Fitch Affirms 'BB+' Preferred Stock Rating CHEROKEE SIMEON: Gives Up on Reorganization Due to Cash Woes CHESAPEAKE ENERGY: Fitch Rates $2.3 Billion Unsecured Notes 'BB-' CHESAPEAKE ENERGY: Moody's Rates New $2.3-Bil. Senior Notes 'Ba3' CHESAPEAKE ENERGY: S&P Rates New $2.3BB Sr. Unsecured Debt 'BB-' COLLEGE BOOK: Trustee Hires Bass Berry & Sims as IP Counsel COMMUNITY HOME: Disclosure Statement Hearing Moved to March 26 COSTA BONITA BEACH: Can Hire Carlos E. Gaztambide as Appraiser CRAWFORDSVILLE LLC: Court Approves Indiana Real Estate Counsel CRAWFORDSVILLE LLC: Court OKs Davis Brown as Litigation Counsel CV STEEL: Case Summary & 20 Largest Unsecured Creditors DESERT DERMATOLOGY: Case Summary & 18 Largest Unsecured Creditors DEX ONE: Reports $35 million Net Loss for Fourth Quarter DEX ONE: S&P Lowers CCR to 'D' on Plan to File for Chapter 11 DIGERATI TECHNOLOGIES: Obtains Injunction vs. Sonfield DNL INDUSTRIES: Files Schedules of Assets & Liabilities DOLE FOOD: Fitch Keeps 'B+' IDR on Rating Watch Positive DTS8 COFFEE: Incurs $812,800 Net Loss in Jan. 31 Quarter DUNLAP OIL: Court Okays Waterfall Economidis as Special Counsel DVORKIN HOLDINGS: Trustee Seeks to Employ CBRE Inc. as Broker DVORKIN HOLDINGS: Trustee Seeks to Employ NAI Hiffman as Broker DVORKIN HOLDINGS: Seyfarth Can Represent Trustee in Asset Sales DYNEGY INC: Full Year 2012 Adjusted EBITDA at $57 Million DYNEGY INC: To Acquire Ameren's Merchant Generation Business EAST COAST BROKERS: Files List of Top Unsecured Creditors EASTMAN KODAK: Offer to Subscribe for Loans Expires ECOSPHERE TECHNOLOGIES: Names Founder as CEO and Chairman EL CENTRO: Court Okays Hiring of GlassRatner as Financial Advisor ELCOM HOTEL: Taps Barthet Firm as Special Collections Lit. Counsel ELCOM HOTEL: Wants to Hire Benchmark as Management Company ELCOM HOTEL: Court Okays Hiring of Kozyak Tropin as Ch. 11 Counsel ELCOM HOTEL: Files Schedules of Assets & Liabilities EVANS & SUTHERLAND: Faces Defined Benefit Pension Plan Burden EXTERRAN HOLDING: Moody's Affirms 'Ba2' CFR; Outlook Stable FAIRWEST ENERGY: Seeks CCAA Stay Extension Until April 26 FIDELITY & GUARANTY: Fitch Assigns 'BB' LT Issuer Default Rating FIDELITY & GUARANTY: $300MM Notes Issue Gets Moody's 'B1' Rating FIDELITY & GUARANTY: S&P Rates $300MM Sr. Unsecured Notes 'B+' FENDER MUSICAL: Moody's Rates $200MM Sr. Secured Term Loan 'B2' GENE CHARLES: Cash Collateral Hearing Scheduled for March 25 GENTIVA HEALTH: S&P Raises CCR to 'B' & Rates Loans 'B+' GEOKINETICS INC: Proposes Akin Gump as Counsel GEOKINETICS INC: Taps Richards Layton as Co-Counsel GEOKINETICS INC: Has GCG as Claims and Notice Agent GMX RESOURCES: Delays 2012 Form 10-K for Liquidity Issues GORDIAN MEDICAL: Court Extends Plan Filing Exclusivity to May 14 GREAT LAKES: In Default of Credit Facility; Delays 10-K Filing HANOVER INSURANCE: Fitch Affirms BB Subordinated Debentures Rating HEMCON MEDICAL: Further Amends Chapter 11 Plan HOSTESS BRANDS: Has Court Approval of 3 Sale Transactions IDEARC INC: Creditors Seek to Resurrect $9.9-Bil. Suit INOVA TECHNOLOGY: Incurs $3.5 Million Net Loss in Jan. 31 Quarter ISTAR FINANCIAL: Fitch Affirms 'CCC-' Preferred Stock Rating JEFFERIES FINANCE: S&P Assigns 'BB-' Issuer Credit Rating JOHN'S FAMILY: Voluntary Chapter 11 Case Summary KBI INDUSTRIES: Voluntary Chapter 11 Case Summary LEHMAN BROTHERS: Giants Stadium Seeks OK of Discovery Protocol LEHMAN BROTHERS: Elliott Drops Bid for $3.2-Bil. Payment LEHMAN BROTHERS: LBI Taps Bonn Steichen as Special Counsel LEHMAN BROTHERS: Liquidators, Trustee Agree to Stay Suits LEONARD A. FARBER: Radiation Oncology Center Files in New York LIBERACE FOUNDATION: Exclusive Period Extension Hearing April 10 LIBERTY MEDICAL: Has Court OK to Use Cash Collateral Until April 4 LIBERTY MEDICAL: Committee Taps Lowenstein Sandler as Counsel LIBERTY MEDICAL: Committee Hires Stevens & Lee as Co-Counsel LIFECARE HOLDINGS: To Proceed with Sale to Senior Lenders LODGENET INTERACTIVE: Deregisters Unsold Securities LP DOYLE: Case Summary & 20 Largest Unsecured Creditors MALLINCKRODT PLC: Moody's Assigns 'Ba2' CFR; Outlook Stable MENDOCINO COAST: Stipulation on Use of Cash Collateral Approved MAGNUM HUNTER: Delays Annual Report Filing for Yr. Ended Dec. 2012 MF GLOBAL: Files Plan Supplement With Loan, Trust Agreements MINH VU HOANG: Sec. 542 Turnover Succeeds Where 549 Would Fail MONEYGRAM INTERNATIONAL: S&P Affirms 'BB-' Issuer Credit Rating MPG OFFICE: Reports $396.1 Million Net Income in 2012 MTS LAND: Plan Payments to be Financed by $8MM Exit Loans NASH FINCH: S&P Lowers Corp. Credit Rating to 'B+'; Outlook Stable NBTY INC: S&P Rates $1.508 Billion Term Loan Due 2017 'BB-' NNN CYPRESSWOOD: Files Schedules of Assets & Liabilities NEVILLE VERA: Case Summary & Largest Unsecured Creditor NEW ENGLAND COMPOUNDING: PritzkerOlsen Law Firm Files Suit v. MAPS NORTHLAND RESOURCES: Faces TSX Delisting After Non-Compliance OAK KNOLL: Case Summary & 7 Largest Unsecured Creditors OCD LLC: Section 341(a) Meeting Scheduled for April 4 PATRIOT COAL: Wins Approval to End Supplemental Retirement Plan PETTUS PROPERTIES: Court Closes Chapter 11 Case PHIL'S CAKE: Proposes Claims Treatment Scheme PHOENIX COMPANIES: Delays 2012 Form 10Q & Form 10-K Filings PHOENIX FOOTWEAR: Reports Financial Results for Fiscal Year 2012 PICACHO HILLS UTILITY: Receiver Wants Chapter 11 Case Dismissed PLAY BEVERAGES: Playboy Loses Bid to Dismiss Lawsuit PREFERRED PROPPANTS: May Remain Disadvantaged Over Rivals PROMMIS HOLDINGS: Files Bankruptcy After Lenders Pushed for Sale PROMMIS HOLDINGS: Case Summary & 30 Largest Unsecured Creditors QUANTITATIVE ALPHA: Mobile Integrated Ends Deal After Default RADIAN GROUP: Phillip Bracken Joins Unit as Chief Policy Officer RANCHO HOUSING: General Unsecured Creditors Out of the Money RAPID-AMERICAN CORP: Proposes Reed Smith as Counsel RAPID-AMERICAN CORP: Keeps SNR Denton On Board as Special Counsel RAPID-AMERICAN CORP: Wins OK for Logan & Co. as Claims Agent REID PARK: Senior Lender Amends Chapter 11 Plan RG STEEL: Gets Approval to Hire Barnes as Special Counsel RG STEEL: Gets Court Nod to Settle Wheeling-Pittsburgh Trust Claim RHYTHM AND HUES: Has Final Loan Approval Before Sale ROTECH HEALTHCARE: Moody's Cuts CFR to 'Ca' After Chap. 11 Filing ROTECH HEALTHCARE: S&P Cuts CCR to 'SD' & Sec. Notes Rating to 'D' RUPANJALI SNOWDEN: District Court Upholds Judgment Against CIC SAN DIEGO HOSPICE: Has Interim OK to Obtain $2-Mil. DIP Loan SAN DIEGO HOSPICE: Files Schedules of Assets & Liabilities SCC KYLE PARTNERS: Bank Asks Court to Dismiss Case SELECT TREE: US Trustee Wants Case Dismissed, Hearing on March 25 SILVERLEAF RESORTS: S&P Withdraws 'B-' Corporate Credit Rating SINCLAIR TELEVISION: Moody's Rates New $600MM Senior Notes 'B1' SINCLAIR BROADCAST: S&P Rates New $1 Billion Secured Debt 'BB+' SONIC AUTOMOTIVE: "Material Weakness" No Impact on Moody's B1 CFR SMTC CORP: Needs to Restate Financial Statements Under Amendment SPEEDWAY MOTORSPORTS: Moody's Affirms Ba1 CFR After Term Changes SUNTECH POWER: Gets Default & Acceleration Notice on 3% Notes SUPERCOM LTD: Reports $4.8 Million Net Income in 2012 SUPERMEDIA INC: S&P Cuts CCR to 'D' on Plan to File for Chapter 11 SURGERY CENTER: New US$335MM Debt Facility Gets Moody's B1 Rating SURGERY CENTER: S&P Affirms 'B' CCR & Rates New $335MM Debt 'B' TANDY BRANDS: Unveils Restructuring Plan; In Covenant Default TELECOMMUNICATIONS MANAGEMENT: Moody's Rates New Debt Facility B2 TORM A/S: Annual General Meeting Scheduled for April 11 USA COMMERCIAL: Pond Avenue Partners May Be Dragged in Knight Suit VERMILLION INC: Glass Lewis Recommends WHITE Proxy Card Vote VILLAGIO PARTNERS: Sells Unimproved Tract for $2.3 Million VIVARO CORP: Herrick, Feinstein Assists in Sale to Next Angel WAVE SYSTEMS: Incurs $33.9 Million Net Loss in 2012 WEIGHT WATCHERS: Moody's Rates New Sr. Secured Term Loan 'Ba1' WEIGHT WATCHERS: S&P Cuts CCR to 'BB-' on Weaker Earnings * Chambers Global Names Morrison & Foerster Law Firm of the Year * Watermill Group Wins Award for Michigan Paper Mill Restructuring * Three Lawyers Form New Whistleblower Law Firm Boutique * Upcoming Meetings, Conferences and Seminars ********* 6371-77 VNB: Case Summary & 15 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: 6371-77 VNB, LLC 14431 Ventura Boulevard, #401 Sherman Oaks, CA 91423 Bankruptcy Case No.: 13-11840 Chapter 11 Petition Date: March 18, 2013 Court: U.S. Bankruptcy Court Central District of California (San Fernando Valley) Debtor's Counsel: Leslie A. Cohen, Esq. LESLIE COHEN LAW, P.C. 506 Santa Monica Boulevard, Suite 200 Santa Monica, CA 90401 Tel: (310) 394-5900 Fax: (310) 394-9280 E-mail: leslie@lesliecohenlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company's list of its 15 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/cacb13-11840.pdf The petition was signed by Deborah Adri, managing member. Affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- Moshe Adri 12-20733 12/12/12 710 LONG RIDGE: Union Wants Case Moved to Connecticut ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports the New England Health Care Employees Union filed papers on March 15 telling the bankruptcy court in Newark, New Jersey, that the Chapter 11 reorganization of five Connecticut nursing homes managed by HealthBridge Management LLC should be in Connecticut where all the facilities are located. The union represents 700 workers at the facilities. The report relates that the motion to move the case came 11 days after the New Jersey bankruptcy judge gave the company permission on an interim basis to modify union contracts. The union believes Connecticut is the proper location for bankruptcy because 2,500 of 3,000 creditors are in Connecticut. Only 106 creditors are in New Jersey, according to a union court filing. The union says the bankruptcy was filed in New Jersey because the parent company is located there. The union says that half of the creditors with the 20 largest unsecured claims are in Connecticut. "The interest of justice and the convenience of the parties" mandate transferring venue to Connecticut, according to the union. The nursing homes say there is no reason for a quick hearing about transferring venue. They wrote a letter to the bankruptcy judge March 18 proposing the venue hearing take place April 11. About 710 Long Ridge 710 Long Ridge Road Operating Company II, LLC and four affiliates own sub-acute and long-term nursing care facilities for the elderly in Connecticut. The facilities, which are managed by HealthBridge Management LLC, are Long Ridge of Stamford, Newington Health Care Center, Westport Health Care Center, West River Health Care Center, and Danbury Health Care Center. 710 Long Ridge and its affiliates sought Chapter 11 protection (Bankr. D.N.J. Case Nos. 13-13653 to 13-13657) on Feb. 24, 2013 to modify their collective bargaining agreements with the New England Health Care Employees Union, District 1199, SEIU. The Debtors owe $18.9 million to M&T Bank and $7.99 million on loans from the U.S. Department of Housing and Urban Development Federal Housing Administration. Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, serve as counsel to the Debtors. Logan & Company, Inc. is the claims and notice agent. Alvarez & Marsal Healthcare Industry Group, LLC, is the financial advisor. ADEPT TECHNOLOGIES: Has Interim Nod to Use Cash Collateral ---------------------------------------------------------- ADEPT Technologies, LLC, obtained interim authorization from the Hon. Jack Caddell of the U.S. Bankruptcy for the Northern District of Alabama to use PNC Bank, National Association's cash collateral for a period of 60 days from March 7, 2013. PNC asserts that the aggregate of the PNC debt totaled approximately $6,402,852 as of the Petition Date, and is secured by, among other things, certain real property in four locations in Madison County, Alabama, and PNC's security interest in the Debtor's inventory, chattel paper, accounts, equipment and general intangibles, together with all other accessories, accessions, attachments, tools, parts, supplies, replacements of and additions thereto, all products and produce thereof and all proceeds of the foregoing, including insurance proceeds. The Debtor has an immediate need for authority to use the Cash Collateral in its ongoing business operations. The Debtor said that if it does not receive authority to use the Cash Collateral, it will have to close down without further prospects of reorganization. As adequate protection to PNC for the use of the Cash Collateral, Debtor grants PNC a first priority replacement lien nunc pro tunc as of the Petition Date on and in all assets of the Debtor that comprise the PNC Collateral. The Debtor will deliver to PNC monthly adequate protection payments in the amount of $77,000, commencing on March 15, 2013, and continuing on the 15th of each month through the Termination Date. About ADEPT Technologies ADEPT Technologies, LLC, filed a Chapter 11 petition (Bankr. N.D. Ala. Case No. 12-83490) on Oct. 31, 2012, in Decatur, Alabama. The Debtor, which has principal assets located in Huntsville, Alabama, estimated assets of $10 million to $50 million and liabilities of up to $10 million. Judge Jack Caddell presides over the case. Kevin D. Heard, Esq., at Heard Ary, LLC, represents the Debtor as counsel. The petition was signed by Brad Fielder, managing member. AFFYMAX INC: To Reduce Workforce Amid Product Investigation ----------------------------------------------------------- Affymax, Inc. on March 18 disclosed that it will reduce its workforce as part of a plan to focus the company's resources on the ongoing investigation of reported hypersensitivity reactions in patients receiving OMONTYS(R) (peginesatide) Injection following the nationwide voluntary recall of product from the market. This action will reduce the company's workforce by approximately 230 employees (or 75%), which includes its commercial and medical affairs field organizations as well as other officers and employees. "I would like to sincerely thank all of our departing employees and recognize their important and valued contributions to the company," said John Orwin, chief executive officer of Affymax. "While this decision was extremely difficult, aligning and managing our limited resources around our product investigation is our most important priority." The company also announced that it will retain a bank to evaluate strategic alternatives for the organization, including the sale of the company or its assets, or a corporate merger. The company is considering all possible alternatives, including further restructuring activities, wind-down of operations or even bankruptcy proceedings. About Affymax, Inc. Affymax, Inc. -- http://www.affymax.com-- is a biopharmaceutical company based in Palo Alto, California. Affymax's mission is to discover, develop and deliver innovative therapies that improve the lives of patients with kidney disease and other serious and often life-threatening illnesses. AMBER HOTEL: Case Summary & 23 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Amber Hotel Corporation aka Amber Hotel Company 28632 Roadside Dr. Suite 260 Agoura Hills, CA 91301 Bankruptcy Case No.: 13-11804 Chapter 11 Petition Date: March 17, 2013 Court: United States Bankruptcy Court Central District of California (San Fernando Valley) Judge: Alan M. Ahart Debtor's Counsel: David L. Oberg, Esq. LAW OFFICES OF DAVID LAWRENCE OBERG, APC 23679 Calabasas Rd, Ste 541 Calabasas, CA 91302 Tel: (818) 223-9384 Fax: (818) 743-7612 E-mail: david@oberglawapc.com Scheduled Assets: $143,109 Scheduled Liabilities: $3,251,190 A copy of the Company's list of its 23 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/cacb13-11804.pdf The petition was signed by Stephen K. Post, president. AMERICAN AIRLINES: Execs Defend Merger at Senate Panel Hearing -------------------------------------------------------------- Sarah Portlock, writing for Dow Jones Newswires, reports that executives for American Airlines and US Airways on Tuesday appeared at a Senate Judiciary Committee hearing on the two airlines' planned merger. The executives defended the merger against claims from consumer advocates who said it could lead to higher fares, fewer regional routes and decreased competition. According to Dow Jones, the Senate panel questioned airlines executives about fare increases, route cancellations to small- and midsize markets and how expanding globally would affect domestic flights. Senators also pressed executives on capacity at Washington-area airports. The new company would have nearly 70% of the available slots at Reagan National Airport, said Sen. Michael Lee (R., Utah), which regulators could raise as a competitive issue. Dow Jones relates that Mr. Parker, who is slated to be chief executive of the combined company, and Thomas Horton, CEO of AMR, told senators that routes wouldn't be disrupted, competition would be stronger, not eliminated, and it would allow them to expand globally. 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. 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). AMERICAN AIRLINES: JetBlue Seeks to Expand Ties With AMR -------------------------------------------------------- JetBlue CEO Dave Barger said the company is hoping to expand its partnership with American Airlines Inc. by the end of the year, according to a March 5 report by USA Today. JetBlue already has a tie-up with American Airlines in which its passengers can connect to 15 international destinations not served by JetBlue. American Airlines, in turn, can funnel its passengers to connecting JetBlue flights on 26 domestic routes not served nonstop by the airline. Mr. Barger said he'd like to expand that agreement by adding more options, particularly via New York JFK, which is a hub for both American Airlines and JetBlue, USA Today reported. 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. 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). AMERICAN AIRLINES: Promotes Bev Goulet as SR. VP & CIO ------------------------------------------------------ American Airlines, a wholly owned subsidiary of AMR Corporation, announced that Bev Goulet has been promoted to senior vice president and chief integration officer for American Airlines. Last month, Goulet was appointed to lead the merger transition planning and integration coordination efforts with US Airways on behalf of American. Immediately prior to her appointment, she served as vice president of corporate development, treasurer and chief restructuring officer. "For American, Bev has led the most successful airline restructuring in history, resulting in savings of more than $2 billion across the enterprise, and also played the lead role in the merger evaluation process," said Tom Horton, chairman, president and chief executive officer, American Airlines. "Bev is a talented leader who will play a significant leadership role in helping to establish a framework for the new American to be very successful." With Goulet's move to the new position, Peter Warlick has been promoted to vice president and treasurer for American Airlines. "We are fortunate to have an individual of Peter's caliber on our team who is able to step into this key role. Peter has the depth and breadth of experience, having served in a number of key financial functions at American and having led major company-wide initiatives," said Bella Goren, chief financial officer, American Airlines. Previously, Warlick served as managing director of fleet development, where he has played a key role in helping to execute on American's historic aircraft fleet order in July 2011. Prior to his role in leading American's fleet development strategy, Warlick served in a variety of leadership positions within the Finance organization, including managing director of treasury and managing director of corporate finance and banking. Warlick joined American in 1994 as a financial analyst. Warlick holds an MBA from Duke University's Fuqua School of Business and earned a Bachelor of Arts in Economics from Denison University. 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. 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). AMERICAN AIRLINES: Files Rule 2015.3 Report for Dec. 31 ------------------------------------------------------- AMR Corp. and its affiliated debtors filed a periodic report regarding the value, operations and profitability of entities in which they hold a substantial or controlling interest under Rule 2015.3 of the Federal Rules of Bankruptcy Procedure. AMR Chief Financial Officer Isabella Goren noted that the basis for the valuation of each entity is the net book value calculated as total liabilities of each entity subtracted from its total assets as of December 31, 2012. The non-debtor entities and their corresponding net book value are: Interest of the Net Book Entity Estate Value ------ -------- ---------- Avion Assurance Ltd. 100% $9,082,169 Aerodespachos Colombia S.A. AERCOL S.A. (Columbia) 100% $2,836,908 Caribbean Dispatch Services Limited (St. Lucia) 100% $5,797,663 American Airlines Division de Servicios Aeroportuarios (R.D.) S.A. (Dominican Republic) 100% $1,891,252 International Ground Services S.A. de C.V. (Mexico) 100% $1,439,500 AA 2002 Class C Certificate Corp. 100% $108,605,000 AA 2003-1 Class C Certificate Corp. 100% $100 AA 2004-1 Class B Note Corp. 100% $42,031,000 AA 2002 Class D Certificate Corp. I 100% $0 AA 2003-1 Class D Certificate Corp. 100% $100 AA 2005-1 Class C Certificate Corp. 100% $103,464,203 American Airlines de Mexico S.A. 100% ($379,630) American Airlines de Venezuela S.A. 100% $0 Aerosan Airport Services S.A./ Aerosan S.A. 50% $6,738,251 The periodic report also contains separate reports on the valuation, profitability and operations of each non-debtor entity. The periodic report does not include information for five non- debtors in which a debtor maintains a joint venture or minority interest, and is bound by confidentiality obligations from publicly disclosing their financial statements. These entities are: Interest of the Entity Estate ------ -------- Texas Aero Engine Services LLC 50% oMC Venture LLC 50% oneworld Alliance LLC 25.6% oneworld Management Company Inc. 25.6% Aerolineas Pacifico Atlantico SA 25% A full-text copy of the periodic report dated March 4, 2013, is available for free at http://is.gd/yM0t1h 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. 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). AMERICAN AIRLINES: U.S. Trustee Objects to Hikes and Bonuses ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that when AMR Corp. comes to bankruptcy court on March 27 for approval of the merger agreement with US Airways Group Inc., the U.S. Trustee will oppose salary increases for non-union workers. AMR, the parent of American Airlines Inc., says wage increases for non-union workers are intended to bring them into parity with US Airways. Wages for AMR pilots and flight attendants are governed by union contracts negotiated during bankruptcy. The report relates that, in papers filed March 15, the U.S. Trustee questions whether across-the-board wage increases are in the ordinary course of business and may be instituted without court authorization following a proper factual showing by AMR. The merger agreement also calls for the implementation of bonus programs for non-union workers to become effective when the merger is effected. Although the bonuses won't be paid until after bankruptcy, the U.S. Trustee argues that the company hasn't made the proper showing to demonstrate that the bonuses are of a type Congress approves for bankrupt companies. The bankruptcy watchdog for the Justice Department also takes issue with a $20 million severance payment to AMR Chief Executive Officer Thomas Horton, who will lose the position when the airlines merge. The U.S. Trustee contends there hasn't been a factual showing to demonstrate that the bonus is within the realm of those Congress permits. Half of Mr. Horton's severance will be paid in cash and the other half in stock. AMR has yet to file the Chapter 11 reorganization plan that will put the merger into effect. The airline expects the merger to be completed in the third quarter following confirmation of the plan. The plan will allow existing AMR shareholders to receive 3.5% or more of the stock in the merged companies. The plan also gives stock in the merged companies to AMR creditors. AMR stock has risen 52% this month, closing down 8.4% to $3.80 on March 15 in over the counter trading. The stock was around $1.30 before the merger was announced. The stock could have been purchased for less than 40 cents in October. 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. 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). AMERICAN PETROLEUM: Moody's Rates $280MM Debt Facility '(P)B2' -------------------------------------------------------------- Moody's Investors Service assigned a (P)B2 rating to the $280 million first lien senior secured credit facility that American Petroleum Tankers Parent Holdings, LLC plans to arrange as part of a refinancing of its capital structure. As part of that refinancing, APT also plans to convert its existing unrated sponsor PIK junior debt facility to equity. Pursuant to its normal practice, Moody's will recognize a limited default upon the conversion of the junior debt facility to equity by changing the Probability of Default rating to Caa1-PD-LD when the conversion occurs. Pending completion of the conversion, Moody's affirmed the Caa1 Corporate Family and Caa1-PD Probability of Default ratings and the B1 rating assigned to the company's existing 10.25% first lien senior secured notes due December 2015 ("Notes"). Moody's will withdraw the rating on the Notes as these will be paid off in full including the required premium as part of the refinancing. The outlook is developing, reflecting the evolving nature of the company's refinancing transaction. Ratings Rationale: The affirmation of the Caa1 Corporate Family Rating is based on the company's pre-refinancing credit profile, which is marked by very weak credit metrics because of the inclusion of the large junior debt facility in the capital structure. The Caa1 rating balances the company's small size, weak credit metrics and still limited operating history with the risk-mitigating chartering strategy, the demonstrated ability to generate steady free cash flow in excess of 10% of the first lien debt and the benefits of its protected US Jones Act market. The company owns and operates five Jones Act product tankers, trading them under time charters with major oil companies or the US Military Sealift Command. The pending recognition of the limited default considers that while the conversion of the junior debt is not being done to avoid a near term default (the sponsor debt matures in 2016), it is being done to facilitate the planned refinancing as well as alleviate what Moody's believes will become an untenable capital structure. Expected upgrades of the Corporate Family and Probability of Default ratings would follow the closing of the refinancing and would be based on the company's improved capital structure, with debt to capital of about 40% versus almost 100% prior to the refinancing. Credit metrics will improve to levels typical of issuers rated in the B2 rating category. The ratings will continue to reflect the company's small size, the cyclicality of the Jones Act tanker sector, the potential market and price risk associated with renewing charters during cyclic troughs and event risk as Moody's believes the company might seek to grow the fleet. The stability of cash flows that the chartering strategy should provide, the attractiveness of the relatively young fleet to potential charterers and the good coverage based on Moody's estimates of liquidation value of the ships support the ratings. Adequate liquidity, anchored by expected free cash flow of about $30 million per year and an excess cash flow sweep and restricted payment terms governed by debt leverage incurrence tests in the Credit Facility agreement, further supports the ratings. Moody's used a 65% E(FRR) in its post-refinancing Loss Given Default waterfall, given the all first lien bank debt structure, which will result in the Probability of Default rating being one notch below the Corporate Family rating after it recognizes the limited default. The assignment of the (P)B2 rating to the new Credit Facility was based on the expected post-refinancing credit profile, which will include meaningfully lower leverage and stronger interest coverage resulting from the conversion of debt to equity. Moody's expects to raise the Corporate Family and Probability of Default ratings into the single B rating category following the realization of the limited default and the closing of the refinancing. The conversion of the junior debt facility will be the key driver of the improvements in the company's credit metrics and credit profile. Moody's does not expect any changes to APT's operations or fleet profile during the near term. The principal methodology used in this rating was the Global Shipping 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 (and/or) the Government-Related Issuers methodology published in July 2010. Downgrades: Issuer: American Petroleum Tankers Parent LLC Senior Secured Regular Bond/Debenture May 1, 2015, Downgraded to LGD2, 14 % from LGD2, 13 % Assignments: Issuer: American Petroleum Tankers Parent LLC Senior Secured Bank Credit Facility, Assigned (P)B2 Senior Secured Bank Credit Facility, Assigned (P)B2 Senior Secured Bank Credit Facility, Assigned a LGD3, 35 % Senior Secured Bank Credit Facility, Assigned a LGD3, 35 % Outlook Actions: Issuer: American Petroleum Tankers Parent LLC Outlook, Changed To Developing From Stable Affirmations: Issuer: American Petroleum Tankers Parent LLC Probability of Default Rating, Affirmed Caa1-PD Corporate Family Rating, Affirmed Caa1 Senior Secured Regular Bond/Debenture May 1, 2015, Affirmed B1 American Petroleum Tankers Parent LLC, headquartered in Plymouth Meeting, PA, owns a fleet of five modern U.S. Jones Act petroleum products tankers. The company is owned by affiliates of The Blackstone Group L.P. and Cerberus Capital Management L.P. AMERICAN SUZUKI: Confirms Modified Chapter 11 Plan -------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that American Suzuki Motor Corp. for a second time has a confirmed Chapter 11 plan that allows the parent Suzuki Motor Corp. to stop selling cars in the U.S. According to the report, after a hearing Feb. 28, the U.S. Bankruptcy Court in Santa Ana, California, signed a confirmation order on March 6 approving the Chapter 11 reorganization plan. Before the plan could be implemented, the company decided it needed to change the identity of the affiliate that will purchase part of the business. The bankruptcy court held another hearing and signed a new confirmation order on March 15. The company said it makes no substantive difference to creditors. The plan, the report relates, transfers the sale and distribution of all-terrain vehicles, outboard motorboat engines, and auto parts in the U.S. to another subsidiary free of liabilities. Suzuki autos won't be sold in the U.S. anymore. The non-auto businesses are being sold for about $100 million. After liquidating other assets and payment of expenses, the company anticipated that about $107 million would remain for distribution to creditors, according to the disclosure statement. Secured creditors will be paid in full. Dealers whose dealership agreements were ended and other unsecured creditors are being paid in full so long as they drop claims against the Japanese parent. The dealer's claims total about $45 million. Other unsecured claims amount to some $14 million. Meanwhile, American Suzuki has sought and obtained approval to employ CBRE, Inc. as its real estate broker to market for sale certain real property: (i) 46976 Magellan Drive, Wixom, Michigan; (ii) three vacant land parcels located in Brea, California; (iii) two leased land parcels located in Brea, California; and (iv) a 50,000 square foot building located at 3170 Nasa, Brea, California in one or more sales, on commercially reasonable terms. CBRE will be compensated for its services in an amount equal to 2% of the gross sales price for the California property. It will be compensated for its services in an amount equal to 6% of the gross sales price for the sale of the Michigan property. The Debtor is informed that the commissions are reasonable and standard within the real estate industry. 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. 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. Freddie Reiss, Senior Managing Director at FTI Consulting, served as chief restructuring officer. Rust Consulting Omni Bankruptcy, a division of Rust Consulting, Inc., is the claims and notice agent. The Debtor 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. B K HILL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: B K Hill, LLC dba Kaniksu Sands on Priest River 485 Jim Low Road Nordman, ID 83848 Bankruptcy Case No.: 13-20251 Chapter 11 Petition Date: March 18, 2013 Court: U.S. Bankruptcy Court District of Idaho (Coeur dAlene) Judge: Terry L. Myers Debtor's Counsel: David E. Eash, Esq. EWING ANDERSON P.S. 522 West Riverside Avenue, Suite 800 Spokane, WA 99201 Tel: (208) 667 7990 Fax: (509) 838 4906 E-mail: deash@ewinganderson.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company's list of its 20 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/idb13-20251.pdf The petition was signed by Fred Johnston, managing member. BAY HARBOR: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Bay Harbor Apartments, LLC P.O. Box 617 Champaign, IL 61824-0617 Bankruptcy Case No.: 13-90310 Chapter 11 Petition Date: March 18, 2013 Court: U.S. Bankruptcy Court Central District of Illinois (Danville) Judge: Gerald D. Fines Debtor's Counsel: Brett Kepley, Esq. RAWLES, O'BYRNE, STANKO & KEPLEY, P.C. P.O. Box 800 Champaign, IL 61824 Tel: (217) 352-7661 E-mail: bakepley@rosklaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Gerald W. Hartman, member. BEN ENNIS: Court Okays Disclosures Explaining Liquidation Plan -------------------------------------------------------------- Judge Fredrick E. Clement of the U.S. Bankruptcy Court for the Eastern District of California, Fresno Division, has approved the disclosure statement explaining Wells Fargo Bank, N.A.'s Plan of Liquidation for Ben A. Ennis. Under Wells Fargo's Plan, the Plan Administrator will have the option to not pay Wells Fargo's secured claim against Ennis with a current principal balance of approximately $2,840,198, provided that Wells Fargo retain all its liens and deeds of trusts securing the full amount of its claim. Wells Fargo believes the properties securing its claim can be profitably sold, and that the Plan Administrator can therefore pay all payments due on the secured claim. Unsecured claims, which total approximately $81 million, are still subject to objections by the Plan Administrator. Wells Fargo estimates that holders of allowed unsecured claims will receive a distribution in the range of 3.7% to 8.3% of their Allowed Claim. A full-text copy of the Disclosure Statement explaining Wells Fargo's Plan, dated Dec. 14, 2012, is available for free at: http://bankrupt.com/misc/ENNISds1214.pdf About Ben Ennis Porterville, California-based Ben Ennis, dba Ennis Homes, LLC, filed its Chapter 11 Petition on Oct. 25, 2010, with Bankruptcy Case No. 10-62315, before the U.S. Bankruptcy Court Eastern District of California (Fresno). Judge Whitney Rimel oversees the case. The Debtor is represented by Riley C. Walter, Esq. BIOLITEC INC: Files Schedules of Assets & Liabilities ----------------------------------------------------- Biolitec Inc. filed with the U.S. Bankruptcy Court for the District of New Jersey its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $0.00 B. Personal Property $8,986,073.61 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $311,622.23 E. Creditors Holding Unsecured Priority Claims $0.00 F. Creditors Holding Unsecured Non-priority Claims $45,975,141.15 -------------- -------------- TOTAL $8,986,073.61 $46,286,763.38 About Biolitec Inc. Biolitec Inc. is a member of the Biolitec Group, a multinational group of affiliated companies that is a global market leader in the manufacture and distribution of fiber optic devices and products such as medical lasers and fibers, photo-pharmaceuticals and industrial fiber optics. Biolitec AG, a German public company listed on the highly regulated Prime Standard segment of the Frankfurt stock exchange, is the ultimate parent of the Debtor. Biolitec, Inc., filed a Chapter 11 petition (Bankr. D.N.J. Case No. 13-11157) on Jan. 22, 2013, to stop competitor AngioDynamics Inc. from collecting $23 million it won in a breach of contract lawsuit. Brian K. Foley signed the petition as chief operating officer. Lowenstein Sandler, LLP, serves as the Debtor's counsel. The Debtor estimated assets and debts of $10 million to $50 million. BIOZONE PHARMACEUTICALS: Delays Form 10-K for 2012 -------------------------------------------------- Biozone Pharmaceuticals, Inc., said that the compilation, dissemination and review of the information required to be presented in the Form 10-K for the year ended Dec. 31, 2012, has imposed time constraints that have rendered timely filing of the Form 10-K impracticable without undue hardship and expense to the Company. The Company undertakes the responsibility to file that annual report no later than 15 days after its original due date. About Biozone Pharmaceuticals Biozone Pharmaceuticals, Inc., formerly, International Surf Resorts, Inc., was incorporated under the laws of the State of Nevada on Dec. 4, 2006, to operate as an internet-based provider of international surf resorts, camps and guided surf tours. The Company proposed to engage in the business of vacation real estate and rentals related to its surf business and it owns the Web site isurfresorts.com. During late February 2011, the Company began to explore alternatives to its original business plan. On Feb. 22, 2011, the prior officers and directors resigned from their positions and the Company appointed a new President, Director, principal accounting officer and treasurer and began to pursue opportunities in medical and pharmaceutical technologies and products. On March 1, 2011, the Company changed its name to Biozone Pharmaceuticals, Inc. Since March 2011, the Company has been engaged primarily in seeking opportunities related to its intention to engage in medical and pharmaceutical businesses. On May 16, 2011, the Company acquired substantially all of the assets and assumed all of the liabilities of Aero Pharmaceuticals, Inc., pursuant to an Asset Purchase Agreement dated as of that date. Aero manufactures markets and distributes a line of dermatological products under the trade name of Baker Cummins Dermatologicals. On June 30, 2011, the Company acquired the Biozone Labs Group which operates as a developer, manufacturer, and marketer of over- the-counter drugs and preparations, cosmetics, and nutritional supplements on behalf of health care product marketing companies and national retailers. In the auditors' report accompanying the financial statements for year ended Dec. 31, 2011, Paritz and Company. P.A., in Hackensack, N.J., expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company does not have sufficient cash balances to meet working capital and capital expenditure needs for the next twelve months. In addition, as of Dec. 31, 2011, the Company has a shareholder deficiency and negative working capital of $4.37 million. The continuation of the Company as a going concern is dependent on, among other things, the Company's ability to obtain necessary financing to repay debt that is in default and to meet future operating and capital requirements. Biozone reported a net loss of $5.45 million in 2011, compared with a net loss of $319,813 in 2010. The Company's balance sheet at Sept. 30, 2012, showed $8.25 million in total assets, $8.33 million in total liabilities and a $74,927 total shareholders' deficiency. CASCADE AG: Nears Plan; In Talks With Whyte's Food for Funding -------------------------------------------------------------- Cascade Ag Services, Inc., said in court papers it is in the process of negotiating a plan of reorganization with Whyte's Food Corporation, a multinational food manufacturer and importer. The plan currently under discussion involves an equity purchase by Whyte's, as well as a capital infusion to fund a Plan of Reorganization. The Debtor said it intends to file a Plan on or before the April 1 deadline set by the Court. At this time, the Debtor believes that the Plan would contemplate a Disclosure Statement hearing in early May, and a confirmation in June or July 2013. In the meantime, Cascade seeks an order authorizing its continued use of cash, accounts, and inventory through July 31, 2013. Cascade will appear before Bankruptcy Judge Karen A. Overstreet on March 28 at 9:30 a.m. for a hearing on its request for continued access to cash collateral. In a Jan. 8, Judge Overstreet extended Cascade's exclusive period to propose a Chapter 11 plan through and including April 15, 2013, and the exclusive solicit plan votes through and including June 14, 2013. The Order is without prejudice to the rights of the Debtor to request additional extensions of the Exclusive Periods. Two days later, Judge Overstreet issued a Fourth Interim Order authorizing the Debtor to use cash collateral as set forth in a budget through March 31, 2013. That order provides that the Debtor's cumulative expenditures for the period beginning Dec. 31, 2012, and ending March 31, 2013, will not exceed $2,626,853, which amount is equal to the total budgeted disbursements for the Current Cash Collateral Period, as provided in the Budget. The Debtor previously received a $7,800,000 offer from stalking horse bidder Pleasant Valley Farms, LLC, for the Debtor's assets. Pleasant Valley later withdrew the offer, citing subjective concerns about the Debtor's finances and accounting system integrity. After the Stalking Horse's withdrawal, the Debtor contacted other potential purchasers regarding their willingness to step into the Stalking Horse's shoes so that a sale could continue as planned. The Debtor said in court papers in December it continues to receive inquiries regarding a sale, and believes that at least five parties are interested in purchasing its assets. The Debtor is optimistic that a sale will occur in the first part of 2013. In court papers filed early this month, Cascade said that since filing for bankruptcy, the Debtor has used Cash Collateral to conduct ordinary-course business operations, to satisfy the Perishable Agricultural Commodities Act trust claims of Uesugi Farms and Falkner Produce, and to pay administrative fees, including professional fees. Over the past several weeks, the Debtor has engaged in aggressive efforts to improve its financial condition. Specifically, the Debtor has reduced its sales staff, improved accounting efficiency, and reduced brokerage fees from 3% to 1% effective Feb. 15, 2013. Additionally, the Debtor has implemented 10% price increases for customers constituting 85% of the Debtor's sales. These price increases will be realized in March and April 2013. The Debtor has also increased its sales volume over last year. Specifically, January 2013 sales were approximately 10% higher than January 2012 sales; and February 2013 sales were approximately 15% higher than February 2012 sales. The Debtor continues to maintain Cash Collateral values in excess of $7 million, for a total asset value of roughly $13.9 million on an orderly liquidation basis, and $20 million on a going concern basis. The Debtor has not alienated any material assets since the commencement of the bankruptcy case, nor does it intend to -- except in connection with a Court-approved plan. The Debtor submits that under these circumstances, its secured creditors, whose claims total at most $13.3 million, are adequately protected. In December, the Debtor filed an amended list of its largest unsecured creditors. A copy of the list is available at http://bankrupt.com/misc/CascadeAGAmendedCreditorsList.pdf About Cascade AG Cascade AG Services, Inc., dba Pleasant Valley Farms, fdba Mountain View Produce, Inc., fdba Staffanson Harvesting LLC, fdba Sterling Investment Group, L.L.C., is a vegetable processing company that processes Washington-grown cucumbers and cabbage into pickles and sauerkraut. Cascade AG filed for Chapter 11 bankruptcy (Bankr. W.D. Wash. Case No. 12-18366) on Aug. 13, 2012. It scheduled $25,820,499 in assets and $22,255,482 in liabilities. Lawyers at Cairncross & Hempelmann PS, in Seattle, serve as the Debtor's counsel. Clyde A. Hamstreet & Associates, LLC, is the Debtor's chief restructuring officer and financial advisor. The petition was signed by Craig Staffanson, president. The U.S. Trustee appointed seven creditors to the Official Unsecured Creditors' Committee. Lawrence R. Ream, Esq., at Schwabe, Williamson & Wyatt PC, Seattle, represents the Committee as counsel. DIP lender One PacificCoast Bank, FSB, is represented by Brad T. Summers, Esq., and David W. Criswell, Esq., at Ball Janik LLP. CASCADE AG: Files Amended Schedules of Assets & Liabilities ----------------------------------------------------------- Cascade Ag Services, Inc., filed with the U.S. Bankruptcy Court for the Western District of Washington its amended schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $2,234,000.00 B. Personal Property $23,288,648.96 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $9,480,412.03 E. Creditors Holding Unsecured Priority Claims $495,255.24 F. Creditors Holding Unsecured Non-priority Claims $11,379,075.51 -------------- -------------- TOTAL $25,522,648.96 $21,354,742.78 About Cascade AG Cascade AG Services, Inc., dba Pleasant Valley Farms, fdba Mountain View Produce, Inc., fdba Staffanson Harvesting LLC, fdba Sterling Investment Group, L.L.C., is a vegetable processing company that processes Washington-grown cucumbers and cabbage into pickles and sauerkraut. The Debtor filed for Chapter 11 bankruptcy (Bankr. W.D. Wash. Case No. 12-18366) on Aug. 13, 2012. Lawyers at Cairncross & Hempelmann PS, in Seattle, serve as the Debtor's counsel. Clyde A. Hamstreet & Associates, LLC, is the Debtor's chief restructuring officer and financial advisor. The petition was signed by Craig Staffanson, president. The U.S. Trustee appointed seven creditors to the Official Unsecured Creditors' Committee. Lawrence R. Ream, Esq., at Schwabe, Williamson & Wyatt PC, Seattle, represents the Committee as counsel. DIP lender One PacificCoast Bank, FSB, is represented by Brad T. Summers, Esq., and David W. Criswell, Esq., at Ball Janik LLP. CENTERPOINT ENERGY: Fitch Keeps 'BB+' Rating Following Jt. Venture ------------------------------------------------------------------ Fitch Ratings has affirmed the long-term Issuer Default Ratings (IDR) and instrument ratings of CenterPoint Energy Inc. and its subsidiaries following the announcement of a midstream joint venture (JV) agreement. The Rating Outlook for all entities is Stable. Simultaneously, Fitch has upgraded the short-term IDR for CNP and its subsidiary CenterPoint Energy Resources to 'F2' from 'F3'. CNP will combine 100% of its Field Services and Interstate Pipelines businesses in an existing CNP subsidiary that will become the Midstream JV. OGE Energy along with Enogex JV partner ArcLight, will contribute 100% of their interests in Enogex to the Midstream JV. Key Rating Drivers CNP's existing ratings and outlook have taken into consideration the expected expansion in the midstream business segment including a private or public partnership. Fitch believes that the overall business strategy and operating risk at CNP and CERC will not meaningfully change as a result of the formation of the JV in the foreseeable future. Fitch consolidates the JV proportionately when calculating the credit metrics for CNP and CERC. Fitch believes that CNP will likely support the JV under times of the stress, due to its strategic importance. Fitch estimates that this business segment will represent approximately 30% of CNP's total EBITDA by 2016, rising from 25% in 2011. For analytical purposes, Fitch would consider deconsolidation once a sizeable amount of the economic interest is held by the public shareholders and an independent board is established. CNP and CERC are expected to reduce debt with the proceeds from the JV term loan. Fitch understands that CERC will provide a limited guarantee over the life of JV's three-year $1.05 billion bank term loan and that such guarantee will be subordinated to CERC's existing debt and will be of collection not payment. CNP and CERC's leverage metrics are expected to weaken in the next two to three years, as their midstream earnings currently represent approximately 66% of the total earnings at the JV while they receive 59% of the economic interest. Additionally, the expected debt reduction at CERC will be taken gradually resulting in deterioration of the leverage ratio in the near term. Nevertheless, the credit profile remains supportive of current ratings due to the headroom from its relatively low leverage and strong interest coverage ratios. Fitch expects the metrics to improve in 2015 when synergy savings and benefits of the growth projects materialize. Fitch calculates that over the next three years CNP and CERC will produce consolidated FFO to debt, on average, of 20.6% and 20.7% respectively and FFO interest coverage of 4.6x and 5.4x. These metrics remain in line with Fitch's guideline ratios for a 'BBB' rated issuer. Following the formation of the JV, CNP and OGE may take various actions to facilitate an initial public offering of the joint venture as a Master Limited Partnership (MLP). An MLP would enhance capital access and efficiency in managing planned growth capex over the next few years. The upgrade of the short-term IDR reflects CNP and CERC's improved liquidity as a result of the transaction. The JV is expected to obtain its own credit facility and CNP is expected to maintain the size of its credit facilities in the foreseeable future. CNP and CERC's credit facilities mature in September 2016. Additionally, CERC is expected to reduce intercompany borrowings and public debt maturities using proceeds from the three-year $1.05 billion bank term loan of the JV. The ratings and outlook of CNP's regulated subsidiary CenterPoint Energy Houston Electric (CEHE) are not affected by the proposed JV. RATING SENSITIVITIES Positive -- Upgrade at CNP and CERC is unlikely in the foreseeable future due to the JV formation. Negative -- If CNP and CERC incur substantial leverage to meet the capital calls at JV or the JV is downgraded; -- If CEHE is downgraded; -- CNP and CERC's ratings will be negatively impacted if the regulatory construct governing the gas distribution subsidiaries becomes unfavorable. Fitch affirms the following ratings with a Stable Outlook: CenterPoint Energy, Inc. -- Long-term IDR at 'BBB'; -- Senior unsecured notes and pollution control revenue bonds at 'BBB'; -- Secured pollution control revenue bonds at 'A'; -- Junior Subordinated Debenture (ZENS) at 'BB+'. CenterPoint Energy Houston Electric LLC. -- Long-term IDR at 'BBB+'; -- First mortgage bonds at 'A'; -- Secured pollution control revenue bonds at 'A'; -- General mortgage bonds at 'A'; -- Unsecured Credit Facility at 'A-'; -- Short-term IDR at 'F2'. CenterPoint Energy Resources Corp. -- Long-term IDR at 'BBB'; -- Long-term senior unsecured notes at 'BBB'; Fitch upgrades the following ratings: CenterPoint Energy, Inc. -- Short-term IDR/commercial paper to 'F2' from 'F3'. CenterPoint Energy Resources Corp. -- Short-term IDR/commercial paper to 'F2' from 'F3'. CENTRAL EUROPEAN: "Favorably Inclined" to Roust Proposal -------------------------------------------------------- Central European Distribution Corporation on March 18 confirmed that it has received a proposal for a financial restructuring of its 3% Convertible Notes due March 15, 2013. The proposal was jointly made to CEDC by Roust Trading Ltd. of the 2013 Notes, and other beneficial owners holding an aggregate of approximately $85.7 million in outstanding principal amount of the 2013 Notes. Roust Trading and the 2013 Steering Committee collectively hold approximately 73% of the outstanding principal amount of the 2013 Notes. CEDC disclosed that Roust Trading and the 2013 Steering Committee have reached an agreement on a restructuring of the 2013 Notes, the terms of which were publicly disclosed by Roust Trading on March 14, 2013. While CEDC is still reviewing the proposal in detail, it is favorably inclined toward the proposal and anticipates that it will support it, subject to appropriate documentation that, if approved, will be reflected in a supplement to the offering memorandum distributed by CEDC in respect of the exchange offers launched on February 25, 2013, as amended on March 8, 2013. In addition, CEDC has determined to make certain amendments to key dates relating to the CEDC FinCo Exchange Offer, the Consent Solicitation, and the solicitation of acceptances to the Plan of Reorganization in light of the agreement reached between Roust Trading and the 2013 Steering Committee, and following further consultation with a Steering Committee of holders of approximately 30% of the outstanding principal amount of CEDC Finance Corporation International, Inc.'s Senior Secured Notes due 2016 as follows: -- the record date for the Consent Solicitation and the solicitation of acceptances of the Plan of Reorganization will be March 21, 2013; -- the Consent Fee Deadline and Early Voting Deadline (each as defined in the Offering Memorandum) will be 5:00 p.m. on April 3, 2013; and -- the Voting Deadline and Expiration Time (each as defined in the Offering Memorandum) will be 5:00 p.m. on April 4, 2013. CEDC is making these amendments to these key dates to allow fulsome consideration of the Exchange Offers, the Consent Solicitation and the Plan. In order to receive the Existing 2016 Notes Consideration, holders of 2016 Notes must validly tender and not withdraw their 2016 Notes, at or prior to the Expiration Time. To receive payment of cash pursuant to the Cash Option, the holder of record of the applicable 2016 Notes on the Distribution Date must have been the holder of record of the applicable 2016 Notes electing the Cash Option as of March 21, 2013. CEDC continues to believe that a successful restructuring will improve its financial strength and flexibility and enable it to focus on maximizing the value of its strong brands and market position. The restructuring is expected to have no effect on CEDC's operations in Poland, Russia, Hungary or Ukraine, all of which will continue doing business as usual. Obligations to all employees, vendors, and providers of credit support lines in Poland, Russia, Hungary and Ukraine will be honored in the ordinary course of business without interruption. CEDC believes that its subsidiaries in Poland, Russia, Hungary and Ukraine have sufficient cash and resources on hand to meet all such obligations. Maturity of 3% Convertible Notes due March 15, 2013 On March 15, 2013, CEDC failed to pay $257,858,000 principal due on the 2013 Notes. Under the terms of the 2013 Notes Indenture, the failure to pay principal when due constitutes an Event of Default. In addition, under Section 6.2 of the Indenture governing the 2016 Notes, the failure to pay principal when due on the 2013 Notes constitutes an Event of Default under the 2016 Notes Indenture and, if continuing, holders of not less than 25% of the aggregate principal amount of the outstanding 2016 Notes may declare the principal plus any accrued and unpaid interest on the 2016 Notes to be immediately due and payable. CEDC currently has $380 million and EUR430 million (or approximately $559.4 million) of 2016 Notes outstanding. CEDC intends to address the maturity of the 2013 Notes, as well as the Event of Default under the 2016 Notes Indenture, through the Exchange Offers. Alternatively, CEDC may choose to implement the restructuring pursuant to a pre-packaged chapter 11 plan of reorganization that is included with the offering materials related to the Exchange Offers. Roust Trading and the 2013 Steering Committee, who collectively hold approximately 73% of the 2013 Notes, support a restructuring of the 2013 Notes in accordance with the terms of their restructuring proposal. Separately, the 2016 Steering Committee has stated that it supports the terms of the restructuring of the 2016 Notes as described in the Offering Memorandum. Any chapter 11 filing would be limited solely to CEDC and CEDC Finance Corporation International, Inc. None of CEDC's Polish, Russian, Ukrainian or Hungarian operations would become the subject of any insolvency proceedings. In this scenario, CEDC anticipates that all its operations would continue without interruption in the ordinary course, including the payment of all employee, vendor, and other obligations. Annual General Meeting of Shareholders In light of CEDC's current financial condition as well as the on- going nature of CEDC's restructuring, the board of directors of CEDC has determined to delay the annual meeting of CEDC's shareholders currently scheduled for March 26, 2013, until Tuesday, May 14, 2013. CEDC Annual Report Finally, CEDC announced on March 18 that its Annual Report on Form 10-K for the year ended December 31, 2012 could not be filed with the United States Securities and Exchange Commission within the prescribed time period as the process of preparing CEDC's financial statements for the year ended December 31, 2012 has been delayed due to the focus of CEDC's resources on restructuring its financial obligations, including preparation and commencement of the Exchange Offers, negotiating with creditors and addressing open accounting issues related to CEDCs financial restructuring. CEDC expects to file its Annual Report on Form 10-K as soon as practicable. About CEDC Mt. Laurel, New Jersey-based Central European Distribution Corporation is one of the world's largest vodka producers and Central and Eastern Europe's largest integrated spirit beverages business with its primary operations in Poland, Russia and Hungary. Ernst & Young Audit sp. z.o.o., in Warsaw, Poland, expressed substantial doubt about Central European's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that certain of the Company's credit and factoring facilities are coming due in 2012 and will need to be renewed to manage its working capital needs. The Company's balance sheet at Sept. 30, 2012, showed US$1.98 billion in total assets, US$1.73 billion in total liabilities, US$29.44 million in temporary equity, and US$210.78 million in total stockholders' equity. Liquidity The Company's Convertible Senior Notes are due on March 15, 2013. The Company has said its current cash on hand, estimated cash from operations and available credit facilities will not be sufficient to make the repayment of principal on the Convertible Notes and, unless the transaction with Russian Standard Corporation is completed the Company may default on them. The Company's cash flow forecasts include the assumption that certain credit and factoring facilities coming due in 2012 would be renewed to manage working capital needs. Moreover, the Company had a net loss and significant impairment charges in 2011 and current liabilities exceed current assets at June 30, 2012. These conditions, the Company said, raise substantial doubt about its ability to continue as a going concern. * * * As reported by the TCR on Aug. 10, 2012, Standard & Poor's Ratings Services kept on CreditWatch with negative implications its 'CCC+' long-term corporate credit rating on U.S.-based Central European Distribution Corp. (CEDC), the parent company of Poland-based vodka manufacturer CEDC International sp. z o.o. "The CreditWatch status reflects our view that uncertainties remain related to CEDC's ongoing accounting review and that CEDC's liquidity could further and substantially weaken if there was a breach of covenants which could lead to the acceleration of the payment of the 2016 notes, upon receipt of a written notice of 25% or more of the noteholders," S&P said. As reported by the TCR on Jan. 16, 2013, Moody's Investors Service has downgraded the corporate family rating (CFR) and probability of default rating (PDR) of Central European Distribution Corporation (CEDC) to Caa3 from Caa2. "The downgrade follows CEDC announcement on the 28 of December that it had agreed with Russian Standard a revised transaction to repay its US$310 million of convertible notes due March 2013 which, in Moody's view, has increased the risk of potential loss for existing bondholders", says Paolo Leschiutta, a Moody's Vice President - Senior Credit Officer and lead analyst for CEDC. CENTURYLINK INC: Fitch Rates New $500MM Sr. Unsecured Notes 'BB+' ----------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to CenturyLink, Inc.'s proposed offering of $500 million of senior unsecured notes due 2020. Proceeds are expected to be used to reduce revolver borrowings, repay $176 million of senior unsecured notes maturing on April 1, 2013 and for general corporate purposes. CenturyLink's Issuer Default Rating (IDR) is 'BB+'. The Rating Outlook is Stable. Key Rating Drivers The following factors support the rating: -- Fitch's ratings are based on the expectation that CenturyLink will demonstrate steady improvement in its revenue profile over the next couple of years; -- Free cash flows (FCFs) are expected to strengthen with a reduction in the dividend, and liquidity is expected to remain relatively strong; -- Execution risks related to the integration of Qwest Communications International, Inc. (Qwest) and Savvis, Inc. are nearly behind the company. The following concerns are embedded in the rating: -- The company's recent change in financial policy, which incorporates the maintenance of net leverage of up to 3.0x, less restrictive than its previous mid-2x target; -- The decline of traditional voice revenues, primarily in the consumer sector, from wireless substitution and moderate levels of cable telephony substitution. Although such revenues are declining in the revenue mix and are being replaced by broadband and business services revenues, these latter sources have lower margins. Fitch expects CenturyLink's revenues to decline slightly in 2013, and reach stability in 2014. Revenues from high-speed data and certain advanced business services, including the managed hosting and cloud computing services offered by Savvis and a modest but growing level of revenues from facilities-based video, are expected to contribute to stability. In February 2013, the company initiated a $2 billion common stock repurchase program, which while accompanied by a dividend reduction, will result in a lower level of debt reduction over the next two years than previously incorporated in Fitch's expectations. The company plans to repurchase $2 billion in common stock by February 2015, primarily funded from FCF. Annual FCF improves by approximately $450 million as a result of a reduction in the common stock dividend of approximately 25%, but on a net basis, cash returned to shareholders will increase. On a gross debt basis, leverage in 2012 was approximately 2.7x, consistent with the 2.7x to 2.8x range Fitch expects over the next several years. Debt reduction in 2013 and 2014 is expected to be modest. Additionally, there will be some pressure on EBITDA as there are lower incremental merger-related cost savings in 2013 than in 2012. CenturyLink's total net debt was $20.4 billion at Dec. 31, 2012. Financial flexibility is provided through a $2 billion revolving credit facility, which matures in April 2017. As of Dec. 31, 2012, approximately $1.18 billion was available on the facility. CenturyLink also has a $160 million uncommitted revolving letter of credit facility. The principal financial covenants in the $2 billion revolving credit facility limit CenturyLink's debt to EBITDA for the past four quarters to no more than 4.0x and EBITDA to interest plus preferred dividends (with the terms as defined in the agreement) to no less than 1.5x. Qwest Corporation (QC) has a maintenance covenant of 2.85x and an incurrence covenant of 2.35x. The facility is guaranteed by Embarq, Qwest Communications International Inc. and Qwest Services Corporation (QSC). In 2013, Fitch expects CenturyLink's FCF (defined as cash flow from operations less capital spending and dividends) to range from $1 billion to $1.3 billion. Expected FCF levels reflect capital spending within the company's guidance range of $2.8 billion to $3 billion. Within the capital budget, areas of focus for investment primarily include continued spending on fiber-to-the-tower, data center/hosting, broadband expansion and enhancement, as well as spending on IPTV, the company's facilities based video program. Fitch believes CenturyLink has the financial flexibility to manage upcoming maturities due to its FCF and credit facilities. Debt maturities in 2013 and 2014 are approximately $1.1 billion and $0.7 billion, respectively. Going forward, Fitch expects CenturyLink and QC will be CenturyLink's only issuing entities. CenturyLink has a universal shelf registration available for the issuance of debt and equity securities. Rating Sensitivities: Fitch does not expect a positive rating action over the next several years based on its assessment of the competitive risks faced by CenturyLink and expectations for leverage. A negative rating action could occur if: -- Consolidated leverage through, but not limited to, operational performance, acquisitions, or debt-funded stock repurchases, is expected to be 3.5x or higher; and -- For QC or Embarq, leverage trends toward 2.5x or higher (based on external debt). CENTURYLINK INC: Moody's Rates New Series V Notes 'Ba2' ------------------------------------------------------- Moody's Investors Service has assigned a Ba2 (LGD5, 85%) rating to CenturyLink Inc.'s proposed offering of Series V Notes. The proceeds from the notes offering are expected to be used to repay a portion of the indebtedness outstanding under its $2 billion revolving credit facility, to repay the $176 million Series O Notes maturing on April 1, 2013 and for other general corporate purposes. Consequently, Moody's has raised CenturyLink's Speculative Grade Liquidity rating to SGL-3 from SGL-4. The company's other ratings and stable outlook remain unchanged. Moody's has taken the following rating actions: CenturyLink, Inc. New Senior Unsecured Series V Notes: Assigned Ba2 (LGD5, 85%) Speculative Grade Liquidity rating: Upgraded to SGL-3 from SGL-4 Ratings Rationale: CenturyLink's SGL rating has been raised to SGL-3 from SGL-4 to reflect its adequate liquidity profile. Moody's expects the company to use the proceeds from the proposed offering to reduce outstanding revolver indebtedness and address a near-term maturity. Moody's has included in Moody's SGL analysis the timing of share repurchases which are expected to be $875 million in 2013, $1.0 billion in 2014 and $125 million in 2015. Moody's expects CenturyLink to maintain approximately $1.0 billion of availability under its revolver over the next twelve to eighteen months. CenturyLink's Ba1 Corporate Family Rating largely reflects the company's stable cash flows, its broad scale of operations, and its strong market position. These positives are offset by the challenges the company faces in reversing the downward pressure on revenues and sustaining EBITDA margins exacerbated by a tolerance for higher leverage. The principal methodology used in this rating 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. CENTURYLINK INC: S&P Assigns 'BB' Rating to $500MM Senior Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' issue-level rating and '4' recovery rating to Monroe, La.-based telecommunications company CenturyLink Inc.'s proposed $500 million senior notes due 2020. The '4' recovery rating indicates expectations for average (30% to 50%) recovery in the event of payment default. The company intends to use the net proceeds to repay a portion of the indebtedness outstanding under its $2 billion revolving credit facility, to repay senior notes maturing on April 1, 2013, and for other general corporate purposes. The 'BB' corporate credit rating on CenturyLink is unchanged and the outlook remains stable as the transaction is unlikely to have an impact on the company's credit measures, including leverage, which was about 3.4x as of Dec. 31, 2012, including S&P's adjustment for operating leases and postretirement liabilities. S&P expects CenturyLink's leverage to remain in the mid-3x area over the next year, which is supportive of a "significant" financial risk profile. Despite its substantial free operating cash flow (FOCF) generation, CenturyLink also has an aggressive financial policy, with a large dividend payout and substantial share repurchases over the next couple of years, which limits potential debt reduction. In addition to S&P's assessment of a significant financial risk profile, its ratings on CenturyLink reflect a business risk profile assessment of "fair". Standard & Poor's Ratings Services expects that revenues will continue to decline modestly because of competition in the core consumer wireline phone business from cable telephony and wireless substitution, which contributed to access-line losses of about 5.7% during the fourth quarter of 2012, year over year. Tempering factors in the business risk assessment include good scale and a favorable market position as the third-largest incumbent telecom carrier in the U.S.; solid operating margins and FOCF generation; and growth from strategic services, including high speed data, Internet Protocol TV, Ethernet connections for businesses, and managed data hosting. RATINGS LIST CenturyLink Inc. Corporate Credit Rating BB/Stable/-- New Rating CenturyLink Inc. $500 Mil. Senior Notes Due 2020 BB Recovery Rating 4 CHAMPION INDUSTRIES: Likely to Default on Debt Covenants -------------------------------------------------------- Champion Industries, Inc. on March 15 disclosed that a net loss from continuing operations of $(3.3) million or $(0.29) per share on a basic and diluted basis for the quarter ended January 31, 2013 compared to a net loss from continuing operations of $(83,000) or $(0.01) per share on a basic and diluted basis for the quarter ended January 31, 2012. The Company reported a net loss from discontinued operations for the quarter ended January 31, 2013 of $(291,000) compared to a net loss from discontinued operations for the quarter ended January 31, 2012 of $(3,000) or $(0.02) and $(0.00) on a basic and diluted per share basis. The results for 2013 over 2012 reflected a substantial decrease in earnings, primarily as a result of pre-tax non-cash impairment charges associated with goodwill of $(2.2) million associated with the printing segment as well as higher interest costs primarily associated with the amortization of debt discount associated with warrants issued to the Company's secured lenders. Marshall T. Reynolds, Chairman of the Board and Chief Executive Officer of Champion, said, "Our results continue to be impacted by various non-cash events but we continue to generate positive cash flow from operating activities. If we examine our gross profit, which is a key starting point for profitability, our gross profit dollars were $6.7 million in first quarter 2013 and $8.1 million in first quarter 2012. However, this decrease was substantially offset by a reduction in SG&A expenses of $1.3 million. In other words, in spite of the numerous hurdles and challenges we have faced and actions we have taken in recent years, in the final analysis we were able to essentially hold our core business relatively stable in the first quarter of 2013. We intend to work with our secured creditors and advisors to address our debt maturities and liquidity to the best of our ability and if successful in stabilizing our funding platform going forward, we believe our core business has the opportunity to improve." The net (loss) figures resulted in basic and diluted loss per share from continuing operations of $(0.29) for the quarter ended January 31, 2013 compared with a loss of $(0.01) on a basic and diluted loss per share basis for the comparable quarter of 2012. The Company's results in 2013 and in 2012 are reflective of a continuation of the most difficult operating environment the Company has ever faced, primarily within the printing segment and secondarily in the newspaper segment. The Company experienced a decrease in sales for the quarter of $3.9 million, or 14.8%, from $26.5 million in 2012 to $22.6 million in 2013. The printing segment of the business reflected a sales decrease of $2.6 million or 18.1%, with the office products and office furniture segment showing an overall sales decrease of $1.0 million, or 12.0%. The newspaper segment reported sales of $3.6 million in first quarter 2013 compared to $3.9 million in first quarter 2012, a decrease of $0.3 million or 8.3%. The sales compression experienced by the Company is partially attributable to the residual effect of the overall global economic crisis and the related impact on the core business segments in which the Company operates as well as the impact of certain restructuring initiatives, and is reflective of a continued difficult operating environment as well as macro industry dynamics within the newspaper segment. At January 31, 2013 the Company had approximately $38.2 million of interest bearing debt, of which $35.3 million is syndicated (both totals net of unamortized debt discount of $0.9 million). Actual contractual syndicated debt is $36.1 million. The contractual syndicated debt has been reduced by approximately $49.7 million (excludes impact of deferred fee for Term Loan B) since inception of the debt, which resulted primarily from the acquisition of The Herald-Dispatch in September 2007. This represents a reduction of over 58.1% in a period slightly under 5.5 years. This debt was paid down during a significant economic downturn and severe secular decline within its printing and newspaper segments. The Company has achieved this debt reduction through a combination of earnings, cash flow, assets sales, equity additions and working capital management. The Company is subject to certain restrictive financial covenants requiring the Company to maintain certain financial ratios among other conditions. The Company was in compliance with these covenants at January 31, 2013. However, due to the short term nature of the credit expiration and the multitude of covenants the Company is required to comply with there is a high probability of default at or before March 31, 2013 and its ability to operate as a going concern is dependent on its ability to address its current credit situation. Champion Industries, Inc. is a commercial printer, business forms manufacturer and office products and office furniture supplier in regional markets east of the Mississippi. Champion also publishes The Herald-Dispatch daily newspaper in Huntington, WV with a total daily and Sunday circulation of approximately 22,000 and 28,000, respectively. Champion serves its customers through the following companies/divisions: Chapman Printing (West Virginia and Kentucky); Stationers, Champion Clarksburg, Capitol Business Interiors, Garrison Brewer, Carolina Cut Sheets, U.S. Tag and Champion Morgantown (West Virginia); Champion Output Solutions (West Virginia); Smith & Butterfield (Indiana and Kentucky); Champion Graphic Communications (Louisiana); Blue Ridge Printing (North Carolina) and Champion Publishing (WV, Kentucky and Ohio). CHARLES SCHWAB: Fitch Affirms 'BB+' Preferred Stock Rating ---------------------------------------------------------- Fitch Ratings has affirmed the ratings of Charles Schwab Corporation (Schwab, rated 'A/F1') and Scottrade Financial Services (Scottrade, rated 'BBB-'). The Rating Outlooks for Schwab and Scottrade are Stable. Rating Action and Rationale The rating affirmations are reflective of the retails brokers' continued evolution towards a business model that is more based on net interest revenue and fee revenue than trading revenue, offset by continued moderated trading volumes and low interest rates. While industry leaders such as Schwab have been diversifying their sources of revenue for several years, other smaller players such as Scottrade are now more aggressively growing these sources of revenue. Fitch believes that revenue from both asset management and banking operations provides diversity of revenue sources that tends to be more stable than trading revenue over time, which is a positive from a credit perspective over the long term. Trading revenue tends to be somewhat fickle and moves in tandem with stock market trends. Fitch would note that while daily average revenue trades (DARTs) have been weak over the last few years for the retail brokers, there has been a pick-up in trading with the stock market gains in early 2013. Net interest revenue has increased as deposit growth has been strong, though the net interest margin has continued to decline as the new deposits are invested at lower rates. Fitch continues to believe that earnings for the retail brokers are at cyclical lows, and given the scalability of their business models, they should have meaningful earnings growth with either better stock market trends and/or higher interest rates. While returns on equity remain below historical lows for the retail brokers, they have still improved over the last year. Leverage as measured by adjusted debt-to-EBITDA has also improved from the past year which helps support each institution's Stable Rating Outlook. Fitch believes that the main threat to the retail brokers' business model and ratings could result from a technological or operational loss that is particular to an individual company that results in reputational damage that could cause clients to flee a particular firm. While Fitch believes these risks to be controlled and monitored, Fitch would also note that these types of risks are inherently difficult to predict and quantify, but a large occurrence at any one firm would likely prompt Fitch to review ratings to determine if a negative action was appropriate. An industry-wide event that affects each firm equally may still impact ratings, but may allow each firm to better maintain its client base. An additional risk to ratings is from the continued growth of banking operations. While Fitch generally views the contribution to earnings positively, should the retail brokers aggressively expand their loan portfolios such that they are exposed to adverse selection in growing assets or should they begin to reach of yield in their investment portfolios, ratings or Rating Outlooks could be negatively impacted. KEY RATING DRIVERS - IDRs and Senior Debt: Charles Schwab Corporation Fitch's affirmations reflect Schwab's continued growth in earnings in spite of a challenging interest rate environment and fickle equity markets. Due to a mix of modest revenue growth and continued expense discipline, Schwab's net margin expanded to 19% in 2012 from 18.4% in 2011. Due to some de-leveraging as well as growth in retained earnings, Schwab's return on equity modestly declined to 9.7% in 2012 from 11.2% in 2011. Given Schwab's highly scalable business model, an improvement in equity markets or interest rates could meaningfully increase Schwab's earnings and therefore return on equity. As Schwab continues to grow and expand in asset management and fee-based products as well as expand Schwab Bank's balance sheet primarily through deposit growth, the company has become less reliant on its historical trading revenue. From a credit perspective in terms of earnings stability, Fitch views this mix shift positively. In 2012, fee based revenue accounted for 42% of total net revenue, net interest revenue accounted for 36% of total net revenue, and trading revenue accounted for 18% of total net revenue. Fitch would expect revenue to skew even more towards fee- based revenue and net interest revenue over time. Deposits on Schwab Bank's balance sheet now amount to nearly $80bn as of YE2012 from a mix of both organic growth as well as client balance transfers from Schwab's brokerage subsidiary. Fitch views credit risk in the bank balance sheet as relatively low given that it is comprised of only $10.7 billion of loans, which are primarily mortgage related loans to Schwab clients, and with the balance of deposits being invested in primarily government backed securities. In particular, 51.3% of the banks securities portfolio is invested in highly rated agency mortgage backed securities. Given this posture, as well as a relatively short-duration on the portfolio, Schwab's net interest margin (NIM) declined to 1.49% at 4Q'12 and Fitch would expect this to continue to decline into the mid-1.40% range in 2013. Given some debt repayments and refinancing in 2012 as well as continued growth in earnings, Schwab's leverage as measured by adjusted debt-to-EBITDA declined to 0.88x at YE2012, down from 1.14x at YE2011. Fitch views the decline in leverage metrics positively and notes that it is indicative of Schwab's already strong ratings and supports the Stable Rating Outlook. Scottrade Financial Services Fitch's affirmation is based Scottrade's ability to continue to adequately service its debt obligations despite a challenging interest rate environment and volatile equity markets. Decreasing daily average revenue trades (DARTs) contributed to a 20% decrease in transaction based revenue in fiscal 2012. After a challenging fiscal 2012, Scottrade made expense reductions which combined with a 5.2% improvement in net revenue led to an increase in net margin to 15.6% in fiscal 1Q'13 compared to 5.3% in fiscal 2012. Return on equity improved to 7.9% in fiscal 1Q'13 compared to 2.8% in fiscal 2012. Fitch believes Scottrade's business model is scalable and should benefit from improvements in equity markets while the deposit growth at Scottrade Bank should provide a benefit to earnings in an increasing rate environment. Scottrade's strategy is to continue to grow deposits at Scottrade Bank, thereby continuing to increase the contribution of revenues from net interest revenue as a percentage of total revenue. In fiscal 1Q'13, net interest revenue represented 49% of total revenue compared to just 38% in fiscal 2011, while trading revenue declined to 35.5% in fiscal 1Q'13 from 50% in fiscal 2011. Fitch views the shift in revenue mix from transaction based revenue into more stable spread based revenues positively as it should provide increasing stability to earnings in future periods. Scottrade Bank had $15.3 billion in deposits at Dec. 31, 2012 compared to $11.9bn at September 30, 2011. Scottrade continues to grow deposits by sweeping deposits from the broker-dealer to the bank. Fitch views the credit risk in Scottrade Bank's investment portfolio as relatively low. As of Dec. 31, 2012, 91% of the assets in the portfolio were directly or indirectly guaranteed by the U.S. government, including $7.2 billion invested in asset- backed securities backed by Federal Family Education Loan Program (FFELP) loans and $5.7 billion invested in U.S. government agency securities. As Scottrade Bank grows, they will continue to invest assets, including continued growth of their loan portfolio, which was $284 million as of Dec. 31, 2012. In February 2013, Scottrade Bank purchased a small Missouri based bank which will help serve as part of their loan origination platform. Historically, Scottrade had purchased most of its loans in the secondary market but will now begin to expand their loan origination capabilities. Fitch acknowledges this growth in the loan portfolio does not come without risks and will continue to monitor the asset quality going forward. Scottrade's net interest margin (NIM) improved to 1.46% in fiscal 1Q'13 compared to 1.45% in fiscal 2012. Increasing net interest income and reduced expenses contributed to stronger earnings and lower leverage in the first quarter of fiscal 2013. As of Dec. 31, 2012, adjusted debt-to-EBITDA declined to 2.03(x) compared to 2.76(x) at fiscal 4Q'12 and 3.27(x) at fiscal 3Q'12. Fitch notes its adjusted EBITDA metric is annualized to calculate quarterly ratios. Fitch views this decrease in leverage positively and supports the Stable Rating Outlook. RATING SENSITIVITIES - IDRs and Senior Debt: Charles Schwab Corporation Fitch notes that there is limited upside to Schwab's current ratings given the company's elevated sensitivity to stock market trends and interest rates. However, should Schwab's revenue mix continue to shift and exhibit more stable trends over an extended period through various market cycles, there could be some modest upside to ratings or the Rating Outlook. The key risk to Schwab's ratings is from either poor investment performance that causes client assets to leave the firm or a large idiosyncratic operational loss that similarly causes clients to pull their business from the firm. The latter type of risk is particularly difficult to predict and quantify but has the potential to be harmful to the company and its ratings should the loss impact only Schwab and not all industry participants. This risk also constrains upwards rating potential. An additional risk that could impact ratings over time is the growth of Schwab Bank. While presently Fitch views it to be well and relatively conservatively managed, should the mix of the loan portfolio change or the company begin to reach for yield in its investment portfolio such that it increases the credit or interest rate risk profile of the balance sheet, ratings or the Rating Outlook could come under pressure. Scottrade Financial Services Fitch believes that Scottrade has limited upside potential to current ratings in the near term given the company's sensitivity to stock market trends and challenges regarding the growth of banking. Given Scottrade's limited current revenue diversity, the company is also viewed as more sensitive to adverse market conditions and decreased trading volumes relative to peers. However, should Scottrade maintain current leverage metrics, continue to shift their revenue mix to more stable based spread revenues, and execute on the measured and profitable growth of Scottrade Bank over an extended period of time, there could be some upside to ratings or the Rating Outlook. The primary risk to Scottrade's rating is from a large idiosyncratic operational loss or data breach that causes clients to leave the firm. This risk is difficult to predict and quantify but has the potential to be harmful to the company and its ratings should the loss impact only Scottrade and not all industry participants. This risk also constrains upwards rating potential. Other risks to ratings include the growth at Scottrade Bank and its potential to impact credit quality, as Fitch believes Scottrade could be subject to some adverse selection as the company focuses on organically growing its loan portfolio across various product categories. An additional risk to ratings is the potential for leverage to return and remain at levels seen in 2012 through either reduced earnings power or additional debt issuances, either of which could negatively impact ratings. Fitch also notes that Scottrade's corporate investment portfolio, while small and short duration, is highly concentrated in the financial services industry. In a stress, this could result in correlated adverse performance amongst the securities, as well as relative to Scottrade's primary business activities. Given the increasing risks involved with Scottrade's expansion into new product categories, particularly within the loan portfolio, Fitch feels that Scottrade is more susceptible to downward ratings pressure relative to Schwab. KEY RATING DRIVERS - Support Ratings and Support Floor Ratings: Schwab has a support rating of '5' and a support floor rating of 'NF' indicating that support is unlikely. RATING SENSITIVITIES - Support Ratings and Support Floor Ratings: Not applicable. KEY RATING DRIVERS - Subordinated Debt and Other Hybrid Securities: Schwab has a preferred stock rating of 'BB+' which is five notches below its IDR given its position in the capital structure and potential for non-performance compared with other issuances. RATING SENSITIVITIES - Subordinated Debt and Other Hybrid Securities: Ratings for Schwab's preferred stock are notched five notches from the IDR based on Fitch's treatment of preferreds in bank capital as this source of capital for Schwab has historically been downstreamed to support its banking operations. As such, changes in ratings on the preferred are primarily sensitive to any change in the IDR, where the notching would be realigned in conjunction with any change in the IDR. Fitch has affirmed the following ratings: Charles Schwab Corporation -- Long-term Issuer Default Rating (IDR) at 'A'; Outlook Stable. -- Short-term IDR at 'F1'; -- Senior unsecured notes at 'A'; -- Short-term debt at 'F1'; -- Preferred stock at 'BB+'; -- Support at '5'; -- Support floor at 'NF'. Scottrade Financial Services -- Long-term Issuer Default Rating (IDR) at 'BBB-'; Outlook Stable. -- Senior unsecured notes at 'BBB-' CHEROKEE SIMEON: Gives Up on Reorganization Due to Cash Woes ------------------------------------------------------------ Cherokee Simeon Venture I, LLC, this month filed a motion asking the Bankruptcy Court to dismiss its Chapter 11 bankruptcy case. The Debtor said that due to events outside of the Debtor's control, it has only recently concluded that it does not have the ability to pay its post-petition expenses as they come due. The Debtor filed multiple motions with the Court for permission to access its cash, to allow use of rents received, to terminate burdensome tenancies, and to obtain debtor-in-possession financing. The Debtor used the time afforded through the bankruptcy process to investigate the reduction of claims against the Debtor, formulate possible causes of action and claims and pursue a possible sale of the Debtor's assets which would enable it to formulate and confirm a Chapter 11 plan. "Unfortunately, these efforts have not been sufficiently successful. The Debtor has been awaiting a good faith offer to purchase its assets, but such an offer has not been forthcoming. The Debtor cannot continue to incur post-petition expenses while it waits," the Debtor stated. The Debtor said that it continues to vehemently oppose EFG-Campus Bay, LLC's dismissal motion because it seeks an unsubstantiated ruling from the Court that the Debtor's Chapter 11 case was filed in bad faith. The Debtor last month filed a motion to extend the period during which the Debtor has the exclusive right to file a Chapter 11 plan to May 21, 2013, and the period during which the Debtor has the exclusive right to solicit acceptances of that plan to July 20, 2013. Cherokee Simeon Holding Company LLC and unseated receiver EFG- Campus Bay, LLC, however, conveyed opposition to an extension. They say the Debtor's case lacks progress in the five months during which it has been pending. Cherokee Holding is represented by: Sullivan Hazeltine Allinson LLC William A. Hazeltine 901 North Market Street, Suite 1300 Wilmington, DE 19801 Tel: (302) 428-8191 Fax: (302) 428-8195 E-mail: whazeltine@sha-llc.com and Wendel, Rosen, Black & Dean LLP Elizabeth Berke-Dreyfus 1111 Broadway, 24th Floor Oakland, California 94607 Tel: (510) 834-6600 Fax: (510) 834-1928 E-mail: edreyfuss@wendel.com EFG is represented by: Greenberg Traurig, LLP Sandra G.M. Selzer The Nemours Building 1107 North Orange Street, Suite 1200 Wilmington, DE 19801 Tel: (302) 661 ? 7000 Fax: (302) 661-7360 E-mail: selzers@gtlaw.com Diane E. Vulocolo 2700 Two Commerce Square 2001 Market Street Philadelphia, PA 19103 Tel: (215) 988-7800 Fax: (215) 988-7801 Bryan Cave LLP David R. Weinstein Dena Cruz Natalie B. Daghbandan 800 West Olympic Boulevard, 4th Floor Los Angeles, CA 90015 Tel: (213) 572-4300 Fax: (213) 572-4400 E-mail: david.weinstein@bryancave.com About Cherokee Simeon Cherokee Simeon Venture, I, LLC, is an AstraZeneca Plc affiliate that owns a contaminated former acid-factory site in Richmond, California. Cherokee Simeon sought Chapter 11 protection (Bankr. D. Del. Case No. 12-12913) on Oct. 23, 2012. Cherokee Simeon disclosed $33,600,000 in assets and $17,954,851 in debts in its schedules. Rafael Xavier Zahralddin-Aravena, Esq., at Elliott Greenleaf represents the Debtor. CHESAPEAKE ENERGY: Fitch Rates $2.3 Billion Unsecured Notes 'BB-' ----------------------------------------------------------------- Fitch Ratings has assigned a 'BB-' rating to Chesapeake Energy's $2.3 billion senior notes offering due 2016, 2021 and 2023. The proceeds of this offering will be used to refinance or redeem maturing and other outstanding debt. The Rating Outlook for Chesapeake remains Negative. Key Rating Drivers The ratings on Chesapeake reflect the company's leverage relative to reserves and production, coupled with size of its asset base and operating profile. For the year ended 2012, Chesapeake had 2.6 billion barrels of oil equivalent (boe) in proved reserves with 57% of those reserves proved developed. Due to weak natural gas prices in 2012, Chesapeake, like others in the industry, wrote off a significant amount of reserves which has impacted debt/reserve calculations. Chesapeake's balance sheet debt was approximately $12.6 billion compared at Dec. 31, 2012, compared with approximately $11 billion as of year-end (YE) 2011. Chesapeake's strategy to transition to more liquids production continues to occur. However, weak natural gas prices last year proved to be a headwind. For YE 2012, adjusted debt (which includes preferred equity, non-controlling interests and other Fitch calculations such as future lease operating expenses related to volumetric production payment [VPP] agreements, etc.) to flowing boe per day was approximately $32,000/boe/d and its adjusted debt/proved developed reserves (PD) was nearly $14/PD. The Negative Outlook reflects the funding issues Chesapeake faces as it continues to transition to an increased emphasis on crude production. Fitch expects free cash flow to be negative in 2013 and smaller than 2012. Fitch also expects Chesapeake's free cash flow to be largely funded by asset sales and monetizations. Fitch currently estimates the funding gap to be approximately $4 billion. Liquidity is provided for by Chesapeake's $4 billion secured revolver and expected proceeds from planned asset sales/monetizations. Maturities are relatively light in 2013 with only $464 million due later this year and $1.6 billion due 2015. Chesapeake's revolver was nearly fully available at YE 2012 with nothing drawn and only $31 million in letters of credit against it. Key covenants are primarily associated with the secured revolver and include maximum debt-to-book capitalization (70% covenant threshold) and maximum total debt-to-EBITDA. The revolving facility was amended last year so that the maximum debt-to-EBITDA is: -- 5x at Dec. 31, 2012; -- 4.75x at March 31, 2013; -- 4.5x at June 30, 2013; -- 4.25x at Sept. 30, 2013; and -- 4x thereafter. Rating Sensitivities Future developments that may, individually or collectively, lead to positive rating action include; -- Material progress in deleveraging the balance sheet relative to reserves and production; -- Much stronger cash flow generation leading to consistent and significant positive free cash flow generation. Negative: Future developments that may, individually or collectively, lead to negative rating action include; -- Negative free cash flow leading to rising debt levels relative to reserves and production; -- Marked decrease in production levels or proved developed reserves relative to debt. CHESAPEAKE ENERGY: Moody's Rates New $2.3-Bil. Senior Notes 'Ba3' ----------------------------------------------------------------- Moody's Investors Service assigned Ba3 ratings to Chesapeake Energy Corporation's proposed offering of $2.3 billion of senior notes. The proceeds of the offering will be used to purchase or redeem maturing and other outstanding debt. "The Ba3 ratings on the new senior notes reflect our expectation that the proceeds will ultimately be used to refinance notes maturing in 2013 and other outstanding notes," commented Pete Speer, Moody's Vice-President. "The negative outlook highlights our concern regarding the company completing sufficient asset sales this year to both fund its capital expenditures and meaningfully reduce debt." Ratings Rationale: The rating outlook remains negative based on Chesapeake's elevated leverage metrics and the execution risk of its ongoing asset sales efforts. In order to reduce debt the company must raise proceeds in excess of its estimated $4 billion of negative free cash flow in 2013. While this funding gap is much lower than 2012, Moody's is concerned that the company may be challenged to sustain its overall production levels as forecasted with the lower level of capital investment. Despite Chesapeake completing nearly $12 billion of asset sales and other asset monetizations during 2012, its reported and adjusted debt still increased by approximately $2 billion. The gap between the capital expenditures and cash flows ended up being wider than initially forecasted. The higher adjusted debt combined with the lower proved developed (PD) reserve volumes caused by negative reserve revisions increased debt/PD reserves by $3 to approximately $13.50/boe at December 31, 2012. Rising production kept leverage on production volumes (debt/average daily production) relatively constant year over year at approximately $29,000/boe, but Chesapeake's retained cash flow(RCF)/debt declined to 16% in 2012 from 27% in 2011, as low gas prices reduced its cash flows. If Chesapeake is not able to reduce its adjusted debt and corresponding leverage metrics then its ratings could be downgraded. Debt/pd reserves above $12/boe, debt/average daily production above $35,000/boe or retained cash flow/debt below 20% on a sustained basis could result in a ratings downgrade. If the company is able to execute sufficient asset sales to meaningfully reduce debt and improve its leverage metrics while sustaining its production levels then the outlook could be changed to stable. A rating upgrade appears unlikely through 2013. Chesapeake's Ba2 Corporate Family Rating (CFR) incorporates the benefits of its very large proved reserve and production scale, big acreage positions in multiple basins across the US, low operating costs and competitive drillbit finding and development (F&D) costs. These credit strengths are offset by the company's high adjusted debt and financial leverage metrics resulting from a long track record of rapid growth through acreage acquisitions and capital spending greatly in excess of cash flows. The funding need both for growth and to hold acquired acreage requires the company to continually complete transactions with third parties or access the capital markets to fill the funding gap. While Chesapeake's consistent track record of executing these transactions demonstrates the inherent benefits and financial flexibility that scale provides to an E&P company to service debt, this is a higher risk funding strategy that has also resulted in significant structural and analytical complexity. The Ba3 rating on the company's proposed $2.3 billion senior unsecured notes reflects both the overall probability of default of Chesapeake, to which Moody's assigns a PDR of Ba2-PD, and a loss given default of LGD 4 (69%). Chesapeake has a $4 billion senior secured revolving credit facility. The size of the potential priority claim to the assets relative to the senior unsecured debt outstanding results in the unsecured debt being rated one notch beneath the Ba2 CFR under Moody's Loss Given Default Methodology. The principal methodology used in this rating was the Global Independent Exploration and Production Industry published in December 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Chesapeake Energy Corporation is an independent exploration and production company based in Oklahoma City, Oklahoma. CHESAPEAKE ENERGY: S&P Rates New $2.3BB Sr. Unsecured Debt 'BB-' ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'BB-' rating (with a '3' recovery rating) to Chesapeake Energy Corp.'s proposed $2.3 billion of senior unsecured debt issues, with varying maturities (2016, 2021, 2023). Although Chesapeake's plan to redeem its $1.3 billion 6.775% senior notes due 2019 could be hampered by pending litigation with the notes' trustee and certain noteholders, S&P expects the company to use proceeds of the new debt issues within the next year to refinance existing debt. In addition, S&P affirmed its existing 'BB-' corporate credit and issue-level ratings on Chesapeake and maintained a negative outlook. "The ratings on Chesapeake Energy Corp. reflect Standard & Poor's Ratings Services' view of the company's "satisfactory" business risk profile as one of the largest producers of natural gas and oil in the U.S. and our view of the company's "aggressive" financial risk profile," said credit analyst Scott Sprinzen. S&P's rating depends, in part, on the company's success in its efforts to lessen its reliance on natural gas, while completing asset sales sufficient to fund the portion of capital expenditures not covered by internal cash flow while containing financial leverage. S&P assumes that Chesapeake will benefit from ongoing increases in its liquids output, enabling it to maintain adjusted debt-to-EBITDA below 5.0x. S&P could downgrade the company if it believes that leverage is likely to be above this level for a sustained period. On the other hand, S&P could revise the rating outlook to stable if the company adopts a more-conservative growth strategy and financial policies, with adjusted debt-to-EBITDA consistently below 4.0x. COLLEGE BOOK: Trustee Hires Bass Berry & Sims as IP Counsel ----------------------------------------------------------- Robert H. Waldschmidt, the chapter 11 trustee in the bankruptcy case of College Book Rental Company, LLC, asks the U.S. Bankruptcy Court for permission to employ Martha B. Allard and Bass, Berry & Sims, PLC, as special counsel to represent the trustee with regard to retention of the Debtor's trademarks. The trustee anticipates that the services the attorney may render include, but are not limited to filing appropriate documents; and pursuing any actions the trustee may have. The current hourly rates for the individuals who may perform services are: Attorneys: Robert L. Brewer $365 Martha Allard $225 Paralegal: Marian Moore $180 The firm represented the Debtor prepetition with regard to its trademarks; as a result, the firm has a general unsecured claim for $2,800 for the prepetition representation. About College Book Four creditors filed an involuntary Chapter 11 bankruptcy petition against Murray, Kentucky-based College Book Rental Company, LLC (Bankr. M.D. Ky. Case No. 12-09130) in Nashville on Oct. 4, 2012. Bankruptcy Judge Marian F. Harrison oversees the case. The petitioning creditors are represented by Joseph A. Kelly, Esq., at Frost Brown Todd LLC. The petitioning creditors are David Griffin, allegedly owed $15 million for money loaned; Commonwealth Economics, allegedly owed $15,000 for unpaid services provided; John Wittman, allegedly owed $158 for unpaid services provided; and CTI Communications, allegedly owed $21,793 for unpaid services provided. The owners of College Book Rental consented to the Chapter 11 case and the appointment of a Chapter 11 trustee to run CBR. CBR is co-owned by Chuck Jones of Murray and David Griffin of Nashville, Tenn. An agreed order for relief under Chapter 11 was entered on Oct. 15, 2012. Robert H. Waldschmidt was appointed as trustee the next day. COMMUNITY HOME: Disclosure Statement Hearing Moved to March 26 -------------------------------------------------------------- Bankruptcy Judge Edward Ellington continued to March 26, 2013, at 9:30 a.m., the hearing to consider approval of the disclosure statement explaining Community Home Financial Services, Inc.'s Chapter 11 plan. At the hearing, the Court will also consider the objection to the Disclosure Statement lodged by Edwards Family Partnership LP and Beher Holdings Trust; as well as an Addendum to Disclosure Statement filed by the Debtor. The Debtor filed the Plan and Disclosure Statement on Jan. 29, 2013. The Disclosure Statement Hearing was first held March 12. Pursuant to the Plan, the Debtor intend to utilize all assets consisting of mortgage loan portfolios and joint ventures to fund payment to creditors. The Debtor's goal is to turn assets and claims into cash and after paying secured claims, administrative claims, and priority claims, have funds remaining for a distribution to general unsecured claims. Due to the undetermined recovery of assets, pending litigation and claim issues, there is no way for the Debtor to predict the actual amount of distribution to general unsecured creditors. The Debtor's Plan provides for 100% repayment of Allowed Claims. Claims against and interests in the Debtor are classified as: 1. Claims of Mississippi Department of Revenue (Tax Lien) -- Any Allowed Secured Claims of Mississippi Department of Revenue (Tax Lien) are treated in Class 1 of the Plan and are treated consistently with the treatment of Priority Tax Claims. 2. Other Secured Claims -- The Debtor does not have other undisputed secured creditors. The claims of Beher Holdings Trust and Edward Family Partnership will be treated in Class 3 of the Plan. 3. Priority Unsecured Claims were the claims of the Internal Revenue Service and State Taxing Authorities. All the Debtor's pre-petition tax returns have not been filed. A determination of the claims of the IRS and State Taxing Authorities cannot be made until returns are filed and accepted by the taxing authorities. Any such claims will be treated in Class 2 of the Plan. 4. Unsecured Claims -- The Debtor's creditors holding unsecured claims consist of (i) claims of trade vendors, (ii) loans from lenders and deficiency balances and (iii) causes of action. Accrued unsecured claims as of the Petition Date total approximately $153,740.00 (not including Classes 3, 6 or 7). All unsecured claims will be treated in Class 4 and Class 5 of the Plan. Each Allowed Unsecured Claim shall receive payment from distribution by the estate. 5. Rejection Claims -- Rejection of executory contracts and unexpired leases by the Debtor may give rise to unsecured claims against the Debtor. 6. Indemnity Claims -- William D. Dickson has filed a contingent indemnity claim if he is required to personally pay any funds to BHT and/or EFP on behalf of the Debtor. This claim shall be treated in Class 6 of the Plan. 7. Subordinated Claims, Penalty Claims, Securities Laws Claims and Disallowed Claims -- The Debtor asserts that penalty and disallowed claims should be subordinated and disallowed. Upon final resolution of all claims, any such claims will be treated in Class 7 of the Plan and shall not receive funds under the Plan. 8. Interests - Equity Holder/Shareholders -- The Debtor is a Delaware Corporation which is owned by Victory Consulting, Inc. (100%). All Allowed Interests Equity Holders are treated in Class 8 of the Plan. Unless otherwise provided in the plan, Equity Holders/Shareholders shall retain their interests but shall receive nothing under Class 8 unless all claims are paid pursuant to the Plan. The Debtor believes that its Plan provides the best and most viable solution to exit from bankruptcy and continue the operations of the company. In their objection, Edwards Family Partnership and Beher Holdings Trust contend that the disclosure statement, among others: -- does not contain any projections of anticipated future income and expenses and whether such net income can fund any plan of reorganization; -- fails to contain a pro forma income statement with proposed expenses related to projected post-petition operations. The Debtor has operated for nine months without an approved budget. -- fails to set forth any information about the failure of CHFS to be a duly licensed loan servicer under Mississippi law. -- fails to provide any information about the substantial decline in post-petition collections on the loans securing the "CHFS home improvement loan" to EFP and BHT. Specifically, the disclosure statement wholly failed to explain the precipitous drop in collections on a post-petition basis and failed to disclose that immediately prior to the bankruptcy, its collection percentages on the loans in the CHFS Loan Portfolio averaged 85%; whereas, post-petition it has dropped to less than 60%. -- fails to contain adequate information or an explanation as to the Debtor's servicing of the loans in the Joint Venture portfolios as demonstrated by its precipitous drop in collections. Specifically, prior to the bankruptcy, the collections on the EFP joint venture portfolios averaged 62.2%; whereas, post-petition the collection percentages have dropped to 54.9%. Prior to the bankruptcy, the collection percentages on the BHT joint venture was 84.5%; whereas, post-petition, it has dropped to 75.2%. -- The disclosure statement contains factually incorrect statements with respect to the legal status of the Rainbow Group Limited. Contrary to the statements contained in the disclosure statement, Rainbow Group Limited was a validly incorporated British Virgin Islands corporation that was authorized to do business in the State of Florida. The statements to the contrary in the disclosure statement should be stricken. -- contains misleading information related to the instructions to CHFS to "leave" all collateral assignments in favor or Beher Holdings Ltd. The Debtor is fully aware that BHT is the successor of Beher Holdings, Ltd. and the Beher referred to is BHT. -- contains many baseless allegations and accusations against BHT and EFP, all of which are contradicted by the sworn trial testimony of the Debtor's principal, William D. Dickson. -- wholly fails to disclose the massive pre-petition misappropriation of funds that were collected on the CHFS Loan Portfolio and joint ventures. Instead, the disclosure statement describes certain "loans" of funds to affiliated companies of the Debtor, but completely fails to disclose that the funds "loaned" by CHFS came from funds that belonged to EFP and BHT. -- fails to disclose that of the $3,200,000 transferred from CHFS after February 2012, $2,090,000 was sent to Victory Consulting, Inc., the shareholder of the Debtor, who then transferred significant sums to a trust in the Republic of Panama. -- proposes a plan that cannot be confirmed in that it fails to pay BHT and EFP the full amount of their claims. -- fails to disclose the reason for the Debtor's write off of significant numbers of loans in the CHFS Loan Portfolios on a postpetition basis. Specifically, the Debtor has written off 350 loans in the CHFS portfolio, many of which were current when the Debtor wrote the loans off. Further, the Debtor has written off a significant number of loans in the join venture portfolio even though the Debtor does not own these loans and had no authority to write off any such loans. -- fails to disclose the nature of the relationship between CHFS and Discount Mortgage, Inc. and whether the two entities are sharing employees. -- fails to disclose the particulars of the rental agreement with William D. Dickson Enterprises, Inc. pursuant to which the Debtor pays a related entity $15,000 a month for rent. Further, it is undisclosed whether other related entities are also occupying space in the facilty for which the Debtor is paying rent. CHFS does not agree to the allegations of EFP and BHT. However, to complete disclosure, CHFS filed an Addendum to provide information as to EFP and BHT's position with respect to the Disclosure Statement. On July 10, 2012, the Court entered an Interim Order on the motion of Edwards Family Partnership and Beher Holdings Trust to (I) Prohibit Use of Cash Collateral, (II) Require the Debtor to Segregate Funds Belonging to Joint Ventures, and (III) Prohibit the Debtor from Using Such Joint Venture Funds and Requiring Payment of Funds to Edwards Family Partnership, LP and Beher Holdings Trust. Among other things, the Interim Order approved (on an interim basis) payments to BHT/EFP on a monthly basis for the Home Improvement Loans. The payment was calculated based upon collections received and interest. As to the Joint Venture portfolios, the collections net of a collection fee were deposited to designated Joint Venture Escrow Accounts at Wells Fargo Bank. The Interim Order expired on Sept. 30, 2012. The Debtor made all payments under the Interim Order. On Aug. 28, 2012, the Debtor filed a Motion to Amend Interim Order. The Debtor proposed to escrow Home Improvement Loan collections and to continue to escrow the Joint Venture collections until further Court order. This Motion was not heard and held in abeyance pending the mediation. Other than the disputes with BHT/EFP the Debtor's operations have for the most part continued in the ordinary course of business. The Debtor has filed various claims and pleadings against Edwards, EFP, and BHT. These matters have not been resolved. The Debtor requested the Court to order a mediation with Edwards, EFP, and BHT. The Court granted the request and the mediation was conducted by Honorable Jerry Brown, Bankruptcy Judge for the Eastern District of Louisiana. The mediation was unsuccessful. Thus, CHFS has filed a Disclosure Statement and Plan. On Jan. 29, EFP and BHT filed a second motion to prohibit use of cash collateral or, in the alternative, for adequate protection. They argued that their collateral continues to decrease during the bankruptcy case, and the Debtor's collection efforts on the loans have dropped dramatically postpetition indicating that EFP and BHT's interests are not adequately protected. On Feb. 5, the Debtor withdrew the Motion to Amend Interim Order. A hearing on EFP and BHT's request was slated for Feb. 26. Edwards Family Partnership LP and Beher Holdings Trust are represented by: Jim F. Spencer, Jr., Esq. WATKINS & EAGER PLLC Post Office Box 650 Jackson, MS 39205-0650 Tel: (601) 965-1900 Fax: (601) 965-1901 E-mail: jspencer@watkinseager.com About Community Home Financial Community Home Financial Services, Inc., filed a Chapter 11 petition (Bankr. S.D. Miss. Case No. 12-01703) on May 23, 2012. Community Home Financial is a specialty finance company located in Jackson, Mississippi, providing contractors with financing for their customers. CHFS is in the business of purchasing and servicing loan portfolios consisting of mostly Class B loans of 2nd to 3rd mortgages. Generally, CHFS was involved in Home Improvement Loans and seven Joint Venture Loan Portfolios. CHFS operates from one central location providing financing through its dealer network throughout 25 states, Alabama, Delaware, and Tennessee. CHFS was established in the year 2001. The sole shareholder is Victory Consulting, Inc. The acting President of CHFS is William D. Dickson. Judge Edward Ellington presides over the case. Derek A. Henderson, Esq., at Derek A. Henderson Law Office, in Jackson, Mississippi; Jonathan Bissette Esq., at Wells Marble & Hurst, PLLC, in Jackson, Mississippi; and Roy H. Liddell, Esq., at Wells Marble & Hurst, PLLC, in Ridgeland, Mississippi, represent the Debtor as counsel. In its amended schedules, the Debtor disclosed $46,285,698 in assets and $30,271,338 in liabilities. No committee has been appointed in the case. COSTA BONITA BEACH: Can Hire Carlos E. Gaztambide as Appraiser -------------------------------------------------------------- Costa Bonita Beach Resort, Inc. sought and obtained permission from the U.S. Bankruptcy Court to employ Engr. Carlos E. Gaztambide of Carlos E. Gaztambide & Associates as appraiser. The Debtor says its plan of reorganization calls for the payment of debt to DF Servicing LLC and other creditors with the transfer to DF of some of the Debtor's residential units and Debtor needs to retain and appraiser to conduct an appraisal of the properties. Engr. Gaztambide's engagement is to be for $20,000, payable on the basis of $5,000 upon the approval of the application and 15 monthly payments of $1,000 after the submission of his appraisal report, with meetings, court appearances and other related work on the basis of $150 per hour. The Debtor attests the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Costa Bonita Beach Resort Costa Bonita Beach Resort, Inc., owns 50 apartments at the Costa Bonita Beach Resort in Culebra, Puerto Rico. It filed a bankruptcy petition under Chapter 11 of the Bankruptcy Code for the first time (Bankr. D.P.R. Case No. 09-00699) on Feb. 3, 2009. During this case, the Court entered an Opinion and Order finding that the Debtor satisfied all three (3) prongs of the Single Asset Real Estate, and, as such is a SARE case subject to 11 U.S.C. Sec. 362(d)(3). The Court also entered an Order modifying the automatic stay to allow creditor DEV, S.E., to continue in state court proceedings for the removal of the illegal easement and the restoration of DEV, S.E.'s land to its original condition by the Debtor. The first bankruptcy petition was dismissed on May 10, 2011 on the grounds that the Debtor failed to comply with an April 21, 2011 Order and the Debtor's failure to maintain adequate insurance. The case was subsequently closed on Oct. 11, 2011. Costa Bonita Beach Resort filed a second bankruptcy petition (Bankr. D. P.R. Case No. 12-00778) on Feb. 2, 2012, in Old San Juan, Puerto Rico. In the 2012 petition, the Debtor said assets are worth $15.1 million with debt totaling $14.2 million, including secured debt of $7.8 million. The apartments are valued at $9.6 million while a restaurant and some commercial spaces at the resort are valued at $3.67 million. The apartments serve as collateral for the $7.8 million while the commercial property is unencumbered. Bankruptcy Judge Enrique S. Lamoutte presides over the 2012 case. Charles Alfred Cuprill, Esq., serves as counsel in the 2012 case. The petition was signed by Carlos Escribano Miro, president. CRAWFORDSVILLE LLC: Court Approves Indiana Real Estate Counsel -------------------------------------------------------------- Crawfordsville, LLC et al., sought and obtained permission from the Bankruptcy Court to employ Daniel P. McInerny, Esq., Gary L. Chapman, Esq., Michael A. Lang, Esq., and Bose, McKinney & Evans, LLP, as Special Indiana Real Estate and Environmental Counsel. The Debtor intends to sell and otherwise liquidate certain of its assets and real estate holdings in the State of Indiana, and therefore requires the services of the Firm to advise, counsel and represent the Debtor regarding matters of Indiana real estate and environmental law in connection with the Debtor's plans to sell, liquidate and otherwise dispose of certain of its real estate and other assets located in the State of Indiana. The firm has received a $5,000 retainer, and requests the Court to authorize the Debtor to provide the firm with an additional $5,000 to bring the total amount of the postpetition retainer to $10,000 to guarantee payment of the firm's postpetition services and costs in connection with the Chapter 11 case. At the conclusion of the Chapter 11 case, the firm will file an appropriate final application seeking allowance of all fees and costs, regardless of whether interim compensation has been paid. Upon allowance of such fees and costs, the Debtor will pay the firm the difference between the amount finally allowed and any interim compensation paid. The firm attests that it is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Crawfordsville LLC Crawfordsville, LLC, and three affiliates sought Chapter 11 protection (Bankr. S.D. Iowa Lead Case No. 12-03748) in Council Bluffs, Iowa, on Dec. 7, 2012. Crawfordsville filed schedules disclosing $5.17 million in assets and $32.2 million in liabilities, including $19.6 million owed to secured creditors. The Debtor owns parcels of land in Montgomery County, Indiana. A debtor-affiliate, Brayton LLC, disclosed assets of $14.2 million and liabilities of $27.8 million in its schedules. The Debtor owns the 20-acre of land and buildings known as Goldfinch Place in Audobon County, Iowa, which is valued at $1.68 million. The schedules say the company has $10.5 million in claims for disgorgement and damages resulting from fraudulent conveyances and preferential payments to dissociated partners. Crawfordsville, et al., are subsidiaries of hog raiser Natural Pork Production II, LLP, which filed for Chapter 11 bankruptcy (Bankr. S.D. Iowa Case No. 12-02872) on Sept. 11, 2012, in Des Moines. CRAWFORDSVILLE LLC: Court OKs Davis Brown as Litigation Counsel --------------------------------------------------------------- Crawfordsville, LLC, et al. sought and obtained approval from the U.S. Bankruptcy Court to employ Stanley J. Thompson, Esq., Mark D. Walz, Esq., Sarah K. Franklin, Esq., and Davis, Brown, Koehn, Shors & Roberts, P.C., as special litigation counsel. The firm will, among other things: a. advise, counsel and represent the Debtor in any and all litigation, whether in pursuit of assets of the estate or in defense of any actions that may be filed by or against the Debtor in either the bankruptcy court, U.S. District Court, or any state court actions; b. advise, counsel and represent the Debtor in any adversary proceedings within the bankruptcy case, whether in pursuit of assets of the estate or in defense of any actions that may be filed by or against the Debtor in either the bankruptcy court, U.S. District Court, or any state court actions; and c. perform other legal services with regard to litigation that are necessary for the efficient and economic administration of the Debtor's Chapter 11 case. To the best of its knowledge and information, Davis Brown does not have any interest "adverse" to the Debtor or its estate as that term is used in Bankruptcy Code Section 327(e). To the best of its knowledge and information, Davis Brown is a "disinterested person" as that term is defined in Bankruptcy Code Section 101(14). The Debtor will pay Davis Brown its standard hourly rates in effect from time to time, plus reimbursement of actual, necessary expenses incurred by Davis Brown in the course of the representation. The firm's rates are: Professional Hourly Rate ------------ ---------- Stanley J. Thompson, Es. $320 Mark D. Walz, Esq. $300 Sarah K. Franklin, Esq. $195 Associates $180 to $235 Paralegals $90 to $115 About Crawfordsville LLC Crawfordsville, LLC, and three affiliates sought Chapter 11 protection (Bankr. S.D. Iowa Lead Case No. 12-03748) in Council Bluffs, Iowa, on Dec. 7, 2012. Crawfordsville filed schedules disclosing $5.17 million in assets and $32.2 million in liabilities, including $19.6 million owed to secured creditors. The Debtor owns parcels of land in Montgomery County, Indiana. A debtor-affiliate, Brayton LLC, disclosed assets of $14.2 million and liabilities of $27.8 million in its schedules. The Debtor owns the 20-acre of land and buildings known as Goldfinch Place in Audobon County, Iowa, which is valued at $1.68 million. The schedules say the company has $10.5 million in claims for disgorgement and damages resulting from fraudulent conveyances and preferential payments to dissociated partners. Crawfordsville, et al., are subsidiaries of hog raiser Natural Pork Production II, LLP, which filed for Chapter 11 bankruptcy (Bankr. S.D. Iowa Case No. 12-02872) on Sept. 11, 2012, in Des Moines. CV STEEL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: CV Steel Fab of PR, Inc. P.O. Box 7994 Ponce, PR 00732 Bankruptcy Case No.: 13-02061 Chapter 11 Petition Date: March 16, 2013 Court: United States Bankruptcy Court District of Puerto Rico (Ponce) Debtor's Counsel: Nilda M. Gonzalez Cordero, Esq. P.O. Box 3389 Guaynabo, PR 00970 Tel: (787) 721-3437 E-mail: ngonzalezc@ngclawpr.com Scheduled Assets: $5,297 Scheduled Liabilities: $4,257,235 A copy of the Company's list of its 20 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/prb13-02061.pdf The petition was signed by Miguel A. Cedeno Rodriguez, president. DESERT DERMATOLOGY: Case Summary & 18 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Desert Dermatology Medical Associates, Inc. 35280 Bob Hope Drive, Suite 105 Rancho Mirage, CA 92270 Bankruptcy Case No.: 13-14793 Chapter 11 Petition Date: March 18, 2013 Court: U.S. Bankruptcy Court Central District of California (Riverside) Judge: Wayne E. Johnson Debtor's Counsel: Ian Landsberg, Esq. LANDSBERG & ASSOCIATES, APC 5950 Canoga Avenue, Suite 605 Woodland Hills, CA 91367 Tel: (818) 855-5900 Fax: (818) 855-5910 E-mail: ilandsberg@landsberg-law.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The Company's list of its 18 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/cacb13-14793.pdf The petition was signed by Wendy E. Roberts, president. DEX ONE: Reports $35 million Net Loss for Fourth Quarter -------------------------------------------------------- Dex One Corporation on March 18 announced fourth quarter and full year 2012 results in line with previously provided guidance. The quarter and year were highlighted by digital bookings growth of 29 percent and 34 percent, respectively. Ad sales for the quarter and year declined 14 percent, in line with guidance. Quarterly bookings and revenue declined 13 percent and 14 percent, while annual bookings and revenue declined 13 percent and 12 percent. "Dex One continued to deliver in 2012, as we met all stated guidance objectives," said Dex One CEO Alfred Mockett. "Our team found a way to achieve our business goals despite the continuing pressure on our print business. We have stemmed the rate of ad sales decline, thanks in large part to our bundled sales strategy, and are aggressively selling bundles across our business." "Since early 2010, Dex One has retired $1.9 billion in debt and we have consistently met our financial obligations," said Dex One CFO Greg Freiberg. "Concurrently, we have built a digital business with growth exceeding industry averages." Net loss and cash flow from operations in the fourth quarter were $35 million and $87 million, respectively. Net income, cash flow from operations and total debt (including fair value discount) for full year 2012 were $62 million, $348 million and $2,010 million, respectively. Dex One-SuperMedia Merger Update On March 13, 2013, stockholders of both Dex One and SuperMedia approved the merger. Earlier on Monday, Dex One and SuperMedia each filed pre-packaged plans of reorganization for Chapter 11 Bankruptcy as a means to complete the merger. This process will allow both companies to finalize the proposed credit agreement amendments previously agreed to by a significant percentage of lenders. The companies expect to complete the merger in the first half of 2013. 2013 Guidance The company will not be providing first quarter or full year 2013 guidance due to its pending merger with SuperMedia, Inc. Form 10-K Dex One filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing net income of $62.40 million on $1.30 billion of net revenues for the year ended Dec. 31, 2012, as compared with a net loss of $518.96 million on $1.48 billion of net revenues during the prior year. For the three months ended Dec. 31, 2012, the Company incurred a net loss of $35.40 million on $301.3 million of net revenue, as compared with net income of $5.50 million on $352 million of net revenue for the same period during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $2.83 billion in total assets, $2.79 billion in total liabilities and $40.60 million in total shareholders' equity. "Dex One continued to deliver in 2012, as we met all stated guidance objectives," said Dex One CEO Alfred Mockett. "Our team found a way to achieve our business goals despite the continuing pressure on our print business. We have stemmed the rate of ad sales decline, thanks in large part to our bundled sales strategy, and are aggressively selling bundles across our business." "Since early 2010, Dex One has retired $1.9 billion in debt and we have consistently met our financial obligations," said Dex One CFO Greg Freiberg. "Concurrently, we have built a digital business with growth exceeding industry averages." A copy of the Form 10-K is available for free at: http://is.gd/FyQqBo About Dex One Dex One Corp., headquartered in Cary, North Carolina, is a local business marketing services company that includes print directories and online voice and mobile search. The company employs 2,200 people across the United States. Dex One provides print yellow pages directors, which it co-brands with other recognizable brands in the industry, including Century Link and AT&T. It also provides the yellow pages websites DexKnows.com and DexPages.com, as well as mobile apps Dex Mobile, Dex CityCentral. Dex One and 11 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-10534) on March 17 and 18, 2013, with a prepackaged plan of reorganization designed to effectuate a merger with SuperMedia Inc. Dex One disclosed total assets of $2.84 billion and total liabilities of $2.79 billion as of Dec. 31, 2012. Houlihan Lokey is acting as financial advisor to Dex One, and Kirkland & Ellis LLP is acting as its legal counsel. Pachulski Stang Ziehl & Jones LLP is co-counsel. Epiq Systems serves as claims agent. This is Dex One's second stint in Chapter 11. Its predecessor, R.H. Donnelley Corp., sought Chapter 11 protection in May 2009 (Bankr. Bank. D. Del. Case No. 09-11833 through 09-11852) and changed its name to Dex One Corp. after emerging from bankruptcy in January 2010. As of Dec. 31, 2012, persons or entities directly or indirectly own, control, or hold 5% or more of the voting securities of Dex One are Franklin Advisers, Inc., Hayman Capital Management LP, Robert E. Mead, Restructuring Capital Associates LP, Paulson & Co., Inc., and Mittleman Investment Management LLC DEX ONE: S&P Lowers CCR to 'D' on Plan to File for Chapter 11 ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Cary, N.C.-based Dex One Corp. to 'D' from 'CCC'. All issue-level ratings remain at 'D' as a result of ongoing subpar repurchases that are tantamount to a default under S&P's criteria. The rating actions follow the company's announcement that it plans to restructure through a prepackaged Chapter 11 plan of reorganization. The existing senior credit agreements for both companies require 100% approval from the senior lenders to consummate the merger. The company was unable to get the required lender approval voluntarily and as a result has filed a Chapter 11 plan of reorganization. Subject to court approval and possible delays, S&P still expects the companies to complete the merger in the first half of 2013. S&P expects to evaluate the business risk and financial risk of the combined company in reassessing the post-emergence corporate credit rating. DIGERATI TECHNOLOGIES: Obtains Injunction vs. Sonfield ------------------------------------------------------ Digerati Technologies, Inc. on March 15 provided an update in the matter of Digerati Technologies, Inc. vs. Sonfield & Sonfield, P.C., Robert L. Sonfield, Jr., Robert Rhodes, and William McIlwain ("Defendants"), case number 2013-06483, 281st District Court, Harris County, Texas, and related matters. On March 4, 2013, the Court issued a Temporary Injunction that is to remain in place until the conclusion of a trial on the merits of the case, which the Court scheduled to commence on August 5, 2013. The Temporary Injunction restrains and enjoins the Defendants from taking various actions, including: (i) Filing any documents on behalf of the Company with any state or federal agency, authority or organization, including but not limited to the Securities and Exchange Commission purporting to be on behalf of the Company; (ii) Making any public statements purporting to be on behalf of the Company; (iii) Representing to certain third parties that the Defendants are officers, directors, agents, attorneys, or employees for the Company; (iv) Representing to certain third parties that Arthur L. Smith is not the duly appointed Chief Executive Officer, President, Secretary, Chairman of the Board, and sole Director of the Company; and (v) Accessing or making changes to the Company's website, or any bank or commercial account in the name of or used for the benefit of the Company. Furthermore, as part of the Temporary Injunction, the Court found that irreparable harm will occur to the Company because it appears that assets of the Company have been transferred or are under imminent threat to be transferred or assigned, and therefore ordered that the Company (excluding its subsidiary, Shift8 Technologies, Inc.) and Oleum Capital, LLC, the majority shareholder of the Company, and all persons acting in concert with them, be restrained and enjoined from transferring, conveying, assigning, destroying, or selling any assets conveyed for the benefit of the Company in the November 26, 2012 transaction, without prior approval of the Court, except to the extent necessary for operating in the ordinary course of business. The Company joined in the entry of the injunction concerning the Assets. Through testimony in Court the Company learned that that persons purportedly acting on behalf of the Company's wholly-owned subsidiary, Waste Deep, Inc., received signed notices of default and foreclosure, and entered into and executed an assignment of the Assets in lieu of foreclosure in January and/or February of this year. The Company had not received the Notices or Assignment prior to the Court's Temporary Injunction proceeding, and considers the Assignment of the Assets unauthorized and improper. These matters are under review by the Company. The Company intends to work with all parties to this litigation and others in an effort to resolve current and prospective claims and disputes related to the litigation, including without limitation, the Assets. It is uncertain how, when or if the Disputes will be resolved prior to trial. The Company is uncertain if this litigation will have a material impact on the Company. In addition to the foregoing, as previously disclosed in the Current Report on Form 8-K filed with the SEC on January 30, 2013, the Defendants filed an 8-K, purportedly in the name of the Company, on January 28, 2013, which stated that the Company's board of directors appointed Robert C. Rhodes as President, Chief Executive Officer, and Director and elected William McIlwain as Chairman of the Board and Corporate Secretary to fill the vacancies created by the resignation of John Howell. Contrary to these unauthorized statements by the Defendants in that 8-K, Arthur L. Smith was appointed as the Company's Chief Executive Officer, President, Secretary and Chairman in connection with John Howell's resignation. Mr. Smith remains the Company's President, Chief Executive Officer, Chairman and sole Director. Antonio Estrada remains the Company's Chief Financial Officer. Messrs. Rhodes and McIlwain have no position with the company in either an officer or director capacity. Prior to the Temporary Injunction, these same Defendants took several unauthorized actions purportedly on behalf of the Company, including, but not limited to filing a lawsuit against Oleum Capital, LLC (Digerati Technologies, Inc. v. Oleum Capital, LLC, Case No. 2:13?cv?00191 in the United States District Court for the District of Nevada) and most recently filing an unauthorized Preliminary Schedule 14C with the SEC on February 15, 2013. The Company is working with the SEC, the Nevada Secretary of State and others to remedy the Defendants' unauthorized filings, as well as any other improper and unauthorized acts undertaken by the Defendants purportedly on behalf of the Company. In addition to the aforementioned cases, some of the Defendants, entities they control, and others acting with the Defendants have filed lawsuits against the Company's CEO, CFO, SEC counsel, a financial consultant working with the Company and others. These lawsuits include Rhodes Holdings, LLC et al. v. David L. Gorham et al., Cause No. 2013-CI-02253 in the 285th Judicial District Court of Bexar County, Texas, Recap Marketing and Consulting, LLP v. Gregg E. Jaclin and Christy Albeck, Cause No. 2013-05480 in the 157th Judicial District Court of Harris County, Texas, and Robert L. Sonfield, Jr., P.C. v. Christy E. Albeck and Gregg E. Jaclin, Cause No. 2013-05429 in the 129th Judicial District Court of Harris County, Texas. The Company intends to work with the parties to this litigation in an effort to resolve current and prospective claims related to this litigation. It is uncertain whether, how or when these claims may be resolved. The Company is uncertain if this litigation will have a material impact on the Company. As of March 14, 2013, the Company has not completed the audits of Hurley Enterprises, Inc. and Dishon Disposal Inc. which were acquired on November 26, 2012 pursuant to the Form 8-K filed with the SEC on December 3, 2012. Pursuant to Item 9.01(a)(4) of Form 8-K, audited financial statements were required to be filed for the Dishon and Hurley acquisitions. Due to the Disputes, the circumstances described above and other circumstances outside the Company's control, the Company has been unable to timely complete the audits. However, it anticipates filing a Form 8-K as soon as practicable to report the results of the audits. On March 8, 2013, the Company submitted a Current Report on Form 8-K with the SEC to disclose the aforementioned events, however, the filing was not accepted by the SEC for reasons that remain unclear to the Company. The Company is seeking to work with the SEC to address this matter. As a result of this current inability to file and the matters discussed in the preceding paragraph, the Company is uncertain if it will be permitted to file its Quarterly Report on Form 10-Q for the period ended January 31, 2013 on the filing date, March 18, 2013. Digerati Technologies, Inc. -- http://www.digerati-inc.com-- is a provider of cloud communication services. DNL INDUSTRIES: Files Schedules of Assets & Liabilities ------------------------------------------------------- DNL Industries, LLC filed with the U.S. Bankruptcy Court for the Southern District of New York, its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $0.00 B. Personal Property $52,939.98 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $1,425,000.00 E. Creditors Holding Unsecured Priority Claims $0.00 F. Creditors Holding Unsecured Non-priority Claims $3,326,888.47 -------------- -------------- TOTAL $52,939.98 $4,751,888.47 DNL Industries said the value of its patents is unknown. Those patents include a system and method for identifying a food event, tracking the food product, and assessing risks and costs associated with intervention; system and method of providing product quality and safety; food product contamination event management system and method; and monitoring and management of lost product. DNL Industries, LLC, based in Bedford, New York, filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 13-22079) on Jan. 22, 2013. Judge Robert D. Drain oversees the case. Stephen B. Selbst, Esq., at Herrick, Feinstein, LLP, serves as the Debtor's counsel. In its petition, the Debtor estimated $10 million to $50 million in assets and $1 million to $10 million in debts. The petition was signed by Roger D. Timpson, chief restructuring officer. DOLE FOOD: Fitch Keeps 'B+' IDR on Rating Watch Positive -------------------------------------------------------- Fitch Ratings maintains the Rating Watch Positive on Dole Food Co., Inc. (Dole; NYSE DOLE) and Solvest Ltd. - Dole's wholly-owned subsidiary ratings as follows: Dole (Operating Company) -- Long-term Issuer Default Rating (IDR) 'B+'; -- Asset-based (ABL) revolver due 2016 'BB+/RR1'; -- Secured term loan B due 2018 'BB+/RR1'; -- 13.875% third-lien notes due 2014 'BB/RR2'; -- 8% third-lien notes due 2016 'BB/RR2'; -- 8.75% senior unsecured notes due 2013 'B-/RR6'. Solvest Ltd. (Bermuda-Based Subsidiary) -- Long-term IDR 'B+'; -- Secured term loan C due 2018 'BB+/RR1'. At Dec. 29, 2012, Dole had $1.7 billion of total debt. Fitch placed the ratings of Dole and Solvest on Watch Rating on Sept. 19, 2012 following the firm's announcement regarding a definitive agreement to sell its worldwide packaged foods and Asia fresh produce business to ITOCHI Corp. (ITOCHU) for $1.685 billion in cash. ITOCHU will have exclusive rights to the Dole trademark on packaged food products worldwide and on fresh produce in Asia, Australia, and New Zealand, subject to certain exceptions. Dole simultaneously announced that it would use the majority of the proceeds, net of about $300 million of cash cost associated with the transaction and subsequent restructuring, to pay off its existing debt. In connection with the divestiture and debt pay down, Dole indicated that it would recapitalize its balance sheet with any new debt issued on more favorable terms and being biased towards term loans. Fitch's Rating Watches indicate a heightened probability of a rating change and the likely direction of such a change. They are typically event-driven and, as such, are generally resolved over a relatively short period. After a Rating Watch has been in place for six months, Fitch's policy is to review the Rating Watch every three months until it is resolved. Fitch will monitor any negotiations that may develop between Dole and Itochu and will resolve the Rating Watch when there is clarity regarding a potential transaction and the terms thereof. KEY RATING DRIVERS: The Positive Rating Watch indicates that there is heightened probability of an upgrade with the ultimate outcome dependent on Dole's post recapitalization capital structure and leverage. Dole expects the closing of the divestiture and confirmation of its final debt structure to occur on April 1, 2013, versus the firm's original expectation that closure would occur by the end of 2012. Board approval and customary regulatory approvals have been received. On Feb. 22, 2013, ITOCHU paid Dole a non-refundable cash deposit of $200 million to be applied towards the purchase price and the parties agreed that, with limited exceptions, the deposit would be forfeited and retained by Dole if the closing does not occur by April 1, 2013. Fitch believes Dole will maintain materially lower debt levels as a smaller commodity produce company with volatile operating earnings and cash flow but views a debt-financed shareholder payout as a possibility. In early 2013, Dole announced that it was finalizing the written banking commitments for a new $400 million term loan and a $300 million revolving credit facility, to be implemented upon completion of the sale transaction. However, Dole continues to assess its capital structure and at this time plans to confirm final debt levels concurrent with the closing of the divestiture of its worldwide packaged foods and Asia fresh businesses on April 1. Dole has not committed to a new leverage goal but prior to its strategic business review and definitive agreement with ITOCHU, the firm's financial strategy was to utilize free cash flow (FCF) and asset sale proceeds to pay down debt, engage in select tuck-in acquisitions, and reduce net debt-to-EBITDA to 2.0x. Upon resolution of the Positive Watch, Dole's ratings will continue to reflect its mid-single digit margins and the periodic volatility of its remaining fresh produce operations in North America, Latin America, Europe and Africa. Ratings will also incorporate Fitch's view of normalized or average EBITDA, future FCF generation, and the fact that Dole is less diversified. Dole's operating earnings and cash flow should benefit from reduced overhead and operational costs associated with a smaller more streamlined organization and lower interest expense due to reduced debt levels. Pro forma for the divestiture, Dole will have approximately $4.2 billion revenue with nearly 75% or about $3.2 billion from fresh fruit and about 25% or $1 billion from fresh vegetables. For 2013, Dole expects consolidated EBITDA for these operations to approximate the low end of its $150 million - $170 million guidance due mainly to competitive pricing in North American bananas which according to the company has resulted in a small loss of market share. Dole also intends to spend $170 million in capital expenditures during 2013 as it strategically invests in its farm assets and expand its port in Ecuador. Fitch currently views normalized EBITDA for new Dole to be in the $200 million - $250 million range but realizes it may take more than a year for earnings to reach this level. Fitch also believes Dole can generate modest FCF in most years. This belief is based on assumptions regarding normalized EBITDA, cash taxes in the 20% range, meaningfully reduced cash interest expense due to lower debt levels, and a normal capital expenditure run rate of $60 million - $70 million. Most of Dole's earnings and cash flow is generated in the first half of the year. Dole expects to realize $20 million of sustainable cost savings in 2013 and is developing other initiatives and operational programs to capture additional future savings. The company is also targeting $175 million - $200 million of proceeds from the marketing of approximately 20,600 acres of non-core Hawaiian land not currently being farmed. Funds, which will be received over the next few years, are expected to be reinvested in its business. Following these asset sales, Dole will continue to maintain a substantial asset base of farm land, manufacturing facilities, ships, containers, ports, and other buildings. Credit Statistics, Liquidity and Maturities: For the latest 12-month (LTM) period ended Dec. 29, 2012, comparable total debt-to-operating EBITDA inclusive of the $188 million of EBITDA generated by Dole's businesses being sold to ITOCHU during 2011 has been estimated at 4.7x, in line with levels from Dec. 31, 2011. FCF from continuing operations was negative $60.5 million versus negative $77.1 million for the year ended Dec. 31, 2011. At Dec. 29, 2012, Dole's liquidity consisted of $91.6 million of cash and $117.1 million of availability under its $350 million revolving ABL facility expiring July 8, 2016. ABL availability reflects a borrowing base of $331.3 million, $95 million of letters of credit, and a $119.2 million of outstanding balance. Dole's only financial covenant for its credit facilities is a springing fixed charge coverage ratio of at least 1.0x if ABL availability is below a certain amount. Dole's debt agreements contain mandatory prepayment requirements related to asset sales. At Dec. 29, 2012, Dole had $155 million of 8.75% senior unsecured notes due July 2013, $174.9 million of 13.875% junior-lien notes due March 2014, $315 million of 8% of junior-lien notes due September 2016, and a $311 million term B loan due July 2018. Solvest's $556.6 million term C loan is due July 2018. Dole's existing ABL has a first-priority lien on U.S. account receivables and inventory and a second-priority lien on real and intangible property. Term loans are secured on a first priority basis by real and intangible property and on a second priority basis by ABL collateral. Lastly, third-lien notes have the benefit of a lien on certain U.S. assets of Dole that is junior to the liens of the company's senior secured credit facilities. Rating Sensitivities: Future developments that may, individually or collectively, lead to a positive rating action include: -- The closure of Dole's asset sale transaction, the subsequent payoff of existing debt, and more certainty as to Dole's capital structure following the recapitalization of its debt structure is expected to result in rating upgrade(s). However, continued loss of market share due to competitive pricing in North American bananas would be viewed negatively. Future developments that may, individually or collectively, lead to a negative rating action include: -- A downgrade is not anticipated as Fitch expects Dole to maintain a materially lower debt level following its recapitalization. DTS8 COFFEE: Incurs $812,800 Net Loss in Jan. 31 Quarter -------------------------------------------------------- DTS8 Coffee Company, Ltd., formerly known as Berkeley Coffee & Tea, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $812,864 on $65,463 of sales for the three months ended Jan. 31, 2013, as compared with a net loss of $6,363 on $59,270 of sales for the same period during the prior year. For the nine months ended Jan. 31, 2013, the Company incurred a net loss of $996,386 on $185,256 of sales, as compared with a net loss of $7,137 on $161,929 of sales for the same period a year ago. The Company's balance sheet at Jan. 31, 2013, showed $4.62 million in total assets, $661,274 in total liabilities and $3.96 million in total shareholders' equity. A copy of the Form 10-Q is available for free at: http://is.gd/aTumdN About DTS8 Coffee DTS8 Coffee Company, Ltd. (previously Berkeley Coffee & Tea, Inc.) was incorporated in the State of Nevada on March 27, 2009. Effective Jan. 22, 2013, the Company changed its name from Berkeley Coffee & Tea, Inc., to DTS8 Coffee Company, Ltd. On April 30, 2012, the Company acquired 100% of the issued and outstanding capital stock of DTS8 Holdings Co., Ltd., a corporation organized and existing since June 2008 under the laws of Hong Kong and which owns DTS8 Coffee (Shanghai) Co., Ltd. DTS8 Holdings, through its subsidiary DTS8 Coffee, is a gourmet coffee roasting company established in June 2008. DTS8 Coffee's office and roasting factory is located in Shanghai, China. DTS8 Coffee is in the business of roasting, marketing and selling gourmet roasted coffee to its customers in Shanghai, and other parts of China. It sells gourmet roasted coffee under the "DTS8 Coffee" label through distribution channels that reach consumers at restaurants, multi-location coffee shops, and offices. As reported in the TCR on Aug. 14, 2012, MaloneBailey, LLP, in Houston, Texas, expressed substantial doubt about Berkeley Coffee & Tea Inc.'s ability to continue as a going concern, following the Company's results for the fiscal year ended April 30, 2012. The independent auditors noted that the Company has suffered recurring losses from operations. DUNLAP OIL: Court Okays Waterfall Economidis as Special Counsel --------------------------------------------------------------- The Bankruptcy Court overseeing the Chapter 11 proceeding of Dunlap Oil Company Inc. approved the Debtor's employment of a special collections counsel. As reported in the Troubled Company Reporter on Feb. 4, 2013, Dunlap specifically identified Steven J. Itkin, Esq., at Tuczon- Arizona-based Waterfall, Economidis, Caldwell, Hanshaw & Villamana, P.C., for the job. Waterfall Economidis will, among other things, provide Dunlap Oil with legal advice with respect to its rights and options on pending collection claims, state court actions and proceedings and other related or potential collection matters. About Dunlap Oil Company and Quail Hollow Inn Dunlap Oil Company, Inc., and Quail Hollow Inn, LLC, sought Chapter 11 protection (Bankr. D. Ariz. Case No. 12-23252 and 12-23256) on Oct. 24, 2012. Founded in 1958, Dunlap Oil is a Willcox, Arizona-based operator of 14 gasoline services stations. QOH owns the 89-room outside corridor Best Western Plus Quail Hollow hotel in Willcox. The two companies are owned and operated by the Dunlap family. Judge James M. Marlar presides over the case. John R. Clemency, Esq., and Lindsi M. Weber, Esq., at Gallagher & Kennedy, P.A., serve as the Debtors' counsel. Peritus Commercial Finance LLC serves as financial advisor. Quail Hollow Inn also hired Sally M. Darcy of McEvoy Daniels & Darcy P.C. for the limited purpose of handling any claims, issues, and/or disputes between QHI and Best Western International, Inc. The Debtors' lead counsel, Gallagher & Kennedy, P.A., has a conflict precluding its representation of the Debtor in matters relating to Best Western. QOH declared assets of at least $1 million and debts exceeding $10 million. DOC estimated assets and debts of $10 million to $50 million. The petitions were signed by Theodore Dunlap, president. Ilene J. Lashinsky, the U.S. Trustee for Region 14, has appointed three creditors to serve on an Official Committee of Unsecured Creditor for the Chapter 11 bankruptcy case of Dunlap Oil Company. The Committee tapped Nussbaum Gillis & Dinner, P.C. as its counsel. Pineda Grantor Trust II, successor-in-interest to Compass Bank, is represented by Steven N. Berger, Esq., and Bradley D. Pack, Esq., at Engelman Berger, P.C. Counsel to Canyon Community Bank NA are Jeffrey G. Baxter, Esq., Pat P. Lopez III, Esq., and Rebecca K. O'Brien, Esq., at Rusing Lopez & Lizardi PLLC. DVORKIN HOLDINGS: Trustee Seeks to Employ CBRE Inc. as Broker ------------------------------------------------------------- Gus A. Paloian, as the Chapter 11 trustee of the bankruptcy estate of Dvorkin Holdings, LLC, is asking the Bankruptcy Court for authority to employ CBRE, Inc., as real estate broker to the Estate for the sale of certain real property, pursuant to the terms of an exclusive sales listing agreement. The Real Property currently consists of one office property with the commonly known street address identified on the schedule to the Agreement. The Broker's Commission will consist of (a) 5% of the first $1,000,000 of the sale proceeds, and (b) 4% for every dollar of sale proceeds that exceed $1,000,000. The Trustee also seeks approval to list additional real property with the Broker and to pay the commission pursuant to the same fee structure. The Trustee assures the Court the Broker is a "disinterested person," as that term in used and defined in Bankruptcy Code sections 327(a) and 101(14). About Dvorkin Holdings Dvorkin Holdings, LLC, a holding company that has interests in 40 non-debtor entities, filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 12-31336) in Chicago on Aug. 7, 2012. The Debtor estimated assets of at least $10 million and debts of up to $10 million. Bankruptcy Judge Jack B. Schmetterer oversees the case. Michael J. Davis, Esq., at Springer, Brown, Covey, Gaetner & Davis, in Wheaton, Illinois, served as counsel to the Debtor. The petition was signed by Loran Eatman, vice president of DH-EK Management Corp. The Bankruptcy Court in October 2012 granted the request of Patrick S. Layng, the U.S. Trustee for the Northern District of Illinois, to appoint Gus Paloian as the Chapter 11 trustee. Lender, FirstMerit Bank, N.A., also sought appointment of a chapter 11 trustee. DVORKIN HOLDINGS: Trustee Seeks to Employ NAI Hiffman as Broker --------------------------------------------------------------- Gus A. Paloian, as the Chapter 11 trustee of the bankruptcy estate of Dvorkin Holdings, LLC, is asking the Bankruptcy Court for authority to employ NAI Hiffman as real estate broker to the Estate for the sale of certain real property, pursuant to the terms of an exclusive sales listing agreement. The Real Property currently consists of two office properties located at: -- 2 East 22nd Street, Lombard, IL 60148; and -- 17 W 695-745 Butterfield Road, Oakbrook Terrace, IL 60181. The Broker's Commission will consist of (a) 5% of the first $1,000,000 of the sale proceeds, and (b) 4% for every dollar of sale proceeds that exceed $1,000,000. The Trustee also seeks approval to list additional real property with the Broker and to pay the commission pursuant to the same fee structure. The Trustee assures the Court the Broker is a "disinterested person," as that term in used and defined in Bankruptcy Code sections 327(a) and 101(14). About Dvorkin Holdings Dvorkin Holdings, LLC, a holding company that has interests in 40 non-debtor entities, filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 12-31336) in Chicago on Aug. 7, 2012. The Debtor estimated assets of at least $10 million and debts of up to $10 million. Bankruptcy Judge Jack B. Schmetterer oversees the case. Michael J. Davis, Esq., at Springer, Brown, Covey, Gaetner & Davis, in Wheaton, Illinois, served as counsel to the Debtor. The petition was signed by Loran Eatman, vice president of DH-EK Management Corp. The Bankruptcy Court in October 2012 granted the request of Patrick S. Layng, the U.S. Trustee for the Northern District of Illinois, to appoint Gus Paloian as the Chapter 11 trustee. Lender, FirstMerit Bank, N.A., also sought appointment of a chapter 11 trustee. DVORKIN HOLDINGS: Seyfarth Can Represent Trustee in Asset Sales --------------------------------------------------------------- Gus A. Paloian, as the Chapter 11 trustee of the bankruptcy estate of Dvorkin Holdings, LLC, sought and obtained an order from the Bankruptcy Court explicitly authorizing him to amend and clarify the scope of employment of Seyfarth Shaw LLP to expressly permit Seyfarth to represent him and the Estate in the sale of certain assets, including real property. The Debtor lists ownership interests in more than 40 partnerships and joint ventures, all of which are limited liability companies -- the Nondebtor LLCs. The Debtor also discloses numerous beneficial interests in land trusts. The Debtor is a codebtor or guarantor of the debt for at least 44 entities, most of which appear to be Non-Debtor LLCs or Land Trusts. The Trustee clarified the scope of retention of Seyfarth to expressly permit Seyfarth to represent the Trustee and the Estate in their capacity as agent for the various Land Trusts under powers of direction, the Nondebtor LLCs as manager thereof, and other entities owned or controlled, in whole or in part, by the Estate as disclosed in the amended bankruptcy schedules and statement of financial affairs or as otherwise indicated by the Trustee. This representation may include, but is not limited to: (a) the sale of assets, including real property, owned by such Affiliates; and (b) the wind-up of such Affiliates. As such, Seyfarth will also, at least indirectly, represent the Debtor's Affiliates with respect to the sale of their real property and wind-ups. While it may be possible for Trustee to commence Chapter 11 bankruptcy cases for, and seek joint administration of, most, or all of the Debtor's Affiliates, the Trustee believes the procedure will best maximize the Debtor's assets for creditors of the Estate. As reported in the Troubled Company Reporter on Jan. 9, 2013, the Chapter 11 Trustee said it needs counsel to represent him in the performance of his duties, the liquidation of certain assets, and, as may be appropriate, confirmation of a chapter 11 plan. Additionally, the Trustee anticipates the need to initiate litigation to recover funds that are property of the Estate, but which were not disclosed in the Debtor's schedules and have not been willingly returned thereto. The firm attests it is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm's rates are: Professional Position/Practice Area 2012 Rate ------------ --------------------------- ---- Gus A. Paloian Partner/Bankruptcy $600.00 Jason J. DeJonker Partner/Bankruptcy $480.00 Jason P. Stiehl Partner/Litigation $435.00 James B. Sowka Associate/Bankruptcy $395.00 Christopher J. Harney Associate/Bankruptcy $370.00 Andrew Connor Paralegal/Bankruptcy $265.00 Jennifer M. McManus Paralegal/Bankruptcy $255.00 Alice Shepro Case Assistant/Bankruptcy $90.00 About Dvorkin Holdings Dvorkin Holdings, LLC, a holding company that has interests in 40 non-debtor entities, filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 12-31336) in Chicago on Aug. 7, 2012. The Debtor estimated assets of at least $10 million and debts of up to $10 million. Bankruptcy Judge Jack B. Schmetterer oversees the case. Michael J. Davis, Esq., at Springer, Brown, Covey, Gaetner & Davis, in Wheaton, Illinois, served as counsel to the Debtor. The petition was signed by Loran Eatman, vice president of DH-EK Management Corp. The Bankruptcy Court in October 2012 granted the request of Patrick S. Layng, the U.S. Trustee for the Northern District of Illinois, to appoint Gus Paloian as the Chapter 11 trustee. Lender, FirstMerit Bank, N.A., also sought appointment of a chapter 11 trustee. DYNEGY INC: Full Year 2012 Adjusted EBITDA at $57 Million --------------------------------------------------------- Dynegy Inc. on March 14 reported full-year 2012 Enterprise-wide Adjusted EBITDA of $57 million compared to $281 million for the same period in 2011. Lower realized prices for the Coal segment, lower revenues from the termination of certain California contracts, and the settlement of legacy financial positions reduced Adjusted EBITDA for the Coal and Gas segments by $305 million. Partially offsetting these items were an $18 million improvement in Coal and Gas segments operating and maintenance expenses, a $27 million improvement in spark spreads, net of hedges and basis, in the Gas segment, and a $38 million positive adjustment for non-cash amortization related to the Gas segment's Independence contract. The Company's operating loss was $99 million for the full-year 2012 compared to an operating loss of $189 million for the same period in 2011. "2012 was a transformative year for Dynegy. We completed the majority of our financial and organizational restructuring during the year and now have one of the strongest balance sheets in the merchant generation sector. Both our coal and gas fleets had strong operational performance in 2012 despite pressure on power prices from low natural gas prices," said Robert C. Flexon, Dynegy President and Chief Executive Officer. "Our work in 2012 allows us to further focus on executing daily operations, strategic priorities including capital allocation, successfully closing the AER acquisition and completing a corporate-level refinancing. We are committed to maintaining and building upon our financial strength and affirm the 2013 Adjusted EBITDA and cash flow guidance that we provided during our January 2013 investor meeting." Fourth quarter 2012 Enterprise-wide Adjusted EBITDA was $(42) million compared to $(14) million for the same period in 2011. The weaker financial results were primarily driven by lower realized power prices for the Coal segment, due to lower hedge prices and increased basis differentials, which decreased energy margins by $62 million. Unfavorable financial settlements of $29 million related to legacy financial positions for the Gas segment were more than offset by a $34 million increase in operating margin due to improved spark spreads, net of hedges and basis, and the absence of a $34 million loss on commercial activities which occurred in 2011. The 2012 fourth quarter operating loss was $104 million compared to an operating loss of $105 million for the same period in 2011. A copy of Dynegy's earnings release for the twelve months ended Dec. 31, 2012, is available for free at http://is.gd/ge1CHh About Dynegy Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) on Nov. 7, 2011, to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion. Dynegy Inc. on July 6, 2012, filed a voluntary petition to reorganize under Chapter 11 (Bankr. S.D.N.Y. Case No. 12-36728) to effectuate a merger with Dynegy Holdings, pursuant to Holdings' Chapter 11 plan. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. The financial advisor is FTI Consulting. The Official Committee of Unsecured Creditors in Holdings' cases has tapped Akin Gump Strauss Hauer & Feld LLP as counsel. Dynegy Holdings and its parent, Dynegy Inc., completed their Chapter 11 reorganization and emerged from bankruptcy Oct. 1, 2012. Under the terms of the DH/Dynegy Plan, DH merged with and into Dynegy, with Dynegy, Inc., remaining as the surviving entity. Dynegy Northeast Generation, Inc., Hudson Power, L.L.C., Dynegy Danskammer, L.L.C. and Dynegy Roseton, L.L.C., remain under Chapter 11 protection. DYNEGY INC: To Acquire Ameren's Merchant Generation Business ------------------------------------------------------------ Ameren Corporation on March 14 disclosed that it has entered into a definitive agreement to divest its merchant generation business, Ameren Energy Resources Company (AER), to an affiliate of Dynegy Inc. AER consists primarily of Ameren Energy Generating Company (Genco), including Genco's 80 percent ownership interest in Electric Energy, Inc.; AmerenEnergy Resources Generating Company (AERG); and Ameren Energy Marketing Company. "Divestiture of the merchant generation business will position Ameren as a company focused exclusively on its rate-regulated electric, natural gas and transmission operations, clarifying our strategic direction and value proposition to investors," said Thomas R. Voss, chairman, president and CEO of Ameren Corporation. "We expect that this transaction will reduce business risk and improve the predictability of our future earnings and cash flows, which is expected to strengthen Ameren's credit profile and support Ameren's dividend." The divestiture will not impact the electric and natural gas utility service provided by Ameren's rate-regulated businesses, Ameren Illinois and Ameren Missouri. Total value benefits associated with the divestiture are estimated to be approximately $900 million for Ameren. This includes removal of the $825 million principal amount of Genco senior notes from Ameren's consolidated balance sheet and an estimated $180 million, at present value, of tax benefits expected to be substantially realized in 2015. These benefits are partially offset by transaction-related costs and liabilities retained by Ameren. These liabilities include retention of certain employee retirement obligations. In addition, Ameren will retain Genco's Meredosia and Hutsonville energy centers, which are no longer in operation, and related obligations. Further, Ameren will provide guarantees and collateral support, secured by AER assets and a $25 million Dynegy Inc. guarantee, for up to 24 months for certain existing contracts. Ameren will receive no cash proceeds as a result of this transaction. Genco's existing senior notes will remain outstanding after the transaction closes and will continue to be solely obligations of Genco. Prior to entering into the divestiture agreement, the existing Genco put option agreement was amended and exercised. As a result, an affiliate of Ameren that is not a member of the divested group will acquire the Elgin, Gibson City and Grand Tower gas-fired energy centers prior to completion of the divesture transaction, subject to approval by the Federal Energy Regulatory Commission (FERC). This Ameren affiliate will initially pay Genco the greater of $133 million or the appraised value of these assets. Should these assets be sold within two years of the divestiture, the after-tax proceeds realized in excess of the initial amount paid will be due to Genco. Ameren plans to put the three gas-fired energy centers up for sale as soon as reasonably practical. The agreement also provides that the buyer will honor collective bargaining agreements for AER union employees and provide those AER management employees who continue to work for the buyer with competitive pay and benefits. As a result of the planned divestiture, AER is expected to be classified as held for sale and reported as discontinued operations in Ameren's consolidated financial statements beginning in the first quarter of 2013. Ameren also expects to record an after-tax charge to earnings estimated to be in the range of $300 million to write down the carrying value of the divested business and expense transaction-related costs. The transaction is subject to regulatory approvals, including from the FERC, and other customary conditions and is expected to be completed in the fourth quarter of 2013. J.P. Morgan served as lead financial advisor and provided a fairness opinion to Ameren. Greenhill also provided a fairness opinion. Wachtell, Lipton, Rosen & Katz served as legal counsel. About Ameren St. Louis-based Ameren Corporation -- http://www.ameren.com-- serves 2.4 million electric customers and more than 900,000 natural gas customers in a 64,000-square-mile area through our Ameren Missouri and Ameren Illinois rate-regulated utility subsidiaries. Ameren Illinois provides electric and natural gas delivery service while Ameren Missouri provides vertically integrated electric service, with generating capacity of 10,300 megawatts, and natural gas delivery service. Ameren Transmission develops regional electric transmission projects. About Dynegy Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) on Nov. 7, 2011, to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion. Dynegy Inc. on July 6, 2012, filed a voluntary petition to reorganize under Chapter 11 (Bankr. S.D.N.Y. Case No. 12-36728) to effectuate a merger with Dynegy Holdings, pursuant to Holdings' Chapter 11 plan. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. The financial advisor is FTI Consulting. The Official Committee of Unsecured Creditors in Holdings' cases has tapped Akin Gump Strauss Hauer & Feld LLP as counsel. Dynegy Holdings and its parent, Dynegy Inc., completed their Chapter 11 reorganization and emerged from bankruptcy Oct. 1, 2012. Under the terms of the DH/Dynegy Plan, DH merged with and into Dynegy, with Dynegy, Inc., remaining as the surviving entity. Dynegy Northeast Generation, Inc., Hudson Power, L.L.C., Dynegy Danskammer, L.L.C. and Dynegy Roseton, L.L.C., remain under Chapter 11 protection. EAST COAST BROKERS: Files List of Top Unsecured Creditors --------------------------------------------------------- East Coast Brokers & Packers, Inc., filed a list of creditors holding 20 largest unsecured claims: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bell Irrigation Inc. $1,139,084 1920 Meadowbrook Dr Cairo, GA 39828 Georgia Pacifici Corp. PO Box 102574 Atlanta, GA 30368-0574 $443,188 East Coast Agri-Technologies, Inc. $220,649 3164 Gov Moore Road Clinton, NC 28328 Farmore High IQ $196,742 Doug Smith Machinery, Inc. $153,052 Farm Plan $138,254 McCarron & Diess Inc. $87,789 Roggen Enterprises $87,173 John H. Raines III, P.A. $86,384 Neff Rental Inc. $83,910 John Deere Financial, FSB $78,769 Trombley & Hanes $75,000 La Zeta Mexicana $72,528 MSA, P.C. $61,198 Zenith Insurance Co. $52,204 Coast Gas Fort Pierce $50,047 Heritage Propane $50,047 Jennings & Associates Ins. Inc. $50,000 Airgas USA, LLC $48,743 Wimauma Supermarket $44,654 East Coast Brokers & Packers, Inc., along with four related entities, sought Chapter 11 protection (Bankr. M.D. Fla. Case No. 13-02894) in Tampa, Florida, on March 6, 2013. East Coast estimated at least $50 million in assets and liabilities in its bare-bones Chapter 11 petition. Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Prosser, in Tampa, serves as counsel to the Debtors. According to the docket, the Chapter 11 plan and disclosure statement are due July 5, 2013. EASTMAN KODAK: Offer to Subscribe for Loans Expires --------------------------------------------------- Eastman Kodak Company on March 15 announced the expiration, at 5:00 p.m. on March 14, 2013, of the offer to holders of its outstanding 10.625% Senior Secured Notes due March 15, 2019 (CUSIP Nos. 277461BK4 and U27746AH6) and 9.75% Senior Secured Notes due March 1, 2018 (CUSIP Nos. 277461BH1 and U27746AG8) to (i) subscribe for up to an aggregate amount of $455,000,000 of term loans under a new junior secured priming superpriority debtor-in- possession term loan facility; and (ii) exchange Notes for up to an aggregate amount of $375,000,000 of junior term loans under the Junior DIP Facility. The offer was oversubscribed. Kurtzman Carson Consultants LLC, the information agent for the offer, will notify holders whose commitments to participate were accepted of their allocated amounts of New Money Loans and Junior Loans, and provide them with funding and tender instructions on or before Tuesday, March 19, 2013. Participating Holders will be required to fund their allocated amounts of New Money Loans, tender Notes for exchange into Junior Loans and provide signature pages to the Junior DIP Facility credit agreement by 5:00 p.m. on Thursday, March 21, 2013. Kodak expects that both the closing of the Junior DIP Facility and the amendment and restatement of Kodak's existing DIP Facility will occur on Friday, March 22, 2013. Subject to the closing of both facilities, on March 22, 2013, Kodak will make a "catch up" adequate protection payment in the aggregate amount of approximately $116 million to the record holders of Notes on March 21, 2013. Thereafter, the Company will make monthly adequate protection payments in arrears to holders of outstanding Notes in an amount equal to current non-default interest on such Notes. The record date for holders entitled to receive the monthly adequate protection payments will be the last business day of the applicable month and the adequate protection payment date will be the tenth business day of the following month. Bankruptcy Proceedings Kodak and certain of its affiliates have filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. 101 et seq. and are operating their businesses and managing their property as debtors-in-possession pursuant to the Bankruptcy Code. Nothing herein or in any of the offer documents shall constitute or be deemed to constitute a solicitation by any party of votes to approve or reject a Chapter 11 plan for any debtor. A solicitation with respect to votes to approve or reject a Chapter 11 plan only may be commenced once a disclosure statement that complies with section 1125 of the Bankruptcy Code has been approved by the Bankruptcy Court. About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. The Retirees Committee has hired Haskell Slaughter Young & Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC, as Bankruptcy Consultants and Financial Advisors; and the Segal Company, as Actuarial Advisors. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. Kodak completed the $527 million sale of digital-imaging technology on Feb. 1, 2013. Kodak intends to reorganize by focusing on the commercial printing business. ECOSPHERE TECHNOLOGIES: Names Founder as CEO and Chairman --------------------------------------------------------- Ecosphere Technologies, Inc., appointed Dennis McGuire, its Founder and Chief Technology Officer, as Chief Executive Officer and Chairman of the Board of Directors. Mr. McGuire, age 62 years, replaced John Brewster who resigned as Chief Executive Officer and Chairman of the Board on March 12, 2013, for personal reasons. Mr. McGuire will remain as Ecosphere's Chief Technology Officer, a position he has held since January 2011. From September 2005 until January 2011, Mr. McGuire served as Ecosphere's President and Chief Executive Officer. From June 2008 until November 2008, Mr. McGuire was the Co-Chief Executive Officer of Ecosphere, sharing the role with Mr. Patrick Haskell. From November 2008 until August 2009, Mr. McGuire was the Chief Technology Officer of Ecosphere. Mr. McGuire is not receiving any additional compensation for serving as Chief Executive Officer. About Ecosphere Technologies Stuart, Fla.-based Ecosphere Technologies, Inc. (OTC BB: ESPH) -- http://www.ecospheretech.com/-- is a diversified water engineering, technology licensing and environmental services company that designs, develops and manufactures wastewater treatment solutions for industrial markets. Ecosphere, through its majority-owned subsidiary Ecosphere Energy Services, LLC ("EES"), provides energy exploration companies with an onsite, chemical free method to kill bacteria and reduce scaling during fracturing and flowback operations. The Company reported a net loss of $5.86 million in 2011, following a net loss of $22.66 million in 2010, and a net loss of $19.05 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $11.70 million in total assets, $4.41 million in total liabilities, $4.05 million in total redeemable convertible cumulative preferred stock, and $3.22 million in total equity. EL CENTRO: Court Okays Hiring of GlassRatner as Financial Advisor ----------------------------------------------------------------- El Centro Motors, dba Mighty Auto Parts, obtained permission from the U.S. Bankruptcy Court to employ GlassRatner Advisory & Capital Group, LLC as financial advisor and investment banker. As reported in the Troubled Company Reporter on Dec. 18, 2012, Mike Issa attested that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. GlassRatner will identify buyers for the Debtor's dealership and advise the Debtor in connection with a sale process and the potential outcome of a sale process, and GlassRatner will undertake the following related tasks: * preparing an offering memorandum for distribution to prospective buyers; * developing a list of prospective buyers; and * distributing the offering memorandum and related documents to prospective buyers. GlassRatner has a book fee of $25,000. About El Centro Motors El Centro Motors, dba Mighty Auto Parts, operates a Ford-Lincoln automobile dealership in El Centro, California. It filed a Chapter 11 petition (Bankr. S.D. Calif. Case No. 12-03860) on March 21, 2012, listing $10 million to $50 million in assets and debts. Chief Judge Peter W. Bowie presides over the case. Krifor Meshefajian, Esq., at Levene, Neale, Bender, Yon & Brill LLP, serves as counsel. The prior owner of the dealership operated the business since 1932. The business is presently owned by Dennis Nesselhauf and Robert Valdes. The Debtor claims that its assets, which include the property constituting the dealership in El Centro, and new and used vehicles, have a value of $14 million. The Debtor owes Ford Motor Credit Company $4.3 million on a term-loan secured by a first priority deed of trust against the El Centro property, 380,000 on a revolving credit line, and $6 million on a flooring line of credit used to purchase vehicle inventory. The Debtor also owes $1.03 million to Community Valley Bank, which loan is secured by a second priority deed of trust against the property. In addition to $3.95 million arbitration award owed to Dealer Computer Systems, Inc., the Debtor owes $3 million in unsecured debt. According to a court filing, the dealership generally operated at a profit, until it suffered the same economic setbacks suffered by dealerships across the country. In 2007, the Debtor suffered an $806,000 loss; in 2008, it had a $4.5 million loss, and in 2009, it suffered a $957,000 loss. Dealer Computer Services, which provided the dealer management system, obtained in November 2001, an arbitration award in the amount of $3.95 million, following a breach of contract lawsuit it filed against the Debtor. DCS has commenced collection efforts attempting to levy the Debtor's bank accounts and place liens on its assets. The Debtor filed for bankruptcy to preserve and maximize the Debtor's estate for the benefit of creditors, to provide the Debtor a reprieve from highly disruptive and financially detrimental collection efforts, and to provide the Debtor an opportunity to reorganize its financial affairs in as efficient a manner as possible. The Debtor disclosed at least $8,332,571 in total assets and $19,624,057 liabilities as of the Chapter 11 filing. ELCOM HOTEL: Taps Barthet Firm as Special Collections Lit. Counsel ------------------------------------------------------------------ Elcom Hotel & Spa, LLC, LLC, seeks court permission to employ Paul D. Breitner and the law firm of The Barthet Firm, as special collections litigation counsel to Elcom Hotel. Barthet represented the prepetition receiver, Jorge Perez, on an hourly basis as special collections counsel in several pre- petition matters concerning amounts due and owing to Elcom Hotel. For several months prior to the Petition Date, Barthet was pursuing several select matters against unit owners. Some of these matters have resulted in the filing of lawsuits and others are in the pre-suit stage, in which demand letters have been sent, but litigation has not yet commenced. Barthet has successfully recovered in excess of $100,000 for the Receiver; however, approximately seven cases remain pending in the state court. Additionally, there are several collections actions that need to be filed, as well as certain collections actions that the Receiver was pursuing pre-petition that Elcom Hotel intends to have transferred from the Receiver's law firm of McDonald Hopkins LLC to Barthet. In this regard, the expertise and knowledge of Barthet concerning these matters will be crucial to Elcom Hotel's ability to efficiently and expeditiously collect receivables that will be utilized for Elcom Hotel's operations during the Chapter 11 case. Barthet's professionals will provide services on an hourly basis, at rates comparable to those Barthet uses for comparable matters. Currently, the rates for Barthet attorneys range from $275 to $400 per hour, and the rate for non-attorneys is $125. Elcom Hotel seeks to engage Barthet as special litigation collections counsel under Section 327(e) of the Bankruptcy Code, and not as bankruptcy counsel pursuant to Section 327(a) of the Bankruptcy Code. Therefore, Elcom Hotel submits the fact that Barthet may not be "disinterested" does not preclude its employment as special litigation collections counsel under Section 327(e) of the Bankruptcy Code, as Section 327(e) of the Bankruptcy Code only requires that special counsel not hold or represent interests adverse to the Debtors with respect to the matter on which such attorney is to be employed. About Elcom Hotel Elcom Hotel & Spa LLC and Elcom Condominium LLC sought Chapter 11 protection (Bankr. S.D. Fla. Case Nos. 13-10029 and 13-10031) on Jan. 2, 2013, with plans to sell their hotel and condominium property. Elcom Condominium owns nine of the hotel condominium units at the One Bal Harbor Resort & Spa. The resort is located on five acres of land in Bal Harbor, Florida. The building and improvements consist of 185 luxury residential condominium units and 124 hotel condominium units. Elcom Hotel owns the hotel lot. Elcom Hotel estimated assets and liabilities of less than $50 million. The Debtor owes OBH Funding, LLC, $1.8 million on a mortgage and F9 Properties, LLC, formerly known as ANO, LLC, $9 million on a mezzanine loan secured by a lien on the ownership interests in the project's owner. OBH Funding and ANO are owned by Thomas D. Sullivan, the manager of the Debtors. Attorneys at Kozyak Tropin & Throckmorton, P.A., serve as bankruptcy counsel to the Debtor. Duane Morris LLP is the special litigation, real estate, and hospitality counsel. Alvarez & Marsal Real Estate Advisory Services, LLC's Embree C. "Chuck" Bedsole is the chief restructuring officer of the Debtor. ELCOM HOTEL: Wants to Hire Benchmark as Management Company ---------------------------------------------------------- Elcom Hotel & Spa, LLC, LLC, seeks court permission to employ BMC -- The Benchmark Management Company -- as management company of Elcom Hotel's spa, restaurant, hotel units, and common areas located at what is known as One Bal Harbour, which is operated as a five-star resort. Specifically, Benchmark will: a. supervise and direct the management and operations of the Hotel and the Shared Facilities; b. employ all employees working in or about the Hotel and the Shared Facilities; c. hire, train, promote, discharge and supervise the work of the management staff (i.e., general manager, assistant managers and department heads) of the Hotel and supervise through said management staff the recruiting, hiring, promoting, discharging and work of all other operating and service employees performing services in or about the Hotel and the Shared Facilities; d. to the extent of funds available from operation of the Property, be responsible for assuring proper and prompt payment of all payments, wages, compensation, payroll and other taxes, worker's compensation insurance, unemployment insurance, and health, welfare and other fringe benefits, if applicable, related to or incurred in course of the management and operation of the Hotel and the Shared Facilities; e. apply for, obtain and maintain, in the name of Elcom Hotel, all licenses and permits required in connection with the management and operation of the Hotel and the Shared Facilities; f. manage operating cash for the Hotel and the Shared Facilities in a timely, efficient and accurate manner to allow for the uninterrupted and efficient operation and maintenance of the Hotel and the Shared Facilities. Operator shall deliver or cause to be delivered to Elcom Hotel cash flow statements reconciling applicable operating and payroll accounts, accounts receivables and accounts payables, and cash requests, no less than every two weeks and no more than every week; g. supervise and direct the keeping of full and adequate books of account and such other records reflecting the results of the operation of the Hotel and the Shared Facilities; h. assist Elcom Hotel and its counsel with respect to any legal proceedings which may be necessary against lessees, unit owners or any other party; and i. in connection with any sale or lease of any Unit, Benchmark shall cooperate with the Associations to process any request for an estoppel certificate. Benchmark does not have any connection with or any interest materially adverse to the Debtors and other related parties. Benchmark has agreed to perform the services at the ordinary and usual monthly rate of three percent (3.0%) of Hotel Revenues for services rendered with respect to management and operation of the Hotel and $15,000 per calendar month for services rendered with respect to management and operation of the Shared Facilities. About Elcom Hotel Elcom Hotel & Spa LLC and Elcom Condominium LLC sought Chapter 11 protection (Bankr. S.D. Fla. Case Nos. 13-10029 and 13-10031) on Jan. 2, 2013, with plans to sell their hotel and condominium property. Elcom Condominium owns nine of the hotel condominium units at the One Bal Harbor Resort & Spa. The resort is located on five acres of land in Bal Harbor, Florida. The building and improvements consist of 185 luxury residential condominium units and 124 hotel condominium units. Elcom Hotel owns the hotel lot. Elcom Hotel estimated assets and liabilities of less than $50 million. The Debtor owes OBH Funding, LLC, $1.8 million on a mortgage and F9 Properties, LLC, formerly known as ANO, LLC, $9 million on a mezzanine loan secured by a lien on the ownership interests in the project's owner. OBH Funding and ANO are owned by Thomas D. Sullivan, the manager of the Debtors. Attorneys at Kozyak Tropin & Throckmorton, P.A., serve as bankruptcy counsel to the Debtor. Duane Morris LLP is the special litigation, real estate, and hospitality counsel. Alvarez & Marsal Real Estate Advisory Services, LLC's Embree C. "Chuck" Bedsole is the chief restructuring officer of the Debtor. ELCOM HOTEL: Court Okays Hiring of Kozyak Tropin as Ch. 11 Counsel ------------------------------------------------------------------ Elcom Hotel & Spa, LLC and Elcom Condominium, LLC, obtained court approval to hire Kozyak, Tropin & Throckmorton, P.A., as general bankruptcy counsel nunc pro tunc to Jan. 2, 2013. As reported in the Troubled Company Reporter on Jan. 9, 2013, KT&T's professionals will provide services on an hourly basis, at rates comparable to those the firm uses for comparable matters. Currently, the rates for KT&T attorneys range from $250 to $600 per hour, and the rate for non-attorneys is $200. On Dec. 5, 2012, the firm received a $150,000 prepetition retainer from the Debtors' manager, Thomas D. Sullivan. The firm attests it has no connection with the Debtor's creditors or other parties in interest and their respective attorneys. About Elcom Hotel Elcom Hotel & Spa LLC and Elcom Condominium LLC sought Chapter 11 protection (Bankr. S.D. Fla. Case Nos. 13-10029 and 13-10031) on Jan. 2, 2013, with plans to sell their hotel and condominium property. Elcom Condominium owns nine of the hotel condominium units at the One Bal Harbor Resort & Spa. The resort is located on five acres of land in Bal Harbor, Florida. The building and improvements consist of 185 luxury residential condominium units and 124 hotel condominium units. Elcom Hotel owns the hotel lot. Elcom Hotel estimated assets and liabilities of less than $50 million. The Debtor owes OBH Funding, LLC, $1.8 million on a mortgage and F9 Properties, LLC, formerly known as ANO, LLC, $9 million on a mezzanine loan secured by a lien on the ownership interests in the project's owner. OBH Funding and ANO are owned by Thomas D. Sullivan, the manager of the Debtors. Attorneys at Kozyak Tropin & Throckmorton, P.A., serve as bankruptcy counsel to the Debtor. Duane Morris LLP is the special litigation, real estate, and hospitality counsel. Alvarez & Marsal Real Estate Advisory Services, LLC's Embree C. "Chuck" Bedsole is the chief restructuring officer of the Debtor. ELCOM HOTEL: Files Schedules of Assets & Liabilities ---------------------------------------------------- Elcom Hotel & Spa, LLC filed with the U.S. Bankruptcy Court for the Southern District of Florida its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property Unknown B. Personal Property $10,378,304.51 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $1,832,486.14 E. Creditors Holding Unsecured Priority Claims $153,395.42 F. Creditors Holding Unsecured Non-priority Claims $18,024,344.88 -------------- -------------- TOTAL $10,378,304.51 $20,010,226.44 About Elcom Hotel Elcom Hotel & Spa LLC and Elcom Condominium LLC sought Chapter 11 protection (Bankr. S.D. Fla. Case Nos. 13-10029 and 13-10031) on Jan. 2, 2013, with plans to sell their hotel and condominium property. Elcom Condominium owns nine of the hotel condominium units at the One Bal Harbor Resort & Spa. The resort is located on five acres of land in Bal Harbor, Florida. The building and improvements consist of 185 luxury residential condominium units and 124 hotel condominium units. Elcom Hotel owns the hotel lot. Elcom Hotel estimated assets and liabilities of less than $50 million. The Debtor owes OBH Funding, LLC, $1.8 million on a mortgage and F9 Properties, LLC, formerly known as ANO, LLC, $9 million on a mezzanine loan secured by a lien on the ownership interests in the project's owner. OBH Funding and ANO are owned by Thomas D. Sullivan, the manager of the Debtors. Attorneys at Kozyak Tropin & Throckmorton, P.A., serve as bankruptcy counsel to the Debtor. Duane Morris LLP is the special litigation, real estate, and hospitality counsel. Alvarez & Marsal Real Estate Advisory Services, LLC's Embree C. "Chuck" Bedsole is the chief restructuring officer of the Debtor. EVANS & SUTHERLAND: Faces Defined Benefit Pension Plan Burden ------------------------------------------------------------- Evans & Sutherland Computer Corporation on March 15 reported financial results in its Form 10-K filing for the year ended December 31, 2012. Sales for 2012 were $24.9 million, compared to sales of $28.3 million for 2011. The net loss for 2012 was $2.3 million or $0.21 per share, compared to a net loss of $2.1 million or $0.19 per share for 2011. The total comprehensive loss for the year was $2.8 million compared to $10.6 million for 2011. Revenue backlog as of December 31, 2012 was $15.5 million compared to backlog of $17.4 million as of December 31, 2011. Comments from David H. Bateman, President and Chief Executive Officer: "Lower sales in 2012 resulted in a larger operating loss for the year as compared to 2011. The net losses for the two years were comparable due to a $0.7 million loss on the condemnation of property in 2011. The lower sales were the result of a decrease in the volume of orders and deliveries of all of our products. The larger total comprehensive loss is primarily attributable to increases in the net pension obligation. The major cause of the increases in the pension obligation was low market interest rates used in measuring the obligation. The drop in interest rate was steeper in 2011 than in 2012, hence the much larger total comprehensive loss in 2011. "For the past several years we have employed various strategies for growth and costs reduction in an effort to reverse a long history of operating losses. While this effort has significantly reduced our operating losses, we now believe that the business, as currently capitalized, is not capable of overcoming the enormous burden of our defined benefit pension plan (the "Pension Plan"). The unfunded accounting liability for the benefits payable under the Pension Plan is $28.3 million as of December 31, 2012. Additionally, the Company has a total stockholders' deficit of $24.6 million and total assets of $24.2 million as of December 31 2012. The $28.3 million unfunded liability is for benefits which were earned for service of Company employees prior to when plan benefits were frozen in 2002 and during a period when the Company was much larger, with as many as 1,400 employees. The Pension Plan is currently responsible for the retirement benefits of over 1,100 participants, of whom only 24 are current employees. We believe we have exhausted all efforts to overcome this burden. Because we believe that the business has the potential for long term profitability without the burden of the Pension Plan, we have applied to the Pension Benefit Guarantee Corporation ("PBGC") for a distress termination of the Pension Plan. Legal counsel engaged to assist with this effort has advised that the facts and circumstances of our application provide basis for approval of the plan termination, and that PBGC settlements for resulting termination liabilities are usually in amounts that are feasible for the sponsor company to pay and remain as a going concern. "The Company's goal in seeking a distress termination is to ensure that the pension benefits of all Pension Plan participants are paid and that the Company continues to operate as a going concern while avoiding the costly damage and disruption to the business which would result from bankruptcy reorganization. "We intend to continue to aggressively pursue opportunities in the digital theater and other markets served by our products, as well as development and improvement of new and innovative products. We expect variable but consistent future sales and gross profits from our current product line at annual levels sufficient to cover or exceed operating expenses, not including the expense of the Pension Plan. With relief from the burden of the Pension Plan, we believe an improved financial position may present opportunities for better results through the availability of credit and stronger qualification for customer projects. "Our outlook for the business remains positive." About Evans & Sutherland Based in Salt Lake City, Utah, Evans & Sutherland is the world's first computer graphics company and has developed an advanced computer graphics technology for almost four decades. Focusing primarily on digital planetariums and digital cinemas worldwide, E&S offers Digistar 3, the world's leading digital planetarium system, full-dome movies and production services, premium-quality projection domes, theater design services, and the E&S Laser Projector, the world's highest resolution video projection system. EXTERRAN HOLDING: Moody's Affirms 'Ba2' CFR; Outlook Stable ----------------------------------------------------------- Moody's Investors Service affirmed Exterran Holding, Inc.'s Corporate Family Rating at Ba2, Probability of Default Rating at Ba2-PD and senior notes rating at Ba3. The outlook was changed to stable from negative. Moody's also assigned a Ba3 CFR, Ba3-PD and B2 rating to Exterran Partners, LP (EXLP) proposed $300 million senior notes, co-issued by EXLP Finance Corp (unrated). Proceeds for the notes offering will be used to repay outstanding indebtedness under EXLP's senior secured revolving credit facility. This is the first time that Moody's has rated EXLP as a stand-alone entity. The outlook is stable. "Exterran Holding's Ba2 Corporate Family Rating and stable outlook are supported by its substantial scale, leading market positions and global diversification," stated Michael Somogyi, Vice President and Senior Analyst. "The Ba3 CFR on Exterran Partners, LP is reflective of its large scale and visible growth potential. These strengths are tempered by its reliance on Exterran Holdings for support in terms of cost cap contributions and characteristics related to its MLP structure." Issuer: Exterran Holdings, Inc. Corporate Family Rating, affirmed Ba2 Probability of Default rating, affirmed Ba2-PD US$350 million Senior Unsecured Regular Bond/Debenture, affirmed Ba3 Speculative Grade Liquidity Rating, changed to SGL-2 from SGL-3 Rating Outlook, changed to Stable from Negative Issuer: Exterran Partners, LP Corporate Family Rating, assigned Ba3 Probability of Default rating, assigned Ba3-PD US$300 million Senior Unsecured Regular Bond/Debenture, assigned B2 Speculative Grade Liquidity Rating, assigned SGL-3 Rating Outlook, assigned Stable Ratings Rationale: Exterran Partners, L.P. is a publicly traded master limited partnership majority owned and controlled by Exterran Holdings, Inc. through its 2% General Partnership stake and 29% Limited Partnership interest. While EXLP's debt is nonrecourse to Exterran, Moody's views it as a strategic subsidiary that Exterran would support, if necessary, and therefore include EXLP's assets and debt in Moody's fundamental analysis of Exterran. However, for notching purposes, each entity's capital structure is assessed on a stand-alone basis in accordance with Moody's Loss Given Default Methodology. Exterran's $350 million senior unsecured notes are rated Ba3, or one notch beneath the Ba2 CFR, because of their junior position relative to the company's $900 million senior secured credit facility but structurally senior position to the $355 million convertible notes under Moody's Loss Given Default Methodology. EXLP's proposed $300 million senior unsecured notes are rated B2, or two notches beneath the Ba3 CFR, reflective of their junior position relative to its $650 million senior secured revolving credit facility and $150 million senior secured Term Loan facility. Exterran continues to make progress on deleveraging initiatives under a new management team focused on increasing operating efficiencies and managing costs. Through these actions and earnings improvements driven by increased development activity and higher realized prices, Exterran ended 2012 with a consolidated debt balance of approximately $1.7 billion (Moody's adjusted), down from a peak level of $2.6 billion in 2008, and ended the year with a consolidated leverage profile approaching 3.0x compared to over 4.5x at year-end 2011. Cost reduction actions, an ongoing profit improvement plan and projected business improvement are expected to further support debt reduction efforts. EXLP's Ba3 CFR is supported by its size and visible growth potential driven by potential asset drop-downs from Exterran. EXLP is the largest contract compression service provider in the U.S. Combined, Exterran and EXLP hold a U.S. market share position of approximately 45%. Exterran intends to use EXLP as the growth vehicle for its U.S. contract operations. Since its IPO in 2006, EXLP has purchased approximately 250,000 horsepower of compressors each year from Exterran. Exterran currently has about 1.0 million horsepower available to drop-down to EXLP, assuming Exterran can convert them to service contracts. In connection with the proposed drop-down of contracts using 259,000 horsepower of compressor units announced in March 2013, the omnibus agreement between Exterran and EXLP will be amended to increase the cost caps on quarterly operating expenses allocated to EXLP to $22.50 per working horsepower per quarter from $21.75, beginning on January 1, 2014 and extending through year-end 2014. In addition, the cap on SG&A costs will be raised to $12.5 million per quarter for the remainder of 2013 and to $15 million per quarter through year-end 2014. These caps will terminate on December 31, 2014, unless otherwise extended. Exterran's ratings were stabilized reflective of its debt reduction efforts and strengthening business conditions that should support enhanced cash flows. The ratings could be considered for an upgrade if Exterran is able to reduce consolidated leverage to below 3x. If Exterran's consolidated leverage profile rises above 4x, then the ratings could be downgraded. EXLP's ratings are not likely to be upgraded in the near-term as the entity is expected to continue to acquire assets from Exterran and remains dependent on Exterran for cost cap contributions. EXLP's ratings could be considered for an upgrade upon proving its ability to manage its financial profile below a 4x leverage metric and a distribution coverage ratio above 1.2x without the dependence on cost cap contributions from Exterran. EXLP's ratings could be downgraded should leverage exceed 5x on a sustained basis or if its distribution coverage ratio falls below 1x on a sustained basis. The principal methodology used in this rating was Global Oilfield Services 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. Exterran Holdings, Inc. and Exterran Partners, LP are headquartered in Houston, Texas. FAIRWEST ENERGY: Seeks CCAA Stay Extension Until April 26 --------------------------------------------------------- FairWest Energy Corporation on March 18 disclosed that it has obtained an Order on March 15, 2013 from the Court of Queen's Bench of Alberta extending the stay of proceedings granted to FairWest under the Companies' Creditors Arrangement Act ("CCAA") to March 19, 2013. The Company is petitioning the court for an extension to April 26, 2013. FairWest is a Calgary, Alberta based junior oil and gas company engaged in the acquisition, exploration, development and production of crude oil, natural gas and natural gas liquids in the provinces of Alberta and Saskatchewan. FIDELITY & GUARANTY: Fitch Assigns 'BB' LT Issuer Default Rating ---------------------------------------------------------------- Fitch Ratings has assigned a 'BB' Long-term Issuer Default Rating (IDR) to Fidelity & Guaranty Life Holdings, Inc.'s (F&G Life Holdings). At the same time, Fitch has assigned a 'BB-' rating to F&G Life Holdings' proposed issuance of $300 million senior unsecured notes. The Rating Outlook is Stable. Fitch has also affirmed the 'BBB' Insurer Financial Strength (IFS) ratings assigned to F&G Life Holdings' insurance subsidiaries, Fidelity & Guaranty Life Insurance Co. and Fidelity & Guaranty Life Insurance Co. of New York (collectively referred to as Fidelity & Guaranty Life). The Rating Outlook is Stable. Key Rating Drivers The ratings assigned to F&G Life Holdings are based on the credit quality of its insurance subsidiaries, which will be the primary source of debt service. Non-standard notching of three levels was applied between the 'BBB' IFS ratings of the insurance subsidiaries and the 'BB' IDR of F&G Life Holdings (standard notching is two levels) based on the ratings and financial profile of F&G Life Holdings' highly leveraged parent, Harbinger Group Inc. (HRG, 'B' IDR) and its own limited financial flexibility and liquidity. The one notch difference between F&G Life Holdings' IDR and the anticipated rating of 'BB-' for the new senior unsecured note reflects standard notching. The proposed debt issuance is anticipated to be a $300 million eight-year note with standard covenants that include debt and upstream payment restrictions. The newly rated debt issuance is part of the company's plan to provide growth funds for Fidelity & Guaranty Life. Fitch estimates the financial leverage ratio under the new plan will be approximately 26% on a pro forma basis as of Dec. 30, 2012. Fitch expects $195 million of the note proceeds to be moved to the insurance subsidiaries, $75 million to be dividended to HRG and $20 million to be retained for liquidity equal to roughly one year's note interest payments. Interest payments will be funded by interest on a new $195 million Fidelity & Guaranty Life Insurance Company surplus note held by F&G Life Holdings and statutory dividend payments from Fidelity & Guaranty Life. Terms of the surplus note will be comparable to the new senior unsecured note. Statutory dividend capacity from Fidelity & Guaranty Life Insurance Company is approximately $90 million for 2013, which leads to good statutory cash interest coverage of 5 times(x) for the new senior note. The affirmation of Fidelity & Guaranty Life's IFS ratings reflects the company's progress in executing against its plan for measured growth, reduced expenses, and improved capitalization. Fitch's IFS ratings also consider Fidelity & Guaranty Life's relatively limited product diversification, competitive challenge in the company's target markets, macroeconomic challenges associated with low interest rates and economic weakness, and a highly leveraged ultimate parent company. Reported statutory net income was $103 million in 2012 versus $115 million for full year 2011. Net income was affected by the statutory strain from increased sales and lower net investment yields. Positively, bond quality remained consistent with Dec. 31, 2011, as approximately 3% of bonds were below investment grade. The trend toward lower full year impairment losses continued with a drop to $15 million in 2012 versus $37 million in 2011 and $114 million in 2010, respectively. Fitch expects Fidelity & Guaranty Life's statutory earnings to remain level at approximately $100 million per year for the immediate future. Statutory capitalization is in line with rating expectations and is considered strong. In 2012, statutory capital has increased $79 million to $949 million and operating leverage declined slightly to 17x, both compared to year-end 2011. Fidelity & Guaranty Life's risk based capital (RBC) was approximately 406% at Dec. 31, 2012. Fitch expects capital to grow modestly over the near term as statutory earnings will largely be used to fund growth and dividend payments to the parent company. Approximately $40 million of dividends were made in 2012 and Fitch expects this to remain steady over the immediate future. Fidelity & Guaranty Life has narrowed its product focus to the manufacture of equity-indexed annuity and indexed universal life products for brokers and independent agents. Fitch expects annuity premiums, which are up in 2012, to continue to trend upward over the next year based on the execution of various marketing initiatives. Fidelity & Guaranty Life and F&G Life Holdings are wholly owned subsidiaries of HRG, a publicly traded holding company that seeks to acquire significant interests in businesses across a diverse range of industries. HRG is majority owned by investment funds affiliated with Harbinger Capital Partners. Rating Sensitivities Fitch does not anticipate Fidelity & Guaranty Life's financial condition will position it for an upgrade in the immediate future, unless it is owned by a higher rated entity. The key rating triggers that could result in a downgrade include: -- Deterioration in HRG's credit profile; -- Fidelity & Guaranty Life's consolidated RBC falls below 300% with operating leverage above 20x; -- Consolidated financial leverage for F&G Life Holdings exceeds 35%; -- Maximum statutory dividend coverage of F&G Life Holdings consolidated interest falls below 3x. -- A prolonged spike in Fidelity & Guaranty Life annuity surrenders; -- Any significant issues with Fidelity & Guaranty Life's market conduct or regulatory environment. Fitch has affirmed these ratings: Fidelity & Guaranty Life Insurance Co. Fidelity & Guaranty Life Insurance Co. of New York -- IFS rating at 'BBB'. Fitch also rates the following: Fidelity & Guaranty Life Holdings, Inc. -- Long term IDR rating 'BB'. -- Sr. Unsecured Note due March, 2021 'BB-' FIDELITY & GUARANTY: $300MM Notes Issue Gets Moody's 'B1' Rating ---------------------------------------------------------------- Moody's Investors Service has assigned a B1 senior unsecured debt rating to Fidelity & Guaranty Holdings, Inc.'s proposed $300 million, eight year note issuance with a positive outlook. Moody's also affirmed the Ba1 insurance financial strength rating of FGLH's primary operating company, Fidelity & Guaranty Life Insurance Company and changed the outlook to positive from stable. Moody's said a major portion of the proceeds from the notes will be used to provide capital to FGL (in exchange for a surplus note) either to support organic growth or to finance in-market acquisitions. The balance of the proceeds will be used to fund a dividend to the parent company, Harbinger Group Inc. ("HGI", senior secured B3, stable outlook) and to provide additional liquidity to FGLH. Ratings Rationale: The rating agency stated that the affirmation of FGL's Ba1 IFS rating reflects its adequate asset quality, flexible operating costs and good capitalization, including resilience under a stress scenario. The change in FGL's outlook to positive reflects the stabilization of-and strong recovery in-distribution and sales production, as well as expected profitability improvements given manageable asset impairments and prospects for writing new profitable business. Commenting on the new debt issuance, Moody's Vice President Ann Perry, said, "Although the new debt increases financial leverage and cash demands on FGLH, it also somewhat improves financial flexibility by reducing capital dependence on its parent and by establishing an independent presence in the capital markets." The rating agency noted, however, that FGL's capital management, including dividend policy, use of reinsurance, and relative quality of capital, is likely to be relatively more aggressive under HGI ownership compared to ownership by a traditional strategic parent. The ratings incorporate the expectation of financial leverage in the mid-to-high 20% range and that FGLH will maintain cash equal to at least one year of interest expense. Moody's noted that the spread between FGLH's B1 senior unsecured debt rating and the Ba1 IFS rating of its operating subsidiary is three notches, which is consistent with Moody's typical notching practices for U.S. insurance holding company structures for higher rated insurance groups, and reflects the stabilization and improvements in both the business and financial profile of the company. The rating agency added that it expected the additional capital in FGL will be used to finance disciplined business growth in fixed index annuities (FIAs), the company's primary product. According to Moody's, FIAs incorporate hedging challenges and the need to carefully manage actuarial assumptions. Substantial or rapid organic growth would present risks relating to competitive pricing and/or overly aggressive product features, which would weaken the credit profile of the company. The other possible use of proceeds - acquisitions - raises uncertainty until the particulars of a specific transaction are identified. According to Moody's the following could place upward pressure on FGLH and FGL's ratings: 1) a growth strategy that allows the NAIC RBC ratio to remain above 350%; 2) sustained statutory return on capital (adjusted for unrealized derivative gains and losses) exceeding 4%; 3) managed growth in profitably priced new FIA business and life insurance. Conversely, given the positive outlook on the ratings, the following could result in a return of the outlook of FGLH and its operating subsidiary's rating to stable: 1) financial leverage above 30%; 2) sustained statutory return on capital (adjusted for unrealized derivative gains and losses) less than 4%;3) significant use of reinsurance to finance growth; 4) RBC ratio declines below 350%. The principal methodology used in this rating was Moody's Global Rating Methodology for Life Insurers published in May 2010. FGLH an insurance holding company headquartered in Baltimore, Maryland. As of December 31, 2012, FGLH reported total assets of about $20.7 billion and equity of approximately $1.1 billion. FIDELITY & GUARANTY: S&P Rates $300MM Sr. Unsecured Notes 'B+' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned a 'B+' long-term counterparty credit rating to Fidelity & Guaranty Life Holdings Inc. (FGLH) and a rating of 'B+' to its $300 million senior unsecured notes maturing in 2021. The outlook is stable. "The rating on FGLH is one rating category below our financial strength rating on its operating companies," said Standard & Poor's credit analyst Marilyn Castro. The standard gap notching, per S&P's criteria, recognizes the dependence of FGLH on the dividend stream from Fidelity & Guaranty Life Insurance Co. (FGL) for debt or stock servicing. It also reflects that regulatory intervention can restrict the flow of funds to the holding company. The senior unsecured note rating reflects S&P's view that ordinary statutory dividends from FGL will be adequate to service the debt and that debt leverage and interest coverage metrics are commensurate with the rating. Following the issuance, FGLH's debt-to-capital ratio will be 28% and statutory interest coverage will be 5x, calculated according to S&P's criteria. FGLH plans to use the net proceeds of the notes for general corporate purposes, to support the growth of FGL, and to pay a dividend to Harbinger Group Inc. FGLH is a 100% owned subsidiary of Harbinger. The stable outlook reflects S&P's expectation that FGLH's key holding company credit metrics will remain consistent with the current rating level. S&P expects FGLH's debt leverage to remain less than 45% and its minimum statutory interest coverage to be 4x. S&P also expects FGL to continue to grow and generate stable cash flow in the intermediate term (12 to 24 months) to meet debt- service requirements. S&P expects prospective ordinary dividends to FGLH from FGL to average $40 million per year, in line with the historical range. As of year-end 2012, FGL had adjusted statutory pretax income of $182 million. Year-end 2012 adjusted income includes pretax statutory income of $112 million and unrealized capital gains on derivatives of $70 million. When analyzing statutory net income, S&P adjusts earnings to include the unrealized gains or losses on derivatives backing the fixed-indexed annuities--reported as a component of capital and surplus--to match it against the offsetting credit to reserves reported in income from operations. S&P expects FGL to produce at least $85 million-$100 million in pretax statutory income in 2013. FENDER MUSICAL: Moody's Rates $200MM Sr. Secured Term Loan 'B2' --------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Fender Musical Instruments Corporation's new $200 million senior secured term loan. Moody's also affirmed the B2 Corporate Family Rating and the B2-PD Probability of Default Rating. The rating outlook is stable. The proceeds of the new facility together with a $40 million equity contribution by Fender's financial sponsors will be used to refinance the company's existing $300 million term loan (about $234 million outstanding), and pay transaction fees and expenses. The B2 rating on the existing term loan is affirmed, but will be withdrawn at close. "The refinancing improves Fender's debt maturity profile and financial flexibility and reduces its financial leverage," said Kevin Cassidy, Senior Credit Officer at Moody's Investors Service. "This will enable the company to focus on its business without being distracted by potential liquidity concerns," he noted. The following rating was assigned: $200 million senior secured term loan due March 2019 at B2 (LGD 4, 56%); The following ratings were affirmed: Corporate Family Rating at B2; Probability of Default Rating at B2-PD; The following rating was affirmed, but will be withdrawn at the close of the transaction: $300 million senior secured term loan (about $240 million outstanding) due June 2014 at B2 (LGD4, 56% ) Ratings Rationale: Fender's B2 Corporate Family Rating reflects its fairly high financial leverage approaching 6 times (5.2 times pro forma), lack of significant product diversification outside of musical instruments (principally guitars) and relatively small size with revenue around $700 million. The rating also reflects the uncertainty in the macro economy, including weak discretionary consumer spending, higher taxes and risks in Europe where the company generates more than 20% of its revenue. Having a significant amount of business with Guitar Center (Caa2 stable), which is experiencing financial distress, is also a risk. The company's well-known brand names, good liquidity profile (assuming refinancing closes), good geographic diversification throughout the United States and internationally and leading market share in guitars supports the rating. The stable outlook reflects Moody's expectation of modest earnings and revenue growth over the next 12 to 18 months. Moody's expectation is that Fender will deploy its free cash flow to reduce debt. The rating could be downgraded if Fender's operating performance were to deteriorate. Key credit metrics driving a potential downgrade would be debt to EBITDA sustained over 6 times (presently 5.8 times and 5.2 times pro forma), low single digit EBITA margins (currently 6%) and EBITA to interest sustained under 1.5 times (now 2.5 times, but around 2 times pro forma). Failure to close the proposed $200 million debt refinancing and equity contribution would also pressure the rating as the existing term loan matures in June 2014. There is little upward rating pressure in the near term given the company's modest operating performance and relatively high financial leverage. Over the longer term, the rating could be upgraded if debt to EBITDA falls to around 4 times for a sustained period and operating margins return to previous levels of high single digits or low double digits. An improvement in the macro economy is also necessary for an upgrade to be considered. The B2 rating (LGD 4, 56%) on the term loan reflects its second lien position with respect to the collateral securing the $100 million ABL revolving credit facility, its first lien position in certain other assets and its upstream guarantees from operating subsidiaries. The term loan has a first lien on PP&E, intangibles and substantially all other assets, except the ABL collateral, and a second lien on the ABL collateral. The principal methodologies used in this rating were Global Consumer Durables 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. Fender Musical Instruments Corporation, based in Scottsdale, Arizona, develops, manufactures and distributes musical instruments, principally guitars, to wholesale and retail outlets throughout the world. The company's revenue for the last twelve months ending September 30, 2012 approximated $700 million. Fender is partially owned by a private equity firm. GENE CHARLES: Cash Collateral Hearing Scheduled for March 25 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of West Virginia will convene a hearing on March 25, 2013, at 1:30 p.m., to consider The Gene Charles Valentine Trust's further use of cash collateral. The Debtor's use of cash collateral to remain in effect as provided for in the prior order authorizing use of cash collateral. On Jan. 8, 2013, the Debtor entered into a stipulation and agreed order authorizing the Debtor to enter into certain pipeline right of way agreements, roadway easement agreements, and surface use agreement and to use cash collateral from the pipeline agreements. Under a stipulation with Gulf Coast Bank and Trust Company: 1. The Debtor will not make any postpetition loans or other transfers to Peace Point Farm Equestrian Facility, LLC, or to Delhi Development, LLC, dba Aspen Manor without further of the Court. 2. The Debtor will not make any postpetition loans or other transfers for the payment of any present or past federal or state income tax obligations of Gene Charles Valentine, without further order of the Court. 3. Gene Charles Valentine will at his discretion be authorized by the Court to loan monies, interest free, to the Debtor on an unsecured basis for the purposes of paying the actual and necessary administrative costs and expenses of the Debtor that are not able to be paid by the Debtor's various sources of income. 4. Respondent will not object to the allowance of an administrative claim for Gene Charles Valentine for monies lent to the Debtor in compliance with this Stipulation and Agreed Order. About Gene Charles Valentine A business trust created by investment advisor and broker-dealer agent Gene Charles Valentine sought Chapter 11 bankruptcy protection (Bankr. N.D. W.Va. Case No. 12-01078) in Wheeling, West Virginia on Aug. 9, 2012. The Gene Charles Valentine Trust owns commercial and real estate properties in West Virginia, the Financial West Group, the Peace Point Equestrian Center and the Aspen Manor. The Debtor disclosed in its schedules $34,101,393 in total assets and $22,623,554 in total liabilities. Financial West Investment Group, Inc., doing business as Financial West Group -- http://www.fwg.com/-- is a firm with more than 340 registered representatives supervised by 44 Offices of Supervisory Jurisdiction throughout the United States. Financial West Group is a FINRA, and SIPC member and SEC Registered Investment Advisor (over $1 billion under control) that offers a full range of financial products and services. Its corporate office 32 member staff is dedicated to providing registered representatives quality service and technology to allow them to focus on best servicing their investors needs. Aspen Manor -- http://www.aspenmanorresort-- is a resort that claims to be the "The Jewel of the Ohio Valley." Along with its architectural artistry, including hand-carved ceilings, the Manor is filled will original art, statues, historic furniture and artifacts. Bankruptcy Judge Patrick M. Flatley oversees the case. The Trust hired Mazur Kraemer Law Inc., as bankruptcy counsel. The Debtor's Chapter 11 Plan dated Feb. 8, 2013, provides for the auction of the leasing rights of, or ownership rights to, certain of the Debtor's subsurface assets located underneath the Debtor's Peace Point Farms Equestrian Facility and its surrounding parcels. The U.S. Trustee said that an official committee has not been appointed in the bankruptcy case of Gene Charles Valentine Trust. GENTIVA HEALTH: S&P Raises CCR to 'B' & Rates Loans 'B+' -------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Gentiva Health Services Inc. to 'B' from 'B-' as a result of improved margins and the company's ability to generate more than $100 million of free operating cash flow. The outlook is stable. At the same time, S&P raised its issue-level ratings on the company's senior secured credit facility, which includes a $180 million term loan A, $550 million term loan B, and $110 million revolver, to 'B+' from 'B'. The recovery rating on this debt is '2', indicating S&P's expectation for substantial (70%-90%) recovery of principal in the event of payment default. In addition, S&P raised its issue-level ratings on the company's $325 million senior unsecured notes to 'CCC+' from 'CCC'. The recovery rating on this debt is '6', indicating S&P's expectation for negligible (0%-10%) recovery of principal in the event of a payment default. "Our ratings on Atlanta-based Gentiva Health Services Inc. reflect the company's significant reliance on Medicare payments that continue to be under pressure, particularly in the home health sector," said Standard & Poor's credit analyst Tahira Wright. "The ratings also reflect the company's $1 billion debt-financed acquisition of hospice provider Odyssey Healthcare in 2010." Standard & Poor's stable rating outlook reflects its expectation that Gentiva will be able to manage through 2013 Medicare rate cuts that include sequestration and sustain improved margins. S&P expects the company will continue to generate ample free operating cash flow. S&P could raise the rating on Gentiva if the company continues to demonstrate resilience during a difficult reimbursement environment and further establish its track record of steady EBITDA margins and free cash flow generation. Given high cash balances, a lower rating would result from a combination of events that include resumption of an aggressive acquisition strategy in home health, utilizing significant cash flows and borrowings on its revolver, while adverse developments in Medicare reimbursement further jeopardizes the company's operations. GEOKINETICS INC: Proposes Akin Gump as Counsel ---------------------------------------------- Geokinetics Inc., et al., seek approval to hire Akin Gump Strauss Hauer & Feld LLP as bankruptcy counsel, nunc pro tunc to the Petition Date. The principal professionals and paraprofessionals designated to represent the Debtors and their current hourly rates are: Hourly Rate ----------- Sarah Link Schultz $850 Michael S. Haynes $625 Travis A. McRoberts $550 Sarah J. Crow $450 Jason S. Sharp $400 Brenda Kemp $225 The Debtor proposes that the $469,000 retainer Akin Gump was holding as of the Petition Date be treated as an evergreen retainer as security throughout the Chapter 11 cases until Akin Gump's fees and expenses are awarded by final order. Akin Cump has provided the Debtors with general corporate advice and counsel since 2007. About Geokinetics Inc. Headquartered in Houston, Texas, Geokinetics Inc., a Delaware corporation founded in 1980, provides seismic data acquisition, processing and integrated reservoir geosciences services, and land, transition zone and shallow water OBC environment geophysical services. The Company's balance sheet at Sept. 30, 2012, showed $415.71 million in total assets, $590.79 million in total liabilities, $90.72 million in mezzanine equity, and a $265.80 million total stockholders' deficit. For the first three quarters of 2012, the net loss was $64.5 million. For 2011, there was a $231.2 million net loss on revenue of $763.7 million. Geokinetics Inc. and its nine affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-10472) on March 10, 2013, with a prepackaged Chapter 11 plan that converts $300 million of senior secured notes into 100% of the reorganized Company's common stock. Akin Gump Strauss Hauer & Feld LLP serves as counsel to the Debtors; Richards, Layton & Finger, P.A., is co-counsel; Rothschild Inc. is the financial advisor and investment banker; UHY LLP is the independent auditor; and GCG, Inc., is the claims agent and administrative agent. GEOKINETICS INC: Taps Richards Layton as Co-Counsel --------------------------------------------------- Geokinetics Inc., et al., seek approval from the Bankruptcy Court to hire Richards, Layton & Finger, P.A., as co-counsel, nunc pro tunc to the Petition Date. The principal professionals and paraprofessionals designated to represent the Debtors and their current standard hourly rates are: Paul N. Health $600 L. Katherine Good $450 Tyler D. Semmelman $375 Cathy Greer $215 Prepetition, the Debtors paid the firm a total retainer of $100,000. The Debtors propose that the monies be treated as evergreen retainer to be held by RL&F as security throughout the Chapter 11 cases until the firm's fees and expenses are awarded by final order. To the best of the Debtors' knowledge, the firm is a "disinterested person" under Sec. 101(14) of the Bankruptcy Code. About Geokinetics Inc. Headquartered in Houston, Texas, Geokinetics Inc., a Delaware corporation founded in 1980, provides seismic data acquisition, processing and integrated reservoir geosciences services, and land, transition zone and shallow water OBC environment geophysical services. The Company's balance sheet at Sept. 30, 2012, showed $415.71 million in total assets, $590.79 million in total liabilities, $90.72 million in mezzanine equity, and a $265.80 million total stockholders' deficit. For the first three quarters of 2012, the net loss was $64.5 million. For 2011, there was a $231.2 million net loss on revenue of $763.7 million. Geokinetics Inc. and its nine affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-10472) on March 10, 2013, with a prepackaged Chapter 11 plan that converts $300 million of senior secured notes into 100% of the reorganized Company's common stock. Akin Gump Strauss Hauer & Feld LLP serves as counsel to the Debtors; Richards, Layton & Finger, P.A., is co-counsel; Rothschild Inc. is the financial advisor and investment banker; UHY LLP is the independent auditor; and GCG, Inc., is the claims agent and administrative agent. GEOKINETICS INC: Has GCG as Claims and Notice Agent --------------------------------------------------- Geokinetics Inc., et al., sought and obtained approval to hire GCG, Inc., as claims and noticing agent. The Debtors said that by appointing GCG, the distribution of notices and the processing of claims will be expedited, and the Clerk's office will be relieved of the administrative burden of processing what may be an overwhelming number of claims. GCG has agreed to provide services at its discounted hourly rates and agreed to cap the highest hourly rate at $295: Position Discounted Rate -------- --------------- Administrative and Claims Control $45 to $55 Project Administrators $70 to $85 Quality Assurance Staff Consultant $80 to $125 Project Supervisors $95 to $110 Systems, Graphic Support & Tech Staff $100 to $200 Project Managers and Sr. Project Managers $125 to $175 Directors and Asst. Vice Presidents $200 to $295 Vice Presidents and above $295 For its noticing services, GCG will charge $50 per 1,000 e-mails, and $0.10 per page for facsimile noticing. For its claims administration services, GCG will charge $0.15 per claim for association of claimants' names and addresses to the database, and will bill at its discounted hourly rates for processing of claims. For solicitation and processing of ballots, GCG will also charge at its discounted hourly rates. About Geokinetics Inc. Headquartered in Houston, Texas, Geokinetics Inc., a Delaware corporation founded in 1980, provides seismic data acquisition, processing and integrated reservoir geosciences services, and land, transition zone and shallow water OBC environment geophysical services. The Company's balance sheet at Sept. 30, 2012, showed $415.71 million in total assets, $590.79 million in total liabilities, $90.72 million in mezzanine equity, and a $265.80 million total stockholders' deficit. For the first three quarters of 2012, the net loss was $64.5 million. For 2011, there was a $231.2 million net loss on revenue of $763.7 million. Geokinetics Inc. and its nine affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-10472) on March 10, 2013, with a prepackaged Chapter 11 plan that converts $300 million of senior secured notes into 100% of the reorganized Company's common stock. Akin Gump Strauss Hauer & Feld LLP serves as counsel to the Debtors; Richards, Layton & Finger, P.A., is co-counsel; Rothschild Inc. is the financial advisor and investment banker; UHY LLP is the independent auditor; and GCG, Inc., is the claims agent and administrative agent. GMX RESOURCES: Delays 2012 Form 10-K for Liquidity Issues --------------------------------------------------------- GMX Resources Inc. notified the U.S. Securities and Exchange Commission that it will be late in filing its annual report on Form 10-K for the year ended Dec. 31, 2012. GMX Resources and its advisors have been actively exploring alternatives to address the Company's current liquidity needs, which may include a potential recapitalization of the Company's balance sheet. The Company is currently engaged in discussions and negotiations with representatives of certain holders of its outstanding senior secured notes due 2017 regarding its current liquidity situation. "If we are not able to implement a consensual alternative for restructuring our balance sheet, or in order for us to implement a financial alternative, we may voluntarily seek protection under the U.S. Bankruptcy Code. Because the efforts of management have been focused on the ongoing discussions with the holders of our outstanding senior secured notes and financing alternatives, we have not been able to complete our 2012 Form 10-K within the prescribed time period." About GMX Resources GMX Resources Inc. -- http://www.gmxresources.com/-- is an independent natural gas production company headquartered in Oklahoma City, Oklahoma. GMXR has 53 producing wells in Texas & Louisiana, 24 proved developed non-producing reservoirs, 48 proved undeveloped locations and several hundred other development locations. GMXR has 9,000 net acres on the Sabine Uplift of East Texas. GMXR has 7 producing wells in New Mexico. The Company's strategy is to significantly increase production, revenues and reinvest in increasing production. GMXR's goal is to grow and build shareholder value every day. The Company reported net losses of $206.44 million in 2011, $138.29 million in 2010, and $181.08 million in 2009. The Company's balances sheet at Sept. 30, 2012, showed $343.14 million in total assets, $467.64 million in total liabilities and a $124.49 million total deficit. * * * As reported by the TCR on March 11, 2013, Standard & Poor's Ratings Services said it lowered its corporate credit rating on U.S.-based exploration and production company GMX Resources Inc. to 'D' from 'CCC', indicating a default. "The downgrades follow GMX's March 4 announcement that it failed to make the scheduled interest payment on its senior secured second-priority notes due 2018," said Standard & Poor's credit analyst Paul Harvey. (These notes are not rated.) The company continues to review possible financial solutions to address its liquidity needs, which include a possible restructuring of its debt. GORDIAN MEDICAL: Court Extends Plan Filing Exclusivity to May 14 ---------------------------------------------------------------- The Hon. Mark S. Wallace of the U.S. Bankruptcy Court for the Central District of California granted Gordian Medical, Inc.'s request to extend its exclusive period to propose a plan until May 14, 2013, and the period to solicit acceptances of that plan until July 3, 2013. As reported by the Troubled Company Reporter on Feb. 5, 2013, the Debtor said that the additional time will, among other things, facilitate its efforts to reach a resolution of its disputes with: * the Centers for Medicare and Medicaid Services ("CMS") pertaining to CMS's refusal to pay for certain wound dressings sold by the Debtor to residents of nursing home facilities and the related withholding from the Debtor of certain Medicare payments, which payments account for a substantial amount of the Debtor's revenue, and * the Internal Revenue Service regarding the claims filed by the IRS on Dec. 6, 2012, in the amount of $17.8 million. About Gordian Medical Gordian Medical, Inc., dba American Medical Technologies, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-12339) in Santa Ana, California, on Feb. 24, 2012, after Medicare refunds were halted. Irvine, California-based Gordian Medical provides supplies and services to treat serious wounds. The company has active relationships with and serves patients in more than 4,000 nursing facilities in 49 states with the heaviest concentration of the nursing homes being in the south and southeast sections of the United States. The Debtor estimated assets and debts of up to $50 million. It has $4.3 million in cash and $31.1 million in receivables due from Medicare. Judge Mark S. Wallace oversees the case. Pachulski Stang Ziehl & Jones LLP serves as the Debtor's counsel. GlassRatner Advisory & Capital Group LLC serves as the Debtor's financial advisor. The U.S. Trustee appointed five members to the Official Committee of Unsecured Creditors. The Committee is represented by Landau Gottfried & Berger LLP. GREAT LAKES: In Default of Credit Facility; Delays 10-K Filing -------------------------------------------------------------- Great Lakes Dredge & Dock Corporation on March 14 reported financial results for the quarter and year ended December 31, 2012. For the three months ended December 31, 2012, Great Lakes reported Revenue of $207.1 million, Net Income attributable to Great Lakes of $0.3 million and Adjusted EBITDA of $21.3 million. For the year ended December 31, 2012, Great Lakes reported Revenue of $687.6 million, Net Loss attributable to Great Lakes of $2.7 million and Adjusted EBITDA of $60.9 million. The Company will amend its September 30, 2012 and June 30, 2012 Quarterly Reports on Form 10-Q which will delay its filing of the 2012 Form 10-K. The Company expects to file its 2012 Form 10-K and amendments to its September 30, 2012 and June 30, 2012 Quarterly Reports on Form 10-Q by March 29, 2013. The Company will also identify and disclose a material weakness in internal control over financial reporting. Restatement of Second and Third Quarters During the preparation of its year-end financial statements, the Company identified instances in its demolition segment where revenue was recognized in a manner not consistent with Great Lakes' accounting policy. Great Lakes' policy regarding pending change orders is to immediately recognize the costs but defer the recognition of the related revenue until the recovery is probable and collectability is reasonably assured. Certain pending change orders where client acceptance has not been finalized were included as revenue. After a review, the Company concluded 2012 second and third quarter demolition segment revenues were overstated by $3.9 million and $4.3 million, respectively. The Company believes recognition of a significant portion of these amounts is a timing issue. However, the Company cannot provide assurance the revenue from these pending change orders is certain to be realized. Restatements of the financial statements to be included in the amended Quarterly Reports on Form 10-Q for the second and third quarters of 2012 will also include adjustments to dredging operating income to record $1.3 million and $0.9 million, respectively, of expenses previously capitalized and incurred in the preparation of vessels for the Wheatstone Australia LNG project. These expenses were incurred as a strategic decision to minimize downtime and positively impact the project gross margin while we work in a remote area of Australia in 2013 and 2014. Fourth Quarter For the fourth quarter, $5.6 million of demolition revenue originally expected to be realized did not meet the Company's revenue recognition standards. The Company also believes recognition of a significant portion of these amounts is a timing issue. However, the Company cannot provide assurance the revenue from these pending change orders is certain to be realized. Executive Departure The Company also announced the departure of Bruce J. Biemeck, President and Chief Operating Officer effective March 13, 2013 with recognition of his years of service as an officer and member of the Board of Directors. Mr. Biemeck served as Chief Financial Officer until August 20, 2012. Commentary Jonathan Berger, Chief Executive Officer, said "I am deeply disappointed with the issues in our demolition segment, which contributed to the need to restate our second and third quarter financial results, and deferral of the recognition of revenue and Adjusted EBITDA. We will be focusing on improving controls at our demolition segment and throughout the Company. We at Great Lakes are committed to growing our business and increasing shareholder value. The demolition segment is a key part of our growth strategy, and we are committed to having the right personnel and tools in place to effectively grow the segment while maintaining adequate operational and financial controls. "On December 31, 2012 we purchased the assets of Terra Contracting, a respected provider of a wide variety of essential services for environmental, maintenance and infrastructure-related applications. With Terra's environmental expertise we expect to broaden the service offerings of our demolition and environmental businesses and expand their market reach." William Steckel, Chief Financial Officer said "The dredging segment had a strong quarter, with record revenue of $190.1 million. The dredging segment safely and efficiently executed over 18 domestic projects in the quarter. Although our results in dredging were outstanding, we fell short of our high expectations for the fourth quarter. This was in part because three dredging projects shifted from the fourth quarter into the first quarter of 2013 and there were cost overruns in two other projects. The dredging segment had also expected to sell an underutilized dredge prior to year end. The buyer experienced funding delays and we now expect to realize the $4.0 million gain on the sale of this dredge in 2013. "We maintained our strategic investment in working capital for key projects and balanced these investments with our overall objective of maximizing shareholder value, with the decrease in cash in the quarter resulting primarily from our $15 million special dividend. As previously disclosed, we have committed substantial working capital to large projects this year with the most significant investments being Wheatstone and the Scofield island coastal restoration project in Louisiana. Across these two projects, we have invested nearly $60 million. We expect to recapture this working capital throughout 2013. We have a strong focus going forward on working capital management and generating positive cash flow. "During 2012 we incurred $4.7 million of accelerated maintenance expenses related to preparation of vessels for the Wheatstone project in Australia, which we expected to recognize in future periods based on project performance. In our amended June 30, 2012 and September 30, 2012 Form 10-Qs we will adjust dredging operating income to record $1.3 million and $0.9 million, respectively, of these expenses as a period cost. The remaining $2.5 million was expensed in the fourth quarter. The Company does not frequently incur significant accelerated maintenance as a part of its international deployments. We have therefore excluded these accelerated maintenance expenses from the calculation of Adjusted EBITDA that we are including in this earnings release. Exclusion of these expenses from the calculation of Adjusted EBITDA allows users of the financial statements to more easily compare our year-to-year results. "As a result of the matters described in this release, we did not meet one of our financial covenants in our senior revolving credit facility ("Credit Agreement") and our International Letter of Credit Facility at December 31, 2012. Both the Credit Agreement and the International Letter of Credit Facility require us to maintain a minimum fixed charge coverage ratio of 1.25 to 1.0. Our fixed charge coverage ratio as of December 31, 2012 was 1.12x, resulting in a default under the Credit Agreement and International Letter of Credit Facility, and a potential default due to a change of condition under our bonding agreement. While there can be no guarantees, we expect to receive all necessary waivers from our banks and our surety prior to filing our Form 10- K and we anticipate being in full compliance will all financial covenants in the first quarter of 2013." A copy of Great Lakes' earnings release for the fourth quarter and year ended Dec. 31, 2012, is available for free at http://is.gd/zWzO2a Great Lakes Dredge & Dock Corporation is the largest provider of dredging services in the United States and a major provider of commercial and industrial demolition and remediation services. HANOVER INSURANCE: Fitch Affirms BB Subordinated Debentures Rating ------------------------------------------------------------------ Fitch Ratings has affirmed the 'A-' Insurer Financial Strength (IFS) rating of The Hanover Insurance Company, the principal operating subsidiary of The Hanover Insurance Group (NYSE: THG). Fitch has also affirmed the following ratings for THG: -- Issuer Default Rating (IDR) at 'BBB'; -- Senior unsecured notes at 'BBB-'. The Rating Outlook is Stable. KEY RATING DRIVERS THG's ratings reflect adequate operating subsidiary capitalization, and Fitch's belief that THG's operating subsidiaries internal capital formation is likely to marginally improve over the intermediate term. GAAP operating leverage (net premium written to shareholders' equity) was 1.63x and net leverage was 4.60x at Dec. 31, 2012. Operating leverage has increased significantly over the last three years nearer to maximum credit sector factor guidelines for the current rating level due largely to acquisitions and limited growth in shareholders' equity. The score for U.S. subsidiaries on Fitch's Prism capital model was 'adequate' at year-end 2011 and the financial leverage ratio (FLR) was 26.8% at year-end 2012. Profitability has declined over the last three years due to above average catastrophe related losses and competitive market conditions. THG's calendar-year combined ratio was 104.8% in 2012 from 105.1% in 2011. Catastrophe losses impacted the combined ratio by 8.7 points in 2012 and 10.0 points in 2011. Underwriting losses and declining investment yields promoted a significant decline in profitability. THG's net income return on GAAP equity was 2.2% in 2012 and 1.5% in 2011. Growth in commercial lines has primarily been through renewal rights transactions and acquisitions where THG has focused on smaller, easy-to-integrate acquisitions. THG's 2011 acquisition of Chaucer Holdings plc (Chaucer) represented a significantly larger diversification effort. Fitch also notes the uncertainty tied to ultimately meeting return objectives for the transaction given the cyclical and competitive nature of Chaucer's business. THG's future profit potential is buoyed by a hardening premium rate environment across most U.S. property/casualty market segments. Recently, THG has experienced an improving price environment in commercial lines overall and has increased rates in auto, especially commercial auto, in response to higher loss trends. A more balanced U.S. risk appetite and shifts in the company's geographic mix from traditional northeast markets and from a product perspective towards more specialty commercial lines also positions the company for improved profitability over the intermediate term. RATING SENSITIVITIES Key ratings triggers that could lead to a downgrade include: a material and sustained deterioration in the Prism score and/or material increases in GAAP operating leverage from current levels; GAAP operating EBIT coverage below 5x and maintenance of parent company cash and investments less than 2x annual interest expense; a further material deterioration in underwriting or operating performance relative to peers; and a material deterioration in THG's reserve adequacy, particularly regarding Chaucer. Key ratings triggers that could lead to an upgrade include underwriting results and consolidated profitability comparable to higher rated peer companies and industry averages; improvement in the Prism score to 'strong'; and maintenance of the run-rate holding company financial leverage ratio below 25%. Fitch affirms these ratings with a Stable Outlook: The Hanover Insurance Group -- IDR at 'BBB'; -- 7.5% senior notes due 2020 'BBB-'; -- 6.375% senior unsecured notes due 2021 at 'BBB-'; -- 7.625% senior unsecured notes due 2025 at 'BBB-'; -- 8.207% junior subordinated debentures due 2027 at 'BB'. The Hanover Insurance Company Citizens Insurance Company of America -- IFS at 'A-'. HEMCON MEDICAL: Further Amends Chapter 11 Plan ---------------------------------------------- HemCon Medical Technologies, Inc., further amended its Plan of Reorganization to provide for the following: (1) The United States Government will retain its non-exclusive, non-transferrable, irrevocable license to practice or have practiced for and on behalf of the government the lyophilized human plasma program (LyP) Product and certain of the medical device business technology to the extent provided by the terms of its agreements with Debtor and applicable law. (2) The Bank Lenders' Secured Claim will be paid (a) from the sale of the medical devices business and assets; (b) pursuant to a royalty and security agreement, an initial payment of $50,000, plus payments equal to 2% net revenue from the manufacture and sale of the LyP Product; and (c) from a deferred payment of $1,500,000 from the sale of GuardIVa(R), an infection control product, plus associated intellectual property and trademark, to Bard Access Systems, Inc. In addition, the Banks will have or retain a security interest in the Deferred Bard Payment and the LyP Product. (3) Unsecured Creditors will be issued shares of Common Stock in NewCo. Common Stock will be issued at the rate of one share for each $50 of Allowed Unsecured Claim. The total number of shares issued to Creditors if all Claims are Allowed could approximate 1 million. An additional 700,000 shares of Common Stock in NewCo will be reserved for issuance under potential stock options for consultants, directors and employees. The Debtor related that the first phase of the GuardIVa(R) sale has closed and approximately $3 million has been paid to Debtor's subsidiaries in Europe. Five hundred thousand dollars has been disbursed to the Banks, and approximately $800,000 has been used in connection with operations in Europe and the United States, the Debtor said. The Debtor related that funding costs for Phase II clinical trials for LyP until completion, together with NewCo's operating costs through the third quarter of 2014, will be approximately $7 million. The Debtor added that the LyP product has little or no present value absent new investment, and it is subject to the security interests of the Bank. No binding commitments have been received for new investment in NewCo, the Debtor added. A full-text copy of the Disclosure Statement explaining the Debtor's Second Amended Plan, dated Feb. 15, 2013, is available at http://bankrupt.com/misc/HEMCONds0215.pdf About HemCon Medical Technologies Portland, Oregon-based HemCon Medical Technologies Inc., fdba HemCon, Inc. filed a Chapter 11 bankruptcy petition (Bankr. D. Ore. Case No. 12-32652) on April 10, 2012, estimating up to $50 million in assets and liabilities. Founded in 2001, HemCon -- http://www.hemcon.com/-- is a diversified medical technology company that develops, manufactures and markets innovative wound care, anti-microbial and oral care products for the military, emergency medical, surgical, dental and over-the-counter markets. HemCon has subsidiaries in the United Kingdom and Europe. The bankruptcy filing comes after an en banc decision by the U.S. Court of Appeals for the Federal Circuit on March 15, 2012, which affirmed an award of $34.2 million in damages to Marine Polymer Technologies Inc. in a patent infringement case initiated in 2006. HemCon's European subsidiary is not subject to the Chapter 11 proceedings. Judge Elizabeth L. Perris presides over the case. Attorneys at Tonkon Torp LLP represent the Debtor. The petition was signed by Nick Hart, CFO. The Official Committee of Unsecured Creditors appointed Marine Polymer as its chair. HOSTESS BRANDS: Has Court Approval of 3 Sale Transactions --------------------------------------------------------- Rachel Feintzeig, writing for Dow Jones Newswires, reports that Bankruptcy Judge Robert Drain on Tuesday approved the sale of certain Hostess Brands Inc. assets: Asset Buyer Purchase Price ----- ----- -------------- Majority of cake Apollo Global $410 million brands, including Management LLC Ho Hos, Ding Dongs and Metropoulos and Twinkies & Co. Five major bread Flowers Foods Inc. $360 million brands, including Wonder and Nature's Pride Beefsteak rye Grupo Bimbo $31.9 million SAB de CV In total, Hostess's sale transactions have brought in about $860 million so far, Heather Lennox, a Jones Day attorney representing the company, said at Tuesday's hearing, according to the Dow Jones report. The three transactions up for approval Tuesday represent about $800 million of that, Jones Day attorney Lisa Laukitis added. Many of the transactions include assets like depots, bakeries and equipment in addition to the brands themselves. As reported by the Troubled Company Reporter, Hostess Brands scheduled auctions to obtain the best and highest possible offer for the assets. Nobody challenged the so-called stalking horse offers from the tandem of Apollo and Metropoulos, and from Flowers. Both auctions were canceled. For the Beefsteak rye brand, Bimbo outbid Flowers's initial $30 million offer. Flowers is entitled to a $900,000 breakup fee after serving as the stalking horse. Dow Jones relates Hostess will return to the Bankruptcy Court on April 9 to seek permission to sell its Drake's brand of coffee cakes and other treats to McKee Foods Corp., which submitted an unchallenged lead bid of $27.5 million. Hostess will seek approval for the sale of its Eddy's, Standish Farms and Grandma Emilie's bread brands -- plus four bakeries and 14 depots -- to a subsidiary of United States Bakery Inc., which emerged as the winner of a Friday auction for the bread assets, according to a person familiar with Hostess's sale process, with a $30.9 million offer. It initially bid $28.9 million as the stalking horse for that contest. According to the Dow Jones report, Ms. Lennox said Hostess expects to generate more money through smaller asset sales being run by Hilco Industrial LLC, which could bring in proceeds in the "high eight figures," she said. But it is still unclear whether that will be enough to enable the company to repay the $1.03 billion to $1.04 billion it owes secured creditors. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Hostess Hostess filed papers last week answering contentions by unions that the buyers must be compelled to abide by the company's last offer to the unions. Hostess says all union workers have been fired, so federal labor law no longer applies. About Hostess Brands Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known for iconic brands such as Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution centers and 570 outlets in 49 states. Hostess filed for Chapter 11 bankruptcy protection early morning on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through 12-22056) in White Plains, New York. Hostess Brands disclosed assets of $982 million and liabilities of $1.43 billion as of the Chapter 11 filing. The bankruptcy filing was made two years after predecessors Interstate Bakeries Corp. and its affiliates emerged from bankruptcy (Bankr. W.D. Mo. Case No. 04-45814). In the new Chapter 11 case, Hostess has hired Jones Day as bankruptcy counsel; Stinson Morrison Hecker LLP as general corporate counsel and conflicts counsel; Perella Weinberg Partners LP as investment bankers, FTI Consulting, Inc. to provide an interim treasurer and additional personnel for the Debtors, and Kurtzman Carson Consultants LLC as administrative agent. Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry Wilson, the head of turnaround and restructuring firm MAEVA Advisors, are representing the Teamsters union. Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and Bakery & Confectionery Union & Industry International Pension Fund are Jeffrey R. Freund, Esq., at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright & Jaworski L.L.P. The official committee of unsecured creditors selected New York law firm Kramer Levin Naftalis & Frankel LLP as its counsel. Tom Mayer and Ken Eckstein head the legal team for the committee. Hostess Brands in mid-November 2012 opted to pursue the orderly wind down of its business and sale of its assets after the Bakery, Confectionery, Tobacco and Grain Millers Union (BCTGM) commenced a nationwide strike. The Debtor failed to reach an agreement with BCTGM on contract changes. Hostess Brands said it intends to retain approximately 3,200 employees to assist with the initial phase of the wind down. Employee headcount is expected to decrease by 94% within the first 16 weeks of the wind down. The entire process was expected to be completed in one year. IDEARC INC: Creditors Seek to Resurrect $9.9-Bil. Suit ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that creditors of Idearc Inc. are relying on a technicality to resurrect a $9.8 billion lawsuit against Verizon Communications Inc. that a federal district judge tossed out largely, if not entirely. The report relates that Idearc creditors contend the corporation was never properly formed, so Verizon remained liable for the debt even though Idearc emerged from Chapter 11 reorganization. Idearc was a subsidiary of Verizon until it was spun off in November 2006. It implemented a Chapter 11 reorganization plan in January 2010, mostly worked out before the Chapter 11 filing in March 2009. Reducing debt from $9 billion to $2.75 billion, the plan created a trust to file lawsuits on behalf of creditors, such as the pending suit against Verizon. According to the report, in the latest filing at the end of last week, creditors contend Idearc was never properly formed as a corporation before the spinoff. Corporate formalities were inadequate, the creditors say, because there were supposed to be two directors, and only one was ever named. For a second technical shortcoming, the creditors contend Verizon never paid for the one share of Idearc stock it was to own before the spinoff. As a consequence of both deficiencies, the creditors believe that that none of the actions taken in connection with the spinoff were properly authorized. The creditors' suit has claims based on theories known as alter ego and promoter liability. The creditors believe Verizon's failure to incorporate Idearc properly makes the former parent liable for unpaid debt under both theories. The report notes that theories espoused by Idearc creditors so far failed to gain traction with U.S. District Judge A. Joe Fish in Dallas. In January he wrote an opinion that could be the death knell for the entire suit. After a trial without a jury, Judge Fish ruled that Idearc was worth $12 billion at the time of the spinoff and therefore was solvent. Judge Fish said the finding of solvency meant claims for constructive fraudulent transfer must be dismissed. He asked both sides to file additional papers on the question of whether any of the creditors' other claims could survive after a finding of solvency. The report recounts that the creditors' trust filed papers in February explaining how several claims should survive, including claims for an illegal dividend. The creditors also argued that the board never properly authorized the dividend paid to Verizon. Verizon responded with its own papers explaining why the entire lawsuit should be dismissed given the solvency finding. The creditors' lawsuit is U.S. Bank National Association v. Verizon Communications Inc., 10-01842, U.S. District Court, Northern District Texas (Dallas). About Idearc Inc. Headquartered in D/FW Airport, Texas, Idearc, Inc., now known as SuperMedia Inc., is the second largest U.S. yellow pages publisher. Idearc was spun off from Verizon Communications, Inc. Idearc and its affiliates filed for Chapter 11 protection (Bankr. N.D. Tex. Lead Case No. 09-31828) on March 31, 2009. The Debtors' financial condition as of Dec. 31, 2008, showed total assets of $1,815,000,000 and total debts of $9,515,000,000. Toby L. Gerber, Esq., at Fulbright & Jaworski, LLP, represented the Debtors in their restructuring efforts. The Debtors tapped Moelis & Company as their investment banker; Kurtzman Carson Consultants LLC as their claims agent. William T. Neary, the United States Trustee for Region 6, appointed six creditors to serve on the official committee of unsecured creditors. The Committee selected Mark Milbank, Tweed, Hadley & McCloy LLP, as counsel, and Haynes and Boone, LLP, co- counsel. Idearc completed its debt restructuring and its plan of reorganization became effective as of Dec. 31, 2009. In connection with its emergence from bankruptcy, Idearc changed its name to SuperMedia Inc. Under its reorganization, Idearc reduced its total debt from more than $9 billion to $2.75 billion of secured bank debt. INOVA TECHNOLOGY: Incurs $3.5 Million Net Loss in Jan. 31 Quarter ----------------------------------------------------------------- Inova Technology Inc. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $3.50 million on $2.55 million of revneue for the three months ended Jan. 31, 2013, as compared with a net loss of $657,433 on $3.73 million of revenue for the same period during the prior year. For the nine months ended Jan. 31, 2013, the Company incurred a net loss of $3.59 million on $14.64 million of revenue, as compared with a net loss of $486,798 on $14.44 million of revenue for the same period a year ago. The Company's balance sheet at Jan. 31, 2013, showed $6.26 million in total assets, $20.73 million in total liabilities and a $14.46 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/utMxKT About Inova Technology Based in Las Vegas, Nevada, Inova Technology, Inc. (OTC BB: INVA) -- http://www.inovatechnology.com/-- through its subsidiaries, provides information technology (IT) consulting services in the United States. It also manufactures radio frequency identification (RFID) equipment; and provides computer network solutions. The company was formerly known as Edgetech Services Inc. and changed its name to Inova Technology, Inc., in 2007. The Company reported a net loss of $1.24 million for the year ended April 30, 2012, compared with a net loss of $3.35 million during the prior year. MaloneBailey, LLP, in Houston, Texas, issued a "going concern" qualification on the consolidated financial statements for the year ended April 30, 2012. The independent auditors noted that Inova incurred losses from operations for the years ended April 30, 2012, and 2011 and has a working capital deficit as of April 30, 2012, which raise substantial doubt about Inova's ability to continue as a going concern. ISTAR FINANCIAL: Fitch Affirms 'CCC-' Preferred Stock Rating ------------------------------------------------------------ Fitch Ratings has taken several rating actions on iStar Financial Inc. (NYSE: SFI): The following ratings have been affirmed: -- Issuer Default Rating (IDR) at 'B-'; -- 2012 senior secured tranche A-1 due March 2016 at 'BB-/RR1; -- 2012 senior secured tranche A-2 due March 2017 at 'B+/RR2'; -- Senior unsecured notes at 'B-/RR4'; -- Convertible senior notes at 'B-/RR4'; -- Preferred stock at 'CCC-/RR6'. The Rating Outlook is revised to Positive from Stable. Fitch has assigned the following ratings: -- October 2012 Secured Credit Facility due 2017 'BB-/RR1'. Key Rating Drivers The revision of the Outlook to Positive is based on the company's demonstrated access to the unsecured debt market, which, combined with certain secured debt refinancings, have significantly improved SFI's near-term debt maturity profile. The affirmation of the IDR at 'B-' is driven by continued weak portfolio metrics, particularly non-performing loans relative to the size of the total loan portfolio. Improvements in the company's loan and operating property portfolios should increase its ability to repay upcoming indebtedness. Stronger performance should be driven by the mild improvement in commercial real estate fundamentals, value stabilization, and financing markets (which increases the likelihood of iStar's borrowers to repay their debt). Weak Loan Portfolio Quality The quality of SFI's loan portfolio has remained roughly the same, with non-performing loans representing approximately 42% of the company's gross loan portfolio balance as of Dec. 31, 2012, which is up from 38% as of Dec. 31, 2011. Illustrative of the company's lending activity focus on higher-risk, weaker-performing collateral, 46% of its non-accrual loans were comprised of condominium and land loans as of Dec. 31, 2012, down from 55% as of Dec. 31, 2011. Further, as of Sept. 30, 2012, 68% of the company's real estate owned (REO) and real estate held for investment, which represent loans on which the company has foreclosed, consists of condominium and land collateral. High Leverage Despite an improved debt maturity profile, the company's leverage measured on a GAAP earnings basis (defined as net debt divided by annual recurring operating EBITDA) of approximately 21x as of Dec. 31, 2012 remains stubbornly high, although it is down from approximately 26x as of Dec. 31, 2011. Reported EBITDA may understate SFI's cash generation power, given that the accounting for non-performing loans and REO allows it to recognize income only upon cash receipt or resolution of the loan. For example, the company generated over $1.1 billion of asset monetizations during 2012, mostly from repayments of and principal collections on loans, driving a $1.1 billion reduction in total debt during 2012. Low Coverage Fixed charge coverage (defined as recurring operating EBITDA before non-cash impairments, provisions and gains divided by the sum of interest expense and preferred stock dividends) was only 0.5x for the year ended Dec. 31, 2012, compared with 0.6x and 1.0x for the years ended Dec. 31, 2011 and 2010, respectively. Fitch expects this ratio to strengthen moderately as the company reduces debt from asset sales and begins to recognize additional GAAP earnings from lease-up of assets within its operating property segment and sales of residential properties. Constrained Growth The company is moderately constrained by non-compliance with an unsecured bond fixed charge incurrence covenant, which limits the company's ability to incur any additional debt to grow its investment portfolio. SFI's growth will occur via investment of asset sales proceeds, such as the recently announced sale of LNR Property LLC and from external capital raising, such as the company's recent $200 million convertible preferred stock offering. Lower Quality Unencumbered Pool SFI's corporate unsecured obligations will need to be serviced by the company's unencumbered pool, income from assets serving as collateral for the 2012 secured financings, and external sources of liquidity, given that both the 2012 senior secured financing and October 2012 secured credit facility debt transactions require that collateral repayments, sales proceeds and other monetizations be used primarily to repay debt encumbering collateral pools for each financing. As of Dec. 31, 2012 a majority of the company's unencumbered loans are non-performing. However, a portion of its unencumbered assets is liquid and could be sold to meet corporate obligations over the next two years, which would mitigate default. The company's recent announcement of the owners' sale (SFI holds a 24% ownership interest) of LNR Property LLC will generate $220 million in net proceeds to SFI, indicative of some liquidity of the company's unencumbered asset base. Recoveries While concepts of Fitch's Recovery Rating methodology are considered for all companies, explicit Recovery Ratings are assigned only to those companies with an IDR of 'B+' or below. At the lower IDR levels, there is greater probability of default so the impact of potential recovery prospects on issue-specific ratings becomes more meaningful and is more explicitly reflected in the ratings dispersion relative to the IDR. The October 2012 secured credit facility and 2012 senior secured tranche A-1 ratings of 'BB-/RR1', or a three-notch positive differential from iStar's 'B-' IDR, are based on Fitch's estimate of outstanding recovery in the 91%-100% range. Together with 2012 senior secured tranche A-2, these obligations represent first lien security claims on collateral pools comprising primarily performing loans and credit tenant lease assets. The 2012 senior secured tranche A-1 has amortization payment priority relative to the A-2 tranche. The 2012 senior secured tranche A-2 rating of 'B+/RR2', or a two- notch positive differential from iStar's 'B-' IDR, is based on Fitch's estimate of superior recovery. Together with the A-1 tranche, these obligations represent first lien security claims on a collateral pool comprising primarily performing loans and credit tenant lease assets, but would receive principal amortization only upon the full repayment of the A-1 tranche. The senior unsecured notes and senior convertible notes ratings of 'B-/RR4' are in line with iStar's 'B-' IDR, based on Fitch's estimate of good recovery based on iStar's current capital structure. While the application of Fitch's recovery criteria indicates a stronger 'RR3' recovery, the company may further encumber a portion of its unencumbered pool to repay unsecured indebtedness. This action benefits the IDR at the detriment of recoveries, and Fitch has incorporated the presence of the unencumbered pool in the 'B-' IDR. This adverse selection also results in less liquid and less traditional commercial real estate collateral remaining in the unencumbered pool to support bondholder recoveries, resulting in Fitch rating recoveries of the unsecured corporate obligations at 'RR4'. The Preferred Stock rating of 'CCC-/RR6' or a three-notch negative differential from iStar's 'B-' IDR, is based on Fitch's estimate of poor recovery based on iStar's current capital structure. Fitch's recovery ratings criteria provide flexibility for a two- or three-notch negative differential between the IDR and instrument rating. A three-notch negative differential is based on the nature of iStar's perpetual preferred stock - a deeply subordinated security that has weak terms and remedies available both before and after a general corporate default (e.g. no stated maturity, an inability for holders to put the security back to the company, and iStar has the ability to defer dividends indefinitely without triggering a corporate default). Positive Outlook The Positive Outlook is based on iStar's ability to access the unsecured bond market three times in 2012, raising $775 million. These offerings, combined with a refinancing of certain secured debt financings have created a stronger liquidity profile and manageable debt maturities until 2016. In addition, the nascent recovery in commercial real estate fundamentals and value should enable the company to further monetize assets within its operating property segment and its unencumbered asset pool more broadly. Rating Sensitivities The following may have a positive impact on iStar's ratings and/or Outlook: -- The ability to incur additional debt under the company's debt incurrence fixed charge covenant; -- Improvement in the quality of the unencumbered pool, measured by the sum of non-performing loans, other real estate owned and real estate held for investment comprising less than 25% of the unencumbered pool; -- Monetization of the company's unencumbered real estate investment portfolio via asset sales to repay unsecured debt; -- Continued demonstrated access to the common equity or unsecured bond market. The following may have a negative impact on the ratings and/or Outlook: -- Deterioration in the quality of iStar's loan portfolio, including an increase in non-performing loans and additional provisions for loan losses; -- An increase in the operating property segment as a percentage of the company's investments. In addition, Fitch has withdrawn ratings on the below obligations as they are no longer outstanding: -- Senior secured A-1 tranche due June 2013 at 'BB-/RR1'; -- Senior secured A-2 tranche due June 2014 at 'B+/RR2'; -- Unsecured revolving credit facility at 'B-/RR4'. JEFFERIES FINANCE: S&P Assigns 'BB-' Issuer Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'BB-' issuer credit rating to Jefferies Finance LLC (JFIN). The outlook is stable. S&P also assigned a 'B+' rating to Jefferies Finance LLC and JFIN Co-Issuer Corp.'s proposed issuance of $500 million in senior unsecured notes. "Our rating on JFIN reflects its narrow business model, rapid growth plans, and the liquidity and credit risk in its originate- to-syndicate strategy," said Standard & Poor's credit analyst Brendan Browne. The company's track record of relatively modest credit losses, and the funding, credit, and operational support provided by its two equity owners -- Jefferies Group LLC (Jefferies) and Massachusetts Mutual Life Insurance Company (MassMutual) -- are positive ratings factors. S&P adds one notch to its 'b+' stand-alone credit profile on JFIN to arrive at the 'BB-' issuer credit rating because S&P believes Jefferies would support the entity under some circumstances of stress. JFIN is a $1.7 billion commercial-lending joint venture that Jefferies and MassMutual own fully and equally. Jefferies launched JFIN in 2004, in conjunction with MassMutual, largely to complement its growing investment banking business. JFIN provides financing to Jefferies-advised companies for acquisitions, refinancings, dividend recapitalizations, and other uses, syndicating the vast majority of the loans it makes to third parties. The company also purchases leveraged corporate loans sourced through Babson Capital Management LLC, a subsidiary of MassMutual and a large investor in the leveraged loan market. S&P's stable outlook on JFIN reflects its expectation that the company will expand quickly without greatly easing its underwriting standards, maintain total leverage below 3.5x, and carefully manage its liquidity risk. "We could raise our rating on JFIN if it can demonstrate a track record of low credit losses as it grows over the next two to three years with further evidence of careful underwriting and liquidity management," said Mr. Browne. "We could lower our rating on JFIN if the company experiences a rise in credit losses, or we believe it is taking on a level of liquidity risk that could threaten its ability to meet all of its commitments," said Mr. Browne. For instance, S&P could downgrade the company if its sources of liquidity dropped in relation to its commitments, compared with current levels. S&P also could lower its rating if JFIN's leverage exceeded 3.5x and the company did not have a credible plan to reduce that level. JOHN'S FAMILY: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: John's Family Inc. 48 Bi-State Plaza, #233 Old Tappan, NJ 07675 Bankruptcy Case No.: 13-15577 Chapter 11 Petition Date: March 18, 2013 Court: U.S. Bankruptcy Court District of New Jersey (Newark) Judge: Novalyn L. Winfield Debtor's Counsel: Glenn R. Reiser, Esq. LOFARO AND REISER, LLP 55 Hudson Street Hackensack, NJ 07601 Tel: (201) 498-0400 Fax: (201) 498-0016 E-mail: greiser@new-jerseylawyers.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 Hye Sook Jang, president. KBI INDUSTRIES: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: KBI Industries, Inc. 2850 Appleton Street, Suite E Camp Hill, PA 17011 Bankruptcy Case No.: 13-01381 Chapter 11 Petition Date: March 18, 2013 Court: U.S. Bankruptcy Court Middle District of Pennsylvania (Harrisburg) Judge: Mary D. France Debtor's Counsel: Robert E. Chernicoff, Esq. CUNNINGHAM AND CHERNICOFF, P.C. 2320 North Second Street Harrisburg, PA 17110 Tel: (717) 238-6570 Fax: (717) 238-4809 E-mail: rec@cclawpc.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Ben Wootton, president. LEHMAN BROTHERS: Giants Stadium Seeks OK of Discovery Protocol -------------------------------------------------------------- Giants Stadium LLC seeks a court order approving its proposed protocol for mutual discovery concerning the company's claim against Lehman Brothers Holdings Inc. and its special financing unit. The move came after the companies failed to reach an agreement to establish a protocol as ordered by the U.S. Bankruptcy Court in Manhattan in November 2012, according to a court filing. "Giants Stadium is forced to seek the court's intervention on this issue due to debtors' continued refusal to agree upon a protocol," Bruce Clark, Esq., at Sullivan & Cromwell LLP, in New York. Giants Stadium's claims stemmed from the swap deal it entered into with Lehman's special financing unit in connection with the $650 million in securities it issued to finance the construction of the New Meadowlands stadium. The swap deal was terminated by Giants Stadium after the Lehman units filed for bankruptcy protection in September 2008. A copy of the proposed order detailing the protocol can be accessed for free at http://is.gd/Z5G7FS About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: Elliott Drops Bid for $3.2-Bil. Payment -------------------------------------------------------- Elliott Management Corp. withdrew its request for initial payment by Lehman Brothers Inc.'s trustee of $3.2 billion to creditors. Elliott, a hedge fund client of the Lehman brokerage, demanded in June 2012 that the trustee make the payment immediately after he has sold securities owned by the brokerage. Shortly after the brokerage's parent filed for bankruptcy protection, the trustee transferred 110,000 mostly retail Lehman accounts containing $90 billion in assets largely to Barclays. Elliott and other customers, however, "were not fortunate enough to participate in that process," according to the hedge fund. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: LBI Taps Bonn Steichen as Special Counsel ---------------------------------------------------------- The trustee overseeing the liquidation of Lehman Brothers Holdings Inc.'s brokerage filed an application seeking court approval to hire Bonn Steichen & Partners as his special counsel. James Giddens, the court-appointed trustee, tapped the Luxembourg- based firm to advise him on matters relating to the brokerage's claims against Lehman Brothers (Luxembourg) Equity Finance S.A. In exchange for its services, Bonn Steichen will charge a reduced, public interest discount rate on an hourly basis at a 10% discount from their standard rates, and will receive reimbursement for work-related expenses. The firm's current hourly rates are: Hourly Rates Professionals (In Euros) ------------- ------------ Partners 450 Counsel 360 Senior Associates 315 Associates 202.50 Paralegals 90 The firm does not have connection with and interest in the Lehman brokerage, or interest materially adverse to any class of creditors, according to a declaration by Fabio Trevisan, Esq., a partner at Bonn Steichen. A court hearing is scheduled for April 24. Objections are due by March 25. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: Liquidators, Trustee Agree to Stay Suits --------------------------------------------------------- James Giddens, the trustee of Lehman Brothers Holdings Inc.'s brokerage, signed an agreement to extend indefinitely the stay applied to the litigations with respect to the objections of the liquidators for Lehman Brothers International (Europe) to the trustee's determination of claims. A full-text copy of the agreement is available without charge at: http://bankrupt.com/misc/LBHI_StipLBIEStayLitigations.pdf About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEONARD A. FARBER: Radiation Oncology Center Files in New York -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Leonard A. Farber MD, PLLC, a doctor-owned radiation oncology facility on West Broadway in Manhattan, filed a petition for Chapter 11 reorganization (Bankr. S.D.N.Y. Case No. 13-10797) on March 15, estimating assets of $12.3 million and liabilities totaling $17 million. According to the report, cost overruns and a dispute with the contractor explain the need for bankruptcy. The facility opened in late 2010. Liabilities include about $2.9 million in secured debt owing to Community National Bank. An objective of Chapter 11 is to form an alliance with a hospital or health care organization, according to a court filing. LIBERACE FOUNDATION: Exclusive Period Extension Hearing April 10 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada has set a hearing for April 10, 2013, at 9:30 a.m. on Liberace Foundation for the Creative and Performing Arts' motion for an order extending the exclusive period to file a plan of reorganization by 120 days to June 21 and an additional 60 days to Aug. 20 within which to obtain approval of its plan. The Debtor's 120-day exclusivity period within which to file its disclosure statement and plan of reorganization expires on Feb. 22, 2013. The 180-day deadline for acceptance of a plan is April 23, 2013. The Debtor said it continues to negotiate with its creditors in good faith, while working diligently towards consummating an effective plan of reorganization. According to the Debtor, its major creditor is oversecured. The Debtor assured the Court that it continues to pay all expenses related to real property in Las Vegas, also known as the Liberace Plaza, in a timely manner. The Debtor is in the process of marketing for sale the Plaza, with intent to use sale proceeds to pay off its creditor, US Bank. The Debtor said it continues to work and negotiate with US Bank regarding a settlement of its claim. "However, the marketing and listing for sale is an extensive process which has taken away from Debtor's time to formulate and secure acceptance of a plan. The complexity of the trademark and copyright issues is another factor for cause favoring extension of exclusivity," the Debtor states. The Debtor possesses various trademarks and copyrights, the retention and protection of which through a plan of reorganization raises unique and complex issues, which will likely require the assistance of special counsel adept at handling intellectual property issues. The Debtor is filing an application to employ special counsel. About Liberace Foundation Founded in 1976, the Liberace Foundation for the Creative and Performing Arts -- http://www.liberace.org/-- helps students in Southern Nevada pursue careers in the performing and creative arts through scholarship assistance and artistic exposure. The foundation has awarded more than 2,700 students with scholarships. It owns the Liberace Museum Collection at 1775 E. Tropicana, in Las Vegas. The Liberace Museum, which has exhibited the jewelry, pianos, garish gowns and other artifacts owned by the great pianist and showman, was opened in 1979. The property is valued at $13 million. The secured creditor, U.S. Bank N.A., is owed $1.269 million. Liberace Foundation filed a Chapter 11 petition (Bankr. D. Nev. Case No. 12-22004) in Las Vegas on Oct. 24, 2012, estimating $10 million to $50 million in both assets and liabilities. Bankruptcy Judge Mike K. Nakagawa presides over the case. The Ghandi Law Offices serves as the Debtor's counsel. The petition was signed by Anna Nateece, business manager. No committee has been appointed or designated by the U.S. Trustee. LIBERTY MEDICAL: Has Court OK to Use Cash Collateral Until April 4 ------------------------------------------------------------------ ATLS Acquisition, LLC, et al., obtained second interim authorization from the Hon. Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware to use cash collateral until April 4, 2013. As reported by the Troubled Company Reporter on Feb. 26, 2013, the Debtors obtained first interim court approval to use cash collateral. The Debtors said in their cash collateral motion filed Feb. 16 that they currently are not seeking postpetition financing. Thus, cash collateral is the Debtors' sole source of funding for their operations and the costs of administering the chapter 11 process. The Debtors will grant prepetition lender Alere Inc. adequate protection in the form of: -- additional and replacement security interests in and liens upon the Debtors' prepetition and postpetition real and personal, tangible and intangible property and assets, and causes of action; -- an allowed super-priority administrative expense claim against each Debtor; and -- periodic interest payments to Alere at the default rate provided for in the Promissory Note. On March 12, the Official Committee of Unsecured Creditors filed an objection to the Debtor's cash collateral use, saying that certain provisions of the interim cash collateral order are unduly prejudicial to the rights of unsecured creditors and, therefore, must be stricken or modified in any further order authorizing the Debtors' use of cash collateral, as more particularly set forth below. Such terms, if continued in a final order, would unduly prejudice the Debtors' estates and unsecured creditors. The Committee has reached an agreement on several issues, but not all of the Committee's concerns have been resolved. While the Committee is hopeful that a consensual resolution will be met prior to the final hearing. "In exchange for the use of Cash Collateral, Alere is provided with a package of benefits that can only be described as overly generous and unwarranted as Alere is simply providing the use of cash collateral and not an infusion of new money to the Debtors' estates," the Committee stated. The Committee is represented by: Stevens & Lee P.C. Joseph H. Huston, Jr. Maria Aprile Sawczuk Camille C. Bent 1105 North Market Street, Suite 700 Wilmington, DE 19801 Tel: (302) 425-3310; -3306 Telecopier: (610) 371-7972 E-mail: jhh/masa/ccb@stevenslee.com and Lowenstein Sandler LLP Bruce Buechler S. Jason Teele Nicole Stefanelli 65 Livingston Avenue Roseland, New Jersey 07068 Tel: (973) 597-2500 Fax: (973) 597-2400 A hearing on the Debtor's cash collateral use will be held on April 4, 2013, at 11:00 a.m. About Liberty Medical Entities that own diabetics supply provider Liberty Medical led by ATLS Acquisition, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-10262) on Feb. 15, 2013, just less than three months after a management buy-out and amid a notice by the lender who financed the transaction that it's exercising an option to acquire the business. Liberty has been in business for 22 years serving the needs of both type 1 and type 2 diabetic patients. Liberty is a mail order provider of diabetes testing supplies. In addition to diabetes testing supplies, the Debtors also sell insulin pumps and insulin pump supplies, ostomy, catheter and CPAP supplies and operate a large mail order pharmacy. Liberty operates in seven different locations and has 1,684 employees. The Debtors have tapped Greenberg Traurig, LLP as counsel; Ernst & Young LLP to provide investment banking advice; and Epiq Bankruptcy Solutions, LLC, as claims and noticing agent for the Clerk of the Bankruptcy Court. LIBERTY MEDICAL: Committee Taps Lowenstein Sandler as Counsel ------------------------------------------------------------- The Official Committee of Unsecured Creditors in ATLS Acquisition, LLC, et al.'s Chapter 11 cases has sought authorization from the Hon. Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware to retain Lowenstein Sandler LLP as lead counsel, effective as of Feb. 28, 2013. Lowenstein Sandler will, among other things, assist the Committee in investigating the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of the Debtors' business, potential claims, and any other matters relevant to the case at these hourly rates: Partners $475-$945 Senior Consel & Counsel $385-$685 Associates $260-$495 Paralegals & Assistants $155-$260 The Committee is also seeking approval to employ Stevens & Lee P.C. to serve as co-counsel. Lowenstein Sandler and S&L will allocate their delivery of services to the Committee so as to avoid unnecessary duplication of services. To the best of the Committee's knowledge, Lowenstein Sandler is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code. Committee Members Roberta A. DeAngelis, the U.S. Trustee for Region 3, appoints three members to the Official Committee of Unsecured Creditors in ATLS Acquisition, LLC, et al.'s Chapter 11 cases. The Committee members include: 1) LifeScan, Inc. Attn: David Rowan 1000 Gibraltar Drive Milpitas, CA 95035 Tel: (800) 578-9284 Fax: (215) 489-5225 2) Abbott Laboratories Attn: David E. Mendelson 100 Abbott Park Road Abbott Park, IL 60064 Tel: (847) 938-0266 Fax: (847) 938-6235 3) Teva Pharmaceuticals USA, Inc. Attn: Sean Haney 1090 Horsham Road North Wales, PA Tel: (215) 293-6426 Fax: (215) 293-6499 About Liberty Medical Entities that own diabetics supply provider Liberty Medical led by ATLS Acquisition, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-10262) on Feb. 15, 2013, just less than three months after a management buy-out and amid a notice by the lender who financed the transaction that it's exercising an option to acquire the business. Liberty has been in business for 22 years serving the needs of both type 1 and type 2 diabetic patients. Liberty is a mail order provider of diabetes testing supplies. In addition to diabetes testing supplies, the Debtors also sell insulin pumps and insulin pump supplies, ostomy, catheter and CPAP supplies and operate a large mail order pharmacy. Liberty operates in seven different locations and has 1,684 employees. The Debtors have tapped Greenberg Traurig, LLP as counsel; Ernst & Young LLP to provide investment banking advice; and Epiq Bankruptcy Solutions, LLC, as claims and noticing agent for the Clerk of the Bankruptcy Court. LIBERTY MEDICAL: Committee Hires Stevens & Lee as Co-Counsel ------------------------------------------------------------ The Official Committee of Unsecured Creditors in ATLS Acquisition, LLC, et al.'s Chapter 11 cases has sought authorization from the Hon. Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware to retain Stevens & Lee, P.C., as co-counsel, effective as of March 4, 2013. S&L will, among other things, attend hearings, draft and review pleadings and generally advocate positions which further the interests of the creditors represented by the Committee, at these hourly rates: Joseph H. Huston, Jr., Shareholder $665 Maria Aprile Sawczuk, Of Counsel $470 Camille C. Bent, Associate $290 Paralegals & Legal Assistants $155-$250 The Committee is also seeking approval to employ Lowenstein Sandler to serve as its lead counsel. S&L and Lowenstein Sandler will allocate their delivery of services to the Committee so as to avoid any unnecessary duplication of services. To the best of the Committee's knowledge, S&L is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code. About Liberty Medical Entities that own diabetics supply provider Liberty Medical led by ATLS Acquisition, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-10262) on Feb. 15, 2013, just less than three months after a management buy-out and amid a notice by the lender who financed the transaction that it's exercising an option to acquire the business. Liberty has been in business for 22 years serving the needs of both type 1 and type 2 diabetic patients. Liberty is a mail order provider of diabetes testing supplies. In addition to diabetes testing supplies, the Debtors also sell insulin pumps and insulin pump supplies, ostomy, catheter and CPAP supplies and operate a large mail order pharmacy. Liberty operates in seven different locations and has 1,684 employees. The Debtors have tapped Greenberg Traurig, LLP as counsel; Ernst & Young LLP to provide investment banking advice; and Epiq Bankruptcy Solutions, LLC, as claims and noticing agent for the Clerk of the Bankruptcy Court. LIFECARE HOLDINGS: To Proceed with Sale to Senior Lenders --------------------------------------------------------- LCI Holdco, LLC, the parent company of LifeCare Holdings Inc., on March 18 disclosed that it will proceed with the sale of substantially all of its assets to Hospital Acquisition, LLC the stalking horse purchaser in the Company's pending Chapter 11 cases. Hospital Acquisition, LLC is a vehicle formed and supported by LifeCare's senior secured lenders. In its December filings with the United States Bankruptcy Court for the District of Delaware, the Company sought and received approval of procedures to facilitate participation by other potential interested parties as part of a Court-supervised sale process. The deadline for receipt of bids was 5 p.m. EDT March 13, 2013, and no other qualified bids were received. A hearing to approve the sale is scheduled for April 2, 2013, and the proposed transaction is expected to be completed this summer. In addition to Court approval, closing of the transaction is subject to the satisfaction of usual and customary conditions, including obtaining all necessary regulatory consents. About LifeCare Hospitals 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. LODGENET INTERACTIVE: Deregisters Unsold Securities --------------------------------------------------- LodgeNet Interactive Corporation filed with the U.S. Securities and Exchange Commission a post-effective amendment no.1 to the Form S-3 registration statement relating to the Registration Statement on Form S-3, filed with the SEC on Oct. 5, 2007. The Registration Statement registered the resale of up to 1,000,000 shares of the Company's common stock, par value $0.01 per share, by certain stockholders. On Dec. 30, 2012, the Company entered into an Investment Agreement with Colony Capital, LLC, and its affiliate, Col-L Acquisition, LLC, and certain other investors, pursuant to which Colony and those other investors will invest $60 million of new capital in the Company, with an option to invest up to an additional $30 million to support a proposed recapitalization of the Company. Pursuant to the terms of the Investment Agreement, on Jan. 27, 2013, the Company and all of its direct and indirect domestic subsidiaries filed a voluntary petition for reorganization under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York, in the proceeding titled In re: LodgeNet Interactive Corp., et al., Case No. 13-10238. The Bankruptcy Case was filed in order to effect the Company's pre-packaged plan of reorganization, which is based on the recapitalization to be effected under the Investment Agreement. Upon the closing of the recapitalization transactions contemplated by the Investment Agreement and the Plan, among other things, all of the capital stock of the Company issued, or outstanding as of the date immediately prior to the Closing, will be cancelled without receiving any distribution, and the Company will issue to Colony and the other investors, or their designees, shares of new common stock of the Company representing 100% of the issued and outstanding shares of New Common Stock as of the date of the Closing. The Closing of the Transactions is subject to various closing conditions, including, among others, bankruptcy court confirmation of the Plan. On March 7, 2013, the Bankruptcy Court entered an order confirming the Plan. The Plan provides that it will become effective upon the completion of certain conditions precedent, including other closing conditions under the Investment Agreement. The Company expects that all those closing conditions will be met and the Closing of the Transactions will occur on or before April 1, 2013. As a result of the Plan becoming effective on the Closing, the outstanding common stock of the Company, including the shares of common stock offered pursuant to the Registration Statement, will be cancelled and the offering under the Registration Statement will be terminated. The Company removes from registration the securities registered but unsold under the Registration Statement. A copy of the amended prospectus is available for free at: http://is.gd/ikHs6g About LodgeNet Sioux Falls, South Dakota-based LodgeNet Interactive Corporation (Nasdaq: LNET) -- http://www.lodgenet.com/-- provides interactive media and connectivity services to hospitality and healthcare businesses and the consumers they serve. Recently named by Advertising Age as one of the Leading 100 US Media Companies, LodgeNet Interactive serves roughly 1.5 million hotel rooms worldwide in addition to healthcare facilities throughout the United States. As of Sept. 30, 2012, LodgeNet, on a consolidated basis, reported $292 million in assets and $449 million in liabilities. LodgeNet Interactive and its affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 13-10238) on Jan. 27, 2013, with a prepackaged Chapter 11 plan of reorganization. The plan extends the maturity date and modifies a $332.6 million term loan and $21.5 million revolver. Colony Capital, LLC, is acquiring 100% of the new shares of the reorganized company for $60 million. Weil, Gotshal & Manges LLP serves as counsel to the Debtors; Leonard Street and Deinard is the co-counsel; Miller Buckfire & Co., LLC and Moorgate Bankers are the investment banker; FTI Consulting, Inc. is the financial advisor; and Kurtzman Carson Consultants is the claims and notice agent. LP DOYLE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: LP Doyle, Inc. dba Euphoria Salons and Day Spas 3355 S. Highland Drive, Suite 112 Las Vegas, NV 89109 Bankruptcy Case No.: 13-12182 Chapter 11 Petition Date: March 18, 2013 Court: U.S. Bankruptcy Court District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtor's Counsel: Matthew L. Johnson, Esq. MATTHEW L. JOHNSON & ASSOCIATES, P.C. 8831 W. Sahara Avenue Las Vegas, NV 89117 Tel: (702) 471-0065 Fax: (702) 471-0075 E-mail: annabelle@mjohnsonlaw.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/nvb13-12182.pdf The petition was signed by Joseph LaMarca, president. MALLINCKRODT PLC: Moody's Assigns 'Ba2' CFR; Outlook Stable ----------------------------------------------------------- Moody's Investors Service assigned a Ba2 Corporate Family Rating and a Ba2-PD Probability of Default Rating to Mallinckrodt plc the pharmaceutical company being spun out of Covidien plc. Moody's also assigned a Speculative Grade Liquidity Rating of SGL- 1 as well as a Ba2 rating to the proposed $900 million bond offering of Mallinckrodt International Finance SA. The rating outlook is stable. Ratings assigned: Mallinckrodt plc: Ba2 Corporate Family Rating Ba2-PD Probability of Default Rating SGL-1 Speculative Grade Liquidity Rating Mallinckrodt International Finance SA: Ba2 (LGD4, 57%) Senior unsecured notes of $900 million Ratings Rationale: Mallinckrodt's Ba2 rating reflects good balance between two business segments (Specialty Pharmaceuticals and Global Medical Imaging) but is constrained by its overall scale with a $2 billion revenue base. Within pharmaceuticals, Mallinckrodt has good balance between generic products, branded products, and active pharmaceutical ingredients, yet its pharmaceutical products are highly concentrated in the opioid pain category. These products face high regulatory scrutiny and the possible transition by prescribing physicians to abuse deterrent products, which could negatively affect Mallinckrodt's non-abuse deterrent products, particularly in its generic drug segment. Mallinckrodt's branded drug business could significantly benefit from this trend if the company commercializes two late-stage pipeline products involving extended-release formulations of controlled substance analgesics. Successful launches of these products could improve Mallinckrodt's credit profile over time. However, without these products Mallinckrodt's organic growth will be sluggish. Further, Mallinckrodt's nuclear segment (approximately 25% of sales) -- which produces nuclear imaging agents for diagnostic procedures -- faces high risk of supply disruption due to a limited number of nuclear plants producing molybdenum-99 and frequent shutdowns of these plants. The initial capital structure post-spin contains only a moderate degree of financial leverage (with debt/EBITDA of 2.6 times), but could increase over time to support business development. The Ba2 rating on the senior notes of Mallinckrodt International Finance SA reflects a guarantee from Mallinckrodt plc. The notes are not guaranteed by operating subsidiaries, and are structurally subordinate to the obligations of Mallinckrodt's subsidiaries. However, the amount of subsidiary obligations is currently not enough to cause the notes to be rated lower than the Corporate Family Rating. The rating outlook is stable, reflecting Moody's expectation that Mallinckrodt's branded pain product development will remain on track, that near-term organic growth will be positive, and that leverage will be maintained below 3.0 times. Establishment of a greater track record as a public company with positive organic growth, successful launches of new pain products and maintenance of debt/EBITDA below 2.5 times could result in a rating upgrade. Conversely, setbacks in branded pain product development or an increase in debt/EBITDA sustained above 3.0 times could result in a ratings downgrade. Scenarios where debt/EBITDA could rise include business development, a prolonged supply disruption in the nuclear business, or unexpected product withdrawals or regulatory compliance issues. The methodologies used in this rating were Global Pharmaceutical Industry published in December 2012, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Dublin, Ireland, Mallinckrodt plc is a specialty pharmaceutical and medical imaging company. Revenues for the twelve months ended December 28, 2012 were approximately $2.06 billion. MENDOCINO COAST: Stipulation on Use of Cash Collateral Approved --------------------------------------------------------------- U.S. Bankruptcy Judge Alan Joslovsky last month entered an order approving a stipulation signed by Chapter 9 debtor Mendocino Coast Healthcare District with lender California Office of Statewide Health Planning and Development on the use of cash collateral. The OSHPD has permitted the District to use cash collateral subject to a perfected prepetition lien in favor of OSHPD and to grant to OSHPD adequate protection in the form of a replacement lien in postpetition cash. No objections to the stipulation were filed. About Mendocino Coast Health Care District Mendocino Coast Health Care District, the operator of a 25-bed acute-care hospital in Fort Bragg, California, filed for Chapter 9 municipal bankruptcy protection (Bankr. N.D. Calif. Case No. 12-12753) on Oct. 17, 2012. Andrea T. Porter, Esq., at Friedman and Springwater LLP, serves as counsel to the Chapter 9 Debtor. Bankruptcy ensued when mediation failed to reach agreement with the union. The hospital district complied with California law requiring negotiations before filing a Chapter 9 petition. The petition showed that assets and debt both exceed $10 million. MAGNUM HUNTER: Delays Annual Report Filing for Yr. Ended Dec. 2012 ------------------------------------------------------------------ Magnum Hunter Resources Corporation on March 18 disclosed that, due to the reasons previously disclosed in its SEC filings, the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2012 will be delayed beyond the extended due date of March 18, 2013. Status of Annual Report on Form 10-K As previously disclosed, Magnum Hunter identified certain material weaknesses in its internal controls over financial reporting in connection with its (i) lack of sufficient qualified personnel to design and manage an effective control environment, (ii) period- end financial reporting processes and (iii) share-based compensation. Magnum Hunter has implemented, and continues to implement, measures to address these weaknesses in the future. These measures have included the employment of a significant number of more experienced accounting personnel, including the addition of the following new personnel: a chief accounting officer, a head of financial reporting, a head of internal audit, a head of tax, two Company controllers, and two regional controllers. In addition, Magnum Hunter is utilizing third party technical resources, including consultants and professional advisory firms, to assist in the implementation of these measures. Magnum Hunter also intends to implement a new integrated accounting and land information system during fiscal year 2013. The Company may identify additional material weaknesses as it finalizes its financial statements for fiscal 2012 and, if so, it will take appropriate measures to address any such weaknesses. The Company's rapid growth, particularly during the last 24 months, has resulted in complex and challenging accounting issues and operational integration matters that have required a significant amount of time and human resources in order to complete the fiscal 2012 audit. Magnum Hunter continues to work diligently with PricewaterhouseCoopers LLP, its independent auditors, to provide all the necessary information, including the finalization of all adjustments and supporting analysis, so they can complete the audit of the Company's financial statements for the fiscal year ended December 31, 2012 as promptly as possible. At this time, Magnum Hunter is not aware of any disagreements with its auditors regarding the Company's fiscal 2012 financial statements. In addition, the Company has not discovered any material errors or omissions that would require a restatement of its previously issued unaudited 2012 quarterly financial information. Magnum Hunter expects to obtain the necessary consents from its lenders under the Company's senior credit facility to allow the Company to provide its 2012 audited consolidated financial statements at a later date, and also expects to obtain similar consents from the lenders under Eureka Hunter Pipeline, LLC's credit facilities. In addition, Magnum Hunter intends to take the appropriate action to prevent or cure any default under the Company's senior notes indenture resulting from its failure to timely file this audited financial information. Guidance for 2012 Selected Unaudited Financial and Operating Data for the Three Months and Twelve Months Ended December 31, 2012 A copy of the selected unaudited financial and operating data for the three months and twelve months ended December 31, 2012 is available for free at http://is.gd/2HLvFM About Magnum Hunter Resources Corporation Magnum Hunter Resources Corporation -- http://www.magnumhunterresources.com-- and its subsidiaries are a Houston, Texas based independent exploration and production company engaged in the acquisition, development and production of crude oil, natural gas and natural gas liquids, primarily in the states of West Virginia, Kentucky, Ohio, Texas and North Dakota and Saskatchewan, Canada. The Company is presently active in five of the most prolific unconventional shale resource plays in North America, namely the Marcellus Shale, Utica Shale, Eagle Ford Shale, Pearsall Shale and Williston Basin/Bakken Shale. MF GLOBAL: Files Plan Supplement With Loan, Trust Agreements ------------------------------------------------------------ MF Global Holdings Ltd. revealed new details about its proposed Chapter 11 plan in court papers filed on Friday, according to a March 18 report by Reuters. The filings reveal the initial members of a director selection committee who will select board members for MF Global as it liquidates, according to the report. The initial members are Andrew Shannahan, of Knighthead Capital LLC; Joe Kronsberg, of Cyrus Capital Partners; and Austin Saypool, of Silver Point Capital. A trust agreement, called the "MF Global Plan Trust," will aid and implement the firm's liquidation plan, according to the filings. The filings also reveal terms of a $70 million senior secured credit facility to finance the liquidation. The court filings can be accessed for free at http://is.gd/HlJxQ3 About MF Global New York-based MF Global -- http://www.mfglobal.com/-- was 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 also was one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy cases of MF Global Holdings Ltd. and its affiliates. The Chapter 11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. An Official Committee of Unsecured Creditors has been appointed in the case. The Committee has retained Capstone Advisory Group LLC as financial advisor. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. MINH VU HOANG: Sec. 542 Turnover Succeeds Where 549 Would Fail -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a trustee who hadn't brought a lawsuit within the required two years to set aside unauthorized post-bankruptcy transfers was able to keep the claims alive by seeking a turnover of estate property under Section 542(a) of the Bankruptcy Code. The report relates that an individual made a living by purchasing foreclosed properties, fixing them up, and selling them quickly. Although the business was profitable, she didn't report income to taxing authorities and didn't disclose the properties in her bankruptcy filings. She is serving a five-year prison sentence. According to the report, the Chapter 7 trustee claimed that a title company received proceeds from sale of properties after bankruptcy, knowing they were unauthorized sales. The trustee had a problem because he didn't sue to recover the unauthorized post- petition transfers within two years as required by Section 549 of the Bankruptcy Code. To avoid the problem, the trustee sued for a turnover of estate property under Section 542(a). The title company unsuccessfully sought dismissal of the suit, contending it isn't possible to perform an end run on Section 549 by suing under 542. U.S. District Deborah K. Chasanow in Baltimore denied the motion to dismiss last week. She relied on a 2000 decision from the U.S. Court of Appeals in Richmond, Virginia, for the proposition that someone who had possession of estate property can still be held liable for its value even after transferring the property to someone else. She also ruled that the trustee is not required to avoid a postpetition transfer under Section 549 "in order to draw the property back into the estate." The case is Rosen v. Gemini Title & Escrow LLC (In re Minh), 12-0593, U.S. District Court, District of Maryland (Baltimore). A copy of the District Court's March 15 Memorandum Opinion is available at http://is.gd/31T9jzfrom Leagle.com. About Minh Vu Hoang and Thanh Hoang Minh Vu Hoang and Thanh Hoang filed a Chapter 11 petition (Bankr. D. Md. Case No. 05-21078) on May 10, 2005. They served as debtor- in-possession until Gary A. Rosen was appointed as chapter 11 trustee on Aug. 31, 2005. The case was converted to chapter 7 on Oct. 28, 2005, and Mr. Rosen was appointed the chapter 7 trustee and continues to serve in that capacity. Pre-bankruptcy, the Hoangs engaged in a massive asset-concealment scheme. Since 1998, the Hoangs purchased distressed real estate at foreclosure and sold those properties at a profit. The Debtors concealed those assets, through sham entities and paperless transactions, in an effort to impede judgment creditors from executing on any judgments. MONEYGRAM INTERNATIONAL: S&P Affirms 'BB-' Issuer Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'BB-' issuer credit rating on MoneyGram International (MoneyGram). The outlook remains stable. At the same time, S&P assigned a 'BB-' issue-level rating on the company's proposed $975 million senior secured credit facility. The rating affirmation follows MoneyGram's announcement that it will issue a new $975 million senior secured credit facility, made up of a seven-year $850 million term loan B and a five-year $125 million revolver. The company will primarily use the proceeds to refinance its existing indebtedness, which includes $325 million second-lien notes, with an interest rate of 13.25%, and a senior secured term loan B. "We view the transaction favorably because it will reduce the company's interest expense and extend its debt maturities," said Standard & Poor's credit analyst Igor Koyfman. After the company completes the transaction, MoneyGram's annual interest expense will be reduced by over $26 million, increasing S&P's expectation of annual adjusted EBITDA to interest expense to approximately 6.5x. (S&P adjusts EBITDA for legal accruals and fees, restructuring costs, and other nonrecurring items.) Leverage (adjusted for noncancellable operating leases and unfunded postretirement benefits) will increase marginally because the company will finance the make-whole premium on the second-lien notes and other transaction costs. S&P expects leverage to be approximately 3.5x during 2013. The stable outlook reflects S&P's expectation that MoneyGram will operate with leverage (adjusted for noncancellable operating leases and unfunded postretirement benefits) of approximately 3.5x in 2013 and continue to gradually expand its global agent locations. "We believe competition could counteract any material benefit in earnings that relate to moderate improvements in the global economy and an increase in its agent locations," said Mr. Koyfman. "MoneyGram's ownership structure and relatively high agent concentration in its Global Funds Transfer segment will continue to limit the rating to a degree as well." "We could lower our ratings on MoneyGram if its leverage exceeds 4.5x on a sustained basis or the company approaches its first-lien covenant coverage ratios. In our view, this could occur if financial performance deteriorates as a result of competition or the company issues additional debt to finance a payout to shareholders," S&P said. "We could raise the ratings if the IRS settlement has a limited impact on the company, Western Union's pricing actions and other competitive forces don't materially weaken profit margins, and debt leverage is maintained below 3x on a sustained basis," S&P added. MPG OFFICE: Reports $396.1 Million Net Income in 2012 ----------------------------------------------------- MPG Office Trust, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing net income of $396.11 million on $231.17 million of total revenue for the year ended Dec. 31, 2012, as compared with net income of $98.22 million on $234.96 million of total revenue during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $1.46 billion in total assets, $1.98 billion in total liabilities and a $518.32 million total deficit. "In connection with our year-end financial reporting, management needs to perform an evaluation of MPG Office Trust, Inc.'s ability to continue as a going concern. If management cannot conclude that MPG Office Trust, Inc. will be able to continue as a going concern for a reasonable period of time from the date of our year- end consolidated financial statements, our independent registered public accounting firm will need to include an explanatory paragraph in its report on the consolidated financial statements regarding the substantial doubt to continue as a going concern. If we receive such an explanatory paragraph in our opinion, it might further impede our ability to raise funds. The ability of MPG Office Trust, Inc. to continue as a going concern depends in part upon our ability to generate cash from operations or obtain suitable and adequate financing that, in each case, is sufficient to fund our operations, service our indebtedness and potentially re-balance our indebtedness so that it can be refinanced at maturity." A copy of the Form 10-K is available for free at: http://is.gd/THCCKS Form S-11 Prospectus Amendment The Company filed a separate regulatory filing regarding a post- effective amendment no.3 to the Form S-11 registration statement relating to the potential sale of up to 135,526 shares of the Company's common stock by the selling stockholders should they exchange their units representing common limited partnership interests, or common units, in MPG Office, L.P., or the operating partnership, for the Company's common stock. The Company is registering the potential resale of the applicable shares of its common stock to provide the selling stockholders with freely tradable securities. The Company will receive no proceeds from any issuance of the shares of its common stock to the selling stockholders in exchange for common units or from any sale of those shares by the selling stockholders, but the Company has agreed to pay certain registration expenses. The Company's common stock currently trades on the New York Stock Exchange, under the symbol "MPG." On March 8, 2013, the last reported sales price of the Company's common stock on the NYSE was $2.77 per share. A copy of the amended prospectus is available for free at: http://is.gd/5DYJVj 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. MPG Office Trust, Inc., reported net income of $210.47 million on $53.88 million of total revenue for the three months ended Dec. 31, 2012, as compared with a net loss of $30.82 million on $57.37 million of total revenue for the same period during the prior year. MTS LAND: Plan Payments to be Financed by $8MM Exit Loans --------------------------------------------------------- MTS Land, LLC, and MTS Golf, LLC, amended their Plan of Reorganization to include financing for their exit from Chapter 11. Under the Second Amended Joint Plan of Reorganization, there will be two exit loans. The first exit loan will be secured by a first lien on the approximately 68 acres of real property nestled at the base of Camelback Mountain senior in priority to the Restated USB Loan and Restated Hertz Loan in an amount not to exceed $6,860,000. The second exit loan will be secured by a lien on the Real Property junior to the Restated USB Loan and Restated Hertz Loan in an amount not to exceed $1,170,000. The Second Amended Plan continues to impair certain classes of creditors although it promises 100% recovery to all classes. All Creditors with Allowed Claims will be paid the amount of their Allowed Claims in full through the Plan. Further, under the Second Amended Plan, MTS Golf will be merged and consolidated into MTS Land, as the Reorganized Debtor. MTS Land's existing articles of organization, by-laws, and operating agreement will continue in effect following the Effective Date, except to the extent that those documents are amended in conformance with the Plan or by proper governance action after the Effective Date. A full-text copy of the Second Amended Plan, dated Feb. 15, 2013, is available for free at http://bankrupt.com/misc/MTSds0215.pdf About MTS Land MTS Land, LLC, and MTS Golf, LLC, own and operate the now dormant Mountain Shadows Golf Club. They filed separate Chapter 11 petitions (Bankr. D. Ariz. Case Nos. 12-16257 and 12-16257) in Phoenix on July 19, 2012. Mountain Shadows Golf Club -- http://www.mountainshadowsgolfclub.com/-- is an 18 hole, par 56 course located at Paradise Valley. Nestled in the foothills of Camelback Mountain, the 3,081-yard Executive course claims to be one of the most scenic golf courses in Arizona. MTS Land and MTS Golf are affiliates of Irvine, Calif.-based Crown Realty & Development Inc. MTS Land and MTS Golf each estimated assets and debts of $10 million to $50 million. Judge Charles G. Case II oversees the Debtors' cases. Lawyers at Gordon Silver serve as the Debtors' counsel. The petition was signed by Robert A. Flaxman, administrative agent. Lender U.S. Bank is represented by Steven D. Jerome, Esq., and Evans O'Brien, Esq., at Snell & Wilmer L.L.P. The U.S. Trustee for Region 14 advised the Court that an official committee of unsecured creditors has not been appointed because an insufficient number of persons holding unsecured claims against the Debtors have expressed interest in serving on a committee. The U.S. Trustee reserves the right to appoint a committee if interest develop among the creditors. According to the disclosure statement in support of their First Amended Chapter 11 Plan of Reorganization that was filed mid- January, debtors MTS Land, LLC, and MTS Golf, LLC, have a 100% payment plan notwithstanding that the plan impairs certain classes of creditors. NASH FINCH: S&P Lowers Corp. Credit Rating to 'B+'; Outlook Stable ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Minneapolis-based wholesale food distributor Nash Finch Co. to 'B+' from 'BB-'. The outlook is stable. At the same time, S&P lowered its rating on the company's $322 million senior subordinated notes to 'B-' from 'B'; the '6' recovery rating on this debt is unchanged. S&P is subsequently withdrawing the issue-level and recovery ratings following the redemption of this debt instrument. The downgrade reflects Standard & Poor's reassessment of the company's financial risk profile to "aggressive" from "significant". "The reassessment follows deterioration of the company's credit measures resulting from performance erosion and an increase in debt to fund the acquisitions of Bag 'N Save and No Frills," said Standard & Poor's credit analyst Mariola Borysiak. Total debt to EBITDA increased to 4.1x as of Dec. 29, 2012, from 2.7x one year earlier and EBITDA coverage of interest weakened to 3.7x from 4.6x for the corresponding time periods. "We anticipate that further moderate EBITDA erosion and additional borrowings under the revolving credit facility will result in debt leverage increasing to about 4.5x during 2013. We estimate that EBITDA coverage of interest will show modest improvement toward 4x at year-end 2013, as a result of redemption of the subordinated notes. On March 15, 2013, the company redeemed its subordinated convertible notes due 2035 with about $150 million reserved borrowings under its revolving credit facility," S&P said. "In our opinion, Nash Finch could be an industry consolidator, as it attempts to improve its market position given the changing industry dynamics and as more and more highly competitive discounters enter the industry. We expect that the company will likely finance its future acquisition with debt, but we believe that the size of the acquisition will not alter our current assessment of the company's financial risk profile," S&P added. "The rating on Nash Finch also reflects our assessment of the company's business risk profile as "weak" based on our belief that the increased presence of discounters and other nonconventional food retailers will continue to take market share from smaller grocery store chains. An easing of inflation, increasing competition, and declining sales in the military segment hurt Nash Finch's operations during the fourth quarter leading to a 1.1% decrease in revenues. EBITDA margin narrowed about 40 basis points to about 2.4% as of Dec. 29, 2012, due to lack of operating leverage, incremental cost to revise the private-label program, and inefficiencies at the military business," S&P noted. The stable outlook on Nash Finch reflects S&P's expectation that the company's competitive profile will support flat revenues and modest margin erosion and that credit measures will remain in line with S&P's current assessment of an aggressive financial risk profile. S&P would consider lowering the rating if operating trends deteriorate more than it anticipates because of higher customer attrition or significant declines at one or more of Nash Finch's operating segments, coupled with an increase in debt for further asset purchases. S&P would consider a lower rating if leverage reaches the low-5x area. A combination of about 15% debt increase and about 10% EBITDA erosion from Dec. 29, 2012, levels will likely result in debt leverage increasing to about 5.2x. Although not likely in the next 12 months, S&P could consider an upgrade if Nash Finch achieves stable operating performance despite the continued threats from nontraditional food retailers and successfully increases sales and EBITDA such that its debt leverage declines below 4x. S&P believes that scenario is possible if EBITDA increases about 18% from its projected level at end of 2013 while debt remains constant. NBTY INC: S&P Rates $1.508 Billion Term Loan Due 2017 'BB-' ----------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'BB-' issue-level rating to Ronkonkoma, N.Y.-based NBTY Inc.'s proposed $1.508 billion term loan B-2 facility due Oct. 1, 2017. The recovery rating on the vitamin and nutritional supplement company's proposed term loan is '2', indicating S&P's estimation that lenders could expect substantial (70% to 90%) recovery in the event of a payment default or bankruptcy. S&P anticipates that the company will use proceeds from the term loan B-2 facility to repay the existing $1.508 billion term loan B-1 facility. S&P expects to withdraw the ratings on the term loan B-1 facility upon repayment. The ratings are subject to change and assume the transaction closes on substantially the terms presented to S&P. All of NBTY's other ratings, including the 'B+' corporate credit rating, are unchanged. The outlook is stable. Pro forma for the proposed transaction, total debt outstanding is about $2.78 billion inclusive of holding company debt. "The ratings on NBTY reflect our opinion that the company will maintain an "aggressive" financial risk profile, including forecasted leverage in the high 4x area, in part due to its ownership by private equity firm The Carlyle Group. It also reflects our assessment that the company's business risk profile is "fair," incorporating its ongoing exposure to the growing, but highly competitive and fragmented, vitamins, minerals, herbs, and supplements industry, and some customer concentration," S&P said. RATINGS LIST NBTY Inc. Corporate credit rating B+/Stable/-- Ratings Assigned NBTY Inc. Senior secured $1.508 bil. term loan B-2 due 2017 BB- Recovery rating 2 NNN CYPRESSWOOD: Files Schedules of Assets & Liabilities -------------------------------------------------------- NNN Cypresswood Drive 25 LLC filed with the U.S. Bankruptcy Court for the Northern District of Illinois its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property Unknown B. Personal Property $336,293.15 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $17,506,636.00 E. Creditors Holding Unsecured Priority Claims $0.00 F. Creditors Holding Unsecured Non-priority Claims $17,674,635.02 -------------- -------------- TOTAL Unknown $35,181,271.02 The Debtor disclosed that it owns a 3.305% fee simple tenancy in common on an office building and restaurant located at 9720 and 9730 Cypresswood Drive in Houston, Texas. The value of that stake is unknown, the Debtor said. The real property is encumbered by a first lien on account of a $17,500,000 secured claim held by WBCMT 2007-C33 Office 9729, LLC. The secured claimholder is represented by: Joanne Lee, Esq. FOLEY & LARDNER LLP 321 N. Clark Street, Suite 2800 Chicago, IL 60654-5313 E-mail: jlee@foley.com NNN Cypresswood Drive 25, LLC, filed a bare-bones Chapter 11 petition (Bankr. N.D. Ill. Case No. 12-50952) on Dec. 31, 2012, in Chicago. The Debtor, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), has principal assets located at 9720 & 9730 Cypresswood Drive, in Houston, Texas. The Debtor valued its assets and liabilities at less than $50 million. NEVILLE VERA: Case Summary & Largest Unsecured Creditor ------------------------------------------------------- Debtor: Neville Vera, LLC 7 Midwood Road Lincoln Park, NJ 07035 Bankruptcy Case No.: 13-15604 Chapter 11 Petition Date: March 18, 2013 Court: U.S. Bankruptcy Court District of New Jersey (Newark) Judge: Morris Stern Debtor's Counsel: Susan B. Fagan-Rodriguez, Esq. 89 Mountain Heights Avenue P.O. Box 208 Lincoln Park, NJ 07035 Tel: (973) 872-6232 E-mail: sbflesq@optonline.net Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Neville Gibson, sole member. The Company?s list of its largest unsecured creditors filed with the petition contains only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ TD Bank N.A. Bank Loan $1,150,862 One Royal Road Flemington, NJ 08822 NEW ENGLAND COMPOUNDING: PritzkerOlsen Law Firm Files Suit v. MAPS ------------------------------------------------------------------ Attorneys Elliot Olsen and Fred Pritzker filed a lawsuit on March 18 against Medical Advanced Pain Specialists (MAPS) on behalf of Traci M. Maccoux, a 23 year old Minnesota woman. She was one of the Minnesota patients that contracted fungal meningitis after epidural spinal steroid injections in the summer of 2012. The steroids were manufactured by New England Compounding Center (NECC). On September 26, 2012, NECC voluntarily recalled three lots of these steroids due to fungal contamination. "At the time my client was diagnosed with fungal meningitis linked to the MAPS epidural steroid injection, she suffered from Complex Regional Pain Syndrome (CRPS), a chronic pain condition," said Olsen. "Because of the fungal meningitis, an effective treatment for CRPS is now unavailable to my client, and she will have few options to use against the debilitating pain." On May 14, 2012, Ms. Maccoux went to MAPS Clinic in Maple Grove for leg pain treatment. MAPS physicians recommended epidural steroid injections (lumbar injections) in her spine. Thus, on July 31, 2012, MAPS doctors administered an injection of methylprednisolone acetate 80 mg/mL manufactured by NECC. Ms. Maccoux had a second injection of NECC methylprednisolone acetate at MAPS on August 10, 2012. By September 2012, Ms. Maccoux had contracted spinal fungal meningitis. She was hospitalized for more than a week. Since that time, Ms. Maccoux has been on continual anti-fungal medication and has had a surgery to remove hardware associated with a pain modulation device. The antifungal therapy has numerous side effects for Ms. Maccoux including visual disturbances and nausea. It also carries a risk of liver damage and squamous cell carcinoma. On September 26, 2012, NECC voluntarily recalled three lots of preservative-free methylprednisolone acetate due to possible contamination with fungus. On October 6, 2012, NECC expanded the recall to include all products in circulation that were distributed from its facility in Framingham, Massachusetts. On or about October 11, 2012, Ms. Maccoux received notice from MAPS that she was injected with a recalled product that was potentially contaminated by NECC, according to the lawsuit. At this same time, the CDC reported that other patients who had received NECC methylprednisolone had developed fungal meningitis. Although the investigation is ongoing, to date there are 377 CDC- confirmed cases of fungal meningitis in 20 states. In its most recent counts, the CDC has confirmed 722 total cases of NECC drug related illness. Of those, 50 people have died, including one in Minnesota. NECC was licensed as a compounding pharmacy in Minnesota. As such, it was required under Minnesota statutes to sell individually compounded pharmaceuticals for specific patients, by prescription. The license did not allow the company to sell pharmaceuticals in bulk. In December 2012, NECC filed for federal bankruptcy protection in Massachusetts. The Maccoux meningitis lawsuit alleges that, in violation of state law, MAPS received methylprednisolone acetate in bulk from NECC. The lawsuit also alleges that the NECC methylprednisolone administered to Ms. Maccoux on July 31 and/or August 10, 2012, was contaminated with the fungus Exserohilum rostratum or Aspergillus fumigatus, potentially deadly pathogens that can cause illness and death if they are able to enter into the fluid surrounding the brain and spinal cord known as the cerebral spinal fluid ("CSF"). "The lawsuit filed [Mon]day seeks fair compensation for Ms. Maccoux from MAPS," said Olsen, lead attorney for this case. "We allege that these businesses should be held accountable for purchasing drugs illegally. MAPS cannot turn a blind eye to Minnesota law which mandates that it purchase in bulk only from a licensed supplier. Had MAPS abided by this law, many Minnesotans would not have been sickened." Ms. Maccoux is a CDC-confirmed case patient in the fungal meningitis outbreak linked to NECC methylprednisolone. The lawsuit filed on her behalf alleges that she contracted fungal meningitis as a direct result of receiving contaminated steroid injections from MAPS. Ms. Maccoux told The Guardian in an interview* in October 2012: "I'm angry at the companies involved - MAPS, and the company that made the drug. I know people make mistakes, but this is a huge mistake that caused a lot of deaths. I'm angry about it, and I'm sad." The lawsuit alleges that as a direct and proximate cause of the fungal infection, certain treatments for her CRPS may no longer be available to Ms. Maccoux. Elliot Olsen and Fred Pritzker are lawyers with PritzkerOlsen, P.A. -- http://www.pritzkerlaw.com-- a Minnesota law firm with a national practice representing victims of pathogenic adulteration of both food and drug products. The firm has offices in Minneapolis, MN. Maccoux v. Medical Advanced Pain Specialists, P.A., Minnesota District Court, Hennepin County, 27-CV-13-4786 About New England Compounding New England Compounding Pharmacy Inc., filed a Chapter 11 petition (Bankr. D. Mass. Case No. 12-19882) in Boston on Dec. 21, 2012. Daniel C. Cohn, Esq., at Murtha Cullina LLP, serves as counsel. Verdolino & Lowey, P.C. is the financial advisor. The Debtor estimated assets and liabilities of at least $1 million. The Debtor owns and operates the New England Compounding Center is located in Framingham, Mass. The company said at the outset of bankruptcy that it would work with creditors and insurance companies to structure a Chapter 11 plan dealing with personal injury claims. The outbreak linked to the pharmacy has killed 39 people and sickened 656 in 19 states, though no illnesses have been reported in Massachusetts. In October, the company recalled all its products, not just those associated with the meningitis outbreak. An official unsecured creditors' committee was formed to represent individuals with personal-injury claims. The members selected Brown & Rudnick LLP to be the committee's lawyers. NORTHLAND RESOURCES: Faces TSX Delisting After Non-Compliance ------------------------------------------------------------- Northland Resources S.A. on March 15 disclosed that the Company's common shares were set to be delisted from the Toronto Stock Exchange on March 15, 2013. Northland has received notice from the Continued Listings Committee of Toronto Stock Exchange that the Company has failed to meet the continued listing requirements of the TSX, following the decision to file for corporate reorganization of its three Swedish subsidiaries. As the reorganization is still ongoing, the shares were set to be delisted from the TSX effective at the close of market on March 15, 2013. Since October 2006, the Company has a dual listing on the Oslo Bors. The Company intends to maintain its listing on the OSE, and shareholders who previously traded on the TSX can still trade on OSE. Karl-Axel Waplan, President & CEO, Northland Resources S.A. Northland is a producer of iron ore concentrate, with a portfolio of production, development and exploration mines and projects in northern Sweden and Finland OAK KNOLL: Case Summary & 7 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Oak Knoll Associates, L.P. One Canal Plaza, Suite 600 Portland, ME 04101 Bankruptcy Case No.: 13-20205 Chapter 11 Petition Date: March 18, 2013 Court: U.S. Bankruptcy Court District of Maine (Portland) Debtor's Counsel: Richard P. Olson, Esq. PERKINS OLSON, P.A. 32 Pleasant Street P.O. Box 449 Portland, ME 04112 Tel: (207) 871-7159 E-mail: rolson@perkinsolson.com Scheduled Assets: $6,700,000 Scheduled Liabilities: $3,529,350 The Company?s list of its seven largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/meb13-20205.pdf The petition was signed by Pamela W. Gleichman, managing general partner. OCD LLC: Section 341(a) Meeting Scheduled for April 4 ----------------------------------------------------- A meeting of creditors in the bankruptcy case of OCD, LLC, will be held on April 4, 2013, at 1:30 p.m. at Room 243A, White Plains. 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. OCD, LLC, filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 13-22416) on March 12, 2013. Charles E. Dewey, Jr., signed the petition as managing member. On the Petition Date, the Debtor estimated assets and debts of at least $10 million. Reich Reich & Reich, P.C., serves as the Debtor's counsel. PATRIOT COAL: Wins Approval to End Supplemental Retirement Plan --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Patriot Coal Corp. received the bankruptcy court's permission on March 15 to save $2.5 million by ending a supplemental 401(k) retirement plan covering 47 current and former executives. There were no objections. According to the report, the program allowed managers to defer part of their incomes while Patriot would make specified matching contributions. Affected workers will have $2.5 million in pre- bankruptcy unsecured claims plus about $300,000 in a post- bankruptcy priority claims to be paid in full if Patriot emerges from Chapter 11. The report relates that Patriot began the process last week aimed at modifying contracts with the mine workers' union and ending the continuing obligation to provide lifetime health care for retirees. Without success on the endeavor, Patriot said it will be forced to liquidate. Patriot's $200 million in 3.25% senior convertible notes due 2013 last traded on March 14 for 13.25 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The notes declined 9% since Nov. 13. The $250 million in 8.25% senior unsecured notes due 2018 last traded on March 15 for 43.375 cents on the dollar, down 18.2% since Nov. 13, Trace reported. 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. PETTUS PROPERTIES: Court Closes Chapter 11 Case ----------------------------------------------- Bankruptcy Judge Laura T. Beyer in February entered a final decree closing the chapter 11 case of Pettus Properties, Inc., saying the Debtor's estate has been fully administered. Charlotte, North Carolina-based Pettus Properties, Inc., filed for Chapter 11 bankruptcy protection (Bankr. W.D.N.C. Case No. 10-31632) on June 8, 2010. The Company estimated its assets and debts at $10 million to $50 million. In 2011, the Debtor filed a Chapter 11 plan of reorganization, which was challenged by VFC Partners 8 LLC. Robert A. Cox, Jr., Esq., at McGuireWoods LLP, represents VFC. A full-text copy of the disclosure statement is available for free at http://bankrupt.com/misc/PETTUS_DS.pdf PHIL'S CAKE: Proposes Claims Treatment Scheme --------------------------------------------- Phil's Cake Box Bakeries, Inc., d/b/a Alessi's Bakery, has delivered to the U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division, a plan of reorganization and accompanying disclosure statement proposing to pay unsecured creditors a pro rata share of the unsecured creditor distribution fund, which will be in the amount of $250,000. Southern Commerce Bank will retain its liens on the property securing the Debtor's prepetition loan. For the SCB Loans, the Debtors will make monthly interest and principal based on a 10- year amortization. The Debtor related that it will further modify its Plan prior to the confirmation hearing to detail any resolution reached with respect to Eagle Trail Drive's secured claims. The Class 4 Secured Claims SBA will be deemed fully unsecured, the property subject to the Liens of the SBA will revest in the Debtor free and clear of all Liens of the SBA, and the Allowed Claim of the SBA will be treated as a Class 11 Unsecured Claim. The Class 5 Claim of the FDIC will be treated consistent with the FDIC Surrender Order. The Holder of the Allowed Ford Motor Credit Secured Claim will retain the Lien securing the Claim. The Allowed Class 8 Secured Claim will be paid in equal monthly installments so as to be paid in full by the contractual maturity date, with interest at 5.25% per annum. Holder of the Allowed Baytree Leasing Secured Claims will retain the Lien securing the Claim to the extent of the Allowed Amount of such Claim. The Allowed Class 9 Secured Claim will be paid in equal monthly installments over 60 months, with interest at 5.25% per annum. Class 10 consists of the Secured Claim of BB&T secured by a Lien on the Debtor's real property located at 1009 Excelda Ave. and 1017 Excelda Ave., in Tampa, Florida. The Debtor may surrender or retain the Property securing the Class 10 Claim. In the event the Debtor elects to surrender, the Debtor will transfer to the Holder of the Class 10 Claim any Property securing its Secured Claim in full and final satisfaction of the Secured Claim. Any deficiency owing to a Secured Creditor with respect to a Class 10 Claim will be classified and treated as a Class 11 Unsecured Claim. If the Debtor elects to retain the Property securing the Class 10 Secured Claim, the Holder of the Allowed Class 10 Secured Claim will retain the Lien securing the Claim. The Allowed Class 10 Secured Claim will be paid in equal monthly installments over 60 months, with interest at 5.25% per annum. A full-text copy of the Disclosure Statement, dated Feb. 20, 2013, is available for free at http://bankrupt.com/misc/PHILSds0220.pdf About Alessi's Bakeries Phil's Cake Box Bakeries, Inc., dba Alessi's Bakeries, Inc., is a family-owned bakery and catering business owned and operated in Tampa, Fla., by four generations of the Alessi family. The operations have grown from a small bakery delivering bread by horse and wagon, to the current 100,000 square foot manufacturing facility serving retail customers nationwide, with a retail location maintaining and continuing its historic traditions in Tampa. Alessi's operates from two locations: a manufacturing facility and a retail bakery. The Eagle Trail manufacturing facility is located at 5202 Eagle Trail Drive, Tampa. The Eagle Trail Facility is a 100,000 sq. ft. building which houses various production lines including five ovens, 40,000 sq. ft. of refrigerated space with four walk-in freezers and two coolers, and 20,000 sq. ft. of raw material and packing supplies warehouse space. Alessi's also operates a retail bakery facility, located at 2909 West Cypress Street, Tampa. Alessi's owns both locations. As of the Petition Date, Alessi's estimates that it has assets of roughly $14.5 million and liabilities of roughly $14.7 million. Liabilities include $5.9 million owing to Zions. There is another $3 million owing to the Small Business Administration and $820,000 to trade suppliers. Alessi's filed for bankruptcy to address the over-leveraging due to the Eagle Trail Facility acquisition and the inability fully and timely to service debt during the period in which sales dropped. Alessi's filed for Chapter 11 bankruptcy (Bankr. M.D. Fla. Case No. 12-13635) on Sept. 5, 2012. Bankruptcy Judge K. Rodney May oversees the case. Harley E. Riedel, Esq., at Stichter Riedel Blain & Prosser, P.A., serves as the Debtor's counsel. The petition was signed by Philip Alessi, Jr., president. PHOENIX COMPANIES: Delays 2012 Form 10Q & Form 10-K Filings ----------------------------------------------------------- The Phoenix Companies, Inc. on March 15 updated the status of its restatement of prior periods and filing of its third quarter 2012 Form 10-Q and its 2012 Form 10-K with the Securities and Exchange Commission (SEC). On Nov. 8, 2012, Phoenix announced that it would restate previously issued GAAP financial statements for the years ended December 31, 2011, 2010 and 2009, the interim periods for 2011, and the first and second quarters of 2012. In its announcement, the company said it was delaying filing its third quarter 2012 Form 10-Q pending the filing of restated financial results, which it expected to be prior to the timely filing of its 2012 Form 10-K. Phoenix reported on March 15 that it will not meet the previously announced timetable for filing its restated financial information and third quarter 2012 Form 10-Q and will not timely file its 2012 Form 10-K. The company will provide an update on or before April 30, 2013. "We are making substantial progress in completing the restatement and closing the third and fourth quarters of 2012, but even with a significant level of dedicated resources, the scope and breadth of the work involved is much more time consuming than we originally anticipated. Resuming timely and accurate GAAP reporting is a top priority, and we are focused intently on completing this process," said James D. Wehr, president and chief executive officer. Restatement Update -- Phoenix initiated the restatement to correct certain errors relating to the classification of items on the consolidated statement of cash flows in the prior periods. The company currently estimates consolidated cash and cash equivalents as of June 30, 2012 will be approximately $210 million, which is approximately $39 million less than previously reported in its second quarter 2012 Form 10-Q. The change is driven by balance sheet reclassifications of assets between cash and other assets or other liabilities. These reclassifications were in the operating subsidiaries, and there was no impact on holding company cash. In addition, there was no impact on consolidated stockholders' equity. -- Phoenix is adjusting the financial statements for errors previously identified and recording the adjustments in the appropriate historical period. It also has identified additional errors affecting prior periods including actuarial valuation of certain insurance liabilities and deferred policy acquisition cost assets, accounting for complex reinsurance transactions, and valuation of certain private debt securities and derivative instruments. The current estimated impact of quantified corrections on reported consolidated stockholders' equity as of June 30, 2012 is a reduction of less than 1% of the amount previously reported in Phoenix's second quarter 2012 Form 10-Q. The impact of these corrections on any individual period could be material. Since the restatement work is not complete, the estimated impact on consolidated stockholders' equity and consolidated cash and cash equivalents is subject to additional adjustments that could be material and adverse. -- Phoenix continues to assess its disclosure controls and procedures and internal control over financial reporting, and believes it has identified multiple material weaknesses that will be reported in its 2012 Form 10-K. -- The company filed a Current Report on Form 8-K/A today that details the current status of the restatement. Full Year 2012 Statutory Results for Phoenix Life Insurance Company Phoenix Life Insurance Company (PLIC), the principal operating subsidiary of The Phoenix Companies, Inc., filed its unaudited statutory financial results for the year ended Dec. 31, 2012 with the New York Department of Financial Services on March 1, 2013. These statutory results are not indicative of the consolidated GAAP results of the parent company. The following are highlights from that filing: -- Statutory surplus and asset valuation reserve was $922.5 million at Dec. 31, 2012, net of the $71.8 million in dividends paid to the holding company during the year and the repurchase of $48.3 million par amount of PLIC's outstanding 7.15% surplus notes due 2034. Statutory surplus and asset valuation reserve was $845.7 million at Dec. 31, 2011. -- Risk-based capital ratio was 379% at Dec. 31, 2012. -- Statutory net gain from operations was $160.5 million, and statutory net income was $156.2 million for the year ended Dec. 31, 2012. Fourth Quarter and Full Year 2012 Estimated Operating Metrics for the Phoenix Companies, Inc. The following are currently estimated operating metrics for the fourth quarter and full year 2012: -- Annuity deposits of $193.2 million for the fourth quarter of 2012 and $830.0 million for full year 2012. -- Net annuity flows (deposits less surrenders) of $62.0 million for the fourth quarter of 2012 and $294.6 million for full year 2012. -- Annuity funds under management of $5.0 billion at Dec. 31, 2012. -- Life insurance annualized premium of $0.8 million for the fourth quarter of 2012 and $2.7 million for the full year 2012. Gross life insurance in-force at Dec. 31, 2012 of $113.3 billion. -- Fourth quarter 2012 mortality that was $8 million unfavorable to expectations. Full year 2012 mortality that was modestly unfavorable to expectations, and two-year results that were modestly favorable. -- Fourth quarter 2012 total individual life surrenders at an annualized rate of 6.2%, and closed block life policies at an annualized rate of 5.8%. Full year 2012 total individual life surrenders at 5.8%, and closed block life policies at 5.4%. -- Fourth quarter 2012 annuity surrenders at an annualized rate of 10.5%, and full year 2012 annuity surrenders at 11.1%. -- Holding company cash and securities of $144.5 million at Dec. 31, 2012. -- Saybrus Partners EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), including inter-company revenues, of $1.8 million for the fourth quarter of 2012 and $3.3 million of EBITDA for full year 2012. 7.45% Quarterly Interest Bonds Due 2032 On Jan. 16, 2013, Phoenix announced the success of its solicitation of bondholders holding its outstanding 7.45% Quarterly Interest Bonds due 2032 (CUSIP 71902E 20 8) seeking a one-time consent to amend the indenture governing the bonds and provide a related waiver. The approval of the amendments and waiver allowed Phoenix to extend the date for providing its third quarter 2012 Form 10-Q to the bond trustee to March 31, 2013. Phoenix is required to file its quarterly and annual reports with the bond trustee within 15 days after the applicable SEC filing deadline. Once that date passes, the trustee or holders representing 25% or more in principal amount of the bonds may then initiate a 60-day "cure" period. If the reports are not delivered to the trustee before the cure period expires, the trustee or holders representing 25% or more in principal amount of the bonds can request acceleration of maturity. With [Fri]day's announcement, Phoenix has concluded that it will not meet the respective deadlines for providing the trustee with its third quarter 2012 Form 10-Q or 2012 Form 10-K. If the company later concludes that it does not expect to deliver these reports within the cure periods, it may solicit its bondholders for another consent that would further extend the deadline for providing the trustee with the third quarter 2012 Form 10-Q and extend the deadline for providing the 2012 Form 10-K. Even without another successful solicitation of bondholders, the company believes acceleration to be unlikely because of, among other things, the favorable interest rate paid on the bonds. However, the company believes it would have adequate liquidity in the holding company to meet those obligations if an acceleration occurred directly after the cure periods. Annual Meeting of Shareholders Phoenix will announce the date for its 2013 Annual Meeting of Shareholders once a timetable for the filing of its 2012 Form 10-K is established. About Phoenix Headquartered in Hartford, Connecticut, The Phoenix Companies, Inc. -- http://www.phoenixwm.com-- is a boutique life insurance and annuity company serving customers' retirement and protection needs through select independent distributors. * * * In December 2012, Moody's Investors Service said it has placed on review for downgrade the B3 senior debt rating of The Phoenix Companies, and the Ba2 insurance financial strength (IFS) rating of the company's life insurance subsidiaries, led by Phoenix Life Insurance Company (Phoenix Life). The rating action was prompted by a reporting covenant breach related to the company's announced delay in the filing of its Q3 2012 financials. According to Moody's Assistant Vice President, Shachar Gonen, "The review for downgrade of Phoenix's ratings is driven by a potential event of default on its $253 million outstanding of 7.45% Quarterly Interest Bonds due 2032. If the company fails to file its Q3 2012 Form 10-Q with the Securities and Exchange Commission (SEC) by January 29, 2013 and does not obtain an amendment and waiver, investors could force an acceleration of principal, which would severely pressure the financial flexibility of Phoenix." Phoenix had about $124 million of cash and liquid assets as of Q3 2012, and Moody's believes the company would need to find alternative financing or take extraordinary dividends out of its operating companies in order to repay accelerated notes. PHOENIX FOOTWEAR: Reports Financial Results for Fiscal Year 2012 ---------------------------------------------------------------- Phoenix Footwear Group, Inc. on March 15 reported results for the fiscal year ended December 29, 2012. Fiscal Year 2012 -- Operating income for the year totaled $513,000 compared to an operating loss of $1.0 million for the prior year. -- Net sales increased $834,000 or 5.2% to $16.7 million from $15.9 million -- Gross margin as a percentage of net sales improved to 37.5% or 240 basis points from 35.1% -- Net loss from continuing operations decreased to $437,000 or $0.06 per share compared to net loss of $1.7 million or $0.21 per share in fiscal 2011. For the year ended December 29, 2012, net sales increased to $16.7 million or 5.2% compared to $15.9 million for the year ended December 31, 2011. Net sales for the Company's SoftWalk(R) and Trotters(R) brands grew by 11.6% and 2.0% in fiscal 2012. The improvement in net sales for the year was achieved with a 9.7% increase in the average unit wholesale price on an increased unit sales volume of full priced goods of 2.9%, together with a 27% decrease in the sales volume of closed-out goods. The gross margin improved 240 basis points to 37.5% from 35.1% when compared to the prior fiscal year. The enhanced gross margin was produced on a higher unit sales volume of full priced goods coupled with an increase in the average unit wholesale of 9.7% and a decrease in the sales volume of closed-out inventory reduced by an increase in the average standard cost per unit. Selling, general and administrative expenses or SG&A, decreased $835,000 or 12.7% to $5.8 million in fiscal 2012 compared to $6.6 million in fiscal 2011. SG&A as a percentage of net sales for fiscal 2012 was 34.4% compared to 41.4% for fiscal 2011. The decrease in SG&A was mostly due to the reduction in legal, rent and other public company costs incurred during the first quarter of fiscal 2011 associated with the completion of a restructuring plan initiated during the second half of fiscal 2010 and an overall lower operating cost structure. Interest expense for fiscal 2012 totaled $927,000 compared to $720,000 for fiscal 2011. On July 30, 2012, the Company refinanced its credit facilities reducing its borrowing costs and increasing the facilities' size. As a result of the refinancing, the Company incurred $220,900 of additional expenses associated with the accelerated expensing of prepaid financing costs and other fees paid with the early termination of the prior loan agreement. The Company reported a loss from continuing operations of $437,000 or $0.06 per share for the fiscal year ended December 29, 2012, compared to loss from continuing operations of $1.7 million or $0.21 per share for the fiscal year ended December 31, 2011. Waiver and Amendment of Lender Covenants On July 30, 2012, the Company entered into a new Loan and Security Agreement with AloStar Bank of Commerce and Subordinated Loan Agreement with Gibraltar Business Capital, LLC. The Loan Agreement and Subordinated Loan Agreement include various financial and other covenants, with which the Company has to comply in order to maintain borrowing availability and avoid penalties including maintaining required minimum EBITDA amounts. As of December 29, 2012, the Company's rolling 12 month EBITDA of $771,000 was not in compliance with the minimum EBITDA covenant of $850,000 required in the Loan Agreement and Subordinated Loan Agreement. On February 27, 2013 and March 4, 2013, the Company entered into the First Amendment to the Subordinated Loan Agreement with Gibraltar and the First Amendment to the Loan Agreement with AloStar, waiving the Company's non-compliance with the required minimum EBITDA covenant of those agreements as of December 29, 2012 and amending the required minimum EBITDA covenant for each of the first, second and third quarters of fiscal 2013. About Phoenix Footwear Based in Carlsbad, California, Phoenix Footwear Group, Inc. (NYSE Amex: PXG) specializes in quality comfort women's and men's footwear with a design focus on fitting features. Phoenix Footwear designs, develops, markets and sells footwear in a wide range of sizes and widths under the brands Trotters(R), SoftWalk(R), and H.S. Trask(R). The brands are primarily sold through department stores, leading specialty and independent retail stores, mail order catalogues and internet retailers and are carried by approximately 650 customers in more than 900 retail locations throughout the U.S. Phoenix Footwear has been engaged in the manufacture or importation and sale of quality footwear since 1882. The Company reported a net loss of $1.70 million on $17.26 million of net sales for the year ended Jan. 1, 2011, compared with a net loss of $6.99 million on $18.76 million of net sales during the prior year. The Company's balance sheet at Jan. 1, 2011 showed $10.74 million in total assets, $7.90 million in total liabilities and $2.84 million in total stockholders' equity. As reported by the TCR on April 18, 2011, Mayer Hoffman McCann P.C., San Diego, Calif., expressed substantial doubt about the Company's ability to continue as a going concern, following the 2010 financial results. The independent auditors noted that the Company has suffered recurring losses and negative cash flows from continuing operations. PICACHO HILLS UTILITY: Receiver Wants Chapter 11 Case Dismissed --------------------------------------------------------------- Robert Martin, appointed by the district court as receiver for Picacho Hills Utility Company, Inc., asks the bankruptcy court in New Mexico to dismiss PHUC's newly filed bankruptcy case on grounds that it was filed in "bad faith." Mr. Martin filed a separate motion asking the bankruptcy judge to abstain from hearing or suspend the Chapter 11 proceeding so that the state court may continue the receivership and consider whether the Debtor's property should be sold for the benefit of the parties and the public. A third motion filed by the receiver is a request to excuse compliance from turnover requirements under 11 U.S.C. Sec. 543(a). The Debtor is a public utility regulated by New Mexico Public Regulation Commission. Mr. Martin says that before the bankruptcy filing, PHUC's owner, Stephen C. Blanco, embezzled loan proceeds of PHUC, fraudulently conveyed PHUC's assets, and discarded orders by its regulator. Investigation by the Commission began October 2008, and in August 2010 the Commission recommended a receiver following findings of unauthorized financial transactions involving PHUC and Mr. Blanco. Orders by the Commission were affirmed by the New Mexico Supreme Court in September 2011. In June 2010, the Bank of Rio Grande accelerated a $758,160 debt and commenced a receivership action in District Court for Dona Ana County, New Mexico. The court appointed Robert Martin as receiver in November 2011. In July 2012, the parties entered into mediation and executed a Settlement Agreement. Mr. Blanco and his attorney, Alex Chisholm, as well as the other parties, executed the settlement agreement, under which Mr. Blanco and PHUC agreed to the sale of the assets by the receiver. The receiver found a buyer, the Dona Ana Mutual Domestic Water Consumers Association, a political subdivision of the State of New Mexico, and in September 2012, filed a motion in the District Court. However, Mr. Blanco filed documents purporting to fraudulently convey the same water rights to Resurrection Mining, LLC. Resurrection Mining is an entity that lists Alex Chisholm, attorney for Mr. Blanco and PHUC, as "Organizer", and his office address is the mailing address and corporate address for the entity. Mr. Blanco received 22% of the stock of Resurrection in return for conveying the waters rights. Attempts by Mr. Blanco to forum shop by having Judge James T. Martin disqualified were opposed by the Commission and denied by the New Mexico Supreme Court. On March 8, just days before the hearing on the sale motion and a bid to hold Messrs. Blanco and Chisholm in contempt for conspiring to steal 1,876 acre feet of water rights from PHUC, Mr. Blanco sent PHUC to bankruptcy. The receiver, citing, the case of In re Starlite Houseboats, Inc., 426 B.R. 375, 387 (Bankr.Kan 2010), says the three factors for abstention are satisfied: (i) The motivation of the petitioner -- in this case Mr. Blanco on behalf of the debtor ?- was to avoid enforcement of the agreed judgment and to avoid the consequences of his contempt of court by removing the case from the state court; (ii) The creditors, and in this case the court should include the public, are better off with a receiver who will competently manage the public utility and honestly distribute the proceeds of sale rather than Mr. Blanco whose honesty was demonstrated when he conveyed water rights of the debtor to his insider entity formed by his attorney; and (iii) The Debtor is better off with an honest receiver than a principal who embezzles assets and loan proceeds. The Receiver is represented by: Paul M. Fish, Esq. MODRALL SPERLING ROEHL HARRIS & SISK, P.A. Post Office Box 2168 Bank of America Centre, Suite 1000 500 Fourth Street, NW Albuquerque, NM 87103 Telephone: (505) 848-1800 E-mail: pmf@modrall.com About Picacho Hills Utility Picacho Hills Utility Company, Inc., filed a Chapter 11 petition (Bankr. D. N.M. Case No. 13-10742) on March 7, 2013. The Debtor is represented by William F. Davis & Associates, P.C. The Debtor estimated assets of at least $10 million and debts of at least $1 million. PHUC is a public utility as defined by the New Mexico Public Utility Act, Sec. 62-3-3.G. and provides water and sewer service to approximately one thousand residences in Dona Ana County, New Mexico. PHUC is 100% owned by Stephen C. Blanco, who is its president. PLAY BEVERAGES: Playboy Loses Bid to Dismiss Lawsuit ---------------------------------------------------- For the third time in four months, Play Beverages LLC, CirTran Beverage Corporation and CirTran Corporation have won in court in what has proven to be a one-sided legal battle with Playboy Enterprises International, Inc. On March 15, 2013, in the Circuit Court of Cook County, Illinois, the Hon. Kathleen M. Pantle denied Playboy's motion to dismiss Play Beverages' and CirTran Beverage Corporation's lawsuit against Playboy. Playboy claimed the lawsuit should be dismissed "with prejudice" based upon a stipulation Playboy had reached with Play Beverages in action in Utah. Judge Pantle disagreed with Playboy's strained interpretation of the stipulation, opting instead to accept Play Beverages' contention that the stipulation was merely "a standstill agreement." Judge Pantle's ruling allows Play Beverages and CirTran Beverage to pursue their claims, including unlawful conduct against Playboy. Earlier this year they won yet again. "The courts have been unanimous in dismissing suits brought by Playboy in futile attempts to enjoin our companies from manufacturing and selling Playboy Energy Drink," said Iehab J. Hawatmeh, CirTran's chairman and president. "We believed from the outset that Playboy's claims were frivolous and without merit, and once again are very happy the courts agree," he said. "Further," said Mr. Hawatmeh," we understand that in all lawsuits there are highs and lows. However, it is comforting to see the courts recognize our rights -- and those of our distributors - so that we may continue our business of selling an amazing energy drink throughout the world." Introduced in 2008, Playboy Energy Drink is manufactured and distributed exclusively by CirTran Beverage Corporation, a wholly owned subsidiary of CirTran Corporation under a product license from Playboy Enterprises to Play Beverages, and is currently available in more than 20 countries around the world. About CirTran Corporation Marking its 20th year in business in 2013, CirTran Corporation -- http://www.cirtran.com-- has evolved from its roots as an international, full-service contract manufacturer. From its headquarters in Salt Lake City, Utah, where it operates, along with its Racore Technology electronics manufacturing subsidiary, from an ISO 9001:2000-certified facility, CirTran has grown in scope and geography. Today, CirTran's operations include: CirTran-Asia, a subsidiary with principal offices in ShenZhen, China, which manufactures high-volume electronics, fitness equipment, and household products for the multi-billion-dollar direct response industry; CirTran Online, which offers products directly to consumers through major retail Web sites; and CirTran Beverage, which has partnered with Play Beverages, LLC, to introduce and distribute the Playboy Energy Drink. About Play Beverages On April 26, 2011, three alleged creditors, LIB-MP Beverage, LLC, George Denney, and Warner K. Depuy, filed an involuntary Chapter 7 petition against Play Beverages, LLC, a consolidated entity of the Company, seeking its liquidation. On Aug. 12, 2011, the proceeding was converted into a Chapter 11 reorganization proceeding (Bankr. D. Utah Case No. 11-26046). PREFERRED PROPPANTS: May Remain Disadvantaged Over Rivals --------------------------------------------------------- Frac-sand industry dynamics will remain stable in 2013, but Preferred Proppants, one of the key producers of frac sand, will remain at a disadvantage to its chief rivals US Silica and Fairmount Minerals, Moody's Investors Service says in a new report, "Frac-Sand Industry's Rising Tide from US Energy Production Fails to Lift All Boats." The rating agency expects shipments of the sand used in hydraulic fracturing, or "hydrofracking," to increase moderately again this year, amid North America's still-hot oil and gas exploration and production sector. Despite such ideal conditions, the frac-sand industry will remain intensely competitive in 2013, says Michael Corelli, Moody's Vice President -- Senior Analyst and the report's author. "Shipments of frac-sand increased last year even as the rig count declined, due to expanded exploration in wet gas and oil basins," Corelli says. "Hydrofracking in North America looks set to continue growing into the foreseeable future." Attractive natural gas prices and a dramatic run-up in oil prices in the past few years encouraged oil field services companies to pursue hydrofracking at a frantic pace, so they have added significant capacity. And the falling rig count will increase the scramble for customers. "Among the three major frac-sand producers we rate, competition will favor US Silica and Fairmount Minerals, since they can offer quick and abundant high-quality sand," Corelli says. "Preferred Proppants is likely to remain at a disadvantage." Those three companies' operating results have diverged recently. While US Silica has seen significant EBITDA growth, Fairmount's earnings have declined modestly. But Preferred's EBITDA has declined substantially because of its lower-quality product mix, higher exposure to natural gas basins and less-developed logistical network. "In the year ahead, we expect US Silica to report solid growth and Fairmount to experience a modest decline, while Preferred's results will remain weak," Corelli says. Both US Silica and Fairmount have stable rating outlooks, while the negative outlook on Preferred's ratings reflects its weak recent operating results, less advantageous competitive position, low liquidity and weak credit metrics. PROMMIS HOLDINGS: Files Bankruptcy After Lenders Pushed for Sale ---------------------------------------------------------------- Atlanta, Georgia-based Prommis Holdings, LLC, and several subsidiaries filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 13-10551) on March 18, 2013, estimating under $50 million in assets and under $100 million in debts. Prommis Solutions -- http://www.prommis.com/-- provides processing services to the real estate finance industry. Prommis provides technology-enabled services that support many aspects of the real estate lifecycle, including full escrow settlements; title research, insurance, and curative work; as well as components of foreclosure, bankruptcy and loss mitigation processing. Katy Stech, writing for The Wall Street Journal, reports that Prommis blamed the bankruptcy on slowed business once federal regulators and state attorneys general began investigating the mortgage industry's "robosigning" scandal. CEO Charlie Piper said in court papers that Prommis filed for Chapter 11 protection after its lenders, who are owed $74 million, pushed the firm to look for a buyer. WSJ also reports that Mr. Piper said the firm lost its biggest customer, "thereby triggering an immediate and, in the near term, irremediable crisis." Mr. Piper did not identify the lost client. Other court papers said McCalla Raymer LLC law firm is its biggest customer, according to the WSJ report. Mr. Piper also said that financial trouble came from "complications arising from customer disputes" without being more specific. Initial bankruptcy court papers didn't name lawsuits it is involved with. WSJ also notes the firm and its affiliates last year took in $120 million in revenue -- not enough to enable it to pull the amount of money it needed from a revolving loan. The company didn't identify its lenders, who hold its debt in several classes, or the lending agent that organizes them. According to WSJ, a bankruptcy sale could remove the company's ownership from investment firms including Ares Capital Corp. and a Blackstone affiliate that, along with five other groups, said they own more than 10% of one of the company's classes of stock. Judge Brendan Linehan Shannon oversees the case. The firm is represented by Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, LLP. The petition was signed by Charles T. Piper, chief executive officer. PROMMIS HOLDINGS: Case Summary & 30 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Prommis Holdings, LLC 400 Northridge Road Atlanta, GA 30350 Bankruptcy Case No.: 13-10551 Affiliates that simultaneously filed Chapter 11 petitions: Debtor Case No. ------ -------- Prommis Fin Co. 13-10552 Prommis Solutions, LLC 13-10553 E-Default Services LLC 13-10554 Statewide Tax and Title Services of Alabama LLC 13-10555 Statewide Tax and Title Services LLC 13-10556 Statewide Publishing Services LLC 13-10557 Nationwide Trustee Services, Inc. 13-10558 Nationwide Trustee Servcies of Virginia, Inc. 13-10559 Interface Inc. 13-10560 Prommis Homeownership Solutions, Inc. 13-10561 Chapter 11 Petition Date: March 18, 2013 Court: United States Bankruptcy Court District of Delaware (Delaware) Judge: Brendan Linehan Shannon Debtor's Counsel: Steven K. Kortanek, Esq. WOMBLE CARLYLE SANDRIDGE & RICE, LLP 222 Delaware Avenue, Suite 1501 Wilmington, DE 19801 Tel: (302) 252-4363 Fax: (302) 661-7728 E-mail: skortanek@wcsr.com Debtors' Co-Counsel: KIRKLAND & ELLIS LLP Debtors' Restructuring Advisor: HURON CONSULTING SERVICES, LLC Debtors' Claims Agent: DONLIN RECANO & COMPANY, INC. Lead Debtor's Estimated Assets: $10,000,001 to $50,000,000 Lead Debtor's Estimated Debts: $50,000,001 to $100,000,000 The petitions were signed by Charles T. Piper, chief executive officer. Debtors' Consolidated List of 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Morris, Manning & Trade $429,928 Martin, LLP 1600 Atlanta Financial Center 3343 Peachtree Rd, NE Atlanta, GA 30326 Johnson & Freedman, LLC Trade $426,131 1587 Northeast Expressway Atlanta, GA 30329 Pite Duncan LLP Trade $389,969 Trust Account 4375 Jutland Dr San Diego, CA 92117 LPS and Affiliates Trade $365,385 601 Riverside Ave. Jacksonville, FL 32204 United Healthcare of GA Trade $244,201 22703 Network Place Chicago, IL 60673-1227 Locke Lord Bissell & Trade $155,541 Liddell LLP Bingham McCutchen LLP Trade $149,660 Sharp Health Plan Trade $108,434 Bendun Abstract Inc. Trade $103,933 Smoothstone LP Trade $81,782 Communications Mothersonsumi Infotech Trade $64,387 & Designs Ltd. UPS, Inc. Trade $59,422 MS Default Trade $58,013 Resolution, LLC Gwinnett Daily Post Trade $55,944 McCalla Raymer Trade $54,924 Superior Abstractors Trade $52,230 News Daily/Daily Herald Trade $51,028 Pitney Bowes Purchase Trade $43,669 Power Resource Max Global Trade $43,125 Technologies, LLC Flat Iron Capital Trade $42,756 West Tennessee Title Trade $36,040 ADP, Inc. Trade $31,061 Indecomm Holdings, Inc. Trade $29,970 Technology Leasing Trade $28,916 Concepts, Inc. Reece & Associates Trade $28,250 Nashville Ledger Trade $26,640 Marietta Daily Journal Trade $26,223 Marlin Business Bank Trade $25,426 Emason, Inc. Trade $24,183 Duke Realty LP Trade $23,628 QUANTITATIVE ALPHA: Mobile Integrated Ends Deal After Default ------------------------------------------------------------- Mobile Integrated Systems, Inc. on March 15 disclosed that it has terminated the arrangement agreement dated August 20, 2012, as amended pursuant to which it had agreed to acquire all of the outstanding common shares of Quantitative Alpha Trading, Inc. Mobile terminated the Arrangement Agreement as a result of QAT being in breach of certain of its covenants under the agreement. Mobile Integrated Systems Inc. also disclosed that, due to QAT being in default of its obligations under the first priority secured bridge loan, the Company took steps to enforce its security interests under the Bridge Loan. Such collateral interests include all of the present and after-acquired intellectual property of QAT. About Mobile Integrated Systems, Inc. Mobile Integrated Systems, Inc. -- http://mobileintegratedsystems.com/-- is a technology company focused on developing and deploying interactive and mobile products and transaction systems for a variety of industry sectors including, but not limited to, financial services, gaming, transportation and telecommunications. RADIAN GROUP: Phillip Bracken Joins Unit as Chief Policy Officer ---------------------------------------------------------------- Radian Guaranty Inc., the mortgage insurance (MI) subsidiary of Radian Group Inc., on March 18 announced the addition of 30-year mortgage industry veteran, Phillip Bracken, to the team. In the newly created role of Chief Policy Officer - Government and Industry Relations, Mr. Bracken will represent Radian on Capitol Hill, by promoting a more traditional balance between private and public capital in the mortgage finance market. Mr. Bracken brings more than 30 years of mortgage industry experience to Radian, most recently serving as an executive consultant for private enterprise clients in the housing, financial services and consumer sectors. Prior to that, Mr. Bracken spent 15 years as an executive at Wells Fargo, where he managed government and industry relations, and policy development, for the Home Mortgage and Consumer Finance Group. Earlier in his career, Mr. Bracken also held senior leadership roles at Prudential Home Mortgage in St. Louis, Missouri, and America's Mortgage Company in Springfield, Illinois. Mr. Bracken is well recognized, having won a variety of national awards for leadership and achievement within the mortgage industry, including a lifetime achievement award from the National Association of Real Estate Brokers and the Mortgage Bankers Association of America. "As the housing market gains momentum, we need a strong, dedicated voice on Capitol Hill who will advocate for Radian and for balance within the mortgage industry, which is why we created this important role," said Teresa Bryce Bazemore, president of Radian Guaranty. "Phil brings a wealth of industry experience and an impressive leadership background that make him a credible spokesperson for positive change in our industry." Mr. Bracken stated, "I have dedicated much of my career to protecting and promoting sustainable homeownership through my work in government and industry relations. I'm pleased to join the Radian team, and look forward to working closely with Teresa and the leadership team as they have already made tremendous progress in Washington, DC, on behalf of the private MI industry." Mr. Bracken is the co-chairman of the Consumer/Lender Roundtable in Washington, DC; and president of the Housing Renaissance, a group that comprises the top housing industry leaders in the country. About Radian Group Headquartered in Philadelphia, Radian Group Inc. -- http://www.radian.biz-- provides private mortgage insurance and related risk mitigation products and services to mortgage lenders nationwide through its principal operating subsidiary, Radian Guaranty Inc. These services help promote and preserve homeownership opportunities for homebuyers, while protecting lenders from default-related losses on residential first mortgages and facilitating the sale of low-downpayment mortgages in the secondary market. * * * As reported by the Troubled Company Reporter on March 4, 2013, Standard & Poor's Ratings Services said that it has affirmed all of its ratings on Radian Group Inc. At the same time, S&P revised the outlook to stable from negative. S&P also assigned its 'CCC+' senior unsecured debt rating to the company's proposed $350 million convertible senior notes. As reported by the Troubled Company Reporter on Oct. 17, 2012, Standard & Poor's Rating Services raised its long-term issuer credit ratings on Radian Group Inc. (RDN) to 'CCC+' from 'CCC-' and MGIC Investment Corp. (MTG) to 'CCC+' from 'CCC'. The financial strength ratings for both RDN's and MTG's respective operating companies are unchanged. The outlook on both companies is negative. "The outlook for each company is negative, reflecting the continuing risk of significant adverse reserve development; the current trajectory of operating performance; and the expected impact ongoing losses will have on their capital positions," S&P said in October 2012. "We expect operating performance to deteriorate for the rest of the year for both companies, reflecting the affect of normal adverse seasonality on new notices of delinquency and cure rates, and the lack of greater improvement in the job markets." RANCHO HOUSING: General Unsecured Creditors Out of the Money ------------------------------------------------------------ Rancho Housing Alliance Inc. on March 15 delivered to the Bankruptcy Court a fourth iteration of its Chapter 11 plan of reorganization and explanatory disclosure statement. A hearing is set for June 4 to consider confirmation of the Plan. A hearing on the disclosure statement was held Feb. 19. The Debtor seeks to reorganize by using estate assets, postpetition revenues and new capital raised from the sale of new equity to make payments to interested parties. Some payments will be made over time. Some payments will commence on the Effective Date of the proposed Plan, which will be 60 days after the Bankruptcy Court issues an order confirming the Plan. The Debtor's bankruptcy filing was precipitated when the City of Coachella filed a judicial foreclosure action on the Debtor's Tierra Bonita housing project and began threatening to do so with respect to the Calle Verde housing project. The aggregate debt for both projects is roughly $6.0 million, with a potential deficiency judgment that could reach $4.9 million. Pursuant to the Fourth Amended Plan, the order confirming the Plan will constitute an order granting the City of Coachella Redevelopment Agency, which is owed $6,000,000 in secured claims, relief from the automatic stay to permit the claimant to foreclose non-judicially on the real property security. The unsecured deficiency claim, as well as any and all claims of the City of Coachella for property maintenance, shall be treated as a Class 10 general unsecured claim. The Debtor is disputing the amount of the secured claim of Riverside County Tax Collector (alleged to be $500,955 plus unknown amount). The Debtor will seek an order of the Bankruptcy Court estimating or determining the amount of the claims for purposes of distribution from the estate. Pursuant to the Fourth Amended Plan, the secured claimant will retain its lien until the secured tax is paid in full. As to those parcels that are lost through foreclosure, sold or otherwise turned over to secured lenders, the secured claim and lien will follow the property and, to the extent not paid, will be treated as a Class l0 general unsecured claim as to the Debtor and the estate. Under the Plan, holders of general unsecured nonpriority claims, owed at least $10.24 million, will receive nothing on account of their claims. All members of the Debtor, meanwhile, will retain their membership interest. Meanwhile, the Debtor won't make payments to certain secured claims, including those asserted by the City of Indio ($4.6 million); and County of Imperial ($587,000). The loans are in the nature of executory contracts for neighborhood stabilization program. Those loans are not in default and have not matured. The loans were made as affordable housing subsidies. No payments are required under the loans provided the Debtor continues meeting the conditions of the subsidy. If conditions continue to be met for a period of l5 years from the inception of the loans, the loans will be forgiven under the program. The Debtor anticipates the Court will confirm the Plan by June 30, 2013. Objections to confirmation of the Plan are due May 14, 2013. The Debtor will submit its plan confirmation brief and a ballot tally no later than April 30. In February, Peter C. Anderson, the U.S. Trustee, objected to the disclosure statement explaining the third amended version of the Plan. Through the objection, the U.S. Trustee launched an attack against the Plan. The U.S. Trustee argued that the Debtor failed to show that the Plan is feasible. Moreover, he said the Plan violates the absolute priority rule. The U.S. Trustee acknowledged the Debtor anticipates confirming the Plan by cramdown. Despite this, the Plan permits the Debtor's members to retain their interests, and the Debtor to retain certain real property that is more valuable than the encumbering debt. "The Debtor cannot retain these properties, and their equity, while paying unsecured creditors nothing," the U.S. Trustee argued. The Federal Home Loan Bank of San Francisco and the County of Riverside also objected to the Plan documents. The County of Riverside requested that its pre-petition claim be placed into a class, and its post-petition claim be accorded administrative status. The Debtor, in response, amended the Disclosure Statement and Plan to create a new Class "C", designated as such because it includes the County's secured pre- petition property tax claims. In response to the U.S. Trustee's objections, the Debtor argued the absolute priority rule does not forbid the Debtor from retaining ownership of properties if general unsecured creditors are unpaid. "Rather, it precludes interests junior to the general unsecured creditors from retaining property in the event that general unsecured creditors are not paid in full," the Debtor pointed out. The Debtor also said liquidation is not a viable alternative. A copy of the Fourth Amended Disclosure Statement is available at http://bankrupt.com/misc/RANCHOHOUSING4thAmendedDS.pdf About Rancho Housing Alliance Rancho Housing Alliance, Inc., is a California non-profit public benefit corporation authorized and operating pursuant to Division 2 of Title I of the California Corporations Code. RHA has members but does not issue equity securities of any kind. Each member also serves on the Debtor's board of directors. However, operational control of the Debtor rests with its Executive Director, Mr. Jeffrey Hays. RHA's specific charitable purposes are to benefit and support another California non-profit public benefit corporation known as Desert Alliance for Community Empowerment, Inc. In assisting DACE, RHA, among other things, provides affordable, decent, safe and sanitary housing for low income persons where adequate housing does not exist and assists low-income households to secure education, training and services for self-sufficiency. In meeting these goals, RHA owns and operates a number of properties and programs. RHA filed for Chapter 11 bankruptcy (Bankr. C.D. Calif. Case No. 11-27519) on May 27, 2011. Judge Scott C. Clarkson presides over the case. Michael B. Reynolds, Esq., at Snell & Wilmer LLP, serves as the Debtor's counsel. The Debtor disclosed $12,882,123 in assets and $22,404,858 in liabilities as of the Chapter 11 filing. RAPID-AMERICAN CORP: Proposes Reed Smith as Counsel --------------------------------------------------- Rapid-American Corporation seeks Court authority to employ Reed Smith LLP as bankruptcy counsel. The regular rates for Reed Smith's paralegals, associates, and partners are: $100 to $350 for paralegals; $260 to $600 for associates, and $410 to $1,005 for partners. The hourly rates for the paralegals and attorneys who will be primarily responsible for Reed Smith's representation of the Debtor, effective through Dec. 31, 2013 (at which time Reed Smith normally adjusts its rates), are: Partners: Paul M. Singer $750/hr. Associates: Chrystal A. Puleo $510/hr Joseph D. Filloy $350/hr. Jared S. Roach $350/hr. Paralegals: Stacy L. Lucas $185/hr. Will Jarboe $180/hr. For services rendered in connection with the preparation of the chapter 11 filing, Reed Smith has been paid $119,100 in fees and $823 in reimbursement for expenses. To the best of the Debtor's knowledge, the partners, counsel, and associates of Reed Smith are "disinterested persons," as that term is defined in Section 101(14) of the Bankruptcy Code. An omnibus hearing is scheduled for April 2, 2013 at 10:00 a.m. Objections are due March 26. About Rapid-American Corp. Rapid-American Corp. filed for bankruptcy protection in Manhattan (Bankr. S.D.N.Y. Case No. 13-10687) on March 8, 2013, to deal with debt related to asbestos personal-injury claims. New York-based Rapid-American was formerly a holding company with subsidiaries primarily engaged in retail sales and consumer products and was never engaged in an asbestos business of any kind. Through a series of merger transactions going back more than 45 years, Rapid has nevertheless incurred successor liability for personal injury claims arising from plaintiffs' exposure to asbestos-containing products sold by The Philip Carey Manufacturing Company -- Old Carey -- as that entity existed prior to June 1, 1967. Attorneys at Reed Smith LLP serve as counsel to the Debtor. Logan & Company, Inc., is the claims and noticing agent. The Debtor estimated assets of at least $50 million and liabilities of up to $500 million. RAPID-AMERICAN CORP: Keeps SNR Denton On Board as Special Counsel ----------------------------------------------------------------- Rapid-American Corporation seeks approval from the Bankruptcy Court to employ SNR Denton US LLP as special counsel, nunc pro tunc to March 8, 2013. The Debtor has requested that SNR Denton serve as special counsel because of that firm's extensive knowledge of the Debtor's corporate history and corporate transactions, and the involvement of that firm in the defense of the asbestos litigation confronting the Debtor and the transactions in which the Debtor has participated related thereto. SNR Denton has represented the Debtor for more than 45 years, and during the last 23 of those years has served as the Debtor's National Coordinating Counsel for asbestos litigation, as local defense counsel for litigation in the states of New York, New Jersey, Florida, Illinois and California, and has been responsible for claims administration and the processing of asbestos settlements for the Debtor throughout that period. SNR Denton has also represented the Debtor for many years in the Midland Insurance Company insolvency proceeding and in other insurer insolvency proceedings and matters where the Debtor was and/or is seeking to recover from insolvent insurer estates. Postpetition, SNR Denton has agreed to provide: 1. Asbestos-Related Services. As the Debtor's National Coordinating Counsel for asbestos litigation prior to the Commencement Date, collecting, tracking and providing the Debtor information with respect to and assisting the Debtor with issues arising from the Debtor's history concerning asbestos personal injury litigation and the tens of thousands of asbestos claims pending against the Debtor; representing the Debtor in the Midland Proceeding and in any other insurer insolvency proceedings where the Debtor is seeking a recovery from insolvent insurer estates; and any other services related to the foregoing; and 2. Corporate Counsel Services. Acting as outside corporate counsel to the Debtor by providing specialized corporate and business advice to the Debtor as needed, including advice and analysis as to overall resolution of asbestos personal injury claims against the Debtor in the context of its restructuring efforts, and any other services related thereto. The Debtor will compensate SNR Denton on an hourly fee basis. The individuals who are and will be involved in providing asbestos-related Services to the Debtor rendered, prior to the Commencement Date, and will render in the future such services at discounted rates that are substantially below SNR Denton's 2013 standard hourly rates. Those discounted hourly rates principally range between: (i) $389 and $491 for partners, (ii) $295.00 and $371 for associates, and (iii) $159 and $164 for paralegals (subject to annual adjustment). The Debtor agreed in the engagement letter that the individuals who are and will be involved in providing corporate counsel services to the Debtor will render such services at SNR Denton's 2013 standard hourly rates. As an accommodation to the Debtor, however, after the engagement letter was signed, SNR Denton has agreed to discount those standard billing rates for corporate counsel services. Stephen A. Marshall's standard billing rate is $910 an hour but will be discounted $750 per hour. The discounted rates for the other attorneys and paralegals who may be responsible for SNR Denton's representation of the Debtor, effective through Dec. 31, 2013 (at which time SNR Denton normally adjusts its rates), are: Partner: Robert Millner $850/hr Jo Christine Reed $625/hr. Counsel: Martin J. Schwartz $625/hr. Associate: Oscar Pinkas $450/hr. Paralegal: Kathryn Schepp $225/hr. To the best of the Debtor's knowledge, SNR Denton does not hold or represent any interest adverse to the Debtor on any matters for which SNR Denton is to be engaged. An omnibus hearing is scheduled for April 2, 2013 at 10:00 a.m. Objections are due March 26. About Rapid-American Corp. Rapid-American Corp. filed for bankruptcy protection in Manhattan (Bankr. S.D.N.Y. Case No. 13-10687) on March 8, 2013, to deal with debt related to asbestos personal-injury claims. New York-based Rapid-American was formerly a holding company with subsidiaries primarily engaged in retail sales and consumer products and was never engaged in an asbestos business of any kind. Through a series of merger transactions going back more than 45 years, Rapid has nevertheless incurred successor liability for personal injury claims arising from plaintiffs' exposure to asbestos-containing products sold by The Philip Carey Manufacturing Company -- Old Carey -- as that entity existed prior to June 1, 1967. Attorneys at Reed Smith LLP serve as counsel to the Debtor. The Debtor estimated assets of at least $50 million and liabilities of up to $500 million. RAPID-AMERICAN CORP: Wins OK for Logan & Co. as Claims Agent ------------------------------------------------------------ Rapid-American Corp. obtained approval from the Bankruptcy Court to hire Logan & Company, Inc., as claims and noticing agent. Assuming that the Court allows the Debtor to serve asbestos personal injury claimants through their legal counsel, the Debtor anticipates that approximately 300 addressees will be eligible to receive notices in the Chapter 11 case. Based on the records maintained by the Debtor's national coordinating counsel for asbestos personal injury claims, an additional 275,000 claimants could be served with a proposed plan of reorganization. In view of the number of anticipated claimants and the complexity of the Debtor's business, the Debtor submits the appointment of a claims and noticing agent is both necessary and in the best interests of both the Debtor's estate and its creditors. As reported in the March 13, 2013 edition of the TCR, for monthly storage, Logan will charge the Debtor $0.10 per creditor name per month. Logan will charge $174 per hour for Web site design and maintenance. For consulting services, professionals at Logan will provide a 15% reduction of their hourly rates: Discounted Category Rate -------- ---------- Principal $252 Court Testimony $276 Senior Consultant $191 Statement & Schedule Preparation $187 Account Executive Support $174 Public Wesbiste Design and Maintenance $174 Data & File Conversion/Programming Support $140 Project Coordinator $119 Analyst $106 Quality Control and Audit $65 Data Entry & Other Admin. Tasks $65 Clerical Support $42 About Rapid-American Corp. Rapid-American Corp. filed for bankruptcy protection in Manhattan (Bankr. S.D.N.Y. Case No. 13-10687) on March 8, 2013, to deal with debt related to asbestos personal-injury claims. New York-based Rapid-American was formerly a holding company with subsidiaries primarily engaged in retail sales and consumer products and was never engaged in an asbestos business of any kind. Through a series of merger transactions going back more than 45 years, Rapid has nevertheless incurred successor liability for personal injury claims arising from plaintiffs' exposure to asbestos-containing products sold by The Philip Carey Manufacturing Company -- Old Carey -- as that entity existed prior to June 1, 1967. Attorneys at Reed Smith LLP serve as counsel to the Debtor. The Debtor estimated assets of at least $50 million and liabilities of up to $500 million. REID PARK: Senior Lender Amends Chapter 11 Plan ----------------------------------------------- Secured lender WBCMT 2007-C31 South Alvernon Way, LLC, further amended its proposed plan for the orderly liquidation of Reid Park Properties, LLC, to leave its secured claim and the class of general unsecured claims impaired. Under the Secured Lender's second amended modifications to its First Amended Plan of Reorganization, the Debtor will convey the Doubletree Hotel Tucson at Reid Park located at 445 South Alvernon Way, in Tucson, Arizona, and all related personal property to the Plan Transferee. The Secured Lender's Secured Claim will not be discharged, but will be assumed by the Plan Transferee on the Effective Date. The Plan Transferee will take title to the Hotel and all related personal property subject to the Allowed Lender Secured Claim and will arrange for a professional hotel management company to continue operating the Hotel as a DoubleTree. Each Holder of an Allowed Class 10 General Unsecured Claim will receive in full satisfaction, settlement, release, extinguishment and discharge of that Claim: (a) a distribution in Cash equal to 25% of its Allowed Claim from the Effective Date Cash and, if necessary, funds provided by the Lender; and (b) pro rata distribution of net proceeds from the Avoidance Actions; or (c) other treatment on other terms and conditions as may be agreed upon in writing by the Holder of the Claim and the Lender. A full-text copy of the second modifications, dated Feb. 11, 2013, is available for free at: http://bankrupt.com/misc/REIDlenderplan0211.pdf In a separate court filing, the Secured Lender maintains that its Plan proposes a better alternative for creditors than the Debtor's Fifth Amended Plan of Reorganization because its Plan provides a substantial 25% distribution to general unsecured creditors. According to the Secured Lender, the Debtor's latest plan suffers from many of the same legal infirmities that prevented confirmation of its prior plan, as well as some new deficiencies. To recall, the Court has denied confirmation of the Debtor's proposed Plan to transfer ownership of its main asset, the hotel, to a preferred investor and preserve a stream of management fees for the Debtor's affiliated management company. The Secured Lender proposed its own reorganization plan after the denial of confirmation. About Reid Park Properties Reid Park Properties LLC is the owner of the Doubletree Hotel Tucson located in South Alernon Way in Tucson, Arizona. The nine- story property has 287 rooms. It was purchased for $31.8 million in 2007 by an affiliate of Transwest Properties Inc. Reid Park filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 11-15267) on May 26, 2011. According to its bankruptcy petition, Reid Park has $52 million in liabilities and $14 million in assets. The Law Offices of Eric Slocum Sparks, P.C., serves as its legal counsel. The U.S. Trustee Christopher Pattock said that an official committee of unsecured creditors has not been appointed because an insufficient number of persons holding unsecured claims against the Debtor have expressed interest in serving on a committee. RG STEEL: Gets Approval to Hire Barnes as Special Counsel --------------------------------------------------------- RG Steel LLC received the green light from the U.S. Bankruptcy Court for the District of Delaware to hire Barnes & Thornburg LLP as its special litigation counsel. RG Steel tapped the Illinois-based firm in connection with litigation in the U.S. District Court for the District of Maryland between its debtor-affiliate RG Steel Sparrows Point, LLC and Kinder Morgan Bulk Terminals, Inc. The company will pay the firm's professionals (except Denise Lazar and Brian Lewis who will be paid $500 per hour) on an hourly basis at these rates: Professionals Hourly Rates ------------- ------------ Partners $365 - $800 Counsel $330 - $630 Associates $275 - $450 Paraprofessionals $185 - $320 Barnes & Thornburg will also receive a contingency fee payment of 10% of any recovery through settlement or trial of the litigation, and will be reimbursed for work-related expenses. Ms. Lazar, Esq., a partner at Barnes & Thornburg, said in a declaration that the firm does not represent interest adverse to RG Steel and its debtor-affiliates. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. The Debtor has sold off the principal plants. The sale of the Wheeling Corrugating division to Nucor Corp. brought in $7 million. That plant in Sparrows Point, Maryland, fetched the highest price, $72.5 million. RG STEEL: Gets Court Nod to Settle Wheeling-Pittsburgh Trust Claim ------------------------------------------------------------------ RG Steel LLC obtained a court order approving a settlement of claims with Wheeling-Pittsburgh Steel Corp. Retiree Benefits Plan Trust. The agreement authorizes the trust to set off its $12.2 million claim against RG Steel's pre-bankruptcy claim. In return, the trust will pay the company $91,330 on account of its post-petition claim. The agreement is available for free at http://is.gd/rvBCAg The trust was established in 2003 as a result of a settlement among Wheeling-Pittsburgh Steel Corp., Wheeling-Pittsburgh Corp. and the United Steelworkers of America. The trust provides for the establishment of health insurance and welfare benefit arrangements for RG Steel retirees. In September 2012, the trust filed a claim against RG Steel for $11.93 million, which it allegedly owes under a certain Memorandum of Understanding between the company and the labor union. The trust also asserts a claim to $259,063 in Pension Benefit Guaranty Corp. deductions, which RG Steel received prior to its bankruptcy filing in May 31, 2012. Meanwhile, RG Steel asserts a claim to $1,798,920 of non-trust pension participant funds, of which $1,704,585 was received by the trust before the May 31 filing. The rest of the amount was received by the trust after the petition date. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. The Debtor has sold off the principal plants. The sale of the Wheeling Corrugating division to Nucor Corp. brought in $7 million. That plant in Sparrows Point, Maryland, fetched the highest price, $72.5 million. RHYTHM AND HUES: Has Final Loan Approval Before Sale ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Rhythm & Hues Inc. received final approval of the financing from Universal City Studios LLC and Twentieth Century Fox Film Corp. to maintain operations until the business can be sold following an auction on March 27. According to the report, the lenders are providing financing because the company is working on film projects for them. The maximum loan, to be disbursed in installments, is about $17 million. Japanese entertainment and content media company JS Communications Co. Ltd. signed a letter of intent to buy the business and pay off the bankruptcy financing. In addition, JS will pay $1 million cash. Together with other assets, R&H predicts the sale will pay $1.5 million of expenses in Chapter 11, $2.8 million in priority claims, while leaving enough cash for a 5.8% recovery by unsecured creditors. 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. The petition was signed by John Patrick Hughes, president and CFO. 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. 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. ROTECH HEALTHCARE: Moody's Cuts CFR to 'Ca' After Chap. 11 Filing ----------------------------------------------------------------- Moody's Investors Service downgraded Rotech Healthcare, Inc.'s Corporate Family Rating to Ca from Caa3 and Probability of Default Rating to Ca-PD from Caa3-PD. Concurrently, the ratings on the $230 million senior secured 1st lien notes were lowered to Caa1 from B3 and the $290 million senior secured 2nd lien notes were lowered to C from Ca. The company's Speculative Grade Liquidity Rating remains at SGL-4. The rating outlook is negative. The rating action is prompted by the company's recent announcement of a debt reduction and restructuring plan (8K filed March 15, 2013) that provides for significant debt elimination through a pre-arranged Chapter 11 bankruptcy filing. Rotech anticipates filing its plan and petitions in the coming weeks and also disclosed it did not make the interest payment on the 2nd lien notes due March 15, 2013 as part of the restructuring plan. The restructuring plan, if consummated, will result in a substantial loss given default, particularly in regard to the 2nd lien notes which may face 100% principal impairment. However, the debt is expected to be converted to the common equity of the company, according to the proposal. The following ratings were downgraded: Corporate Family Rating -- to Ca from Caa3 Probability of Default Rating -- to Ca-PD from Caa3-PD $230 million senior secured 1st lien notes to Caa1 (LGD2, 19%) from B3 (LGD 2, 19%); $290 million senior secured 2nd lien notes due 2018 to C (LGD5, 73%) from Ca (LGD 5, 73%) Ratings Rationale: The lower PDR of Ca-PD reflects the heightened default risk in the very near term. Moody's will consider Rotech in default and lower the PDR to D-PD or LD (limited default) if Rotech does not make the interest payment within the next 30 days or it files for Chapter 11 in the near future. The negative outlook reflects the further downward pressure on the PDR should the company default. The outlook also incorporates the uncertainties regarding final recovery value of the bonds given the restructuring plan has not been finalized yet. The principal methodology used in this rating was the Global Healthcare Service Providers published in December 2011. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Rotech Healthcare Inc., headquartered in Orlando, Florida, is one of the largest providers of home medical equipment and related products and services in the US, with a comprehensive offering of respiratory therapy and durable home medical equipment and related services. Rotech provides equipment and services in 49 states through approximately 420 operating centers located primarily in non-urban markets. For the twelve months ended September 30, 2012, Rotech reported revenue of approximately $466 million. ROTECH HEALTHCARE: S&P Cuts CCR to 'SD' & Sec. Notes Rating to 'D' ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Orlando, Fla.-based Rotech Healthcare Inc. to 'SD' from 'CCC-'. At the same time, S&P lowered its rating on the company's $290 million senior secured second-lien notes to 'D' from 'CCC-' as a result of the missed interest payment. The recovery rating on this debt is '4', indicating S&P's expectation for average (30% to 50%) recovery in the event of a payment default. In addition, S&P lowered its rating on the $230 million senior secured first-lien notes to 'CC' from 'CCC+'. The recovery rating on the first-lien notes is '1', indicating S&P's expectation for very high (90%-100%) recovery in the event of a payment default. The rating actions stem from the company's missed interest payment on its second-lien notes and the stated intention to convert the notes to equity. According to S&P's timeline of payment criteria, it is taking this action now because it do not believe an interest payment will be made within five days of its due date. Upon the company entering Chapter 11 bankruptcy protection, S&P will be lowering all ratings to 'D'. RUPANJALI SNOWDEN: District Court Upholds Judgment Against CIC -------------------------------------------------------------- Before the U.S. District Court for the Western District of Washington are cross appeals by Appellant/Cross-Appellee Check Into Cash of Washington, Inc., and Appellee/Cross-Appellant Rupanjali Snowden. CIC appealed the bankruptcy court's decision on remand awarding Ms. Snowden emotional distress and punitive damages based on CIC's violation of the automatic stay. Ms. Snowden contended for the second time that the bankruptcy court erred in limiting her recovery of attorney's fees to those incurred after May 20, 2009, and in failing to award sanctions pursuant to its civil contempt or inherent authority. The bankruptcy court found that CIC willfully violated the automatic stay when it initiated a postpetition transfer from Ms. Snowden's bank account. On review, District Judge Robert S. Lasnik concluded that after finding that Ms. Snowden actually suffered emotional harm as a result of CIC's violation and a reasonable person would suffer similar harm in similar circumstances, the bankruptcy court properly awarded emotional distress damages under In re Dawson, 390 F.3d 1139, 1145 (9th Cir. 2004). The District Court also affirmed the bankruptcy court's award of punitive damages to Ms. Snowden. Judge Lasnik found CIC's arguments on the matter unpersuasive and cannot conclude that the bankruptcy court's "findings were illogical, implausible or without support in the record." The appeal cases are captioned CHECK INTO CASH OF WASHINGTON, INC., a Washington corporation, Appellant, v. RUPANJALI SNOWDEN, a Washington resident, Appellee; and RUPANJALI SNOWDEN, Cross- Appellant, CHECK INTO CASH OF WASHINGTON, Cross-Appellee, Case No. 12-cv-1095RSL, Bankruptcy Case No. 09-10318, Bankruptcy Internal Appeal No. 12-S029, (W.D. Wash.) A copy of Judge Lasnik's March 11, 2013 is available at http://is.gd/3aoi5Nfrom Leagle.com. SAN DIEGO HOSPICE: Has Interim OK to Obtain $2-Mil. DIP Loan ------------------------------------------------------------ On March 4, 2013, the Bankruptcy Court entered an interim order authorizing San Diego Hospice & Palliative Care Corporation to obtain up to $2,000,000 in the form of a term loan from Scripps Health, a California non-profit corporation. The $2,000,000 amount was determined by the Court as the amount that is necessary in the interim to avoid immediate and irreparable harm to the estate pending a final hearing. On March 14, 2013, the Court entered a minute order putting the DIP financing motion "off calendar as withdrawn." Repayment of the DIP Loan Obligations will be secured by a senior secured first priority interest in, and mortgage on, all of the Debtor's right, title and interest in the Real Property owned by the Debtor, together in each case will all of the Debtor's right, title, and interest in and to all buildings, improvements, and fixtures. On Feb. 15, 2013, the Debtor sought Bankruptcy Court permission to enter into a senior secured debtor-in-possession term loan of up to $5,000,000 from Scripss Health, saying that it immediately needs the DIP Loan to provide post-petition working capital to maintain its ongoing operations and to continue providing the highest possible quality hospice care to the Debtor's patients and their families with the lowest level of disruption pending: (i) transition of 300 of the Debtor's patients to Scripps, including Scripps's purchase of the Debtor's Personal Property, and (ii) the sale of the Debtor's real property and improvements consisting of a 24-bed inpatient facility located at 4311 Third Avenue, San Diego, California to Scripps for $10.7 million, or to the highest qualified bidder at an auction. About San Diego Hospice San Diego Hospice & Palliative Care Corporation filed a Chapter 11 petition (Bankr. S.D. Calif. Case No. 13-01179) in San Diego on Feb. 4, 2013, estimating assets and liabilities of at least $10 million. The Debtor is the operator of the San Diego Hospice and The Institute for Palliative Medicine, one of the largest community-owned, not-for-profit hospices in the country. Even before the bankruptcy filing, the Debtor has been under a federal investigation, focusing whether it allowed patients to stay in the program even when their diagnosis changed. The Debtor said that it will meet with government agencies to address their concerns, explore partnerships with other health care organizations, and work to restructure and resize San Diego Hospice. The Debtor said it has encouraged Scripps Health, the region's largest provider of health care services, to enter the hospice business. Procopio, Cory, Hargreaves & Savitch LLP serves as counsel to the Debtor. SAN DIEGO HOSPICE: Files Schedules of Assets & Liabilities ---------------------------------------------------------- San Diego Hospice & Palliative Care Corporation filed with the U.S. Bankruptcy Court for the Southern District of California its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $10,700,000.00 B. Personal Property $9,669,007.74 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $0.00 E. Creditors Holding Unsecured Priority Claims $1,398,834.54 F. Creditors Holding Unsecured Non-priority Claims $13,489,223.93 -------------- -------------- TOTAL $20,369,007.74 $14,888,058.47 About San Diego Hospice San Diego Hospice & Palliative Care Corporation filed a Chapter 11 petition (Bankr. S.D. Calif. Case No. 13-01179) in San Diego on Feb. 4, 2013, estimating assets and liabilities of at least $10 million. The Debtor is the operator of the San Diego Hospice and The Institute for Palliative Medicine, one of the largest community-owned, not-for-profit hospices in the country. Even before the bankruptcy filing, the Debtor has been under a federal investigation, focusing whether it allowed patients to stay in the program even when their diagnosis changed. The Debtor said that it will meet with government agencies to address their concerns, explore partnerships with other health care organizations, and work to restructure and resize San Diego Hospice. The Debtor said it has encouraged Scripps Health, the region's largest provider of health care services, to enter the hospice business. Procopio, Cory, Hargreaves & Savitch LLP serves as counsel to the Debtor. SCC KYLE PARTNERS: Bank Asks Court to Dismiss Case -------------------------------------------------- Creditor Whitney Bank has filed a motion to dismiss or convert the Chapter 11 case of SCC Kyle Partners, Ltd., to Chapter 7. According to the Bank, the case is a single asset real estate bankruptcy case that was filed to stop a scheduled foreclosure sale of certain parcels of real property totalling 50.174 acres of land in Kyle, Texas, which in essence is the Debtor's only asset. "This case for all intents and purposes is a two-party dispute between Debtor and Whitney Bank, the secured lender. The Debtor has no employees and generates no revenue from on-going business operations. The secured loan in question matured on Jan. 2, 2012, and the Debtor's ability to repay the loan is completely dependent on speculative future sales of the property the Debtor projects over a five year term," the Bank stated. The Bank claimed that the Debtor lacks the funds and the ability to formulate or carry out a plan of reorganization. The Bank said that since the filing of the bankruptcy petition, the Debtor hasn't closed a single sale of any portion of the property and has not made any payment to the Bank. The Debtor's condition, according to the Bank, has worsened as interest continues to accrue on the amounts owed to the Bank, the 2012 property taxes on the property are past due, and the bankruptcy administration costs continue to deplete any claimed equity in the property. The Debtor's proposed amended plan of reorganization "is essentially a liquidation plan as the Debtor intends to liquidate all of its assets over a five-year term under the proposed plan. Additionally, Debtor's lack of forthrightness to date with respect to promises of 'imminent' sales strongly suggests that the Debtor would not hesitate to file another bankruptcy case in order to further impede a scheduled foreclosure sale simply to delay the inevitable," the Debtor said. The Bank is represented by: James G. Ruiz Winstead PC 401 Congress Avenue, Suite 2100 Austin, Texas 78701 Tel: (512) 370-2800 Fax: (512) 370-2850 Austin, Tex.-based SCC Kyle Partners, Ltd., filed for Chapter 11 (Bankr. W.D. Tex. Case No. 12-11978) on Aug. 31, 2012. Judge H. Christopher Mott presides over the case. Eric J. Taube, Esq., at Hohmann, Taube & Summers, LLC, in Austin, Tex., represents the Debtor as counsel. In its schedules, the Debtor disclosed $18,516,094 in assets and $14,758,457 in liabilitie. The petition was signed by Scott A. Deskins, president of SCC Kyle Partners, GP, LLC, general partner. SELECT TREE: US Trustee Wants Case Dismissed, Hearing on March 25 ----------------------------------------------------------------- The Hon. Carl L. Bucki of the U.S. Bankruptcy Court for the Western District of New York will hold on March 25, 2013, at 10:00 a.m. a hearing on the motion of Tracy Hope Davis, U.S. Trustee for Region 2, to convert the Chapter 11 cases of Select Tree Farms Inc. and George and Deborah Schichtel to Chapter 7 or, in the alternative, dismiss the cases. No timetable has been established by the Debtors or the Court for the filing of plans and disclosure statements. The Debtors have failed to file the monthly operating reports required by the United States Trustee Chapter 11 Operating Guidelines for the period of June 2012 through Jan. 31, 2013. The lead Debtor, Select Tree, has failed to pay the quarterly fees due to the U.S. Trustee for the quarters ending Sept. 30, and Dec. 30, 2012. On Jan. 29, 2013, a check in the amount of $9,754.93 was delivered for payment in full of the outstanding fees in the Select Tree case. The U.S. Trustee said that the check has been returned for insufficient funds and the balance due remains outstanding. The U.S. Trustee quarterly fees have been fully paid in the personal case. According to the U.S. Trustee, the Debtors' failure to comply with United States Trustee Chapter 11 Operating Guidelines and pay the U.S. Trustee quarterly fees has been a continual problem throughout the pendency of the Chapter 11 case. In light of the unfortunate and unexpected death of Ms. Schitchel, the U.S. Trustee has deferred earlier adverse action and has attempted to patiently work with Mr. Schitchel in his attempt to secure full compliance. "However, the Debtors' continued failure to file monthly operating reports and pay statutory fees for such an excessive period of time requires action at this time. The Debtors' failure to file operating reports denies the Court, creditors, and this Office the ability to effectively monitor the re-organization process. Absent timely, complete and verifiable reports, parties are unable to ascertain and confirm the Debtors' current financial condition and determine the accrual of administrative expense claims, if any," the U.S. Trustee said. The U.S. Trustee filed a statement regarding the inability to appoint a Committee of Unsecured Creditors on June 20, 2012. About Select Tree Farms Select Tree Farms, Inc., filed a Chapter 11 petition (Bankr. W.D.N.Y. Case No. 12-10669) on March 7, 2012. Select Tree Farms scheduled $11,450,989 in assets and $5,959,983 in liabilities. The petition was signed by George A. Schichtel, president. The Debtor's owner, George A. Schichtel and Debra G. Schichtel, filed for Chapter 11 bankruptcy on the same day (Bankr. W.D.N.Y. Case No. 12-10670). Ms. Schichtel suffered a stroke around October 2012 and became comatose and was intubated. She passed away Nov. 14, 2012. Judge Carl L. Bucki presides over the case. William F. Savino, Esq., and Beth Ann Bivona, Esq., at Damon Morey LLP, serve as the Debtors' counsel. NextPoint LLC serves as the Debtors' financial advisor. Garry M. Graber, Esq., and Steven W. Wells, Esq., at Hodgson Russ LLP, represent Evans Bank, N.A., the primary secured creditor. SILVERLEAF RESORTS: S&P Withdraws 'B-' Corporate Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B-' corporate credit rating on Dallas-based Silverleaf Resorts Inc. at the issuer's request. The 'B-' corporate credit rating reflected S&P's assessment of the company's financial risk profile as "highly leveraged" and its business risk profile as "vulnerable," according to its criteria. SINCLAIR TELEVISION: Moody's Rates New $600MM Senior Notes 'B1' --------------------------------------------------------------- Moody's Investors Service assigned Baa3 ratings to Sinclair Television Group, Inc.'s proposed credit facilities, including a new $100 million 1st lien sr secured revolver, $500 million 1st lien sr secured term loan A, and $400 million 1st lien sr secured term loan B, and assigned a B1 to the new $600 million senior notes. As proposed, up to $445 million of proceeds from the new Term Loan A will be drawn within 180 days of closing (delayed takedown) and after receipt of FCC approval to purchase television stations of Barrington Broadcasting Group and/or certain stations of Cox Media, and $900 million of proceeds from the new Term Loan B and new senior notes will be used to refinance STG's existing 1st lien credit facilities with the remainder to add roughly $133 million to cash balances. In addition, Moody's upgraded STG's 8.375% convertible senior notes and 6.125% senior notes to B1 from B2 reflecting the revised debt mix. Moody's also affirmed Sinclair Broadcast Group, Inc.'s ("Sinclair") Ba3 Corporate Family Rating (CFR), Ba3 Probability of Default Rating (PDR), and B2 on its 4.875% convertible sr notes and affirmed STG's Ba3 on its 2nd lien sr secured notes. The SGL -- 2 Speculative Grade Liquidity (SGL) Rating was affirmed and the outlook remains stable. Assigned: Issuer: Sinclair Television Group, Inc. New $100 million 1st Lien Sr Secured Revolver: Assigned Baa3, LGD2 -- 13% New $500 million 1st Lien Sr Secured Term Loan A: Assigned Baa3, LGD2 -- 13% New $400 million 1st Lien Sr Secured Term Loan B: Assigned Baa3, LGD2 -- 13% New $600 million Senior Notes: Assigned B1, LGD5 -- 78% Upgraded: Issuer: Sinclair Television Group, Inc. 8.375% convertible sr notes due 2018 ($238 million outstanding): Upgraded to B1, LGD5 -- 78% from B2, LGD5 -- 83% 6.125% sr notes due 2022 ($500 million outstanding): Upgraded to B1, LGD5 -- 78% from B2, LGD5 -- 83% Affirmed: Issuer: Sinclair Broadcast Group, Inc. Corporate Family Rating: Affirmed Ba3 Probability of Default Rating: Affirmed Ba3-PD 4.875% convertible sr notes due 2018 ($6 million outstanding): Affirmed B2, LGD6 -- 97% Speculative Grade Liquidity Rating: Affirmed SGL -- 2 Issuer: Sinclair Television Group, Inc. 9.25% 2nd lien sr secured notes due 2017 ($500 million outstanding): Affirmed Ba3, LGD3 -- 42% (from LGD4 -- 51%) Outlook Actions: Issuer: Sinclair Broadcast Group, Inc. Outlook is Stable To be withdrawn upon closing of the transaction Issuer: Sinclair Television Group, Inc. 1st lien sr secured revolver due 2016 ($48 million outstanding): to be withdrawn Ba1, LGD2 -- 16% 1st lien sr secured term loan A due 2016 ($264 million outstanding): to be withdrawn Ba1, LGD2 -- 16% 1st lien sr secured term loan B due 2016 ($588 million outstanding): to be withdrawn Ba1, LGD2 -- 16% Ratings Rationale: Sinclair's Ba3 Corporate Family Rating reflects moderately high leverage with a 2-year average debt-to-EBITDA ratio of 5.3x estimated for FYE 2012 (including Moody's standard adjustments, or 5.0x net of cash) and pro forma for recent acquisitions and pending purchases of Barrington and Cox stations. The pending transactions represent Sinclair's latest debt funded investment to expand its footprint of U.S. households while further diversifying revenues by geography, network affiliations, and market size. Ratings incorporate 4% to 6% revenue declines in 2013, on a same store basis, due to the absence of significant political ad spending only partially offset by low single-digit growth in core ad revenues and expected increases in retransmission fees. Despite higher levels of SG&A and production expense, including reverse compensation, Moody's expects EBITDA margins to remain above 35% (including Moody's standard adjustments) generated by the company's sizable and diverse television station group with a focus on operating multiple primary television stations in a market using duopolies and Local Marketing Agreements. Moody's also expects management will achieve most of its planned acquisition synergies for Barrington and Cox soon after the transactions close given cash flow benefits are primarily from contractual retransmission fees and despite the need to assimilate recently acquired stations from Newport Television. Notwithstanding Moody's base case scenario for flat to modest EBITDA growth in 2013, Moody's believes 2-year average leverage ratios could improve over the next 12 months as excess cash would be used to reduce credit facility balances or prepay earlier maturing notes, absent acquisitions. Moody's believes Sinclair is likely to acquire additional television stations over the next 12 months resulting in increased debt balances. The Ba3 rating and stable outlook reflect Moody's expectation that, despite the potential for additional debt financed purchases, the company will sustain pro forma 2-year average debt-to-EBITDA ratios below 5.50x allowing for financial metrics to be better positioned within the Ba3 category. Ratings incorporate moderately high financial risk, the inherent cyclicality of the broadcast television business, increasing media fragmentation, and potential challenges related to management's acquisition strategy. The SGL-2 liquidity rating reflects good liquidity including the extension of the nearest significant debt maturity to 2017 and full availability under the new revolver. The stable outlook reflects Moody's expectation that core revenues will grow in the low single digit percentage range over the next 12 months with additional increases in retransmission fees (increasingly offset by higher levels of production expense, including reverse compensation), but the lack of significant political ad demand in 2013 will result in overall revenue declines. In the absence of additional acquisitions, Moody's believes Sinclair would apply free cash flow to reduce debt balances in excess of required term loan amortization contributing to improved leverage and greater free cash flow. Ratings could be downgraded if 2-year average debt-to-EBITDA ratios exceed 5.50x (incorporating Moody's standard adjustments) or if distributions, share repurchases or deterioration in operating performance results in free cash flow-to-debt ratios falling below 4%. Ratings could also be downgraded if liquidity deteriorates due to dividends, share buybacks, debt financed acquisitions, or decreased EBITDA cushion to financial covenants. Although not likely in the next 12 months given management's acquisition strategy, ratings could be upgraded if Sinclair's 2-year average debt-to-EBITDA ratios are sustained comfortably below 4.25x with good liquidity including free cash flow-to-debt ratios in the high single-digit range. Management would also need to show a commitment to financial policies consistent with the higher rating. Recent Events In February 2013, Sinclair announced its agreement to purchase the stock and broadcast assets of four Cox Media stations for $99 million (before $4.3 million of working capital benefits) and to provide sales services to a fifth station. The company also announced its agreement to purchase the broadcast assets of 18 television stations owned by Barrington Broadcasting Group, LLC for $370 million and operate or provide sales services to an additional six stations. The transactions are expected to close in the second quarter of 2013, subject to FCC approval. Sinclair set up a new subsidiary, Chesapeake TV, with additional management and retained staff from Barrington to focus on small market operations and acquisitions. Sinclair plans to sell two stations and assign a local marketing agreement and purchase option on a third station to remain compliant with FCC ownership conflict rules. Additionally, the license assets of another four stations will be purchased by Cunningham Broadcasting Corporation (a variable interest entity of Sinclair) and Howard Stirk Holdings, a newly formed entity. The principal methodology used in this rating was Global Broadcast and Advertising Related Industry published in May 2012. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Sinclair Broadcast Group, Inc., headquartered in Hunt Valley, MD, and founded in 1986, is a television broadcaster, operating 112 stations in 61 markets pro forma for pending acquisitions of Barrington and Cox Media stations. The station group reaches just under 30% of U.S. television households and includes 27 FOX, 20 CW, 20 MNT, 17 ABC, 15 CBS, 11 NBC affiliates, plus two other stations. Sinclair is publicly traded with the Smith family owning 49% of class A common shares, 96% of class B shares, and 81% of voting control. Net broadcast revenues for FY2012 totaled more than $1.3 billion pro forma for recent and pending acquisitions. SINCLAIR BROADCAST: S&P Rates New $1 Billion Secured Debt 'BB+' --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed all existing ratings, including the 'BB-' corporate credit rating, on U.S. TV broadcaster Sinclair Television Group Inc. The outlook is stable. At the same time, S&P assigned the company's proposed $1 billion senior secured credit facilities (consisting of a $100 million revolver due 2018, a $500 million term loan A due 2018, and a $400 million term loan B due 2020) S&P's 'BB+' issue-level 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. In addition, S&P assigned the $600 million unsecured notes due 2021 its 'B' issue-level rating, with a recovery rating of '6' (0% to 10% recovery expectation). The company will use proceeds to fund the company's acquisitions of assets from Barrington Broadcasting Group and Cox Media Group, refinance the existing senior secured credit facilities, and put cash on the balance sheet. Sinclair Television Group is a wholly owned subsidiary of Hunt Valley, Md.-based Sinclair Broadcast Group Inc. (Sinclair). S&P also revised its recovery rating on the company's secured second-lien notes due 2017 to '1' (90% to 100% recovery expectation) from '2' (70% to 90%). S&P subsequently raised its issue-level rating on this debt to 'BB+' from 'BB'. S&P based this action on the improved recovery prospects for the debt and Sinclair's higher enterprise value in a hypothetical default scenario given the number of acquisitions that the company has made or is still waiting to close. The ratings on Sinclair reflect a "fair" business risk profile and an "aggressive" financial risk profile. S&P views Sinclair's business risk profile as fair, according to its criteria, because of its significant size, scale, and diversity as the largest independent TV broadcaster, good EBITDA margin, and strong conversion of EBITDA to discretionary cash flow. The rating also reflects the structural changes in the consumption of media, with viewers shifting to alternative media for news and entertainment. Pro forma for all announced acquisitions (including the 2013 acquisitions of Barrington and Cox Media's TV station), Sinclair will be the largest non-network-owned TV broadcaster in the U.S., with 112 stations reaching about 30% of the country's households. Since 2011, the company has announced $1.5 billion in TV station acquisitions. With these acquisitions, the company becomes the largest CW affiliate owner, after already being the largest Fox affiliate owner, and is a sizeable owner of station affiliates of the ABC network. S&P believes the company's unique size among U.S. TV broadcasters adds efficiencies including programming, overhead, and capital expenditures. In addition, S&P believes the company will have a stronger position in negotiating retransmission compensation agreements with cable and satellite companies, and affiliation agreements with the TV networks. Still, its stations generally have lower audience rankings in their markets, resulting in lower ad rates. As a TV broadcaster, its advertising revenue is highly sensitive to economic downturns and election cycles, and is subject to long-term secular trends in audience fragmentation and the increasing popularity of Internet- based entertainment. Separately, Sinclair holds investments in a number of underperforming real estate and other non-TV assets, which S&P views as lying on the fringe of strategic necessity. While not factored into the current rating, Sinclair owns a significant swath of broadcast spectrum, which could be a source of value in the future depending on how the company chooses to monetize it. SONIC AUTOMOTIVE: "Material Weakness" No Impact on Moody's B1 CFR ----------------------------------------------------------------- Moody's Investors Service reports that Sonic Automotive Holdings, Inc.'s disclosure in a Form 8-K dated March 18, 2013 that the company has determined that a material weakness existed in the effectiveness of controls over its dealership level accounting processes resulting from the aggregation of control deficiencies will have no immediate impact on its B1 Corporate Family Rating or its positive outlook. Moody's notes, however, that this is the second material weakness incurred by Sonic in the past two fiscal years. "As it is expected that this material weakness will be remedied in due course, there is no immediate rating action," stated Moody's Senior Analyst Charlie O'Shea. "We will closely monitor the company's remediation progress as current ratings and outlook reflect our expectation of an unqualified audit opinion. As reflected in the 8-K, Sonic's lenders have agreed to take no action relative to this issue." The principal methodology used in rating Sonic was the Global Auto Retailer 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. Sonic Automotive, headquartered in Charlotte, NC, is a leading auto retailer with 118 stores representing 135 franchises, and annual revenues of approximately $7 billion. SMTC CORP: Needs to Restate Financial Statements Under Amendment ---------------------------------------------------------------- SMTC Corporation on March 14 disclosed that the company received a waiver and amendment from PNC associated with compliance with certain covenants of its loan agreement for the quarter ended December 30, 2012. In the process of reviewing the amendment to its loan agreement with PNC, the company reevaluated certain terms of the agreement and based on its consideration of ASC 470 "Debt", the Company's management, with the agreement of the Audit Committee of the Board of Directors, determined that the Company will need to restate certain of its consolidated financial statements for the year ended January 2, 2012 in order to reclassify its revolving credit facility as a current liability. The reclassification will have no impact on previously reported net cash flows, cash, revenues, or net income. As a result, the Company determined that because of the pending reclassification, the balance sheets included in the consolidated financial statements for the quarter ended October 2, 2011, year ended January 2, 2012 and the first three fiscal quarters of the fiscal year 2012 must be restated to reflect a decrease in long-term debt and a corresponding increase in current liabilities for said periods. The reclassification will have no impact on maturity of the facility, which matures on September 22, 2014 or the Company's ability to draw on the revolving credit facility. The Company has filed its Form 8K addressing the reclassification, and will file its Annual Report on Form 10-K for the year ended December 30, 2012, which will include the restated consolidated comparative balance sheet as of January 2, 2012 as soon as is practicable and no later than March 29, 2013. The Company will also restate the consolidated comparative balance sheets for the third fiscal quarter of 2011 and the first three fiscal quarters of 2012 in subsequent filings as soon as practicable." SMTC announced fourth quarter 2012 unaudited results. Revenue for the year was $296 million, a 35% increase over 2011 revenue of $220 million. Adjusted EBITDA was $13.0 million, or $12.3 million when factoring out unrealized foreign exchange gains, a 32% increase over 2011 adjusted EBITDA of $9.3 million. Adjusted EPS was $0.60 and included a $0.15 income tax adjustment related to the expected future usage of tax loss carry-forwards. Up from 2011 adjusted EPS of $0.24. Revenue for the quarter was $73.2 million, a 3% increase over fourth quarter 2011, and a 3% decrease over third quarter 2012 revenue. Factoring out unrealized foreign exchange gains/losses gross margins were 8.6%, compared to 6.5% in the third quarter. Adjusted EBITDA in the fourth quarter was $2.3 million after removing a $536 thousand loss from unrealized foreign exchange contracts, compared to $1.4 million in the third quarter. Adjusted EPS for the quarter was $0.17, and benefited $0.15 from a $2.4 million recognition of deferred income tax assets related to the expected future usage of certain tax loss carry-forwards. This compares to adjusted EPS of $0.08 in the third quarter of 2012, and $0.17 in the fourth quarter 2011. Bank debt, net of cash, decreased to $15.3 million, from $28.9 million in the third quarter. Total debt net of cash decreased to $18.2 million, from $32.3 million in the third quarter. "Fourth quarter adjusted EBITDA improved over the third quarter, but missed our expectations and reflected that we are only partially through our operational turnaround. Our Q4 gross margin percentage, factoring out the unrealized foreign exchange loss on derivative instruments was 8.6%, which although improved over Q3 gross margins of 6.5% remains lower than our target gross margins of 10%-11%. In 2013 our efforts will be focused on improving our gross margins through the lean transformation of our manufacturing plants, especially our Mexican plant, and we anticipate improvement in this area through the year. The closing of our Markham manufacturing operation, scheduled for Q2 2013, will also help improve margins. We also had a strong quarter on working capital performance as evidenced by our lower debt levels. We will continue to focus on optimizing working capital levels throughout the year in combination with our gross margin improvement initiatives" stated Co-Chief Executive Officer, Alex Walker. "Lastly, we were able to increase our deferred tax asset in Q4 demonstrating continued confidence in our future earnings potential. This should serve as a reminder to investors that there is real value to our net operating loss carry-forwards." Co-Chief Executive Officer Claude Germain stated, "From a commercial perspective, 2012 was a successful year. Revenues, adjusted EBITDA and adjusted EPS all grew substantially over 2011. In 2012 we managed to position both the West Coast and China markets for growth, and were one of the fastest growing EMS companies in the industry as recognized by Frost and Sullivan. The major theme for 2013 is moderate top line growth coupled with improved gross margins and cash flow generation. Note, our 2013 revenue guidance reflects the discontinuation of our Markham manufacturing operations. Taking this into account, we are guiding for mid to high single digit growth in revenues. " The disclosure was made in SMTC's earnings release for the fourth quarter ended Dec. 30, 2012, a copy of which is available for free at http://is.gd/lFtNEP SMTC Corporation is a global electronics manufacturing services provider. SPEEDWAY MOTORSPORTS: Moody's Affirms Ba1 CFR After Term Changes ---------------------------------------------------------------- Moody's Investors Service said Sonic Automotive, Inc.'s announcement that it eliminated the pledge of five million shares of Speedway Motorsports, Inc. common stock from the collateral package for Sonic's credit facility is credit positive for SMI, but does not affect SMI's Ba1 Corporate Family Rating or stable rating outlook. SMI's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (ii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside SMI's core industry and believes SMI's ratings are comparable to those of other issuers with similar credit risk. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009 SMI, headquartered in Concord, NC, is the second largest promoter, marketer and sponsor of motor sports activities in the U.S. primarily through its ownership of eight major race tracks. NASCAR sanctioned events account for the majority of SMI's approximate $490 million revenue for the fiscal year ended December 2012. SUNTECH POWER: Gets Default & Acceleration Notice on 3% Notes ------------------------------------------------------------- Suntech Power Holdings Co., Ltd. on March 18 disclosed that it has received from the trustee of its 3% Convertible Notes a notice of default and acceleration relating to Suntech's non-payment of the principal amount of US$541 million that was due to holders of the Notes on March 15, 2013. Such event of default has also triggered cross-defaults under Suntech's other outstanding debt, including its loans from International Finance Corporation and Chinese domestic lenders. As previously announced, Suntech has entered into a forbearance agreement with holders of over 60% of the Notes, one of the terms of which is that the forbearing Note holders will cooperate with Suntech in addressing certain legal proceedings that may be initiated against it. Suntech understands that those Note holders have also requested the trustee under the Notes not to take any further action as consensual restructuring discussions continue. Suntech is thus far unaware of any legal proceedings initiated by any Note holders against the Company. Suntech intends to continue to engage with holders of the Notes and other lenders with a view to achieving a consensual restructuring. Suntech is also continuing its efforts to restructure and increase the cost-efficiency of its operations, maintain business relationships with its existing customers and suppliers, and seek additional sources of capital to meet its ongoing operational requirements and debt repayment obligations. In addition, Suntech is in discussions with certain of its suppliers and lenders relating to various other claims for non-payment or non- performance, which the Company hopes to resolve in a timely manner. David King, Suntech's CEO, stated, "It is currently a very difficult time for our company and our industry, but the management and board of Suntech are committed to finding a way forward that will take into account the rights and interests of all of its constituents, including shareholders, noteholders, lenders, customers, suppliers and employees. We are currently exploring strategic alternatives with lenders and potential investors, which could help to set us on a path towards longer term success. We appreciate the support and understanding of our various stakeholders as we undertake efforts to implement these measures." About Suntech Wuxi, China-based Suntech Power Holdings Co., Ltd. (NYSE: STP) produces solar products for residential, commercial, industrial, and utility applications. With regional headquarters in China, Switzerland, and the United States, and gigawatt-scale manufacturing worldwide, Suntech has delivered more than 25,000,000 photovoltaic panels to over a thousand customers in more than 80 countries. SUPERCOM LTD: Reports $4.8 Million Net Income in 2012 ----------------------------------------------------- SuperCom Ltd (formerly Vuance) reported net income of US$4.81 million on US$8.94 million of revenue for the year ended Dec. 31, 2012, as compared with net income of US$1.02 million on US$7.92 million of revenue during the prior year. SuperCom Ltd.'s balance sheet at Dec. 31, 2012, showed US$3.74 million in total assets, US$3.03 million in total liabilities and US$711,000 in total shareholders' equity. "We are very pleased with our performance in 2012, which was a fantastic turnaround year for us, our growth in revenue, our strong and steady profitability approaching 23% Operating Margin with operating income of $2.0 million, was a key milestone for SuperCom," commented Arie Trabelsi, CEO of SuperCom. "We are optimistic with our ability to continually build on this progress within four of the most dynamic industries in the world, as we focus on delivering value for our customers, employees and shareholders." "In comparison to last year, we successfully expanded our gross profit margin and significantly reduced our operating expenses by implementing our restructuring plan," Mr. Trabelsi added. "These efforts positions us well to complete our process to increase our financial strength, putting us on the right path to achieve our business goals in becoming a key global player in the rapidly growing national e-ID, Electronic Monitoring for law enforcement, homecare, and healthcare arena." "I am proud to launch the new Supercom, our new streamlined and focused structure allows us to better target lucrative and growing vertical markets," Mr. Trabelsi added. "We have also brought on board many new and highly experienced executives and market experts to support our broadening activity. Supercom today is in the strongest position it has ever been, and we look forward to continuing to unleash our potential in 2013." A copy of the press release is available for free at: http://is.gd/EwGCVh About SuperCom Since 1988, SuperCom has been a leading global provider of traditional & digital identity solutions, providing advanced safety, identification and security products and solutions, to Governments, private and public organizations throughout the world. SuperCom has been inspiring governments and national agencies, to design and issue secured Multi-ID documents and robust digital identity solutions to its citizen and visitors, using SuperCom e-Government platforms and innovative solutions for traditional and biometrics enrollment, personalization, issuance and border control services. SuperCom features a unique all-in- one field-proven RFID & mobile technology and products, accompanied with advanced complementary services for the healthcare and homecare, security and safety, community public safety, law enforcement, electronic monitoring, livestock monitoring, building and access automation and more. In the auditors report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Fahn Kanne & Co. Grant Thornton Israel expressed substantial doubt about Vuance Ltd's ability to continue as a going concern. The independent auditors noted that the Company has incurred substantial recurring losses and negative cash flows from operations and, as of Dec. 31, 2011, the Company had a working capital deficit and total shareholders' deficit. SUPERMEDIA INC: S&P Cuts CCR to 'D' on Plan to File for Chapter 11 ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on U.S. directory publisher and marketing service company SuperMedia Inc. to 'D' from 'CCC'. All issue-level ratings remain at 'D' as a result of ongoing subpar repurchases that are tantamount to a default under S&P's criteria. The rating actions follow the company's announcement that it plans to restructure through a prepackaged Chapter 11 plan of reorganization. The existing senior credit agreements for both companies require 100% approval from the senior lenders to consummate the merger. The company was unable to get the required lender approval voluntarily and as a result has filed a Chapter 11 plan of reorganization. Subject to court approval and possible delays, S&P still expects the companies to complete the merger in the first half of 2013. S&P expects to evaluate the business risk and financial risk of the combined company in reassessing the post-emergence corporate credit rating. SURGERY CENTER: New US$335MM Debt Facility Gets Moody's B1 Rating ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Surgery Center Holdings, Inc.'s proposed $335 million senior secured credit facilities, consisting of a $30 million revolver expiring in 2018 and a $305 million first lien term loan due 2019. In addition, Moody's assigned a Caa2 rating to the proposed $130 million senior secured second lien term loan due 2020. Surgery Partner's B3 Corporate Family Rating and B3-PD Probability of Default Rating are affirmed. The outlook is stable. Proceeds from the new credit facilities will be used to refinance existing debt, pay a $135 million special dividend to shareholders and cover transaction fees and expenses associated with the refinancing. Ratings Assigned: $30 million senior secured revolving credit facility expiring 2018 at B1 (LGD 3, 33%) $305 million senior secured first lien term loan due 2019 at B1 (LGD 3, 33%) $130 million senior secured second lien term loan due 2020 at Caa2 (LGD 5, 84%) Ratings Affirmed: Corporate Family Rating, B3 Probability of Default Rating, B3-PD Ratings to be withdrawn at closing: $20 million senior secured revolver, B2 (LGD 3, 37%) $237.5 million senior secured loan, B2 (LGD 3, 37%) Ratings Rationale: The B3 Corporate Family Rating reflects Surgery Partners' high leverage, its relatively small scale with revenues under $275 million and an aggressive financial policy, which is characterized by the disbursement of about $135 million in debt-financed dividends. It should be noted that there will be marginal equity left in the business, following the completion of the dividend. Furthermore, the ratings are constrained by an economic environment that has limited growth, particularly the high unemployment rate and increasing healthcare expense burden on patients, which has led to fewer procedures than expected. In addition, the potential for rate compression from government sponsored programs (mostly Medicare) and commercial payors over the longer-term is a concern. However, the ratings also incorporate the positive long-term growth prospects of the sector, as many patients and payors prefer the outpatient environment (primarily due to lower cost and better outcomes) for certain specialty procedures. The stable rating outlook reflects Moody's expectation that Surgery Partners' will continue to benefit from a turnaround in surgical volumes experienced in the second half of 2012, while maintaining positive free cash flow. The outlook also incorporates Moody's expectation that the company will maintain an adequate liquidity profile. Moody's could downgrade the rating should the company take on additional debt to fund either acquisitions or further dividends to shareholders. Furthermore, a negative rating action would be likely if the economic or reimbursement environment resulted in lower revenues and EBITDA, such that leverage and free cash flow materially deteriorated. Specifically, the rating would likely be lowered if leverage were sustained above 7 times or free cash flow turned negative. A negative rating action could also be prompted by any deterioration in liquidity. An upgrade is unlikely over the near-term given the challenges Surgery Partners' faces in regard to growth and de-leveraging. However, Moody's would consider a higher rating should leverage decline to about 5 times debt-to-EBITDA, alongside good free cash flow and liquidity. The principal methodology used in rating Surgery Partners' was the Global Healthcare Service Providers Industry Methodology published in December 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Surgery Partners, headquartered in Tampa, FL, owns and operates 48 ambulatory surgical centers in partnership with its physician partners, across 18 states. The Company has diversified core competencies in pain management, orthopedics, gastrointestinal, ophthalmology, ear, nose and throat, general surgery and urology. Surgery Partners also provides ancillary services including anesthesia and physician practice services. SURGERY CENTER: S&P Affirms 'B' CCR & Rates New $335MM Debt 'B' --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Tampa-based Surgery Center Holdings Inc. At the same time, S&P assigned the company's proposed $335 million first-lien credit facilities (consisting of a $305 million term loan due 2019 and a $30 million revolver due 2018) a 'B' issue- level rating, with a recovery rating of '3', indicating S&P's expectation for meaningful (50%-70%) recovery in the event of a payment default. In addition, S&P assigned the company's $130 million second-lien term loan due 2020 a 'CCC+' issue-level rating, with a recovery rating of '6', indicating its expectation for negligible (0%-10%) recovery in the event of a payment default. The ratings on Tampa-based Surgery Center Holdings Inc. reflect Standard & Poor's Ratings Services' view of the company's business risk profile as "weak," primarily reflecting its reimbursement risk as the owner and operator of outpatient surgery centers. The ratings also reflect the company's highly leveraged financial risk profile, highlighted by debt leverage that S&P projects will be above 6x through 2014. The company operates its outpatient surgery centers under the trade name Surgery Partners. H.I.G Capital bought Surgery Partners in December 2009 in a leveraged transaction, and in 2011, the company acquired NovaMed, adding 37 centers specializing in ophthalmology to its 12 multispecialty centers. S&P's base case assumes surgical volume increases modestly over the next year, following employment trends and tracking to 2012 growth of 7.5%. S&P expects negligible changes in net revenue per case, with the Medicare reimbursement increase in 2013 of 0.6% offset by sequestration, along with approximately 2% growth in commercial payor rates. The recently developed toxicology lab services will add some benefit, driving an organic revenue growth expectation in the mid-single digits over the next two years, somewhat slower than the 2012 growth in the high-single digits. EBITDA margins are in the mid-20% range and S&P expects them to remain stable. S&P believes the company will maintain a "highly leveraged" financial risk profile in the medium term with expected adjusted debt leverage above 6x through 2014 with funds from operations (FFO) to debt remaining below 12%. Moreover, S&P expects the company to operate with an aggressive financial policy, focused on growth rather than debt repayment. Reimbursement is a key credit risk and supports S&P's weak business profile. Currently, standalone outpatient surgery centers are reimbursed at around 55% of hospital-based surgery centers. This differential provides some downside protection because hospital-based centers get paid significantly more for the same procedure. Still, uncertain third-party reimbursement remains a risk, highlighted by a commercial payor contract that went from out-of-network to in-network--the company was unable to capture higher volume from being an in network provider and the lower rates pressured revenue in 2011 and early 2012. Management estimates that about 5% of its revenue is from out-of-network cases. Lower-paying government payors account for about 30% of revenue. This is similar to its peers, with the exception of United Surgical Partners (18% of U.S. revenue). In the near term, S&P expects government reimbursement and commercial reimbursement to be flat to modestly positive for ambulatory surgery center operators. TANDY BRANDS: Unveils Restructuring Plan; In Covenant Default ------------------------------------------------------------- Tandy Brands Accessories, Inc. on March 18 announced a broad restructuring plan that is expected to reduce operating expenses by $6.0 to $7.0 million on an annualized basis, beginning in fiscal year 2014, and the Company provided an update on negotiations with its senior lender to address covenant violation. "We learned some tough lessons this past holiday selling season, and [Mon]day we are announcing actions to accelerate our turnaround in order to deliver sustainable profitability and enhance our competitive position going forward," said Rod McGeachy, President and Chief Executive Officer. "We plan to run a smaller, leaner, more profitable business with a lower risk profile. We intend to accomplish this by reducing complexity, including how we serve customers, manage the supply chain, and use our facilities," continued Mr. McGeachy. Restructuring Plan The Company announced the elements of the restructuring plan, which are expected to improve customer service, increase profits, improve working capital efficiency, and reduce overhead. The key elements of the plan include: -- Eliminating low-volume products -- Emphasizing licensed products and high volume private label products -- Reducing the amount of risk associated with the Gifts business -- Reducing corporate employee headcount by approximately 32% -- Closing or downsizing four of eight leased facilities -- Outsourcing and relocating Gifts distribution from Dallas to California -- Exiting development efforts and accelerating recognition of future expenses associated with non-core brands "We will aggressively pursue this phase of our turnaround strategy," said Rod McGeachy. "Through these restructuring measures, we will sharpen our focus on our most profitable core products, brands and categories, simplify our SKU offerings and significantly reduce SG&A expenses associated with exiting non- core product lines. We think paring down our customer base and reducing the risk associated with the Gifts business will reduce our overall risk profile in fiscal 2014." The Company expects net revenues to decline in fiscal 2014 while reducing operating expenses by a significantly greater percentage. The Company estimates pre-tax charges related to the restructuring will be in the range of $10.6 to $13.8 million. "Tandy Brands has a stable core business and we expect our improved cost structure and strategic operational focus to drive positive overall performance and enhance our competitive position going forward," continued Mr. McGeachy. Updates on negotiations with senior lender to address covenant violation Tandy Brands confirmed it is in breach of the fixed-charge coverage covenant and is in negotiations with its senior lender to address this violation. "[Mon]day, although we are in violation of the fixed-charge coverage covenant, we remain in compliance with the liquidity covenants with our senior lender and we expect to obtain a waiver for this covenant violation in the next few weeks," said Mr. McGeachy. The Company expects to generate $4.0 million to $6.0 million of additional liquidity from inventory liquidation over the next four to six months in connection with the restructuring plan. "We plan to generate immediate liquidity by selling inventories of exited product categories at prices discounted deeply below historical averages to accelerate demand," said Mr. McGeachy. "Additionally, we are working with additional capital sources to improve the amount of liquidity provided by our assets." "While we cannot provide any assurances that the negotiation with our senior lender or our capital raising efforts will be successful, we are several weeks into due diligence with potential capital sources," said Mr. McGeachy. "The markets seem supportive of our restructuring plan and receptive to providing us with sufficiently flexible funding to achieve our profitability goals. In fact, we have begun receiving term sheets from interested parties." About Tandy Brands Tandy Brands is a designer and marketer of branded men's, women's and children's accessories, including belts, gifts, small leather goods and bags. Merchandise is marketed under various national as well as private brand names through all major retail distribution channels. TELECOMMUNICATIONS MANAGEMENT: Moody's Rates New Debt Facility B2 ----------------------------------------------------------------- Moody's Investors Service assigned a B3 corporate family rating and B3-PD probability of default rating to Telecommunications Management, LLC (operating as NewWave). Moody's also assigned a B2 rating to its proposed first lien credit facility and a Caa2 rating to its proposed second lien facility. The rating outlook is stable. The transaction consists of a $15 million first lien revolver (expected to be undrawn at close), a $140 million first lien term loan and a $66 million second lien term loan. Proceeds, together with cash equity from affiliates of GTCR LLC (GTCR) will fund the acquisition of NewWave from its existing owner, Pamlico Capital. GTCR partnered with the management team of Rural Broadband Investment, LLC (RBI) to run NewWave and expects over time to acquire incremental cable systems to consolidate with NewWave. Telecommunications Management, LLC Corporate Family Rating, Assigned B3 Probability of Default Rating, Assigned B3-PD $15M First Lien Revolving Credit Facility, Assigned B2, LGD3, 34% $140.25M First Lien Term Loan, Assigned B2, LGD3, 34% $66M Second Lien Term Loan, Assigned Caa2, LGD5, 86% Outlook, Stable Ratings Rationale: Pro forma for the transaction, Moody's estimates leverage in the mid to high 6 times debt-to-EBITDA range, high for a small company in a competitive, capital intensive industry, and future acquisitions (albeit likely small and at least partially equity funded) could delay any meaningful improvement in leverage. This financial risk, combined with some execution risk related to the likelihood of incremental acquisitions and the new management team, drives NewWave's B3 CFR. Management's experience in telecommunications and cable together with the upgraded network somewhat mitigates the execution risk. Also, the expected EBITDA growth and decline in capital expenditures after several years of heavy investment should facilitate positive free cash flow. Subscriber penetration lags well behind rated incumbent cable peers and, on a blended basis for video, high speed data and phone, is in line with rated overbuilders. Given the low penetration as well as the lack of scale, a particular concern given rising programming costs, Moody's expects EBITDA and revenue per homes passed will remain behind peers. Moody's sees significant upside opportunity for the high speed data residential product and the commercial segment based on the lack of quality broadband in NewWave's territory, but the direct broadcast satellite operators continue to pose formidable competition for the mature video product. GTCR has committed to funding executive and advisory expenses for the first two years, and during the remaining three years of the sponsor support agreement, the operating company can only distribute money for these expenses after sustaining leverage below specified thresholds. This contractual financial backing will support cash flow for the first two years and provide continued downside protection for the remaining three years of the agreement, a credit strength. However, Moody's also believes GTCR will seek value appreciation through growth, including acquisitions which could either increase leverage or delay improvement in credit metrics. The stable outlook incorporates expectations for EBITDA growth, modestly positive free cash flow and for leverage to fall below 6 times debt-to-EBITDA. Moody's would consider an upgrade with a track record of success in operating the existing assets and any future acquisitions, along with expectations for leverage sustained in the mid 5 times debt-to-EBITDA range and continued positive free cash flow. An increase in leverage, inability to generate positive free cash flow, evidence of weakening subscriber trends or a deterioration of the liquidity profile could warrant a negative outlook or downgrade. The principal methodology used in this rating was the Global Cable Television Industry Methodology published in July 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. Telecommunications Management, LLC (operating under the brand name NewWave) provides video, high speed data, and voice to about 90,000 residential and commercial customers in southeast Missouri, Arkansas, southern and western Indiana, and southern and eastern Illinois. TORM A/S: Annual General Meeting Scheduled for April 11 ------------------------------------------------------- Flemming Ipsen of Chairman of the Board of Directors of TORM A/S disclosed that shareholders in the Company are invited to the Annual General Meeting (AGM) on Thursday, April 11, 2013 at 10:00 am CET at Radisson Blu Falconer Hotel, Falkoner Alle 9, DK-2000 Frederiksberg. Agenda and complete proposals The agenda and complete proposals from the Board of Directors are enclosed. The Board of Directors would like to highlight proposal 7.b. regarding an authorization to terminate the Company's American Depositary Receipt program and in this connection allow the Company to acquire own shares as well as delist the Company's American Depository Shares from Nasdaq Capital Market, USA, and deregister the Company's securities under the U.S. Securities Exchange Act of 1934, as amended. The Board of Directors finds that it would be in the interest of the Company due to the limited size of the ADR program and the costs involved with a listing on Nasdaq and the reporting and filing obligations under the U.S. Exchange Act. The ADR program represents approximately 0.5% of the Company's total share capital, following the capital increase carried out in connection with the Company's restructuring in November 2012. Introduction of electronic communication The Board of Directors has decided to exercise the authorization to introduce electronic communication with effect from April 12, 2013. The Board of Directors hopes that you as a shareholder will support TORM by participating in the AGM or by submitting your vote either by proxy or postal vote. NOTICE CONVENING THE ANNUAL GENERAL MEETING Notice is hereby given in accordance with Article 5 of the Articles of Association of TORM A/S (CVR no. 22460218) that the Annual General Meeting (AGM) will be held on Thursday, April 11, 2013 at 10:00 am (CET)at Radisson Blu Falconer Hotel, Falkoner Alle 9, DK-2000 Frederiksberg with the following AGENDA 1. The Board of Director's report on the activities of the Company in the past year 2. Adoption of the Annual Report for 2012 3. The Board of Director's proposal for provision for losses in accordance with the adopted Annual Report 4. Resolution to discharge the members of the Board of Directors and the Executive Management from liability 5. Election of members to the Board of Directors 6. Appointment of auditor 7. Proposals from the Board of Directors a. Approval of the level of remuneration of the Board of Directors for the year 2013 b. Authorization of the Board of Directors to terminate the Company's American Depositary Receipt program and in this connection allow the Company to acquire own shares as well as delist the Company's American Depository Shares from Nasdaq Capital Market, USA and deregister the Company's securities under the U.S. Securities Exchange Act of 1934, as amended 8. Any other business Adoption requirements The AGM is only legally competent to transact business when at least one-third of the share capital is represented (quorum), see also Article 10.1 of the Articles of Association. Adoption of the proposals under items 2, 3, 4, 6, 7.a and 7.b is subject to a simple majority of votes, see also Article 10.2 of the Articles of Association. No board members are up for re- election pursuant to Article 12.2 of the Articles of Association, and no further board members are proposed by the Board of Directors to be elected by the AGM under item 5. Form of notice and availability of information Notice convening the AGM will be sent to all shareholders registered in the Company's register of shareholders and/or ADR holders who have registered their holdings with the Company and who have so requested. Notice will also be announced through the Danish Business Authority's IT system and on the Company's Web site, http://www.torm.com This notice including the agenda, the complete proposals, information on the total number of shares and voting rights on the date of the notice and the forms to be used for proxy voting and postal voting and documents to be presented at AGM including the Company's Annual Report for 2012, will be available at the offices of the Company and on the Company's Web site, http://www.torm.com in the period from Wednesday, March 20, 2013 at the latest and until and including the date of the AGM. Restructuring Agreement Since 2010, TORM has worked on improving the Company's capital structure and liquidity situation by seeking to tap into different corporate bond markets and through other measures. Mainly due to the Company's strategic position as a spot-oriented company, low freight rates and the generally challenging conditions in the capital markets, TORM was unable to obtain this type of financing. With the continuously low freight rates and cyclically low vessel values since fall 2011, TORM's Board of Directors did not find it prudent to inject new equity in the Company at the time without substantial amendments to the existing credit facilities. In October 2011, TORM therefore presented a proposal to the banks that combined an equity injection of US$100 million with subscription rights for existing shareholders and a bank moratorium. The proposal was not accepted by the banks, but the Company achieved a standstill agreement with the banks, which was extended several times during 2012 to ensure that a long-term, comprehensive financing solution was found and implemented. Throughout the whole process, TORM's Board of Directors and Executive Management have worked on avoiding bankruptcy or other in-court solutions in Denmark or abroad in order to best preserve value and put all stakeholders in the best possible position. However, the process also involved detailed negotiations and preparations for a suspension of payments, including under the US "Chapter 11" rules. In the spring of 2012, TORM also succeeded in obtaining conditional offers from reputable, international shipping investors as well as institutional investors, who were prepared to make new investments in the Company provided that substantially amended bank terms were agreed. However, the banks chose not to enter into substantive negotiations with any of these investors as they did not find the investor proposals sufficiently attractive. Since the fourth quarter of 2011 the Company's liquidity situation has been very tight, and the total bank debt could be called at any time at the banks' discretion due to non-compliance with certain financial covenants. Through negotiations with the bank group during 2012 it became clear that the only achievable solution with the bank group would not provide immediate debt relief in the balance sheet nor any new liquid equity contribution. A solution could be found where TORM gained time for a potential general market improvement in order to best preserve shareholder value. Therefore, TORM signed a conditional agreement in principle with the banks and the major time charter partners regarding a long-term financing solution as stated in announcement no. 14 dated April 4, 2012 and elaborated in announcement no. 20 dated April 23, 2012 and at the Annual General Meeting. Completion of the restructuring agreement The conditional agreement in principle formed the basis of the restructuring agreement, which is very comprehensive and contains a number of supplementary agreements with individual parties, including amendments to TORM's existing financing agreements. During the period from April to November 2012, the final contractual framework was detailed, documented and completed by the banks, the group of time charter partners and the Company. This prolonged process, including the period leading up to this, was very costly to the Company, but it was preferable to the alternative. I will now explain the details of the restructuring. Content of the restructuring agreement - Banks New facility As part of the restructuring, TORM has secured new working capital of US$100 million until September 30, 2014 with first lien in the majority of the Company's vessels. Amended terms and conditions Through the implementation of the restructuring, the Company's group of banks has aligned key terms and conditions and financial covenants across all existing debt facilities, and all maturities on existing credit facilities have been adjusted to December 31, 2016. The bank debt remained unchanged at US$1,794 million as of September 30, 2012. The book value of the fleet excluding vessels under finance leases as of September 30, 2012 was US$2,167 million. TORM's quarterly impairment test as of June 30, 2012 supported the carrying amount of the fleet based on the same test and principles as used by the Company since the Annual Report for 2009. Based on broker valuations, TORM's fleet excluding vessels under finance leases had a market value of US$1,316 million as of September 30, 2012, which was US$851 million lower than the carrying amount. The recognized equity amounted to US$358 million as of September 30, 2012. Going forward, interest on the existing debt will only be paid if the Company has sufficient liquidity, and otherwise the remainder will be accumulated until at least June 30, 2014 with potential extension until September 30, 2014. On average the interest margin will increase to approximately 240 basis points on the bank debt. The Company will pay interest on the new working capital facility until September 30, 2014. The new financing agreements provide for a deferral of installments on the bank debt until September 30, 2014, in which period rescheduled principal amortizations will only be payable if the Company has sufficient liquidity. Provided that the Company generates sufficient positive cash flows, certain cash sweep mechanisms will apply. Annualized minimum amortizations of US$100 million will commence with effect from September 30, 2014 until December 31, 2016. If vessels are sold, the related secured debt will fall due. Changed legal group structure As part of the restructuring agreement, TORM has implemented substantial changes to the Company's internal legal group structure, including transfers of vessels to separate legal entities in Denmark and Singapore based on the individual loan facilities. All legal entities are ultimately owned by TORM A/S. New financial covenants New financial covenants will apply uniformly across the bank debt facilities and will include: -- Minimum liquidity: Cash plus the available part of the new US$100 million working capital facility must exceed US$50 million to be tested from December 31, 2012. This will later be adjusted to a cash requirement of US$30 million by September 30, 2014 and US440 million by March 31, 2015. -- Loan-to-value ratio: A senior loan tranche of US$1,020 million has been introduced out of the total bank debt of US$1,793 million as of June 30, 2012. The senior tranche must have an initial agreed ratio of loan to TORM's fleet value based on broker valuations (excl. vessels under finance leases) at 85% to be confirmed from June 30, 2013. This will gradually be stepped down to 65% by June 30, 2016. The remaining bank debt of US$773 million has been divided into two additional debt tranches, both with collateral in the Company's fleet. -- Consolidated total debt to EBITDA: Initial agreed ratio of a maximum of 30:1 to be tested from June 30, 2013, gradually stepped down to a 6:1 ratio by June 30, 2016. -- Interest cover ratio: Agreed EBITDA to interest ratio of initially a minimum of 1.4x by June 30, 2014, gradually stepped up to 2.5x by December 31, 2015. Additional material covenants The terms of the credit facilities will include a catalogue of additional covenants, including amongst others: -- A change-of-control provision with a threshold of 25% of shares or voting rights. -- No issuance of new shares or dividend distribution without consent from the banks. About TORM With headquarters in Copenhagen, Denmark, TORM (NASDAQ: QMX) is one of the world's leading carriers of refined oil products as well as a significant player in the dry bulk market. The Company runs a fleet of approximately 110 modern vessels in cooperation with other respected shipping companies sharing TORM's commitment to safety, environmental responsibility and customer service. USA COMMERCIAL: Pond Avenue Partners May Be Dragged in Knight Suit ------------------------------------------------------------------ Nevada District Judge Robert Jones granted the motion of Intervenors DACA-Castaic, LLC and Debt Acquisition Co. of America V, LLC ("DACA V") for Leave to File Supplemental Counterclaim and Fourth Party Complaint in the case captioned THE RICHARD AND SHEILA J. McKNIGHT 2000 FAMILY TRUST et al., Plaintiffs, v. WILLIAM J. BARKETT et al., Defendants, Case No. 2:10-cv-01617-RCJ- GWF (D. Nev.). Specifically, DACA is given 14 days from the entry of the District Court's March 11, 2013 ruling to file an amended answer to the Third-Party, a Third-Party counterclaim, and a Supplemental Fourth-Party Complaint -- against Pond Avenue Partners, LLC, Merjan Financial Corp., and Palisades Capital (NV), LLC -- to consolidate its answer, its existing claims, and its supplemental claims into a single pleading. DACA, however, does not have leave to amend the substance of its answer. Plaintiff Richard McKnight, as trustee for The Richard & Sheila J. McKnight 2000 Family Trust, provided $100,000 out of the total of $4.5 million that various direct lenders loaned to Castaic III Partners LLC through USA Commercial Mortgage Co. The McKnight Trust alleged that it has received interest payments on the loan since August 2006. Under its complaint, the Knight Trust sued Castaic III and William J. Barkett in Nevada District Court on two claims: (1) Breach of Guaranty (Barkett only); and (2) Declaratory Judgment. A copy of Judge Jones' March 11, 2013 order is available at http://is.gd/D97G3Ofrom Leagle.com. About USA Commercial Based in Las Vegas, Nevada, USA Commercial Mortgage Company, dba USA Capital -- http://www.usacapitalcorp.com/-- provided more than $1 billion in short-term and permanent financing to homebuilders, commercial developers, apartment owners and institutions nationwide. The Company and its debtor-affiliates filed for chapter 11 protection on April 13, 2006 (Bankr. D. Nev. Case Nos. 06-10725 to 06-10729). Lenard E. Schwartzer, Esq., at Schwartzer & Mcpherson Law Firm, and Annette W. Jarvis, Esq., at Ray Quinney & Nebeker, P.C., represented the Debtors in their restructuring efforts. Thomas J. Allison, a senior managing director at Mesirow Financial Interim Management LLC, served as Chief Restructuring Officer for the Debtors. Susan M. Freeman, Esq., and Rob Charles, Esq., at Lewis and Roca LLP represented the Official Committee of Unsecured Creditors of USA Commercial Mortgage Company. Edward M. Burr at Sierra Consulting Group, LLC, provided financial advice to the Creditors Committee of USA Mortgage. Marc A. Levinson, Esq., and Jeffery D. Hermann, Esq., at Orrick, Herrington & Sutcliffe LLP, and Bob L. Olson, Esq., and Anne M. Loraditch, Esq., at Beckley Singleton, Chartered, represented the Official Committee of Equity Security Holders of USA Capital Diversified Trust Deed Fund, LLC. FTI Consulting, Inc., provided financial advice to the Equity Committee of USA Diversified. Candace C. Carlyon, Esq., and Shawn w. Miller, Esq., at Shea & Carlyon, Ltd., and Jeffrey H. Davidson, Esq., Frank A. Merola, Esq., and Eve H. Karasik, Esq., at Stutman, Treister & Glatt, PC, represented the Official Committee of Equity Security Holders of USA Capital First Trust Deed Fund, LLC. Matthew A. Kvarda, at Alvarez & Marsal, LLC, provided financial advise to the Equity Committee of USA First. When the Debtors filed for protection from their creditors, they estimated assets of more than $100 million and debts between $10 million and $50 million. The Debtor's Chapter 11 plan of reorganization was confirmed on Jan. 8, 2007. USACM Liquidating Trust was created pursuant to the Debtors' Third Amended Joint Chapter 11 Plan of Reorganization, which became effective March 12, 2007. Under the Joint Plan, the Trust obtained the right to enforce USACM's causes of action. VERMILLION INC: Glass Lewis Recommends WHITE Proxy Card Vote ------------------------------------------------------------ Robert S. Goggin, Gregory V. Novak, and George Bessenyei, stockholders of Vermillion, Inc. acting together as the "Concerned Vermillion Stockholders" or the "Group", on March 18 disclosed that Glass Lewis, a leading independent proxy voting advisory firm, has recommended that Vermillion stockholders vote on Concerned Vermillion Stockholder's WHITE proxy card to elect highly qualified nominee, Robert S. Goggin. Glass Lewis recommended that Vermillion shareholders "DO NOT VOTE" on the Company's blue proxy card. The recommendation makes Glass Lewis the second independent proxy advisory firm to advise shareholders to vote on the Concerned Vermillion Stockholders' WHITE proxy card. In reaching its conclusion, Glass Lewis performed a detailed analysis of both sides' positions in the election contest and, in particular, carefully considered, among other things, the Company's total stockholder return, financial performance and corporate governance. Glass Lewis concluded that shareholders should vote for Mr. Goggin on the WHITE proxy card. Excerpts from Glass Lewis Analysis & Recommendation Financial Performance "[The] significant reduction in the Company's trailing sales multiple since 2010 suggests to us that investors have either lost confidence in the potential value of the Company's OVA1 product and development pipeline, in management's ability to realize the potential value of those assets, or, more likely, a combination of the two." "The Company has also demonstrated an inability to make reasonable sales projections, which further serves to erode investor confidence in management and the board, in our view. Notably, the Company projected fiscal year 2011 revenue from OVA1 sales of approximately $34.05 million and fiscal year 2010 revenue from OVA1 sales of approximately $9.70 million, compared with actual fiscal year 2011 product sales of approximately $1.47 million and actual fiscal year 2010 product sales of approximately $0.31 million. Here, while we believe a fairly wide margin of error should be expected in forecasting emerging product sales, we nevertheless agree with the Dissident that management and the board should be held accountable for actual sales that represent just 4.3% and 3.2% of forecast sales in fiscal years 2011 and 2010, respectively." Corporate Governance "We believe the Dissident raises a number of valid concerns regarding corporate governance at the Company. In particular, we believe shareholders should be concerned by the board's failure to call an annual meeting in 2012 despite having a window of opportunity following a court ruling on November 16, 2012 that allowed the Company to proceed with calling an annual meeting. Instead, the board received a notice of delisting from the Nasdaq and legal action from the Dissident before finally announcing a meeting in January 2013." From Glass Lewis' Conclusion: "Given the Company's poor financial and operational performance under the current board, we believe shareholders could benefit from new, outside perspective. While we believe removing the Company's CEO was a positive step by the board, it appears to be a reactionary measure taken only after investors voiced concerns to the board. We further question the board's decision to approve a lucrative consulting agreement with the departed CEO in particular given Mr. Huebner's assignment as interim CEO." "Given a number of corporate governance concerns and actions by the existing board that appear contrary to the interests of shareholders, we believe additional independent oversight is warranted and that the Dissident's request to fill a single vacant seat on the board is reasonable. If elected, the Dissident Nominee would constitute a minority of the board (one out of six directors or 16.7%) and would not be able to adopt any measures without the support of other board members. Thus, we expect Mr. Goggin will work proactively with the incumbents if he is to effect long-term change." If you have any questions, require assistance with submitting your WHITE proxy card or need additional copies of the proxy materials, please contact: Okapi PartnersPatrick McHugh/ Geoffrey Sorbello (212) 297-0720 or (877) 566-1922 (toll-free) About Vermillion Vermillion, Inc. is dedicated to the discovery, development and commercialization of novel high-value diagnostic tests that help physicians diagnose, treat and improve outcomes for patients. Vermillion, along with its prestigious scientific collaborators, has diagnostic programs in oncology, hematology, cardiology and women's health. The Company filed for Chapter 11 on March 30, 2009 (Bankr. D. Del. Case No. 09-11091). Vermillion's legal advisor in connection with its successful reorganization efforts wass Paul, Hastings, Janofsky & Walker LLP. Vermillion emerged from bankruptcy in January 2010. The Plan called for the Company to pay all claims in full and equity holders to retain control of the Company. VILLAGIO PARTNERS: Sells Unimproved Tract for $2.3 Million ---------------------------------------------------------- Compass Care Holdings, Ltd., sought and obtained authorization from the Hon. Marvin Isgur of the U.S. Bankruptcy Court for the Southern District of Texas to sell unimproved real property to Fellowship of The Woodlands Church, Inc., for $2.3 million. Fellowship will acquire 11.1033 acres of unimproved real property at RES A BLK 1 Orleans Square Section S, and the approximately 0.37139 acres of unimproved real property at RES C BLK 1 Orleans Square SEC 2. Compass Care owns improved and unimproved real property located at 18315, 18321 and 18323 W. Lake Houston Parkway, Humble, Texas 77346. The current value of the Property is approximately $15.2 million. The Unimproved Tract is a portion of the Property, and it is the non-income producing portion. At closing Compass Care will pay $2.07 million of the Purchase Price to Wells Fargo Bank, N.A., on its asserted secured claim as to the Unimproved Tract. Wells Fargo asserts a lien on the Property, including the Unimproved Tract. The amount owed to Wells Fargo by Compass Care is approximately $13,600,733.16. The Property also secures debts owed to Wells Fargo by the other Debtors. The total outstanding amount owed to Wells Fargo by all Debtors is approximately $51.6 million. Wells Fargo has approved the sale of the Unimproved Tract. Teresa Lowery and Christopher Klein with Colliers Appelt Womack, Inc. d/b/a Colliers International, as the broker to the Contract for Compass Care, will be paid a commission equal to 6% of the Purchase Price at closing, and 7.5% of the commission will be paid to Damon P. Palermo of Palermo Real Estate Interests, LLC, the Purchaser's broker. Compass Care sought and obtained authorization from the U.S. Bankruptcy Court to employ Colliers Appelt to act as its real estate broker and assist in the marketing, negotiation and sale of the Unimproved Tract. At the Dec. 3, 2012 hearing, the Court expressed concern over the conflict arising under the U.S. Bankruptcy Code with Colliers Appelt representing both the Debtor-seller and the buyer. The Court inquired how Colliers Appelt could be "disinterested". To resolve the Court's concern, Compass Care, through a separate pleading, withdrew its employment motion and subsequently filed an amended motion, stating that Colliers Appelt will only represent the Debtor in the potential sale of the Unimproved Tract. Colliers Appelt is no longer representing the buyer, on an intermediary basis or otherwise. The buyer subsequently employed Mr. Palermo as its broker. About Villagio Partners et al. Villagio Partners Ltd., along with six affiliates, filed separate Chapter 11 petitions (Bankr. S.D. Tex. Case Nos. 12-35928, 12-35930 to 12-35932, 12-35934, 12-35936 and 12-35937) in Houston on Aug. 6, 2012. The Debtors are engaged primarily in the business of owning and operating commercial retail shopping centers and offices. The Debtors' commercial real properties are located in and around the Houston Metropolitan area, including Katy, Humble and The Woodlands. The petitions were signed by Vernon M. Veldekens, CEO for The Marcel Group. The Marcel Group -- http://www.themarcelgroup.com/ -- is an integrated commercial real estate firm specializing in development, construction, design, engineering, master planning, leasing and property management. Village Partners, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), estimated assets and debts of at least $10 million. It says that a real property in Katy, Texas, is worth $24.6 million. The affiliated debtors are Compass Care Holdings Ltd., Cinco Office VWM, Greens Imperial Center, Inc., Marcel Construction & Maintenance, Ltd., Tidwell Properties, Inc., and Research-New Trails Partners, Ltd. Bankruptcy Judge Marvin Isgur presides over the cases. Simon Richard Mayer, Esq., and Wayne Kitchens, Esq., at Hughes Watters Askanase, LLP, in Houston, represent the Debtors as counsel. VIVARO CORP: Herrick, Feinstein Assists in Sale to Next Angel ------------------------------------------------------------- Herrick, Feinstein LLP represented Vivaro Corporation in the sale of the Company's operating assets to Next Angel, LLC, a joint venture of 3 telecommunications companies -- Angel Telecom Corp., Next Communications Inc. and Marcatel Telecommunications LLC. The purchase price was approximately $31 million. Pressured by the risk of loss of carrier capacity, Vivaro and its affiliates initiated bankruptcy proceedings in U.S. Bankruptcy Court for the Southern District of NY on September 5th, 2012. The sale followed an auction held in January at Herrick's headquarters in New York City. "We are delighted to have been able to help preserve Vivaro's operating business, maximize the sale price and, at the same time, preserve the jobs of over 125 employees," said Frederick E. Schmidt, Jr., a Partner in Herrick, Feinstein's Bankruptcy Group Practice. The Herrick team, which continues to represent Vivaro in ongoing bankruptcy and related matters, is led by Mr. Schmidt and Senior Litigation Partner John R. Goldman and includes Associates Hanh Huynh and Justin Singer. Counsel Joel Wagman and Associate Valerie Gross of Herrick's Corporate Department assisted in the sale. The Herrick team worked closely with Vivaro's Chief Restructuring Officer Philip Gund and B. Lee Fletcher of Marotta, Gund, Budd & Dzera, LLC and Robert Smith and Louis Pillich of SSG Capital Advisors, LLC as well as teams from BDO Capital Advisors, LLC and Arent Fox LLP, professionals representing the official committee of unsecured creditors. About Herrick, Feinstein LLP Founded in 1928, Herrick, Feinstein LLP is a prominent 170-lawyer firm headquartered in New York City providing a full range of legal services, including art law, real estate, bankruptcy and business reorganization, employment law, government relations, commercial litigation, corporate law, insurance, intellectual property, sports law, and tax and personal planning. About Vivaro Corp. Vivaro Corp., which specializes in the sale of international calling cards in the U.S., filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-13810) on Sept. 5, 2012, together with six other related companies, including Kare Distribution Inc. The Debtor is represented by Frederick E. Schmidt, Esq., at Hanh V. Huynh, Esq., at Herrick, Feinstein LLP. Garden City Group Inc. is the claims and notice agent. A five-member official committee of unsecured creditors has been appointed in the case. WAVE SYSTEMS: Incurs $33.9 Million Net Loss in 2012 --------------------------------------------------- Wave Systems Corp. filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $33.96 million on $28.84 million of total net revenues for the year ended Dec. 31, 2012, as compared with a net loss of $10.79 million on $36.13 million of total net revenues during the prior year. The Company incurred a $4.12 million net loss in 2010. The Company's balance sheet at Dec. 31, 2012, showed $18.63 million in total assets, $21.49 million in total liabilities and a $2.86 million total stockholders' deficit. "Wave will be required to sell shares of common stock, preferred stock, obtain debt financing or engage in a combination of these financing alternatives, to raise additional capital to continue to fund its operations for the twelve months ending December 31, 2013. If Wave is not successful in executing its business plan, it will be required to sell additional shares of common stock, preferred stock, obtain debt financing or engage in a combination of these financing alternatives or it could be forced to reduce expenses which may significantly impede its ability to meet its sales, marketing and development objectives, cease operations or merge with another company. No assurance can be provided that any of these initiatives will be successful. Due to its current cash position, capital needs over the next year and beyond, and the uncertainty as to whether it will achieve its sales forecast for its products and services, substantial doubt exists with respect to Wave's ability to continue as a going concern." A copy of the Form 10-K is available for free at: http://is.gd/2Yi1AE To Raise $ 1 Million Wave Systems has entered into agreements with certain institutional investors for a private placement of 1,204,820 shares of its Class A common stock at a price of $.83 per share, yielding gross proceeds of $1,000,000. Additionally, investors in the offering will receive five-year warrants to purchase an aggregate of 602,410 shares of Wave's Class A common stock for $.83 per share. The net proceeds of the financing will be used to fund Wave's ongoing operations. The offering is expected to close on or about March 15, 2013, subject to the satisfaction of customary closing conditions. Dawson James Securities, Inc., acted as exclusive placement agent in connection with the offering. About Wave Systems Lee, Massachusetts-based Wave Systems Corp. (NASDAQ: WAVX) -- http://www.wave.com/-- develops, produces and markets products for hardware-based digital security, including security applications and services that are complementary to and work with the specifications of the Trusted Computing Group, an industry standards organization comprised of computer and device manufacturers, software vendors and other computing products manufacturers. WEIGHT WATCHERS: Moody's Rates New Sr. Secured Term Loan 'Ba1' -------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Weight Watchers International, Inc.'s (Weight Watchers) proposed senior secured term loan due 2020 and senior secured revolving credit facility due 2018. Proceeds from the new facility will repay existing term loans and replace the revolver. The ratings outlook is stable. Ratings Rationale: The Ba1 senior secured rating reflects Moody's expectations for continued steady decline in debt to EBITDA to below 4 times and free cash flow (i.e., cash from operations less capital spending less dividends) of at least $200 million during 2013. Financial leverage is somewhat higher than Moody's had expected it would be at the close of the March 2012 leveraged share repurchase. Despite the disappointing operating performance in 2012, Weight Watchers maintains a stable core of meeting and on-line members which provides some visibility to revenue going forward. The new financing is credit positive as it extends the maturity of Weight Watchers' term loans to 2020 (from 2018). However, with the lower required amortization, Weight Watchers could deleverage at a slower rate than expected. The stable rating outlook reflects expectations for total meeting minutes and online membership to continue to decline in the near term. However, growth should resume in 2013, driving steady declines in debt to EBITDA and solid free cash flow. Deterioration in operating performance that is worse than Moody's expectations, evidence of erosion in the core membership base, or expectations of a further slowing in the pace of deleveraging could have a negative impact on the rating. A rating downgrade is possible if Moody's expects debt to EBITDA or free cash flow to debt to be sustained at over 4 times or less than 8%, respectively. The ratings could be upgraded following (i) steady membership and attendance growth over a one to two year period and Moody's comes to expect continued growth over the medium term; (ii) growth in profitability or lower debt such that debt to EBITDA and free cash flow to debt are sustained at under 3 times and over 15%, respectively; and (iii) evidence of setting and then sustaining financial targets of leverage and liquidity consistent with a higher rating. The following ratings (assessments) were assigned: Proposed Senior Secured Revolving Credit Facility due 2018, Ba1 (LGD3, 33%) Proposed Senior Secured Term Loan Facility due 2020, Ba1 (LGD3, 33%) Ratings on the existing debt will be withdrawn upon repayment. The principal methodology used in this rating was Global Business and Consumer Service Industry 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. Weight Watchers provides weight management services and a leading global branded consumer company. Moody's expects revenue for 2013 to be just under $2.0 billion. WEIGHT WATCHERS: S&P Cuts CCR to 'BB-' on Weaker Earnings --------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on New York-based Weight Watchers International Inc. (WWI) to 'BB-' from 'BB.' The outlook is stable. At the same time, S&P assigned a 'BB' issue rating to the proposed $250 million revolving credit facility due 2018 and $2.4 billion term loan due 2020. The recovery rating on the proposed revolver and term loan is '2', which indicates S&P's expectation of substantial recovery (70% to 90%) for first-lien creditors in the event of a payment default. S&P is also lowering the issue ratings on the company's existing senior secured credit facilities to 'BB' from 'BB+', and leaving the recovery ratings at '2'. S&P will withdraw these ratings upon completion of the refinancing. The company will have just over $2.4 billion in reported debt outstanding following the transaction. "The downgrade reflects a downward revision in our forecast for operating performance, and our belief that credit measures over the next year will be weaker than previously forecasted," said Standard & Poor's credit analyst Mark Salierno. "We believe the company's 2013 operating performance will continue to decline somewhat as we expect consumer discretionary spending to remain tepid following the nonrenewal of the payroll tax holiday in January 2013, and based on our expectation for fuel prices to remain high." For the fiscal year ended Dec. 31, 2012, WWI's adjusted leverage was about 4.6x, compared to Standard & Poor's prior expectation for leverage to decline to the 4x area at the end of the year. The proposed refinancing would not result in a material change in debt levels. Since S&P expects performance in 2013 will also be weakened by enrollment getting off to a slow start this year, S&P now expects leverage to remain in the mid- to high-4x range through the end of the year, and to steadily approach the 4x area over the next two to three years. The outlook is stable. Although S&P believes 2013 operating performance will be hurt by a slow start in enrollment this year, it expects the company to apply free cash flow to debt reduction, thus resulting in credit ratios remaining close to current levels over the 12 to 24 months, and remaining indicative of an "aggressive" financial risk profile. * Chambers Global Names Morrison & Foerster Law Firm of the Year ---------------------------------------------------------------- Chambers Global has named Morrison & Foerster its 2013 USA Law Firm of the Year. "The US-based global giant," the editors said in announcing the honor, "has experienced one of the most successful years in its long and illustrious history." The award is based on the firm's recent high-profile deals and cases across a wide range of practices around the world. Drawing from research for its 2013 global guide, published on March 14, the editors of Chambers relied on feedback from clients and other law firms to select the winner. "We are deeply honored that this recognition reflects the opinions of our clients and peers," Morrison & Foerster Chair Larren M. Nashelsky said. "Our clients entrust us with their most challenging and complex matters, and we thank them for that. Everyone at MoFo deserves credit for this, and our trademark excellent work and unwavering devotion to clients. We appreciate that Chambers Global has honored MoFo by selecting us from among the highest caliber law firms in the country." The Chambers Global editors cited MoFo's "landmark victories and engagements in the IP arena," which included the firm's work on the global smartphone disputes that spawned the patent trial of our time and a massive jury verdict for our client, "headlines in the bankruptcy arena with its representation of ResCap and the Chapter 11 trustee of MF Global," and "superb national and trans- Pacific capabilities," highlighted by MoFo's representation of SoftBank in its acquisition of Sprint, the biggest outbound transaction from Asia ever. The full report can be found on the Chambers site here: http://www.chambersandpartners.com/awards/4 About Morrison & Foerster Morrison & Foerster is a global firm with clients that include some of the largest financial institutions, investment banks, Fortune 100, technology and life science companies. * Watermill Group Wins Award for Michigan Paper Mill Restructuring ------------------------------------------------------------------ The Watermill Group is the proud recipient of the Restructuring Community Impact Award at the 7th Annual M&A Advisor Turnaround Awards for the firm's acquisition of Manistique Papers. "The award winners represent the best of the M&A industry in 2012 and earned these honors by standing out in a group of very impressive finalists," said Roger Aguinaldo, CEO of The M&A Advisor. "From lower middle-market to multi-billion dollar deals, we have recognized the leading transactions, firms and individuals that represent the highest levels of performance." In May of 2012, The Watermill Group acquired Manistique Papers, the only paper mill in North America producing high-value uncoated printing and writing paper exclusively from 100% recycled fiber. The mill, which currently employs 140 people, is the largest private employer in Michigan's Schoolcraft County and an economic pillar for the region. "We are honored to be recognized through this award for our work with the Manistique mill," said Steven Karol, Founder and Managing Partner of The Watermill Group. "When we first discovered Manistique Papers, not only did we see a promising opportunity to revive an underperforming business, we also saw an exciting opportunity to revive an institution that's the lifeblood of its community and region." The Watermill Group is applying its hallmark approach of combining unique strategic insight and management expertise to set the Manistique mill on a path of stability and growth. Watermill teamed its Manistique mill with another recycled mill in its portfolio, FutureMark Paper Company, to establish the most comprehensive line of coated and uncoated recycled printing papers made in North America. The two mills now operate in concert as FutureMark Paper Group, the leading North American provider of responsibly made recycled paper for books and magazines, as well as for commercial printing and packaging applications A Prime Example of Public-Private Partnership The Manistique mill had been forced into bankruptcy in 2011, when its credit line was unexpectedly pulled. The Manistique mill was faced with liquidation and the permanent loss of about 150 jobs. As an economic engine for the region, the mill's loss would have had devastating consequences on the close-knit community of Manistique, Mich., and on neighboring towns. With just one day to spare in a seven-day deadline to rescue the mill, the mill's management team partnered with a local bank, mBank, and the Michigan Economic Development Corporation (MEDC) to reach a deal with the previous lender to find a buyer. The Watermill Group acquired the Manistique mill in May, 2012, at a 363 Auction. The firm forged a cross-sector partnership with mBank and the MEDC to develop an effective and flexible financing structure. "The Manistique acquisition was remarkable for how it brought together government entities, company management and the town to save this local institution," said Robert Ackerman, a partner at The Watermill Group. "The community's determination not only to save the mill, but to turn it into a sustainable, growing operation was truly impressive to us. It was a privilege to partner with mBank, the management team and the State of Michigan on this unusual cross-sector relationship." About The Watermill Group The Watermill Group -- http://www.watermill.com-- is a strategy- driven private investing firm that revitalizes companies to drive superior returns. For over three decades, Watermill has been acquiring, operating and improving companies. Watermill looks for businesses at a crossroads and applies a unique combination of strategic insight and management expertise to drive growth. The Watermill Group's current portfolio companies include C&M Corporation, Fine Tubes Ltd., FutureMark Paper Group, MultiLayer Coating Technologies LLC., Superior Tube Company and Tenere. * Three Lawyers Form New Whistleblower Law Firm Boutique -------------------------------------------------------- Robert Sadowski, Andrea Fischer and Raphael Katz on March 15 announced the formation of their new law firm -- Sadowski Fischer PLLC. Sadowski Fischer PLLC is a litigation boutique, specializing in complex commercial litigation, health care litigation, employment litigation, bankruptcy litigation and qui tam (whistleblower) litigation. Messrs. Sadowski and Katz, as well as Ms. Fischer have most recently practiced at Diamond McCarthy LLP, where they had a successful litigation practice, with a particular emphasis on qui tam litigation. Prior to Diamond McCarthy, Mr. Sadowski and Ms. Fischer were partners at other prominent New York law firms. Mr. Sadowski stated, "We are very excited to start our own practice and anticipate continuing to service our existing clients, as well as continuing to build our business over the coming years." Sadowski Fischer PLLC is located at 39 Broadway, Suite 1540, New York, NY 10006, phone: 212 913 9768. Contact info: Robert W. Sadowski, Esq. 212 913 9678 x 101 E-mail: rsadowski@sflawgroup.com Andrea Fischer, Esq. 212 913 9678 x 102 E-mail: afischer@sflawgroup.com * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Apr. 10-12, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Chicago, Chicago, Ill. Contact: http://www.turnaround.org/ Apr. 18-21, 2013 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ June 13-16, 2013 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Mich. Contact: 1-703-739-0800; http://www.abiworld.org/ July 11-13, 2013 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Hyatt Regency Newport, Newport, R.I. Contact: 1-703-739-0800; http://www.abiworld.org/ July 18-21, 2013 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Amelia Island, Amelia Island, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 8-10, 2013 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hotel Hershey, Hershey, Pa. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 22-24, 2013 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nev. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 3-5, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Wardman Park, Washington, D.C. Contact: http://www.turnaround.org/ Nov. 1, 2013 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Atlanta Marriott Marquis, Atlanta, Ga. Contact: 1-703-739-0800; http://www.abiworld.org/ Dec. 2, 2013 BEARD GROUP, INC. 20th Annual Distressed Investing Conference The Helmsley Park Lane Hotel, New York, N.Y. Contact: 240-629-3300 or http://bankrupt.com/ Dec. 5-7, 2013 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Terranea Resort, Rancho Palos Verdes, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. Last Updated: Feb. 25, 2013 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers" public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors" Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Carmel Paderog, Meriam Fernandez, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2013. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $975 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000 or Nina Novak at 202-241-8200. *** End of Transmission ***