/raid1/www/Hosts/bankrupt/TCR_Public/130417.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, April 17, 2013, Vol. 17, No. 105
Headlines
4848 LLC: Olive Portfolio Gets Go Signal to Pursue Foreclosure
AES CORP: Fitch Affirms 'B' Short Term Issuer Default Rating
AMC ENTERTAINMENT: Fitch Rates New $925MM Secured Facility 'BB'
AMERICA WEST: FINRA Says J. Thomas Bilked Investors, Bullied Reps
AMERICA WEST: FINRA Files Suit v. JTF Over Fraudulent Share Sale
AMERICAN AIRLINES: Files Merger-Based Bankruptcy Exit Plan
AMERICAN AIRLINES: Files Form S-4 Prospectus/Proxy Statement
AMERICAN PETRO-HUNTER: Incurs $3.3 Million Net Loss in 2012
ANTIOCH COMPANY: Files Second Chapter 11 Bankruptcy Since 2008
B-BAR TAVERN: Cannot Amend Suit vs. Prairie Mountain, Court Rules
BERNARD L. MADOFF: Defrauded Customers Stripped of Defense
BERNARD L. MADOFF: Trustee Barred From Halting Merkin Settlement
BIOVEST INTERNATIONAL: Court Rejects Bid for Examiner or Trustee
BIRDSALL SERVICES: Edwin Stier Named as Chapter 11 Trustee
BIRDSALL SERVICES: Cuts $3.6MM Deal With NJ on Ch. 11, Forfeiture
BOUNDARY BAY: Confirmation Hearing on Contested Plan on April 24
CBI I: Hearing on Disclosure Statement Continued to April 24
CBI I: Briefing Period on Objection to Claims Extended to April 24
CDW CORP: Moody's Assigns 'Ba3' Rating to New $1.35-Bil. Term Loan
CENTRAL EUROPEAN: Common Stock Suspended From WSE
CHAMPION INDUSTRIES: Hires CRO After Default
COGECO CABLE: Fitch Affirms 'BB+' Issuer Default Rating
COGECO CABLE: S&P Affirms 'BB+' CCR on Peer 1 Acquisition
DAFFY'S INC: Plan Effective Date Announced
DETROIT, MI: Mayor Offers Budget, But Emergency Mngr. Flexes Power
DINEEQUITY INC: Fitch Affirms 'B' Long-Term Issuer Default Rating
DISH NETWORK: Fitch Says Bid for Sprint Laced with Risk & Reward
DISH NETWORK: Moody's Ba2 CFR on Downgrade Review on Sprint Bid
EAST LIVERPOOL: Moody's Affirms 'Ba1' Rating on $8.5-Mil. Bonds
EASTMAN KODAK: Seeks Court Approval to Assume Windsor Contract
EDISON MISSION: Files $4.1-Mil. Suit v. Tyche Power & JPMorgan
ENERGY FUTURE: Plays for Time to Pursue Bankruptcy Deal
ENGLOBAL: Posts $8.7-Mil. Net Loss in Fiscal Year Ended Dec. 29
EVERGREEN OIL: Section 341(a) Meeting Scheduled on May 14
EXIDE TECHNOLOGIES: Pomerantz Law Files Securities Class Action
FLAT OUT: Gets Final Order to Incur DIP Loan from HillStreet Fund
GENE CHARLES: Can Access U.S. Bank Cash Collateral Until July 30
GEOKINETICS INC: Modifies Chapter 11 Plan
GIBRALTAR KENTUCKY: Hires Bankruptcy Counsel
GRANITE DELLS: Developer OK'd To Examine Bankrupt Manager
GROVES IN LINCOLN: Files Schedules of Assets and Liabilities
HALLWOOD GROUP: Gets NYSE MKT Listing Non-Compliance Notice
ICEWEB INC: Restructures Debt with Sand Hill Finance
IMARKETING SOLUTIONS: Seeks Ch. 15 Protection in Delaware
INDIANA BANK CORP: Asks Judge to Approve Speedy Sale of Bank
INDIANAPOLIS DOWNS: Reorganization Plan Declared Effective
INSPIREMD INC: Has Exchange Agreement with Debenture Holders
J.C. PENNEY: Fitch Sees Draw on Revolver as Stop-Gap Measure
JEFFERSON COUNTY, AL: Assured Lawsuit Subject to Automatic Stay
JEFFERSON COUNTY, AL: Fires Attorney Before Filing of Plan
JETBLUE AIRWAYS: Moody's Affirms 'B3' CFR; Outlook Positive
KANE & KANE: IRS Gets Favorable Ruling in Avoidance Action
LDK SOLAR: Fails to Make Full Payment of 2013 Convertible Notes
LEGENDS GAMING: Disclosure Statement Hearing Set for May 13
LEGENDS GAMING: Cash Collateral Use Extended Through June 30
LEGENDS GAMING: Hearing on Proposed Bonuses Set for April 22
LEHMAN BROTHERS: NY AG Loses Renewed Bid For $150MM of E&Y's Fees
LIBERTY MEDICAL: Creditors Say $40M Asset Deal Should Stay Put
LIFECARE HOLDINGS: Can Employ Cole Schotz as Conflicts Counsel
LOS ANGELES DODGERS: Try to Keep Docs From Former Owner's Ex
LOS ANGELES DODGERS: Secret Deal Can't Be Used in Divorce
MCF480 LLC: Laguna Beach Restaurant Has Green Light to Pay Bills
MECHEL OAO: Posts $1.7-Billion Net Loss in 2012
MINT LEASING: May File for Bankruptcy Over Missed Loan Payment
MUNICIPAL CORRECTIONS: Looking for New Operator While in Ch. 11
MUSCLEPHARM CORP: Mark Groussman Held 8.4% Stake at March 28
NET ELEMENT: Incurs $16.4-Mil. Net Loss in 2012
NEW ENGLAND COMPOUNDING: Meningitis Plaintiffs' Suit Team Named
NEW ENGLAND COMPOUNDING: Bankruptcy Estate to Battle States
NORTHLAND RESOURCES: Pays Interest to Bondholders
OVERSEAS SHIPHOLDING: Affiliates File Schedules of Assets & Debt
PATRIOT COAL: Peabody Energy Seeks Dismissal of Lawsuit
PATRIOT COAL: Committee Mostly Supports Health Benefit Changes
PATRIOT COAL: US Bank Balks at Trustee Motion/Exclusivity Motion
PATRIOT COAL: 1974 Plan Balks at Bondholders' Trustee Motion
PENINSULA HOSPITAL: Can Access 1199 Funds Cash Until June 30
PEREGRINE FINANCIAL: Customers Blast $1.2 Million Fees
PETTERS COMPANY: 3-Member Creditors' Committee Appointed
PINNACLE AIRLINES: Plan Exclusivity Extended to Aug. 26
PINNACLE AIRLINES: Wins Overwhelming Creditor Approval of Plan
PINNACLE FOODS: Moody's Rates New $400MM Sr. Unsecured Notes 'B3'
PINNACLE FOODS: S&P Rates New $400MM Senior Unsecured Notes 'B-'
PLYMOUTH OIL: Can Access Bridge Lenders Cash Until June 1
PLYMOUTH OIL: Has Plan That Would Pay Creditors in Full Over Time
POSEIDON CONCEPTS: Enters Ch. 15 After Earnings Backtrack
POWERWAVE TECHNOLOGIES: Files Schedules of Assets and Liabilities
POWERWAVE TECHNOLOGIES: Lands Financing Before Auction
PULSAR PUERTO RICO: Loses Bid to Recoup Centennial Rent Payments
READER'S DIGEST: Allowed to Sell European Publications
RESIDENTIAL CAPITAL: Seeks to Hire E&Y as Tax Advisor
RESIDENTIAL CAPITAL: Barred From Using Lawyer Advice on Deal
RESIDENTIAL CAPITAL: Settlement With People's Choice Approved
REVSTONE INDUSTRIES: Seeks to Sell Aluminum Forging Biz
RG STEEL: Gets Additional Time to Remove Prepetition Actions
RG STEEL: to Sell Real Estate to Ohio River for $100,000
RODEO CREEK: Has Authority to Employ Key Bankruptcy Professionals
RODEO CREEK: Committee Taps Pachulski, et al., as Professionals
RODEO CREEK: Deadline for Creditors to File Claims on May 10
ROTECH HEALTHCARE: Section 341(a) Meeting Scheduled on May 17
RUSSEL METALS: Moody's Affirms 'Ba1' Rating on C$300MM Sr. Notes
SAKS INC: Debt Reduction Prompts Moody's to Upgrade CFR to 'Ba2'
SCHOOL SPECIALTY: To Close Pennsylvania Distribution Center
SCOOTER STORE: Rolls Into Ch. 11 Amid Federal Probes
SERVICEMASTER COMPANY: CEO Resignation No Impact on Moody's B2 CFR
SINCLAIR BROADCAST: Fisher Acquisition No Impact on Moody's CFR
SIZZLING PLATTER: Moody's Affirms Caa1 Rating on $118MM Sr. Notes
SPRINT NEXTEL: Moody's 'B1' CFR Still on Review After DISH Offer
STANFORD GROUP: SEC Now OK With $500,000 SIPC Insurance
STOCKTON, CA: Assured Seeks New Ruling on Pre-Bankruptcy Talks
TAYLOR BEAN: Ex-Honcho Owes Insurer $1M, 4th Circ. Rules
WASHINGTON MUTUAL: Circ. Wary Of Noteholders' Bid to Join Suit
WENTWOOD BAYTOWN: Section 341(a) Meeting Set on May 6
WESTERN WOOD: Breached Western Pellets Supply Deal, Court Says
WINDSORMEADE OF WILLIAMSBURG: To Seek Plan Approval May 14
WINDSORMEADE OF WILLIAMSBURG: Has Final Okay to Use Financing
WINDSORMEADE OF WILLIAMSBURG: Can Hire Lead Ch. 11 Professionals
YOSEN GROUP: Goldman Kurland Raises Going Concern Doubt
* Fitch Says Weakening Mortgage Volumes Hitting Banks' Top-Lines
* Not All Shareholder Claims Are Subordinated to Creditors
* Big Banks Must Give Global Exposure Info In 'Living Wills'
* BofA Ordered to Face Claims over Insurance Kickbacks
* Citigroup's Costs for Toxic Assets Soar on Legal Fees
* Economist Eyed for Fannie Mae Watchdog Position
* Visa, MasterCard Judge Asked to Approve Settlement, Fees
* Ex-Credit Suisse CDO Chief Pleads Guilty to Conspiracy
* California's Largest Cities Incur Exorbitant Litigation Costs
* Asha Shravah Joins ERW Law's N.Y. Office as Managing Attorney
* TMA of New York Unveils 2013 Board Members & Pro Bono Initiative
* Upcoming Meetings, Conferences and Seminars
*********
4848 LLC: Olive Portfolio Gets Go Signal to Pursue Foreclosure
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Bankruptcy Judge Margaret Dee McGarity granted the motion for
relief from the automatic stay filed by Olive Portfolio, LLC, as
assignee of BMO Harris Bank, in the bankruptcy case of 4848, LLC,
Case No. 12-36114 (Bankr. E.D. Wis.).
4848 LLC is a single asset real estate debtor who filed for
Chapter 11 protection on Nov. 8, 2012, to stave off foreclosure on
its real estate property located in Greenfield, Wisconsin. It
filed a Chapter 11 plan on Feb. 6, 2013, where it proposed to sell
its property via a public auction.
In 2000, the Debtor executed a mortgage and securitiy agreement
securing promissory notes with BMO Harris, which agreement was
renewed in 2004 and 2008. The parties then executed a
forebearance agreement in April 2010, where the obligations on the
notes were due on or before Dec. 30, 2010. BMO Harris ultimately
commenced a foreclosure action in October 2012.
In its motion for relief from the automatic stay, BMO Harris
raised two issues: (1) whether a prepetition stay waiver within a
forbearance agreement between the debtor and BMO Harris amounts to
"cause" for relief from the automatic stay under 11 U.S.C. Sec.
362(d)(1), and (2) whether relief from the automatic stay should
be granted because the single asset real estate debtor's proposed
plan does not have "a reasonable possibility of being confirmed
within a reasonable time" under 11 U.S.C. Sec. 362(d)(3)(A).
Judge McGarity opines that a waiver is not only the consideration
and must be the only one of many possible circumstances that can
constitute "cause" for relief from the automatic stay.
However, the Bankruptcy Court agrees with BMO Harris that the
debtor's plan is too speculative and too attenuated to comprise a
reasonable possibility of a successful reorganization within a
reasonable time.
"The bank is the only creditor with anything to lose, and any
further delay and expense does it no justice," the judge noted.
The court said, "Third party bids could be obtained by the bank
through the foreclosure process, and the bank could control
expenses. The debtor's right to a surplus, which appears to be
highly unlikely, would be protected, again by the foreclosure
process."
A copy of the Bankrutpcy Court's April 8, 2013 Memorandum Decision
is available at http://is.gd/mpmXCqfrom Leagle.com.
AES CORP: Fitch Affirms 'B' Short Term Issuer Default Rating
------------------------------------------------------------
Fitch Ratings has affirmed the Issuer Default Rating (IDR) of AES
Corporation (AES) at 'BB-'. Fitch has also affirmed the following
ratings:
-- Short-term IDR at 'B'
-- Senior secured debt at 'BB+'
-- Unsecured debt at 'BB'
-- Trust preferred stock issued by AES Trust III at 'B+'
The Rating Outlook is Stable.
The affirmation reflects an improving business risk profile with
the exit from non-core markets and sale of non-core assets,
sustainable reduction in corporate overhead costs, and new growth
investments in long-term contractual electricity generation assets
located in key regions.
Key Rating Drivers
Deleveraging Improves Business-profile: Fitch expects AES to
continue to deleverage in absolute terms and it is a key rating
driver for the assigned IDR. The company repaid $531 million of
its recourse debt in 2012 and Fitch expects the company to further
deleverage in 2013.
Exit From Non-Core Markets: In affirming the IDR, Fitch assumed
that the company will continue to divest its non-core businesses
and exit non-core regions. The company sold a number of non-core
projects for an expected $1 billion in proceeds and Fitch expects
AES to continue to improve its credit and business risk profile by
exiting non-core markets and narrowing its investment focus in
terms of geographical diversity.
Reduced Cash Flow: Large capital expenditures will be required in
select portfolio investments, including Indianapolis Power & Light
(IPL), and internationally, in Chile and Asian subsidiaries. AES
will likely downstream equity as well as face reduced upstream
distributions through 2015. The stress on credit metrics during
the construction period is manageable. AES' cash flows are
subordinated to substantial levels of project debt and other
covenants and restrictions typical in project level financing.
Sovereign Credit Risks: AES has a broad exposure to international
markets including sub-investment-grade countries, exposing cash
flows to various risk factors. These risks are common in emerging
economies where state finances and the property rights are weak
and currency conversions and capital flows can be restricted. A
large portfolio of investments across many markets reduces this
exposure risk.
Manageable Debt Maturities: Just $8 million of corporate level
debt will mature in 2013. AES debt maturities are $508 million in
2014 and 2015. Fitch views these debt maturities as manageable
given AES' liquidity and cash flow profile.
Liquidity
AES has sufficient liquidity to meet its short-term obligations at
least through 2014. The company had $311 million in cash and cash
equivalents at the end of December 2012. In addition, $795 million
was available under its revolving bank credit facilities maturing
in 2015. Fitch expects AES to maintain at least between $550
million-$650 million in liquidity.
Adjusted Parent-Only Cash Flow
Fitch analyzes AES as a holding company owning a portfolio of
assets and investments in a global electricity sector given its
somewhat unique corporate profile and structure. Financially, this
represents a deconsolidated approach with respect to AES' cash
flows and debt levels. Fitch uses adjusted parent operating cash
flows (APOCF), a non-GAAP measure, with its emphasis on dividends
received and return on capital, to analyze AES' credit metrics.
This approach, similar to the method used by AES' lenders in
financial covenants, recognizes that the subsidiaries are
encumbered by individual debt that is structurally superior to the
debt of the corporate parent. The residual subsidiary cash flow
available for upstream dividends and distributions has greater
volatility than the direct cash flow of the operating
subsidiaries, and may be subject to payment restrictions under
subsidiary debt covenants, corporate by-laws, or national laws.
Trends In Credit Metrics
In 2012, the company benefited from higher free cash flow at its
U.S. and Philippines-based merchant generation business and higher
tariffs in Panama. Financial ratios for 2012 were in line with
Fitch's guidelines for the 'BB-' IDR.
Fitch has assumed that management will adjust its strategy to
improve cash flow in light of new regulatory changes in one of its
largest strategic regions - Brazil. In addition, Fitch neither
assumed any dividends from DPL, Inc. (DPL, Fitch 'BB' IDR, on
Rating Watch Negative) in its forecast nor any cash support from
AES to DPL in case DPL struggles to meet its obligations over the
rating horizon. Fitch will assess AES' support of DPL once the
Ohio public utility commission approves Dayton Power & Light's
electric security plan along with its effect on the IDR.
Fitch expects APOCF to benefit from commissioning of new
contracted power capacity and from the growth in AES' contracted
generation portfolio over the rating horizon (2013-2015), although
projected weakness in AES' U.S. Utilities portfolio and on-going
large capital expenditure programs at IPL and AES Gener will
reduce cash flows.
Fitch expects AES' APOCF-to-recourse debt and APOCF-to-interest to
average 18% and 2.2x, respectively, over 2013-2015, which is
moderately below Fitch's guideline metrics of 20% and APOCF-to-
interest ratio of 3.0x for the 'BB-' rating. As capital
expenditures at the large indirect subsidiaries are completed,
Fitch expects AES' cash flow to improve. In addition, higher
distributions from IPL may be possible once the capital spending
at IPL is approved by the Indiana state regulatory agency and it
is able to upstream returns on construction work in progress to
AES.
Cash-flow Diversity Improves Credit-Profile: AES invests in a
global portfolio of electric utilities and power generating
assets. Historically, its cash flow included distributions from
over 50 projects, spread over five continents, in any given year.
Investment diversity shields the company from the macro- and
micro-economic environment adversity affecting a local domestic
electricity sector.
Cash-flow Stability Supports Outlook: Over 80% of total
distributions received by AES in any given year are from utilities
and contracted electricity generating assets, limiting exposure to
volatility in electricity wholesale markets and the merchant risk
of owning un-hedged long-term assets.
The affirmation of AES' debt instruments, senior secured at 'BB+',
senior unsecured at 'BB' and trust preferred at 'B+', reflects
typical notching uplift applied to the capital structure for
issuers with IDRs in the 'BB' category as per Fitch's criteria
report 'Recovery Ratings and Notching Criteria For Utilities,'
dated Aug. 12, 2012. The 'BB' category credits are accorded a
generic capital structure uplift based on Fitch's expectations of
higher than average recoveries for regulated assets over the
course of a business cycle. AES' mix of businesses, which include
both regulated and non-regulated assets as well as investments in
non-developed countries, weighs on the notching uplift accorded.
The Stable Outlook reflects ample liquidity and manageable debt
maturities over the forecast period. The Outlook also reflects
Fitch's view that utilities and contracted generation continue to
derive a significant portion of APOCF (greater than 80% over the
forecast period). It is Fitch's expectation that management will
pursue a balanced capital allocation policy and reduce leverage,
and that investment in new projects will be financed from return
of capital from the projects, regular distributions, and sale of
non-core assets.
Rating Sensitivities
Positive: An upgrade of AES is considered unlikely over the 2013-
2015 timeframe given the heavy investment cycle at several of its
key subsidiaries.
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
-- An aggressive leveraged growth strategy;
-- A sustainable material reduction in dividends received from
subsidiaries.
AMC ENTERTAINMENT: Fitch Rates New $925MM Secured Facility 'BB'
---------------------------------------------------------------
Fitch Ratings assigns a rating of 'BB/RR1' to AMC Entertainment,
Inc.'s (AMC) recently announced new senior secured credit
facility. The facility will be comprised of a $150 million
revolver maturing in 2018 and a $775 million term loan maturing in
2020. The proceeds will be used to refinance $760 million of
existing term loans that mature in 2016 and 2018.
Fitch views the transaction favorably as the transaction will
benefit AMC's intermediate maturity schedule by extending the term
loan maturities to 2020. Fitch also expects slightly lower pricing
resulting in lower annual interest costs. The company pays LIBOR
plus 3.25% (with 1% LIBOR floor) on the term loan due 2016 and
LIBOR plus 3.75% (with 1% LIBOR floor) on the term loan due 2018.
The current revolver has a borrowing capacity of $192.5 million.
While the borrowing capacity of the proposed revolver would be
lower than the current facility, Fitch is comfortable with AMC's
liquidity level.
Fitch calculates EBITDA margins of 14.9% and interest coverage of
2.5x, as of LTM ended Dec. 31, 2012. Fitch believes AMC should be
able to maintain Fitch-calculated EBITDA margins greater than 12%
and expects AMC to demonstrate average interest coverage above
2.0x at the 'B' rating. Fitch calculates gross unadjusted leverage
as of LTM ended Dec. 31, 2012 at 5.6x.
Fitch believes that the Outlook may be stabilized over the next
six to 12 months if AMC can demonstrate average interest coverage
above 2.0x. Given Fitch's expectations for a challenging 2013 box
office, Fitch will need to be comfortable that the credit metrics
could weather a midsingle-digit decline in attendance.
AMC's liquidity is supported by $46.5 million of LTM Free Cash
Flow (FCF), $130 million of cash on hand, and roughly $138 million
available on its $150 million revolver (pro forma for the
transaction and assuming $12 million of outstanding letters of
credit) as of Dec. 31, 2012. Pro forma for the transaction, the
company's maturity schedule would be:
-- Revolver due in 2018;
-- $600 million in senior unsecured notes due in 2019;
-- Term loan and $600 million in subordinated notes due 2020.
Key Rating Drivers
-- AMC's ratings reflect Fitch's belief that movie exhibition
will continue to be a key promotion window for the movie
studios' biggest/most profitable releases.
-- Industry fundamentals have benefitted from a strong film slate
in 2012 that included 'The Avengers,' 'The Amazing Spider-
Man,' and 'The Dark Knight Rises.' The 2013 film slate is also
solid and includes some highly anticipated movies such as 'The
Hunger Games: Catching Fire,' 'Iron Man 3,' 'Star Trek Into
Darkness,' 'The Hobbit: Desolation of Smaug,' and 'Thor: The
Dark World.' However, Fitch believes that the 2013 film slate,
while solid, will not be able to match 2012's performance.
Fitch expects industry box office revenues to be down in the
low to mid-single digits. Fitch believes that this is part of
the hit-cyclical nature of the industry and Fitch maintains a
stable outlook on the industry.
-- For the long term, Fitch continues to expect that the movie
exhibitor industry will be challenged in growing attendance
and any potential attendance declines will offset some of the
growth in average ticket prices. The ratings factor in the
intermediate-/long-term risks associated with increased
competition from at-home entertainment media, limited control
over revenue trends, pressure on film distribution windows,
and increasing indirect competition from other distribution
channels (such as VOD and other OTT services). AMC and its
peers rely on the quality, quantity, and timing of movie
product, all factors out of management's control.
Rating Sensitivities
Stable Ratings: The Outlook may be stabilized over the next six to
12 months if AMC can demonstrate average interest coverage above
2x. In strong-performing box office years, interest coverage may
be higher in order to provide a cushion for weaker box office
years. Given Fitch's expectations for a challenging 2013 box
office, Fitch will need to be comfortable that the credit metrics
could weather a midsingle-digit decline in attendance.
Negative Trigger: An attendance decline at AMC in excess of 5%
and/or interest coverage below 1.5x could lead to negative rating
actions.
Fitch currently rates AMC as follows:
AMC
-- IDR 'B';
-- Senior secured credit facilities 'BB/RR1';
-- Senior unsecured notes 'B-/RR5';
-- Senior subordinated notes 'CCC+/RR6'.
The Rating Outlook is Negative.
AMERICA WEST: FINRA Says J. Thomas Bilked Investors, Bullied Reps
-----------------------------------------------------------------
Brian Mahoney of BankruptcyLaw360 reported that the Financial
Industry Regulatory Authority on Monday accused John Thomas
Financial CEO Anastasios "Tommy" Belesis and others with fraud in
connection with the sale of stock in bankrupt America West
Resources Inc., saying his company refused to fill customer sell
orders and intimidated employees who disagreed with company
practices.
According to the report, FINRA says Belesis and his company co-
defendants stiffed at least 15 customers by refusing to sell their
shares in American West during a price spike in February.
About America West
Based in Salt Lake City, Utah, America West Resources Inc. is a
domestic coal producer engaged in the mining of clean and
compliant (low-sulfur) coal. The majority of the Company's coal
is sold to utility companies for use in the generation of
electricity.
America West Resources and three affiliates sought Chapter 11
protection (Bankr. D. Nev. Case Nos. 13-50201 to 13-50204) on
Feb. 1, 2013, in Reno, Nevada. Nevada Bankruptcy Judge Bruce A.
Markell on Feb. 5, 2013, entered an order transferring the
bankruptcy case from Reno to Las Vegas.
America West disclosed assets of $18.3 million and liabilities of
$35.5 million as of Dec. 31, 2012.
America West has tapped the law firm of Flaster/Greenberg P.C. as
reorganization counsel; the Law Office of Illyssa I. Fogel as
local counsel; and consulting firm CFCC Partners, LLC, as
financial advisor.
AMERICA WEST: FINRA Files Suit v. JTF Over Fraudulent Share Sale
----------------------------------------------------------------
The Financial Industry Regulatory Authority on April 15 disclosed
that it has filed a complaint against John Thomas Financial, of
New York, NY, and its Chief Executive Officer, Anastasios "Tommy"
Belesis, charging fraud in connection with the sale of America
West Resources, Inc. common stock, intimidation of registered
representatives, trading ahead, failing to provide best execution
for customer orders and various other violations. The complaint
also names Michele Misiti, Branch Office Manager; John Ward,
trader; Joseph Castellano, Chief Compliance Officer; and Ronald
Vincent Cantalupo, Regional Managing Director.
JTF and many of its customers owned AWSR stock as a result of
participation in the company's private financings. According to
the complaint, on Feb. 23, 2012, the price of AWSR common stock,
which at the time was thinly traded on the OTC Bulletin Board,
spiked higher, by over approximately 600 percent, opening at 28
cents per share, peaking at $1.80 per share and eventually closing
the day at $1.29 per share. On the same day, JTF sold 855,000
shares, the majority of its proprietary position in AWSR, reaping
proceeds of more than $1 million.
The complaint alleges that while JTF sold its shares at the height
of the price spike, the firm received at least 15 customer orders
to sell more than one million shares, yet only entered one of
these orders for execution on Feb. 23, 2012. Instead, JTF and
Mr. Belesis prevented the orders from being executed on the same
day they were received and some customer orders were executed the
following day or days after at prices grossly inferior to those
obtained by the firm while other customer orders were not entered
or executed at all. AWSR is now in bankruptcy and the customers'
investments are virtually worthless.
In addition, the complaint alleges that JTF and Mr. Belesis,
through Messrs. Misiti and Castellano, lied to the firm's
registered representatives and customers about the reasons the
customer shares could not be sold on Feb. 23, 2012, including that
there was a problem with the clearing firm's trading systems,
there was insufficient volume on that day to fill the orders, and
the shares could not be sold because they were restricted under
the Securities Act of 1933.
FINRA further alleges that to conceal that the firm received the
orders during the February 23 price spike but failed to execute
them, JTF and Mr. Belesis, through Mr. Misiti, "lost" order
tickets for customer orders received on Feb. 23, 2012, and
replaced six of those tickets with falsified tickets dated Feb.
24, 2012. Messrs. Belesis and Misiti also made misrepresentations
to FINRA concerning Mr. Belesis' role in the misconduct.
Also, the complaint charges JTF, Messrs. Belesis, Castellano and
Cantalupo with violating FINRA's anti-intimidation rule by
physically threatening (including threatening to have them "run
over"), harassing and assaulting registered representatives who
have disagreed with Mr. Belesis' business practices, and
threatening to ruin the registered representatives' financial
careers by improperly marking their industry records.
Under FINRA rules, a firm or individual named in a complaint can
file a response and request a hearing before a FINRA disciplinary
panel. Possible sanctions include a fine, censure, suspension or
bar from the securities industry, disgorgement of gains associated
with the violations and payment of restitution. The issuance of a
disciplinary complaint represents the initiation of a formal
proceeding by FINRA in which findings as to the allegations in the
complaint have not been made, and does not represent a decision as
to any of the allegations contained in the complaint.
About America West
Based in Salt Lake City, Utah, America West Resources Inc. is a
domestic coal producer engaged in the mining of clean and
compliant (low-sulfur) coal. The majority of the Company's coal
is sold to utility companies for use in the generation of
electricity.
America West Resources and three affiliates sought Chapter 11
protection (Bankr. D. Nev. Case Nos. 13-50201 to 13-50204) on
Feb. 1, 2013, in Reno, Nevada. Nevada Bankruptcy Judge Bruce A.
Markell on Feb. 5, 2013, entered an order transferring the
bankruptcy case from Reno to Las Vegas.
America West disclosed assets of $18.3 million and liabilities of
$35.5 million as of Dec. 31, 2012.
America West has tapped the law firm of Flaster/Greenberg P.C. as
reorganization counsel; the Law Office of Illyssa I. Fogel as
local counsel; and consulting firm CFCC Partners, LLC, as
financial advisor.
AMERICAN AIRLINES: Files Merger-Based Bankruptcy Exit Plan
----------------------------------------------------------
AMR Corporation and its affiliates on Monday filed a plan of
reorganization and a 489-page explanatory disclosure statement.
The Plan is premised on the previously announced merger with US
Airways Group Inc.
A hearing to approve the disclosure materials and proposed
procedures for soliciting plan votes has been tentatively set for
May 30, 2013, at 11:00 a.m. (Eastern Time). Objections to the
disclosure statement are due May 23.
The Plan has the support of the Official Committee of Unsecured
Creditors and an ad hoc committee of AMR's creditors. Effective
upon confirmation and consummation of the Plan, Merger Sub, a
wholly owned subsidiary of AMR formed for the purpose of effecting
a merger, will be merged with and into US Airways Group, with US
Airways continuing as the surviving entity as a direct, wholly
owned subsidiary of AMR.
The Disclosure Statement said: "the increased value expected to be
created by the Merger would enable the filing of a proposed plan
of reorganization by the Debtors providing for the potential for a
full recovery by creditors of the Debtors and a distribution to
holders of AMR Equity Interests of 3.5% of the aggregate ownership
stake in New AAG with the potential for such Equity Interest
holders to receive additional shares of New AAG (the
implementation of such a plan of reorganization is subject to
confirmation and consummation in accordance with the provisions of
the Bankruptcy Code and the closing of the Merger)."
On Feb. 13, 2013, in conjunction with the Merger Agreement, the
Debtors entered into a Support and Settlement Agreement with
certain members of the Ad Hoc Group of AMR Corporation Creditors
and certain other creditors holding approximately $1.2 billion in
aggregate prepetition unsecured Claims. Pursuant to the terms of
the Support and settlement agreement, each Consenting Creditor has
agreed, among other things, and subject to certain conditions, to
vote in favor of the Plan, generally support confirmation and
consummation of the Plan, and not to support or solicit any plan
in opposition to the Plan.
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.
The Retiree Committee is represented by Jenner & Block LLP's
Catherine L. Steege, Esq., Charles B. Sklarsky, Esq., and Marc B.
Hankin, Esq.
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 Form S-4 Prospectus/Proxy Statement
------------------------------------------------------------
AMR Corporation filed a Form S-4 registration statement to
register 231,489,427 shares of common stock of the Company for a
proposed maximum aggregate offering price of $3,645,958,475.
As previously announced, the board of directors of US Airways
Group has unanimously approved the merger of US Airways Group with
AMR Merger Sub, Inc., a wholly-owned subsidiary of AMR
Corporation, pursuant to the terms and conditions of that certain
Agreement and Plan of Merger, dated as of Feb. 13, 2013, by and
among AMR, US Airways Group, and AMR Merger Sub. The merger will
create a premier global airline that the Company's board believes
will have the scale, breadth, and capabilities to compete more
effectively and profitably in the global marketplace. AMR, as
reorganized following emergence from its Chapter 11 proceedings
currently pending in the U.S. Bankruptcy Court for the Southern
District of New York, will be the ultimate parent of the combined
airline and will be renamed American Airlines Group Inc. The
combined airline will present a single brand name to consumers--
American Airlines(R).
The merger cannot be completed unless US Airways Group
stockholders vote in favor of the adoption of the merger
agreement. The obligations of US Airways Group and AMR to
complete the merger are also subject to the satisfaction or waiver
of other conditions, including clearance from regulatory agencies.
The merger is to be effected pursuant to a plan of reorganization
of AMR and certain of its subsidiaries in connection with their
Chapter 11 proceedings. The plan of reorganization is subject to
confirmation and consummation in accordance with the requirements
of the Bankruptcy Code.
If the merger is completed, holders of US Airways Group common
stock will receive one share of newly issued common stock of AAG
for each share of US Airways Group common stock they own, subject
to the terms and conditions of the merger agreement. The
aggregate number of shares of AAG common stock issuable to holders
of US Airways Group equity instruments will represent 28% of the
diluted equity ownership of AAG. The remaining 72% equity
ownership in AAG will be distributable, pursuant to the plan of
reorganization, to stakeholders, labor unions, and certain
employees of AMR and its debtor subsidiaries.
US Airways Group common stock currently trades on the NYSE under
the symbol "LCC." It is a condition to the completion of the
merger that the shares of AAG common stock to be issued to US
Airways Group equity holders pursuant to the merger be authorized
for listing on the NYSE or NASDAQ.
The Company is asking shareholders to vote to adopt the merger
agreement at the 2013 annual meeting of stockholders on a date yet
to be determined. At the 2013 annual meeting of stockholders,
shareholders will also be asked to vote on the election of US
Airways Group directors and other matters.
A copy of the regulatory filing is available at:
http://is.gd/eHd6b3
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 PETRO-HUNTER: Incurs $3.3 Million Net Loss in 2012
-----------------------------------------------------------
American Petro-Hunter Inc. filed with the U.S. Securities and
Exchange Commission its annual report on Form 10-K disclosing a
net loss of $3.30 million on $308,770 of revenue for the year
ended Dec. 31, 2012, as compared with a net loss of $2.73 million
on $317,931 of revenue during the prior year.
The Company's balance sheet at Dec. 31, 2012, showed $1.65 million
in total assets, $1.64 million in total liabilities and $12,242 in
total stockholders' equity.
Weaver Martin & Samyn, LLC, in Kansas City, Missouri, issued a
"going concern" qualification on the consolidated financial
statements for the year ended Dec. 31, 2012. The independent
auditors noted that the Company has suffered recurring losses from
operations and is dependent upon the continued sale of its
securities or obtaining debt financing for funds to meet its cash
requirements. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
A copy of the Form 10-K is available for free at:
http://is.gd/npZzKu
About American Petro-Hunter
Wichita, Kansas-based American Petro-Hunter, Inc., is an oil and
natural gas exploration and production (E&P) company with current
projects in Payne and Lincoln Counties in Oklahoma.
ANTIOCH COMPANY: Files Second Chapter 11 Bankruptcy Since 2008
--------------------------------------------------------------
St. Cloud, Minn.-based scrapbook company The Antioch Company and
six affiliates filed for Chapter 11 bankruptcy (Bankr. D. Minn.
Case No. 13-41898) in Minneapolis on April 16. Antioch disclosed
$10 million to $50 million in both assets and debts.
The affiliates that separate filed for Chapter 11 are Antioch
International-Canada LLC, Antioch International LLC, zeBlooms LLC,
Antioch Framers Supply LLC, Antioch International-New Zealand LLC,
and Creative Memories Puerto Rico, LLC.
The Debtors also go by business names Creative Memories, Antioch,
Agenda, Antioch Publishing, Cottage Arts, Frame of Mind and
Webway.
This is the company's second trip to bankruptcy. The Debtors are
represented by:
Clinton E. Cutler, Esq.
FREDRIKSON & BYRON, P.A.
200 South Sixth Street, Suite 400
Minneapolis, MN 55402-1425
Tel: 612-492-7000
Fax: 612-492-7077
Email: ccutler@fredlaw.com
- and -
Sean D. Malloy, Esq.
MCDONALD HOPKINS LLC
600 Superior Avenue East, Suite 2100
Cleveland, OH 44114-2653
Tel: 216-348-5400
Fax: 216-348-5474
Email: smalloy@mcdonaldhopkins.com
CEO Chris Veit signed the petition.
Kevin Allenspach, writing for St. Cloud Times, reports that
Creative Memories laid off about 70 headquarters employees.
St. Cloud Times also relates Marnie Beltz, a spokeswoman for
Creative Memories, issued a statement through the public relations
firm of Padilla Speer Beardsley in Minneapolis that confirmed the
action. She said the layoff affected 30% of the company's work
force, which totaled about 230 before the bankruptcy filing.
St. Cloud Times also reports that David Heinsch --
dheinsch@padillaspeer.com -- a representative of Padilla Speer
Beardsley, confirmed that Mr. Veit remains CEO of Creative
Memories. The report notes Mr. Veit did not immediately return
voice messages or e-mails. An operator answered the phone Tuesday
at Creative Memories headquarters but offered no other
information.
On Nov. 13, 2008, The Antioch Company and subsidiary companies
Antioch International, Inc., Antioch Framers Supply Co., Antioch
International-New Zealand, Inc., Antioch International- Canada,
Inc., Creative Memories Puerto Rico, Inc. and ZeBlooms Inc. filed
separate Chapter 11 petitions (Bankr. S.D. Ohio Case No. 08-35741)
together with prepackaged chapter 11 plans. At the time of the
filings, the Debtors disclosed $66 million in assets and $141
million in liabilities.
In the 2008 case, Chris L. Dickerson, Esq., Rena M. Samole, Esq.,
and Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP; Michael J. Kaczka, Esq., and Sean D. Malloy, Esq., at
McDonald Hopkins LLC; and Tony M. Alexander, Esq., at Jenks, Pyper
& Oxley Co. L.P.A., represented the Debtors. W. Timothy Miller,
Esq., at Taft Stettinius & Hollister LLP, represented the
Creditors' Committee.
The Antioch Company emerged from chapter 11 protection under the
terms of a Second Amended Plan of Reorganization confirmed on
Jan. 27, 2009, which created the Antioch Company Litigation Trust.
W. Timothy Miller, Esq., at Taft Stettinius & Hollister LLP,
serves as the Litigation Trustee.
B-BAR TAVERN: Cannot Amend Suit vs. Prairie Mountain, Court Rules
-----------------------------------------------------------------
B-Bar Tavern Inc. failed to convince a Montana bankruptcy court to
grant it leave to amend its adversary complaint captioned, B-Bar
Tavern Inc. v. Prairie Mountain Bank, Adv. No. 12-00043 (Bankr. D.
Mont.).
B-Bar filed a voluntary Chapter 11 petition on Feb. 27, 2012
(Bankr. D. Mont., Case No. 12-60228-11), noting that it is a small
business debtor. The Debtor listed civil claims against Steven T.
Potts and Steven T. Potts PLLC and Prairie Mountain Bank (PMB) in
unknown amounts. It listed PMB as the only creditor holding a
secured claim for $823,681. The PMB claim is marked as contingent
and disputed. PMB filed a proof of claim for $823,681 in June
2012.
On Aug. 22, 2012, the Debtor commenced the complaint, asserting 7
claims for relief objecting to, and seeking denial of, PMB's
claim.
On Feb. 12, 2013, the Debtor filed a combined motion to amend the
complaint and join Potts as party-defendant. PMB filed an
objection on the grounds that the proposed amendment is untimely,
that PMB would be prejudiced by the need to reopen discovery, and
that the proposed amended complaint adds non-core proceedings
which would add possible requests for abstention and withdrawal of
reference.
On review, the Bankruptcy Court concluded in its discretion that
allowing the amendment would unfairly prejudice PMB, and that
justice does not require leave to amend because the Debtor may
pursue its litigation against Potts in a non-bankruptcy forum.
In an April 5, 2013 Memorandum of Decision, Judge Ralph B.
Kirscher sustained PMB's objection and denied the Debtor's
combined motion for leave to amend and join Potts as a party-
defendant, without prejudice. The judge also set a hearing for
May 10, 2013, as required by Sections 1129(e) and 1121(e)(3) of
the Bankruptcy Code.
Previously, after a Sept. 10, 2012 hearing, the Court extended the
period provided in Sec. 1129(e) and Sec. 1121(e)(3) to Dec. 28,
2012. Subsequently, after a Oct. 12, 2012 hearing, the Court
approved the Debtor's disclosure statement, but ordered the
hearing on confirmation of Debtor's Chapter 11 Plan continued
until after the adversary complaint against PMB has been decided.
A copy of Judge Kirscher's April 5, 2013 Memorandum of Decision is
available at http://is.gd/D1AuAjfrom Leagle.com.
BERNARD L. MADOFF: Defrauded Customers Stripped of Defense
----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that for reasons described in a 23-page opinion handed
down April 15 by U.S. District Judge Jed Rakoff in Manhattan,
customers of Bernard L. Madoff Investment Securities Inc. who
actually knew there was a Ponzi scheme aren't entitled to
protection from the so-called safe harbor in bankruptcy law.
According to the report, Judge Rakoff said customers who knew
there was fraud "stand in a different posture" than victims who
thought Madoff was legitimate. Judge Rakoff ruled that "neither
law nor equity permits such a person to profit from a safe harbor
intended to promote the legitimate working of the securities
market."
The opinion on April 15 was a follow-up to a terse, three-page
ruling Judge Rakoff issued on Feb. 12. The judge at the time
promised to write a full opinion later.
Mr. Rochelle relates that the safe harbor is contained in part in
Section 546(e) of the Bankruptcy Code. It says a trustee can't
sue to recover a fraudulent transfer in connection with
transactions in securities except in the case of actual fraud.
Judge Rakoff had ruled in another Madoff case in September 2012
that trustee Irving Picard therefore could only sue going back two
years, not six years or more before bankruptcy. Mr. Picard is
appealing to the U.S. Court of Appeals.
For a defendant to be sued successfully for payments going back
six years or more, Judge Rakoff said, the person being sued must
have had actual knowledge of fraud. It isn't enough, Judge Rakoff
said, that the defendant "should have known" or was showing
"willful blindness" to fraud.
The report adds that the second part of Judge Rakoff's opinion
dealt with situations in which the person being sued knew there
was fraud although the individual didn't receive the transfer
directly from Madoff. In that instance also, Judge Rakoff said, a
subsequent recipient can be sued going back six years or more and
can't use the safe harbor as a defense to limit the suit to two
years. For a subsequent recipient who knew there was fraud, Judge
Rakoff said, the defendant couldn't use an intermediary to
"launder what he or she knows to be fraudulently transferred funds
through a nominal third party."
Finally, Judge Rakoff, according to the report, addressed
situations in which a subsequent recipient had a securities
contract with the initial recipient, and one or the other
qualifies as a so-called financial participant. In those cases,
the safe harbor applies and would limit suits to two years absent
actual knowledge of fraud.
Judge Rakoff specified how the bankruptcy judge should apply the
law and sent the suits back to the lower court for processing.
The Rakoff opinion was part of Securities Investor Protection
Corp. v. Bernard L. Madoff Investment Securities LLC, 12-mc-00115,
U.S. District Court, Southern District of New York (Manhattan).
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A.
Stanton of the U.S. District Court for the Southern District of
New York granted the application of the Securities Investor
Protection Corporation for a decree adjudicating that the
customers of BLMIS are in need of the protection afforded by the
Securities Investor Protection Act of 1970. The District Court's
Protective Order (i) appointed Irving H. Picard, Esq., as trustee
for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP
as his counsel, and (iii) removed the SIPA Liquidation proceeding
to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789)
(Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims
agent.
On April 13, 2009, former BLMIS clients filed an involuntary
Chapter 7 bankruptcy petition against Bernard Madoff (Bankr.
S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The
petitioning creditors -- Blumenthal & Associates Florida General
Partnership, Martin Rappaport Charitable Remainder Unitrust,
Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert
US$64 million in claims against Mr. Madoff based on the balances
contained in the last statements they got from BLMIS.
On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff
Securities International Limited in London under bankruptcy
protection pursuant to Chapter 15 of the U.S. Bankruptcy Code
(Bankr. S.D. Fla. 09-16751).
The Chapter 15 case was later transferred to Manhattan. In June
2009, Judge Lifland approved the consolidation of the Madoff SIPA
proceedings and the bankruptcy case.
Judge Denny Chin of the U.S. District Court for the Southern
District of New York on June 29, 2009, sentenced Mr. Madoff to
150 years of life imprisonment for defrauding investors in United
States v. Madoff, No. 09-CR-213 (S.D.N.Y.).
BERNARD L. MADOFF: Trustee Barred From Halting Merkin Settlement
----------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the trustee liquidating Bernard L. Madoff Investment
Securities LLC lost in a second opinion April 15 when U.S.
District Judge Jed Rakoff threw out his lawsuit attempting to stop
a $410 million settlement between New York Attorney General Eric
Schneiderman and feeder fund manager J. Ezra Merkin.
Given that Mr. Schneiderman sued Mr. Merkin four years ago and
Madoff trustee Irving Picard didn't sue to halt the settlement
until August 2012, the trustee "has lost his right to complain,"
Judge Rakoff said, according to the report.
The report notes that on top of ruling that Mr. Picard isn't
entitled to a preliminary injunction halting the settlement
pending a full trial, Judge Rakoff took the next step and on his
own threw out the trustee's lawsuit entirely, even though Mr.
Schneiderman hadn't formally sought dismissal. Judge Rakoff
applied the doctrine of laches, ruling that Mr. Picard waited too
long before trying to stop the settlement. Judge Rakoff described
laches as a doctrine that "prohibits unreasonable, inexcusable and
prejudicial delay."
Even if laches didn't apply, Judge Rakoff, the report discloses,
reasoned that Mr. Picard had no right to halt the settlement
because no property of the bankrupt estate was involved to invoke
the so-called automatic stay. The judge said Mr. Merkin's
investors were suing on claims that belong to them alone, and not
to the trustee. Judge Rakoff said Mr. Merkin has substantial
other assets, so what he will pay in settlement doesn't
necessarily represent money stolen from Madoff customers.
Mr. Picard also contended that paying the $410 million settlement
would denude Mr. Merkin of assets and render him unable to pay a
judgment when and if the trustee wins his own lawsuit. In that
regard, Judge Rakoff said Mr. Picard only had "conclusory and
speculative assertions" that Mr. Merkin would be unable to pay a
judgment in favor of Mr. Picard.
Even if he hadn't dismissed the suit, Judge Rakoff said,
Mr. Picard hadn't made the showings necessary for receiving an
injunction. Judge Rakoff made one ruling in favor of Mr. Picard.
He said there's so-called bankruptcy jurisdiction because
Mr. Picard was claiming the settlement would deplete assets
"properly belonging to the estate."
Judge Rakoff, the report relates, ended saying prejudice to Mr.
Merkin's investors "cannot be overstated" if the settlement were
to be held up. The April 15 opinion followed three hours of
argument in Judge Rakoff's court on March 25. From the $410
million settlement, the New York attorney general hasn't said
exactly how much will go to Mr. Merkin's investors and how much
can be used by Mr. Merkin to defend Mr. Picard's lawsuit.
Mr. Picard will "pursue an appeal immediately," the trustee's
spokeswoman, Amanda Remus, said in an e-mail. The U.S. Court of
Appeals in Manhattan ruled on Feb. 20 that only Mr. Picard could
sue based on claims that belong to all Madoff customers. Coming
down with the opposite result, U.S. District Judge Victor Marrero
issued an opinion on March 20 telling Mr. Picard he can't stop
investors in another feeder fund from suing that fund's managers.
Judge Rakoff said that the appeals court's decision didn't apply,
while Marrero's case was similar and persuasive. The Merkin
matter was in district court because Mr. Rakoff took the suit out
of bankruptcy court.
The dispute with Schneiderman in district Court is Picard
v. Schneiderman, 12-cv-06733, U.S. District Court, Southern
District of New York (Manhattan). The lawsuit with Schneiderman
in bankruptcy court is Picard v. Schneiderman, 12-bk-01778, U.S.
Bankruptcy Court, Southern District of New York (Manhattan).
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A.
Stanton of the U.S. District Court for the Southern District of
New York granted the application of the Securities Investor
Protection Corporation for a decree adjudicating that the
customers of BLMIS are in need of the protection afforded by the
Securities Investor Protection Act of 1970. The District Court's
Protective Order (i) appointed Irving H. Picard, Esq., as trustee
for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP
as his counsel, and (iii) removed the SIPA Liquidation proceeding
to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Proc. No. 08-01789)
(Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims
agent.
On April 13, 2009, former BLMIS clients filed an involuntary
Chapter 7 bankruptcy petition against Bernard Madoff (Bankr.
S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The
petitioning creditors -- Blumenthal & Associates Florida General
Partnership, Martin Rappaport Charitable Remainder Unitrust,
Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert
US$64 million in claims against Mr. Madoff based on the balances
contained in the last statements they got from BLMIS.
On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff
Securities International Limited in London under bankruptcy
protection pursuant to Chapter 15 of the U.S. Bankruptcy Code
(Bankr. S.D. Fla. 09-16751).
The Chapter 15 case was later transferred to Manhattan. In June
2009, Judge Lifland approved the consolidation of the Madoff SIPA
proceedings and the bankruptcy case.
Judge Denny Chin of the U.S. District Court for the Southern
District of New York on June 29, 2009, sentenced Mr. Madoff to
150 years of life imprisonment for defrauding investors in United
States v. Madoff, No. 09-CR-213 (S.D.N.Y.).
BIOVEST INTERNATIONAL: Court Rejects Bid for Examiner or Trustee
----------------------------------------------------------------
Emily Mullin, writing for FierceBiotech, reports that a bankruptcy
judge in Tampa, Florida, turned down an appeal to appoint an
examiner or Chapter 11 trustee in the bankruptcy case of Biovest
International. The equity committee made the request, saying an
examiner or trustee is needed to investigate allegations that
Biovest "since 2005, consistently misrepresented to the public the
status of its efforts to obtain FDA approval for its principle
drug."
In an email statement to FierceBiotech, the company said: "Biovest
considers the recent motion filed by the equity committee . . . to
be nothing more than a tactical filing within the company's
ongoing reorganization proceedings." Biovest disputed the equity
committee's claims.
FierceBiotech notes that Biovest in March said it wants to emerge
from Chapter 11 in mid-2013, as it did in 2010 from a previous
exit from bankruptcy. Biovest is seeking approval of a plan to
get rid of its debt and reel in $5.6 million in new funding, and
is working toward regulatory filings in Europe and Canada for
BioVaxID for combating follicular non-Hodgkin's lymphoma. The
company anticipates market approval late in 2014.
FierceBiotech says the lawyers of the equity committee did not
respond to inquiries for comment.
About Biovest International
Biovest International, Inc. -- http://www.biovest.com/-- is an
emerging leader in the field of active personalized
immunotherapies. In collaboration with the National Cancer
Institute, Biovest has developed a patient-specific, cancer
vaccine, BiovaxID(R), with three clinical trials completed,
including a Phase III study, demonstrating evidence of safety and
efficacy for the treatment of indolent follicular non-Hodgkin's
lymphoma.
Headquartered in Tampa, Florida, with its bio-manufacturing
facility based in Minneapolis, Minnesota, Biovest is publicly-
traded on the OTCQB(TM) Market with the stock-ticker symbol
"BVTI", and is a majority-owned subsidiary of Accentia
Biopharmaceuticals, Inc. (OTCQB: "ABPI").
Biovest, along with its subsidiaries, Biovax, Inc., AutovaxID,
Inc., Biolender, LLC, and Biolender II, LLC, filed for Chapter 11
bankruptcy protection (Bankr. M.D. Fla. Case No. 08-17796) on
Nov. 10, 2008. Biovest emerged from Chapter 11 protection, and
its reorganization plan became effective, on Nov. 17, 2010.
Biovest International Inc., filed a petition for Chapter 11
reorganization (Bankr. M.D. Fla. Case No. 13-02892) on March 6,
2013, in Tampa, Florida. The new bankruptcy case was accompanied
by a proposed reorganization plan supported by secured lenders
owed about $38.5 million. Total debt is $44.9 million, with
assets listed in a court filing as being valued at $4.7 million.
About $5.4 million is owing to unsecured creditors, according to a
court paper.
BIRDSALL SERVICES: Edwin Stier Named as Chapter 11 Trustee
----------------------------------------------------------
Christopher Baxter, writing for The (N.J.) Star-Ledger, reports
that Edwin Stier, a member of Stier Anderson, was appointed Monday
by the U.S. Trustee Office as Chapter 11 trustee for Birdsall
Services Group. Mr. Stier is a member of Stier Anderson in
Skillman, N.J., and a former state and federal prosecutor who led
one of New Jersey's largest crackdowns on organized crime and has
conducted numerous investigations for businesses across the
country.
Mr. Stier did not immediately return a call for comment, according
to the report.
About Birdsall Services
Birdsall Services Group Inc., an engineering firm from Eatontown,
New Jersey, filed for Chapter 11 protection (Bankr. D.N.J. Case
No. 13-16743) on March 29, 2013, when the state attorney general
indicted the business and obtained a court order seizing the
assets.
Birdsall was accused by the state of violating laws prohibiting
so-called pay-to-play, where businesses make political
contributions in return for government contracts. The state
charged that the company arranged for individuals to make
contributions and then reimbursed the employees. A company
officer pleaded guilty last year to making political contributions
disguised to appear as though made by individuals.
The Chapter 11 petition filed in Trenton, New Jersey, disclosed
assets of $41.6 million and liabilities totaling $27 million.
Debt includes $3.6 million owing to a bank on a secured claim and
$2.4 million in payables to trade suppliers.
BIRDSALL SERVICES: Cuts $3.6MM Deal With NJ on Ch. 11, Forfeiture
-----------------------------------------------------------------
Birdsall Services Group Inc., the engineering firm recently
indicted for an alleged pay-to-play scheme, agreed to a $3.6
million settlement Monday that ends New Jersey's opposition to the
company's bankruptcy and resolves the state's lawsuit aiming to
seize Birdsall's assets.
Lance Duroni of BankruptcyLaw360 notes that the settlement does
not, however, have any bearing on the criminal charges against
Birdsall and seven current and former executives, according to a
statement from the New Jersey Attorney General's Office.
Law360 says that under the deal, Birdsall will pay $2.5 million to
settle the state's civil forfeiture action, the report further
related.
Kathleen Hopkins, writing for Asbury Park Press, reports that
furloughed employees of Birdsall Services Group were notified to
return to work April 16, after the engineering firm on Monday
agreed to forfeit $2.6 million to the state in a civil forfeiture
proceeding and to set aside another $1 million for potential
criminal penalties in its pay-to-play corruption case. In
exchange for the concessions, the state has agreed not to block
the Eatontown firm's access to its remaining assets.
According to Asbury Park Press, the settlement was approved late
Monday afternoon by judges in federal bankruptcy court and in
state Superior Court in Monmouth County, where the state Attorney
General's Office had frozen Birdsall's assets in a civil
forfeiture proceeding.
The report notes a company spokesman said Birdsall will work to
process last week's payroll as quickly as possible and has told
furloughed employees to report for work April 16.
Stay to Cash Use
The report relates the settlement came as U.S. District Court
Judge Michael Shipp, sitting in Trenton, was expected to issue a
decision on whether his temporary order blocking Birdsall from
gaining access to cash for payroll and other expenses would become
permanent.
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
recounts that Birdsall filed for Chapter 11 protection three days
after the state indicted the company and ordered seizure of
property, and persuaded U.S. Bankruptcy Judge Michael B. Kaplan in
Trenton to sign an order on April 1 temporarily allowing the use
of cash to cover payroll. Judge Kaplan signed another order on
April 8 further extending the ability to use cash. The state
appealed both orders.
On April 10, U.S. District Judge Michael A. Shipp in Trenton, New
Jersey, at the state's request, temporarily stayed the bankruptcy
court's order to use cash. As a consequence, Eatontown, New
Jersey-based Birdsall fired all of its 300 workers, according to a
report in the Asbury Park Press.
According to the Bloomberg report, Judge Shipp was slated to issue
a further ruling April 15 on extending the stay and thus
precluding Birdsall from paying its workers. Birdsall
unsuccessfully appealed to the U.S. Court Appeals, which ruled on
April 11 that Judge Shipp could rule Monday before the appeals
court decides whether to reinstate the bankruptcy court's decision
to allow use of cash.
The state argues that once the state court seized property as part
of forfeiture, the assets no longer belonged to Birdsall, leaving
the bankruptcy court with no ability to permit use of the cash.
New Jersey said that forfeiture is intended to "punish criminal
offenders" and doesn't "serve the state's pecuniary interest."
The state cited a 1971 ruling by the U.S. Supreme Court to the
effect that federal courts can't intervene in state criminal
proceedings except when the action is "flagrantly
unconstitutional."
The report notes that although Judge Kaplan would have allowed use
of cash to continue operations, he ruled last week that the
company should be taken over by a trustee in Chapter 11 who
supplants management. He also denied the state's request to
dismiss the bankruptcy. The state says that the company arranged
for individuals to make contributions and then reimbursed the
employees. A company officer pleaded guilty last year to making
political contributions disguised to appear as though made by
individuals.
The state said in court papers that its actions are "about the
integrity of the state's political process and its system of
awarding government contracts."
About Birdsall Services
Birdsall Services Group Inc., an engineering firm from Eatontown,
New Jersey, filed for Chapter 11 protection (Bankr. D.N.J. Case
No. 13-16743) on March 29, 2013, when the state attorney general
indicted the business and obtained a court order seizing the
assets.
Birdsall was accused by the state of violating laws prohibiting
so-called pay-to-play, where businesses make political
contributions in return for government contracts. The state
charged that the company arranged for individuals to make
contributions and then reimbursed the employees. A company
officer pleaded guilty last year to making political contributions
disguised to appear as though made by individuals.
The Chapter 11 petition filed in Trenton, New Jersey, disclosed
assets of $41.6 million and liabilities totaling $27 million.
Debt includes $3.6 million owing to a bank on a secured claim and
$2.4 million in payables to trade suppliers.
BOUNDARY BAY: Confirmation Hearing on Contested Plan on April 24
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
continued until April 24, 2013, at 10 a.m., the hearing to
consider Boundary Bay Capital, LLC's Third Amended Chapter 11
Plan.
At the hearing, the Court will also consider objections to the
Plan, including the one filed by the Official Committee of
Unsecured Creditors.
The Committee is asking the Court to deny the confirmation of the
Plan unless the Debtor puts forth evidence at confirmation that it
has obtained the funding necessary to implement the Plan or that
the Plan is feasible.
The Committee is represented by:
Leonard M. Shulman, Esq.
Melissa Davis Lowe, Esq.
SHULMAN HODGES & BASTIAN LLP
8105 Irvine Center Drive, Suite 600
Irvine, CA 92618
Tel: (949) 340-3400
Fax: (949) 340-3000
E-mail: lshulman@shbllp.com
mlowe@shbllp.com
The Plan
As reported in the Troubled Company Reporter on Feb. 11, 2013, the
Bankruptcy Court approved the disclosure Statement describing the
Debtor's Third Amended Chapter 11 Plan.
According to the Third Amended Disclosure Statement, creditors
holding unsecured claims will become the new owners of the Debtor
and all the equity interests of the current owners will be
terminated. Secured creditors will be paid through the surrender
or sale of their collateral or through payments over time, in some
cases on a restructured basis.
The payments under the Plan will be funded through the proceeds of
a postpetition loan obtained by NewCo, a new company in which the
Debtor will have a membership interest, sales of assets, and funds
generated through operations. The Debtor will make periodic
distributions to creditors (as equity holders of the Reorganized
Debtor) as net proceeds become available.
A copy of the Third Amended Disclosure Statement is available at:
http://bankrupt.com/misc/boundarybay.doc376.pdf
About Boundary Bay
Boundary Bay Capital, LLC, is a California limited liability
company with its headquarters in Irvine, California. The Company
was in the business of making loans secured by liens on real
property and notes secured by other secured notes (which, in turn,
are secured by liens or real property). The Company also owns
some real property through foreclosure.
Boundary Bay Capital filed for Chapter 11 bankruptcy protection
(Bankr. C.D. Calif. Case No. 11-14298) on March 28, 2011. Evan D.
Smiley, Esq., and Hutchison B. Meltzer, Esq., at Weiland, Golden,
Smiley, Wang Ekvall & Strok, LLP, in Costa Mesa, Calif., serve as
the Debtor's bankruptcy counsel.
Affiliate Cartwright Properties, LLC, filed a separate Chapter 11
petition (Bankr. C.D. Calif. Case No. 10-17823) on June 9, 2010.
In its schedules, the Debtor disclosed $15.88 million in assets
and $54.45 million in liabilities.
CBI I: Hearing on Disclosure Statement Continued to April 24
------------------------------------------------------------
The hearing to approve the adequacy of the disclosure statement
for Debtor CBS I, LLC's Plan of Reorganization has been continued
to April 24, 2013, at 9:30 a.m.
As reported in the TCR on Jan. 9, 2013, under the Plan dated
Nov. 14, 2012, the classification and treatment of claims under
the plan are:
A. Administrative claims and priority tax claims will be paid
in full in cash on or prior to the Effective Date.
B. Holders of allowed secured claims of U.S. Bank will
receive a refinanced secured loan, which will modify the
U.S. Bank loan to allow Debtor to obtain secondary
financing on the property of up to $750,000 in the future
in order to repair, remodel, and make capital improvements
to the Property.
C. The holders of U.S. Bank's allowed general unsecured
deficiency claims will receive payment of 5% of their
allowed deficiency claim without interest or $99,885.
This amount will be paid in 60 equal monthly
payments in the amount of $1,664.75 to begin on the first
of the month immediately following the Effective Date of
the Plan.
D. Holders of other general unsecured claims will receive
payment of 100% of their claims to be paid in six months
after entry of the confirmation order with simple interest
at a rate of 3%.
E. Insiders who hold unsecured claims will receive no
payments.
A copy of the Disclosure Statement is available for free at:
http://bankrupt.com/misc/CBS_I_ds_2amended.pdf
About CBS I
CBS I, LLC, filed for Chapter 11 protection (Bankr. D. Nev. Case
No. 12-16833) on June 7, 2012. The Company is a limited liability
company whose sole asset consists of 71,546 square feet of gross
rentable building area on a site containing approximately 206,474
net square feet or 4.74 acres, located at 10100 West Charleston
Boulevard, in Las Vegas, Nevada. Debtor is owned by Jeff Susa
(25%), Breslin Family Trust (25%), M&J Corrigan Family Trust (25%)
and S&L Corrigan Family Trust (25%).
The Debtor scheduled assets of $19,356,448 and liabilities of
$19,422,805. Judge Mike K. Nakagawa presides over the case. Jeff
Susa signed the petition as manager.
The bankruptcy filing came after U.S. Bank, trustee for holders of
the $16.4 million mortgage, initiated foreclosure proceedings and
filed a lawsuit May 24, 2012, in Clark County District Court
asking that a receiver be appointed to take control of the
Summerlin building in Howard Hughes Plaza at 10100 West Charleston
Blvd., just west of Hualapai Way.
Zachariah Larson, Esq., at Marquis Aurbach Coffing, in Las Vegas,
represents the Debtor as bankruptcy counsel. Dimitri P. Dalacas,
Esq., at Flangas McMillan Law Group, in Las Vegas, represents the
Debtor as special counsel.
CBI I: Briefing Period on Objection to Claims Extended to April 24
------------------------------------------------------------------
Debtor CBS I, LLC and objecting secured creditor U.S. Bank
National Association, as Trustee for the Registered Holders of
Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage Pass-
Through Certificates Series 2006-C28, have agreed to extend the
briefing and hearing period on the Debtor's Objection to Proof of
Claim No. 6 filed by Tri-Signal Integration, Inc. [Dkt. No. 151];
and the Debtor's Objection to Proof of Claim No. 3 filed CW
Capital Asset Management, LLC [Dkt. No. 154], to April 24, 2013,
at 9:30 a.m., subject to approval of the Bankruptcy Court of said
hearing date.
The Parties also agreed that the Debtor will have until April 17,
2013, to file its Reply to any Responses to the Objections to
Proof of Claims.
Counsel for U.S. Bank can be reached at:
Jon T. Pearson, Esq.
BALLARD SPAHR, LLP
100 N. City Parkway, Suite 1750
Las Vegas, NV 89106
- and -
Hamid R. Rafatjoo, Esq.
VENABLE, LLP
2049 Century Park East, 21st Floor
Los Angeles, CA 90067
About CBS I
CBS I, LLC, filed for Chapter 11 protection (Bankr. D. Nev. Case
No. 12-16833) on June 7, 2012. The Company is a limited liability
company whose sole asset consists of 71,546 square feet of gross
rentable building area on a site containing approximately 206,474
net square feet or 4.74 acres, located at 10100 West Charleston
Boulevard, in Las Vegas, Nevada. Debtor is owned by Jeff Susa
(25%), Breslin Family Trust (25%), M&J Corrigan Family Trust (25%)
and S&L Corrigan Family Trust (25%).
The Debtor scheduled assets of $19,356,448 and liabilities of
$19,422,805. Judge Mike K. Nakagawa presides over the case. Jeff
Susa signed the petition as manager.
The bankruptcy filing came after U.S. Bank, trustee for holders of
the $16.4 million mortgage, initiated foreclosure proceedings and
filed a lawsuit May 24, 2012, in Clark County District Court
asking that a receiver be appointed to take control of the
Summerlin building in Howard Hughes Plaza at 10100 West Charleston
Blvd., just west of Hualapai Way.
Zachariah Larson, Esq., at Marquis Aurbach Coffing, in Las Vegas,
represents the Debtor as bankruptcy counsel. Dimitri P. Dalacas,
Esq., at Flangas McMillan Law Group, in Las Vegas, represents the
Debtor as special counsel.
CDW CORP: Moody's Assigns 'Ba3' Rating to New $1.35-Bil. Term Loan
------------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to the proposed
CDW Corporation's $1.35 billion 7-year senior secured term loan to
be issued by its wholly-owned subsidiary CDW LLC. The proceeds of
the new term loan will be used to refinance existing senior
secured credit facilities due 2014 and 2017; the ratings on the
facilities will be withdrawn upon the close of transaction. The
rating outlook remains stable.
Ratings Rationale
"Although the proposed refinancing does not result in substantial
interest cost savings, it meaningfully improves CDW's maturity
profile," said Moody's Senior Vice President, Gerald Granovsky.
Upon closing of the refinancing, CDW's next scheduled debt
maturity will be $572 million of senior subordinated notes due
2017, which gives the company ample financial flexibility and time
to focus on its Initial Public Offering ("IPO") efforts.
CDW's B2 Corporate Family Rating incorporates high financial
leverage, thin (albeit improving) interest coverage ratios as well
as limited financial covenants. Significant vendor concentration
to Hewlett-Packard and exposure to the volatile small and medium-
sized business segments also constrain the rating.
Rating Outlook
The stable rating outlook reflects CDW's relatively consistent
revenue stream from the public sector, which counteracts greater
fluctuations in corporate sector revenue, as well as Moody's
expectation for continued execution of its business strategy,
stable vendor/customer relationships and market share gains.
What Could Change the Rating - Up
Ratings could be upgraded if CDW's revenue and operating margins
improve to a higher sustainable range (operating margins in mid to
upper single digits) implying increased market share, continued
favorable shift in product mix and/or a lower cost structure. An
upgrade could also occur upon a successful IPO or other debt
reduction, such that total adjusted debt to EBITDA leverage is
expected to be sustained below 4.5x.
What Could Change the Rating - Down
Ratings could be downgraded if CDW experienced loss of
customers/market share or pricing pressures due to increasing
competition or a weak economic environment led to margin erosion
and impaired interest coverage, reduced free cash flow generation
and financial leverage sustained above 7x total adjusted debt to
EBITDA.
The principal methodology used in this rating was Global
Distribution & Supply Chain Services published in November 2011.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
CENTRAL EUROPEAN: Common Stock Suspended From WSE
-------------------------------------------------
Central European Distribution Corporation received notice from the
Warsaw Stock Exchange that, as of April 15, 2013, the Company's
common stock would be suspended from trading on the WSE for a
period of up to three months. As a result, and following the
suspension in trading in the Company's common stock on the NASDAQ
Stock Market as of April 12, 2013, there is currently no active
trading market for the Company's common stock and such a market
may not develop or be sustained. NASDAQ will file a Form 25-NSE
with the United States Securities and Exchange Commission to
remove its common stock from listing and registration on the
NASDAQ and the Company's common stock may be delisted from trading
on the WSE due to the Company's on-going proceedings under Chapter
11 of title 11 of the United States Code in the United States
Bankruptcy Court for the District of Delaware or for other
reasons. Additionally, if the Company's proposed plan of
reorganization currently under review by the Bankruptcy Court
becomes effective, all of its outstanding common stock will be
cancelled and the Company anticipates that it will no longer be
subject to listing and trading on the WSE.
After the Company's common stock is delisted by NASDAQ, it may
trade on the OTC Markets Group Inc. or the OTC Bulletin Board if
an application is filed by a market maker to quote the Company's
common stock. A potential market maker's application to quote the
Company's common stock on OTCBB will not be cleared until the
Company is current in its reporting obligations under the
Securities Exchange Act of 1934. In order for the Company to
become current in its reporting obligations, it must file its
annual report on Form 10-K for fiscal year 2012. Even if the
Company makes that filing, there is no assurance that any market
maker will apply to quote the Company's common stock on the Pink
Sheets or OTCBB.
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.
On April 7, 2013, CEDC and two subsidiaries sought bankruptcy
protection under Chapter 11 of the Bankruptcy Code (Bankr. D.
Del. Lead Case No. 13-10738) with a prepackaged Chapter 11 plan
that reduces debt by US$665.2 million.
Attorneys at Skadden, Arps, Slate, Meagher & Flom LLP serve as
legal counsel to the Debtor. Houlihan Lokey is the investment
banker. Alvarez & Marsal will provide the chief restructuring
officer. GCG Inc. is the claims and notice agent.
CHAMPION INDUSTRIES: Hires CRO After Default
--------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Champion Industries Inc. hired a chief restructuring
officer last week whose portfolio includes "development and
implementation of a plan of reorganization, if appropriate."
The restructuring officer is Timothy Boates --
tboates@rasmanagement.com -- from RAS Management Advisors LLC.
The company announced in late March that bank lenders on a term
loan and revolving credit gave notice of a covenant default. The
lenders are reserving all their rights, the company said. Fifth
Third Bank is agent on the loan with $36 million outstanding,
according to a regulatory filing.
About Champion Industries
Champion Industries, Inc., is engaged in the commercial printing
and office products and furniture supply business in regional
markets east of the Mississippi River. The Company also publishes
The Herald-Dispatch daily newspaper in Huntington, West Virginia
with a total daily and Sunday circulation of approximately 23,000
and 28,000.
Arnett Foster Toothman PLLC, in Charleston, West Virginia,
expressed substantial doubt about Champion Industries' ability to
continue as a going concern following the fiscal 2012 annual
results. The independent auditors noted that the Company has
suffered recurring losses from operations and has been unable to
obtain a longer term financing solution with its lenders.
Champion reported a $3.5 million net loss for the quarter
ended Jan. 31 on revenue of $22.6 million. The Company reported a
net loss of $22.9 million in fiscal 2012, compared with a net loss
of $4.0 million in fiscal 2011.
The Company's balance sheet at Jan. 31, 2013, showed $43.81
million in total assets, $48.73 million in total liabilities and a
$4.91 million total shareholders' deficit.
COGECO CABLE: Fitch Affirms 'BB+' Issuer Default Rating
-------------------------------------------------------
Fitch Ratings has affirmed the Issuer Default Rating (IDR) for
Cogeco Cable Inc. at 'BB+' and the long-term rating for the
secured notes at 'BBB-'. Fitch has also assigned a 'BB+' rating to
Cogeco's proposed US$400 million senior unsecured notes issuance.
Net proceeds from the offering will be used to repay the term loan
tranches of the senior secured credit facilities Cogeco entered
into in connection with its acquisition of PEER 1 Network
Enterprises, Inc. in January 2013. The revolving facilities used
for the transaction will remain outstanding. The Rating Outlook is
Stable.
The notes will benefit from an unsecured guarantee by Cogeco's
wholly-owned restricted subsidiaries that also guarantee the
Company's obligations under its senior secured credit facilities
and senior secured notes and debentures. The Atlantic Broadband
(ABB) subsidiary is considered an unrestricted subsidiary.
Therefore, ABB does not provide a guarantee for the notes.
Key Rating Drivers
The 'BB+' ratings reflect Cogeco Cable's higher leverage resulting
from two recent transactions that increased leverage from 1.8
times (x) to pro forma 3.6x at PEER 1's closing excluding the non-
guaranteed debt at ABB. Leverage should reduce going forward due
to both cash flow growth and debt repayment but remain above 3x at
year-end 2013.
Fitch believes Cogeco's stable operating profile and the strength
of the Canadian operations that generate the majority of the
company's revenue and cash flow provides material benefits its
credit profile. Cogeco Cable's competitive position is anchored by
its high speed internet and triple play offering. The cable
systems are also clustered in less concentrated and generally less
competitive suburban regions.
The PEER 1 Network Enterprises Inc. (PEER 1) acquisition offers a
diversified faster growing revenue stream although it has elevated
execution risk as Cogeco pursues growth and investment
opportunities outside of their traditional cable footprint. PEER
1's core business of managed services and web hosting is highly
and increasingly competitive. PEER 1 focuses on delivering quality
service and support to differentiate from competition that is
mainly from managed and dedicated cloud providers along with local
and regional operators. PEER 1 has a relatively large SMB customer
base with no customer representing more than 5% of revenues.
Fitch does not expect PEER 1 operations to contribute meaningful
free cash flow during the next several years given the higher
capital intensity rates and need to further scale the operations.
Thus PEER 1 could require additional working capital to support
ongoing operations and expansion. Fitch estimates that LTM EBITDA
and capital spending were both approximately CAD40 million.
Cogeco's strategic shift in pursuing its last two acquisitions is
a result of the maturing of cable services and the competitive
intensity that has lowered growth prospects for the cable
operations. The competitive intensity in Canada is expected to
increase with additional IPTV footprint expansion through fiber-
to-the-home overbuilds in a growing portion of Cogeco's regions.
This will increase the pressure on primary service unit additions
which have been decreasing due to factors mentioned above along
with economic uncertainty and the tightening of credit controls.
Fitch believes Cogeco also needs to upgrade technology supporting
its video offering to better match capabilities with the telco's
IPTV video service.
Cogeco should be able to mitigate revenue pressure through rate
increases and SMB primary service unit additions which will become
an increasingly important offset. In addition, the enterprise
services segment provides a growing diversified revenue stream
with good margins. Cogeco's capital spending intensity has been
elevated relative to its peers due to success-based spending
within this segment.
Cogeco used a material portion of its liquidity position to close
the ABB acquisition. Cogeco's main sources of liquidity are
through its credit facilities, cash position, and free cash flow
(FCF). As of Feb. 28, 2013, Cogeco Cable and ABB had CAD130.8
million and US$46.5 million available under their credit
facilities respectively and CAD37 million of cash on a
consolidated basis. Going forward, Fitch expects Cogeco will
restore at least a portion of its liquidity position using FCF to
pay down the revolver over the next couple of years. Cogeco's FCF
guidance for FY2013 that includes PEER 1 (after considerations for
its dividend payment) is slightly in excess of CAD100 million.
Importantly, Fitch believes the new ABB subsidiary should be in a
self-funding position. This is supported by ABB's current cash
generation, a substantial tax shield related to net operating
losses, a competitive environment with limited triple play
competition and the expected growth from increasing
underpenetrated services. ABB will increase success-based capital
spending which should improve its competitive position relative to
satellite operators which is the primary competitor in
approximately three quarters of its markets.
Sensitivity/Rating Drivers
Negative: Future developments that may, individually or
collectively, lead to negative rating include:
-- Cogeco Cable leverage stays in the mid 3.5x range reflecting
lack of cash flow growth and debt reduction;
-- An additional material leveraging transaction;
-- Greater than expected IPTV competition in Cogeco Cable
territory that adversely affects operating trends;
-- Negative operating trends in the Atlantic Broadband operations
that requires Cogeco Cable to infuse additional funding;
-- Large debt-financed acquisition;
-- Reduced free cash flow prospects.
Positive: Future developments that may, individually or
collectively, lead to positive rating include:
-- Cogeco Cable leverage improves to less than 2.5x due to strong
cash growth and debt reduction;
-- Good operating trends across its three business segments;
-- Pre-dividend FCF to sales of greater than 10%;
-- Financial policy to maintain leverage below 2.5x.
COGECO CABLE: S&P Affirms 'BB+' CCR on Peer 1 Acquisition
---------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed all its
ratings on Montreal-based cable TV services provider Cogeco Cable
Inc., including its 'BB+' long-term corporate credit rating on the
company. At the same time, Standard & Poor's removed the company
from CreditWatch, where it had been placed with negative
implications Dec. 21, 2012. The outlook is stable.
"These rating actions follow Cogeco's C$670 million purchase of
Vancouver-based data center services provider, Peer 1 Networks
Enterprises Inc.," said Standard & Poor's credit analyst Madhav
Hari.
At Feb. 28, 2013, the company had C$3 billion of reported debt,
which includes C$664 million of nonrecourse debt issued by its
U.S.-based Atlantic Broadband Finance LLC (BB-/Stable/--)
subsidiary.
Standard & Poor's also assigned its 'BB-' issue-level rating and
'6' recovery rating to Cogeco's proposed US$400 million senior
unsecured notes due 2020, the proceeds of which will be used to
partially repay secured bank debt outstanding. These notes are
guaranteed by the company's wholly owned restricted subsidiaries
that also guarantee Cogeco's existing and future senior secured
obligations. The ratings are based on preliminary documentation
and are subject to review of final documents.
S&P's affirmation of the corporate credit rating primarily
reflects its belief that Cogeco will temper acquisitions and focus
on improving its moderately leveraged balance sheet in the near
term. S&P's affirmation of the 'BBB' senior secured debt rating
is predicated on the assumption that Cogeco reduces about
US$400 million of secured term debt from the planned senior notes
offering. The '1' recovery rating on the debt is unchanged.
Cogeco is the second-largest cable operator in Ontario and Quebec
in terms of basic cable TV subscribers. The company offers analog
and digital cable TV, high-speed Internet, and digital telephony
services to more than 1.6 million households, typically in midsize
urban communities. The company also provides data connectivity,
co-location, and data center services to business customers.
S&P's ratings on Cogeco reflect what Standard & Poor's views as
the company's "satisfactory" business risk profile and
"significant" financial risk profile, and is also supported by our
assessment of the company's liquidity as "adequate."
Standard & Poor's notes that the rating on Cogeco primarily
reflects the credit profile of the company's Canadian Cable TV and
Canadian Enterprise telecom operations (which includes Peer 1).
S&P views Cogeco's ownership of U.S.-based cable TV services
provider Atlantic Broadband as an investment that benefits from
potential, but only minimal, credit support from Cogeco under
financial stress. As such, our assessment of Cogeco's credit
quality excludes Atlantic Broadband.
The stable outlook reflects Standard & Poor's expectation that in
the next couple of years Cogeco will focus primarily on growth
from existing operations and improving its balance sheet. S&P
expects the company to apply C$60 million-C$70 million of annual
excess cash flow for debt reduction that, along with growth in
EBITDA, should allow the company to improve its adjusted debt-to-
EBITDA ratio (excluding Atlantic Broadband) to the low-3x area by
fiscal year-end 2015 from 3.7x at fiscal year-end Feb. 28, 2013,
on a pro forma basis.
Upside for the ratings is currently constrained by the time to
deleverage and the potential for additional acquisitions or
shareholder-friendly initiatives in the medium-to-long term that
could ultimately weaken credit ratios. However, S&P would
consider an upgrade should the company adopt moderate financial
policies and demonstrate a willingness to maintain adjusted debt
leverage below 3x.
S&P could consider a downgrade should it appear to them that
adjusted debt leverage will remain greater than 3.5x by the end of
fiscal 2014. This could result from additional debt-financed
acquisitions and subsequent difficulties in deleveraging owing to
operational challenges, higher capital spending, or margin
pressures in the core cable business.
DAFFY'S INC: Plan Effective Date Announced
------------------------------------------
Daffy's, Inc., notified the U.S. Bankruptcy Court for the Southern
District of New York that the effective date of its Plan of
Liquidation occurred on April 8, 2013.
The Debtor's Plan of Liquidation was confirmed on April 2, 2013,
without soliciting a single creditor vote and without publishing
disclosure materials explaining the Plan. The Plan paid every
creditor in full, leaving about $18.1 million left for
distribution to the owners.
About Daffy's Inc.
Secaucus, New Jersey-based Daffy's Inc., a 19-store chain, off-
price retailer of designer fashions for women, men, children, and
the home, located in the New York metropolitan area and
Philadelphia, filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y.
Case No. 12-13312) on Aug. 1, 2012, with a plan to shutter the
business and pay off creditors in full. A copy of the Plan is
available at http://bankrupt.com/misc/Daffys_Chapter_11_Plan.pdf
The Debtor has an Asset Purchase, Assignment and Support
Agreement, dated as July 18, 2012, with Marcia Wilson, The Wilson
2003 Family Trust, and Jericho Acquisitions I LLC, pursuant to
which the Debtor's leasehold interests will be sold to Jericho
Acquisitions I LLC through the Plan.
The Debtor has hired Gordon Brothers Retail Partners, LLC and
Hilco Merchant Resources LLC to liquidate the Debtor's inventory.
The Debtor estimates that the proceeds received from the
liquidation of its inventory and the sale of its leasehold
interests will exceed at least $60 million to satisfy
approximately $37 million in claims. Cost of administering the
chapter 11 case will not exceed approximately $5 million (after
certain expenses are reimbursed pursuant to the Purchase
Agreement). Accordingly, the Debtor believes that the disposition
Of its principal assets will generate more than sufficient cash to
pay all holders of Allowed Claims (as such term is defined in the
Plan) in full, with interest, thus rendering all lasses under the
Plan unimpaired.
The Debtor has filed its schedules, disclosing $51,106,469 in
total assets and $36,646,856 in total liabilities.
Bankruptcy Judge Martin Glenn presides over the case. The Debtor
is represented by Andrea Bernstein, Esq., and Debra A. Dandeneau,
Esq., at Weil, Gotwill & Manges LLP as counsel. Donlin, Recano &
Company, Inc., serves as claims and notice agent.
The Debtor's case is being funded by a $10 million postpetition
financing with Vim-3, L.L.C., Vimwilco, L.P., and Marcia Wilson,
as successor to Vim Associates, as guarantors; and Wells Fargo,
National Association, as DIP lender. The DIP loan consists of
$2.5 million in new money loans available on a revolving basis;
and the roll up of $6.2 million of existing prepetition debt.
Counsel for the DIP Lender are Donald E. Rothman, Esq., and
Nathan C. Pagett, Esq., at Riemer & Braunstein LLP.
Gordon Brothers and Hilco Merchant Resources are represented by
Curtis, Mallet-Prevost, Colt & Mosle LLP.
Jericho Acquisition is represented by Brad Eric Scheler, Esq., at
Fried, Frank, Harris, Shriver & Jacobson LLP.
Marcia Wilson is represented by Dana B. Cobb, Esq., at Beattie
Padovano, LLC.
DETROIT, MI: Mayor Offers Budget, But Emergency Mngr. Flexes Power
------------------------------------------------------------------
Steve Neavling, writing for Reuters, reported that Detroit Mayor
Dave Bing proposed a $1 billion budget on April 12 that allows the
deficit to balloon to $380 million, despite a financial crisis
that led the state to appoint Emergency Manager Kevyn Orr to take
over the city's purse strings.
At nearly the same time on Friday, Orr issued an order
underscoring that it is the emergency manager, not city officials,
who has final say on appropriations, contracts and other
substantive matters, Reuters said. Any such acts "will not be
valid or effective unless and until approved by the Emergency
Manager or designee in writing," Orr wrote in his Order No. 3,
according to Reuters.
Reuters related that the order does allow the city to take all
actions necessary to deliver city services. Orr has final say over
the city budget, and the state law creating the emergency manager
position requires Orr to deliver a financial and operating plan
for Detroit by May 9.
Bing's 2013-14 spending plan, which by law must be adopted by June
30 when the prior spending plan expires, calls for continued
mandatory furlough days -- one unpaid day every two weeks for city
workers -- and a $4 million reduction in the city council's $11.2
million budget, but it avoided any sweeping cuts to spending on
public safety, transportation, blight removal, public lighting and
parks and recreation, the Reuters report said.
DINEEQUITY INC: Fitch Affirms 'B' Long-Term Issuer Default Rating
-----------------------------------------------------------------
Fitch Ratings has affirmed the ratings of DineEquity, Inc.
(DineEquity; NYSE:DIN) as follows:
DineEquity, Inc.
-- Long-term Issuer Default Rating (IDR) at 'B';
-- Senior secured bank credit facility at 'BB/RR1';
-- 9.5% senior unsecured notes at 'B+/RR3'.
The Rating Outlook is Stable.
At Dec. 31, 2012, DineEquity had approximately $1.4 billion of
total debt.
Key Rating Drivers:
DineEquity's ratings balance the company's high financial leverage
with its consistent free cash flow (FCF) generation, national
scale, and leading market share in the U.S. casual dining and
family dining categories. The ratings incorporate the firm's
financial strategy which following the successful completion of
its refranchising program in October 2012 reflects an increased
emphasis on returning cash to shareholders.
On Feb. 27, 2013, DineEquity announced a capital allocation
strategy that includes a first quarter $0.75 per share common
dividend and a $100 million share repurchase authorization. As
anticipated, DineEquity used refranchising proceeds and FCF to
reduced debt by over $1 billion since its November 2007
acquisition of Applebee's for $2.1 billion and is now comfortable
with debt and leverage levels.
The firm's business strategy includes operating under a less
capital intensive 99% franchised model and maximizing its business
by ensuring strong brands. Franchise new unit development and
managed general and administrative costs in order to generate
meaningful FCF is also a key part of this strategy. Same-store
sales (SSS) growth is being supported with menu innovation, good
restaurant operations, and effective marketing/advertising.
At Dec. 31, 2012, DineEquity's system of restaurants consisted of
3,615 units of which 2,034 operated under the Applebee's brand and
1,581 operated as IHOP units. Approximately 95% of these
restaurants are in the United States and about 5% are in
international markets. Average annual sales for Applebee's and
IHOP franchised units during 2012 were approximately $2.4 million
and $1.8 million, respectively.
DineEquity's credit profile is enhanced by its stable source of
royalty based revenue and the high level of profitability provided
by its franchise operations. During 2012, the firm's franchise
operations represented 50% of its $850 million of corporate
revenue and had an operating margin of 73.9%.
Applebee's domestic franchisees are mainly large multi-unit
operators where over 70% own more than 10 units. IHOP system of
domestic franchisees is more diverse as approximately 90% operate
10 or less restaurants. Fitch believes DineEquity's franchise
system is in good shape as the company has not reported any
material collection or delinquency issues with its royalties.
Moreover, many existing franchisees purchased company-operated
units sold by DineEquity during the refranchising process.
Refranchising occurred faster than Fitch had anticipated,
resulting in considerable debt reduction. However, due to the
actual versus projected impact of refranchising on the firm's
income statement, deleveraging was not as pronounced as Fitch had
expected. Cash flow from operations and FCF during 2012 was also
lower than Fitch had forecast due mainly to higher cash taxes on
refranchising proceeds. Nevertheless, DineEquity's credit metrics
are commensurate with its current ratings.
For the latest 12 month (LTM) period ended Dec. 31, 2012, rent-
adjusted leverage (defined as total debt plus 8 times gross rent-
to-operating EBITDA plus gross rent) was 6.0 times (x), down from
nearly 7.0x at Dec. 31, 2008. Operating EBITDAR-to-gross interest
expense plus rent was 1.7x, up from 1.5x, and funds from
operations (FFO) fixed charge coverage was 1.3x, down from 1.4x.
DineEquity generated $36 million of FCF during the LTM period,
down from $95 million in 2011, and had an EBITDA margin of over
30%. As mentioned above, FCF was lower than anticipated due mainly
to higher cash taxes on refranchising proceeds. Fitch defines FCF
as cash flow from operations less capital expenditures less
dividends. Receipts from long-term receivables from franchisees,
which are accounted for as cash flows from investing activities,
are not included in Fitch's FCF calculation. During 2012, these
receipts totaled $12.3 million in 2012, and per SEC filings are
expected to approximate $14.2 million in 2013 and $15.2 million in
2014.
Fitch currently expects DineEquity's rent-adjusted leverage to
increase to 6.2x in 2013, as EBITDA declines to reflect the
completion of the firm's refranchising during the fourth quarter
of 2012. Thereafter, Fitch expects rent-adjusted leverage to trend
below 6.0x due to SSS and EBITDA growth. Debt reduction, other
than the 1% mandatory annual amortization required for the firm's
term loan, is not expected to be a priority.
Annual FCF, as calculated by Fitch, is projected to approximate
$50 million due to the firm's recently instituted quarterly
dividend, despite reduced capital expenditure requirements as a
99% franchised system. DineEquity's guidance includes capital
expenditures of $8 million to $10 million in 2013, down from $17
million in 2012 and $26.3 million in 2011. The firm expects FCF of
$77 million to $93 million inclusive of approximately $14 million
of long-term receivables.
The 'RR1' recovery rating on DineEquity's secured bank facility
reflects Fitch's view that recovery prospects for this debt are
outstanding and would exceed 90% in a distressed situation. The
'RR3' recovery rating and corresponding 'B+' issue rating on
DineEquity's 9.5% senior unsecured notes incorporates Fitch's
opinion that bondholders would have above average recovery in the
51% to 70% range if the firm were in financial distressed.
Fitch's issue-level ratings incorporate assumptions regarding
DineEquity's enterprise value in a distressed situation and the
relatively low percentage of secured priority debt in the firm's
capital structure. At Dec. 31, 2012, 34% or $472 million of
DineEquity's $1.4 billion of total debt consisted of secured term
loans, 54% or $760.8 million consisted of the 9.5% senior
unsecured notes, and the remaining 12% was comprised of a $52.1
million financing obligation and $135 million of capital leases.
Same-Store Sales and Net New Unit Development
DineEquity's Great Tasting Under 550 Calories and 2 for $20 menu
platforms at Applebee's led casual dining peers with healthier
meal alternatives and value offerings. Applebee's SSS increased
1.2% in 2012 and 2% in 2011. At IHOP, however, comparable sales
have declined for eight consecutive quarters, being down 1.6% in
2012 and 2% in 2011. DineEquity's 2013 SSS guidance is a range of
negative 1.5% to positive 1.5% for both Applebee's and IHOP. Fitch
views DineEquity's SSS guidance for Applebee's as cautious and
believes it reflects the challenging consumer environment and high
level of competition in the U.S. restaurant industry. Fitch is
concerned about the duration of negative SSS performance at IHOP,
given changes to the brands core menu, promotional strategy, and
efforts to improve service quality.
DineEquity's 2013 guidance on new unit development, a key factor
for system sales, high-margin royalty and other fee revenue
growth, is a range 90-110 across both brands and represents an
increase of 2.5% to 3% in total units. DineEquity does not plan to
open any company-operated restaurants. The firm has development
agreements in place that provide for 46 new Applebee's units and
57 new IHOP units in 2013. As reported in SEC filings, agreements
provide for 56 Applebee's units and 40 IHOP units in 2014. The
majority of Applebee's franchise agreements include a royalty
equal to 4% of monthly net restaurant sales. The royalty rate for
IHOP units totals 4.5% of weekly gross sales.
Liquidity, Maturities and Financial Covenants
DineEquity's liquidity is adequate given the firm's FCF and
limited near-term maturities. Furthermore, the cash needs of a
highly franchised system should be minimal as franchisees
generally self-finance unit development and remodeling
requirements. At Dec. 31, 2012, DineEquity had $127.4 million of
liquidity consisting of $64.5 million of cash and $62.9 million
availability after considering $12.1 million of letters of credit
on the firm's $75 million revolver expiring Oct. 19, 2015.
At Dec. 31, 2012, scheduled maturities of long-term debt were
immaterial until Oct. 19, 2017 when the remaining balance on
DineEquity's term loan becomes due. The term loan amortizes at 1%
of the $472 million balance at Dec. 31, 2012. DineEquity's 9.5%
notes, which have a remaining balance of $760.8 million, mature on
Oct. 30, 2018.
Financial covenants in DineEquity's secured credit facility
include a maximum consolidated leverage ratio (defined as total
indebtedness minus no more than $75 million of cash-to-EBITDA) and
a minimum interest coverage ratio. The maximum leverage ratio is
7.0x in 2013 but steps down 0.25x annually through 2016 to 6.0x.
The minimum coverage ratio is 1.75x in 2013, stepping up 0.25x in
2016. At Dec. 31, 2012, the actual ratios as reported by
DineEquity were 4.6x and 2.5x, respectively. Fitch estimates that
EBITDA would have to decline by approximately 35% to breach the
maximum leverage covenants and that cash interest charges would
have to increase by 42% to breach the minimum coverage ratio test.
On Feb. 5, 2013, DineEquity repriced and amended certain covenants
for its senior secured credit facility. Interest is now computed
at LIBOR plus 2.75% with a LIBOR floor of 1%. Previously, the term
loan had a margin of 3% and a LIBOR floor of 1.25% and the
revolver had leverage-based pricing with a LIBOR margin ranging
from 4% to 4.5%.
Amendments included reducing limitations on the firm's capital
allocation options. Leverage thresholds for excess cash flow (ECF)
prepayments were eased such that 50% of the firm's ECF must be
used to prepay term loans if consolidated leverage is 5.75x or
greater. If leverage is less than 5.75x but greater than or equal
to 5.25x, 25% of ECF must be applied to term loan prepayments.
Lastly, no ECF requirement exists if leverage is less than 5.25x.
Fitch anticipates that DineEquity will not be required to make any
ECF prepayments with its 2013 ECF as consolidated leverage per the
credit facility was 4.6x at Dec. 31, 2012.
DineEquity's senior unsecured notes do not have financial
covenants. The notes contain a Negative Pledge clause that
requires equal and ratable security if non-permitted secured debt
is incurred and have a change of control put option at 101% of
principal plus accrued and unpaid interest.
Rating Sensitivities:
An upgrade of DineEquity's IDR could occur if rent-adjusted
leverage declines to the mid-5.0x range due to higher than
expected EBITDA growth, as significant debt reduction is not
anticipated. Improving SSS growth at IHOP and FCF stability or
growth would also be required for an upgrade.
Conversely, the firm's IDR would be lowered if there is a material
increase in leverage, due to debt-financed share repurchases or
acquisitions. Persistently negative SSS performance, a loss of
market share, or significant store closures would be viewed
negatively. Changes in recovery ratings could be driven by changes
in capital structure or significant increases or decreases in
EBITDA.
DISH NETWORK: Fitch Says Bid for Sprint Laced with Risk & Reward
----------------------------------------------------------------
DISH Network Corporation's $25.5 billion bid for Sprint Nextel
Corporation would create a compelling combination of assets,
spectrum, and service offerings that could uniquely position the
combined entity with a stronger overall competitive position,
according to Fitch Ratings. "While acknowledging that an
agreement is far from certain, we view the proposed merger
positively from a strategic standpoint," Fitch says.
"DISH's proposal marks the final stages of the evolution of its
wireless strategy. A combined company would be better enabled to
provide network connectivity across multiple platforms and devices
to capitalize on growing demand for video-centric, high-speed data
services in both a fixed in-home or mobile environment.
"The centerpiece of the proposed transaction would be the spectrum
portfolio of the combined companies, which would include
approximately 230 MHz of spectrum in high, mid, and low
bandwidths. This spectrum position could enable the company to
provide unique video and high-speed data services to subscribers
although uncertainty exists whether the U.S. Federal
Communications Commission would require any material spectrum
divestures.
"However, we believe there is substantial risk to realizing
expected cost and revenue synergies. We expect a combined
DISH/Sprint would have significant network capital investment
requirements over a multiyear period beyond current expectations
in order to deliver a robust video, wireless data, fixed
broadband, and mobile video solution that DISH outlined in its
proposal. This strategic investment would require a significant
expansion of the number of cell sites to increase network capacity
in the large urban areas to address the increased demand for
existing and new data services. In addition, further investment
would be necessary across the current network to permit the use of
DISH and Clearwire spectrum. While the investment could
potentially improve competitive position by allowing the combined
companies to increase the value of service offerings to consumers,
it also carries material long-term execution risk via successfully
building and integrating the two.
"We believe elevated execution and integration risks along with
higher debt levels associated with the transaction will likely
have negative rating consequences for DISH and would be neutral to
potentially negative to Sprint's credit profile, particularly if a
substantial amount of secured debt is placed ahead of unsecured
bondholders that do not have change of control provisions. DISH's
credit profile has weakened considerably during the course of 2012
due to inconsistent operating performance and increasing debt
levels limiting the company's financial flexibility at the current
'BB-' issuer default rating level.
"DISH has amassed approximately $9.5 billion of cash and
marketable securities and would require an additional $9.3 billion
of debt financing to fund the merger with Sprint. DISH claims the
combined company generated approximately $9.4 billion of pro forma
EBITDA, including Clearwire and $1.8 billion of run-rate cost
synergies during 2012, and would have approximately $43.8 billion
of net debt. We estimate pro forma leverage of 5.7x and 4.7x
calculated on a gross and net debt basis as of Dec. 31, 2012."
DISH's proposal includes $25.5 billion of total consideration,
consisting of approximately $17.3 billion of cash and $8.2 billion
of DISH common stock. Sprint shareholders would receive $4.76 in
cash and 0.05953 DISH shares per Sprint share. Sprint shareholders
would own 32% of the combined entity. The transaction would be
subject to typical regulatory review if accepted by Sprint.
DISH NETWORK: Moody's Ba2 CFR on Downgrade Review on Sprint Bid
---------------------------------------------------------------
Moody's Investors Service placed DISH Network Corporation's Ba2
Corporate Family Rating, Ba1-PD Probability of Default Rating and
Ba2 rated senior unsecured debt on review for downgrade following
its bid to buy Sprint Nextel Corporation (rated B1) for $25.5
billion.
Sprint is the third largest wireless operator in the U.S. with
47.5 million retail subscribers, and owns almost 52% of Clearwire
Communications LLC (Caa2 under review for upgrade) and is in the
process of buying out its remaining stake in Clearwire for $2.1
billion. DISH's offer to merge with Sprint consists of $17.3
billion in cash and $8.2 billion in stock in the combined company,
which it expects to fund with $9.3 billion in new debt and $8
billion in cash.
Moody's anticipates that if the merger is successful, Mr. Ergen,
Chairman of DISH, will retain voting control of the combined
entity. The review will assess the operational and strategic
synergies, growth opportunities, legal structure supporting the
rated debt, as well as financial risk associated with a potential
merger.
Ratings Rationale:
All of DISH's debt is issued at DISH DBS Corporation, DISH's pay-
television operating subsidiary, which its wireless spectrum
assets reside at other subsidiaries outside of DISH DBS. It
remains to be seen if DISH will combine the DISH and Sprint
credits or keep them separate, and in the latter case, where it
will issue the new debt. The credit structure will impact DISH's
current creditors since they may be at the risk of DISH up-
streaming cash from DISH DBS to fund wireless investments, while
not receiving recourse to these investments or DISH's valuable
wireless spectrum. Moody's will assess the additional capital DISH
may require to execute its wireless broadband strategy, though it
expects it will have sufficient spectrum for its strategy upon the
closing of Sprint's acquisition of Clearwire.
Moody's will consider the leverage and liquidity profile of both
the standalone DISH DBS subsidiary as well as the combined DISH-
Sprint entity. DISH DBS' gross leverage was about 4.8x at December
31, 2012 (pro forma for $2.3 billion in debt raised in April 2013
and including Moody's standard adjustments), which is well above
its 3.5x rating downgrade threshold, notwithstanding its
significant cash balance which Moody's expects to be applied
towards the Sprint merger. As a combined entity (assuming full
ownership of Clearwire), DISH's gross leverage would be well over
6.0x, not including anticipated operational synergies, and the
review will consider the combined entity's expected leverage in
the intermediate term. Moody's also expect DISH's standalone free
cash flow generation to decline from over $1 billion to the $750-
850 million range due to its significant debt issuance over the
past year, and given the negative free cash flow (pre potential
cost synergy benefits for the merger) at both Sprint and
Clearwire, the absence of a revolving credit facility at DISH and
debt maturities of about $1.5 billion over the next two years,
Moody's expects DISH's liquidity to be significantly impacted.
DISH had approximately $5.9 billion in cash and $3.6 billion in
marketable securities as of December 31, 2012, and Moody's expects
most of this cash to be applied towards the merger.
The review will also consider the positive long-term strategic
implications of the merger. By being able to offer a national
wireless broadband plan to its pay-television video subscribers,
DISH could eliminate the competitive disadvantage and improve its
ability to grow and retain subscribers relative to cable and some
telco operators which can offer a triple play bundle (video, voice
and data). In addition, the company's video business is a mature
business with low growth potential notwithstanding taking share
from competitors, and a broadband product would reduce its
dependence on this business. These factors could ultimately
support higher leverage under its rating.
DISH Network'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 DISH Network's core industry
and believes DISH Network'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.
DISH is the third largest pay television provider in the United
States, operating satellite services with approximately 14 million
subscribers as of December 31, 2012.
EAST LIVERPOOL: Moody's Affirms 'Ba1' Rating on $8.5-Mil. Bonds
---------------------------------------------------------------
Moody's Investors Service affirmed the Ba1 long-term bond rating
assigned to East Liverpool City Hospital's $8.5 million of
outstanding bonds issued by the City of East Liverpool, OH. The
outlook remains negative.
Ratings Rationale:
The affirmation of the rating and the outlook reflects
stabilizing, although still weak, financial performance,
improvements in patient volume trends, and steady balance sheet
metrics in FY 2012. However, ELCH remains challenged with very
large operating losses, both at the hospital and the employed
physician group, as well as its location in an area with
unfavorable demographics.
Strengths
- Historically strong balance sheet with unrestricted cash and
investments totaling $58.2 million (384 days cash on hand) as
of December 31, 2012
- Improvement in financial performance in FY 2012 with a -8.5%
operating margin and 1.7% operating cash flow margin, compared
to a -12.9% operating margin and -3.5% operating cash flow
margin in FY 2011; performance in FY 2012 was the first time in
three years that the hospital was cash flow positive
- Patient volumes improved in FY 2012 with combined inpatient
admissions and observation stays up 28%, a positive departure
from the large volume declines that occurred in 2010 and 2009
which resulted in revenue contraction for the hospital in those
years
- Relatively low debt-load, with absolute debt of $25.6 million
and cash-to-debt adequate at 227%; ELCH's debt profile consists
of 65% variable rate demand debt which poses put risk and
accelerated payment risk, although cash-to-demand debt is
strong at 339%
- Dominant market share (management-reported) in the hospital's
primary service area of Columbiana County (80% in FY 2008),
although more recent market share data is not available and
Moody's expects some erosion of market share due to the
significant volume losses in FY 2009 and 2010, with some market
share likely recaptured in FY 2012 with the improved patient
volumes and successful physician recruitment
Challenges:
- While financial performance improved in FY 2012, it still
remains quite weak with a -8.5% operating margin and 1.7%
operating cash flow margin, when including losses at the
physician division, operating margin declines to -10.2%; FY
2012 marked the seventh consecutive year of operating losses,
and the hospital has not generated break-even performance from
operations since FY 2005 and relies heavily on investment
income to support operations
- While unrestricted cash levels remain relatively high for the
rating category, as of December 31, 2012 cash had declined to
$58.2 million (385 days cash on hand), down from $60.0 million
(354 days cash on hand) at fiscal yearend (FYE) 2011 and $69.9
million (439 days cash on hand) held at FYE 2010
- FY 2013 budget is not expected to show break-even operating
performance as management anticipates $2 million operating
losses at the hospital for the year ($4 million in losses when
including the physician division); management is relying on
physician recruitment and alignment strategies and revenue
cycle improvements to recover lost volumes and to grow revenues
- Below average service area demographics as indicated by
declining population, high unemployment relative to state and
national averages, and low median income levels results in a
high dependence on governmental payers (Medicare, Medicaid, and
self-pay payers account for 72% of the hospital's gross
revenues)
Outlook:
The negative outlook reflects Moody's belief that financial
performance will remain weak in FY 2013, as well as the
possibility that cash balances may decline further following
multiple years of negative or low cash flow.
What Could Make the Rating Go Up?
Material improvement in operating performance including better
than break-even operating margins, significant improvement in
volume trends and material growth in revenue base, and much
improved debt service coverage measures
What Could Make the Rating Go Down?
Inability to meet FY 2013 operating budget, volume declines, loss
of market share, increase in debt, decline in cash reserves.
The principal methodology used in this rating was Not-for-Profit
Healthcare Rating Methodology published in March 2012.
EASTMAN KODAK: Seeks Court Approval to Assume Windsor Contract
--------------------------------------------------------------
Eastman Kodak Co. filed a motion seeking approval from U.S.
Bankruptcy Judge Allan Gropper to assume a lease contract with
Windsor Renewal I, LLC.
Kodak signed the contract in December 2011 to lease a real
property integral to the operation of the company's personalized
imaging business.
A court hearing to consider approval of the motion is scheduled
for May 2. Objections are due by April 29
Separately, Kodak asked the bankruptcy judge to give the company
until July 31 to decide on whether to assume or reject a lease
dated June 30, 1987 with the County of Monroe.
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.
EDISON MISSION: Files $4.1-Mil. Suit v. Tyche Power & JPMorgan
--------------------------------------------------------------
BankruptcyData reported that Edison Mission Energy filed with the
U.S. Bankruptcy Court a lawsuit against Tyche Power Partners and
JPMorgan Chase seeking to obtain $4.1 million that has been
withheld in escrow from the Debtors (plus legal fees) related to
the suit.
According to the report, in 2003, Tyche purchased from the Debtors
indirect ownership interest in a co-generation plant in Brooklyn,
NY.
The Court scheduled a May 15, 2013 hearing on the matter.
About Edison Mission
Santa Ana, California-based Edison Mission Energy is a holding
company whose subsidiaries and affiliates are engaged in the
business of developing, acquiring, owning or leasing, operating
and selling energy and capacity from independent power production
facilities. EME also engages in hedging and energy trading
activities in power markets through its subsidiary Edison Mission
Marketing & Trading, Inc.
EME was formed in 1986 and is an indirect subsidiary of Edison
International. Edison International also owns Southern California
Edison Company, one of the largest electric utilities in the
United States.
EME and its affiliates sought Chapter 11 protection (Bankr. N.D.
Ill. Lead Case No. 12-49219) on Dec. 17, 2012.
EME has reached an agreement with the holders of a majority of
EME's $3.7 billion of outstanding public indebtedness and its
parent company, Edison International EIX, that, pursuant to a plan
of reorganization and pending court approval, would transition
Edison International's equity interest to EME's creditors, retire
existing public debt and enhance EME's access to liquidity.
The Company's balance sheet at Sept. 30, 2012, showed
$8.17 billion in total assets, $6.68 billion in total liabilities
and $1.48 billion in total equity.
In its schedules, Edison Mission Energy disclosed total assets of
assets of $5,721,559,170 and total liabilities of $6,202,215,094
as of the Petition Date.
Kirkland & Ellis LLP is serving as legal counsel to EME, Perella
Weinberg Partners, LP is acting as financial advisor and McKinsey
Recovery & Transformation Services U.S., LLC is acting as
restructuring advisor. GCG, Inc., is the claims and notice agent.
An official committee of unsecured creditors has been appointed in
the case and is represented by the law firms Akin Gump and Perkins
Coie. The Committee also has tapped Blackstone Advisory Partners
as investment banker and FTI Consulting as financial advisor.
ENERGY FUTURE: Plays for Time to Pursue Bankruptcy Deal
-------------------------------------------------------
Mike Spector and Emily Glazer, writing for The Wall Street
Journal, reported that the troubled Texas power company at the
center of a record private-equity buyout intends to make debt
payments in May that could let it stave off a bankruptcy filing
for as long as another 18 months, according to people close to the
situation.
According to WSJ, the former TXU Corp., now called Energy Future
Holdings Corp., plans to pay roughly $270 million in interest due
on its bonds May 1, these people said. The Dallas-based company,
which employs more than 9,000 people, plans to make the payments
partly because its advisers are in talks with creditors on a so-
called prearranged bankruptcy plan and need more time to negotiate
a debt-restructuring deal, the people said, WSJ added.
WSJ related that in the case of Energy Future Holdings, its
negotiations with creditors are complicated because the company
carries roughly $38 billion in debt and has a complex web of
subsidiaries and other corporate entities with varying financial
obligations to one another.
The company's plans to meet the debt payments suggest that its
advisers like their chances of reaching a prearranged-bankruptcy
deal, Harvey Miller, a veteran bankruptcy lawyer at Weil, Gotshal
& Manges LLP who isn't involved in the situation, told WSJ. "The
payment is in exchange for more time," he said.
Making the May debt payments would let Energy Future Holdings
avoid a default that could trigger a bankruptcy filing in the near
term, WSJ noted. The company's next significant debt payment
doesn't come due until October 2014, when it must repay $3.8
billion in bank debt. It must make some smaller additional
interest payments along the way, including this November.
The company, or parts of it, likely would file for bankruptcy
protection well before October 2014, some of the people said, but
not for at least several months, WSJ added. There remains a
chance Energy Future Holdings could decide to skip the May debt
payments if restructuring preparations pick up steam or some
unforeseen pressures arise, but people close to the situation
expect it to meet the obligations and keep negotiating with
creditors.
About Energy Future
Energy Future Holdings Corp., formerly known as TXU Corp., is a
privately held diversified energy holding company with a portfolio
of competitive and regulated energy businesses in Texas. Oncor,
an 80%-owned entity within the EFH group, is the largest regulated
transmission and distribution utility in Texas.
The Company delivers electricity to roughly three million delivery
points in and around Dallas-Fort Worth. EFH Corp. was created in
October 2007 in a $45 billion leverage buyout of Texas power
company TXU in a deal led by private-equity companies Kohlberg
Kravis Roberts & Co. and TPG Inc.
* * *
As reported by the TCR on Aug. 15, 2012, Moody's downgraded the
Corporate Family Rating (CFR) of EFH to Caa3 from Caa2 and
affirmed its Caa3 Probability of Default Rating (PDR) and SGL-4
Speculative Grade Liquidity Rating. The downgrade of EFH's CFR to
Caa3 from Caa2 reflects the company's financial distress and
limited financial flexibility.
In the Feb. 1, 2013, edition of the TCR, Fitch Ratings has lowered
the Issuer Default Ratings (IDR) of Energy Future Holdings Corp
(EFH) and Energy Future Intermediate Holding Company LLC (EFIH) to
'Restricted Default' (RD) from 'CCC' on the conclusion of the debt
exchange and removed the Rating Watch Negative.
As reported by the TCR on Feb. 4, 2013, Standard & Poor's Ratings
Services said it raised its corporate credit ratings on EFH, EFIH,
TCEH, and Energy Future Competitive Holdings Co. (EFCH) to 'CCC'
from 'D' following the completion of several debt exchanges, each
of which S&P considers distressed.
ENGLOBAL: Posts $8.7-Mil. Net Loss in Fiscal Year Ended Dec. 29
---------------------------------------------------------------
ENGlobal on April 15 reported financial results for the fourth
quarter and fiscal year ended December 29, 2012.
Fiscal Year 2012
Revenues for the year ended December 29, 2012 were $227.9 million,
a decrease of approximately 4% from the $237.6 million posted for
the year ended December 31, 2011. Excluding certain non-cash
charges, such as the impairment of goodwill and the write-off of a
deferred tax asset, ENGlobal reported a net loss from continuing
operations of $8.7 million, or $(0.32) per diluted share for
fiscal year 2012, compared to a net loss of $4.4 million from
continuing operations, or $(0.16) per diluted share for fiscal
year 2011.
Fourth Quarter 2012
Revenues in the fourth quarter of 2012 were approximately $52.1
million, a decrease of 30% from $74.6 million from the prior year
period. ENGlobal reported a net loss of $2.5 million from
continuing operations, or $(0.09) per diluted share, for the
quarter ended December 29, 2012, compared to a net loss of $2.6
million, or $(0.10) per diluted share for the quarter ended
December 31, 2011.
Management's Assessment
William A. Coskey, P.E., ENGlobal's Chairman and Chief Executive
Officer, stated: "ENGlobal's turnaround plan essentially began in
the fourth quarter of last year. While the Company experienced a
difficult 2012 and continues to face a number of challenges, we
are cautiously optimistic about our operations resulting from
measures that were implemented in the last six months. During
this time, the Company sold two non-strategic businesses,
discontinued another, and we are now focused on our core
operational segments."
Mark A. Hess, ENGlobal's Chief Financial Officer, added: "We are
also operating more efficiently and seeing significant margin
improvement from our continuing operations. The latter of which
is primarily due to ENGlobal's ongoing efforts to significantly
reduce overruns on its projects and to improve commercial terms on
its contracts. We remain dedicated to reducing our dependence on
our working capital credit facility. As a result of the
implementation of the above initiatives and the sale of our Field
Solutions divisions, we have reduced the level of borrowings under
our working capital credit facility to $26.8 million at the end of
2012 and we are currently borrowing significantly below that
level."
Mr. Coskey concluded, "As a result of our combined efforts, steady
financial improvement, and increasing backlog, our management team
can be proud to have outperformed the Company's financial
turnaround plan for each month since its inception."
Waiver
As reported by the Troubled Company Reporter on Dec. 27,
2012, ENGlobal entered into a Second Amendment to Revolving Credit
and Security Agreement, Waiver and Forbearance Extension with PNC
Bank, National Association, as administrative agent for the
lenders. The extension will be in place through April 30, 2013,
and requires ENGlobal's compliance with certain terms and
conditions. This extended period is expected to allow ENGlobal's
management sufficient time to see the results of the
implementation of its business improvement plan.
ENGlobal has hired a management consultant and subsequently
developed a plan to restore the Company's compliance with the
revolving credit facility.
About ENGlobal
ENGlobal ENG -- http://www.ENGlobal.com/-- founded in 1985, is a
provider of engineering and related project services principally
to the energy sector throughout the United States and
internationally. ENGlobal operates through three business
segments: Automation, Engineering & Construction, and Field
Solutions. ENGlobal's Automation segment provides services
related to the design, fabrication & implementation of process
distributed control and analyzer systems, advanced automation, and
related information technology.
EVERGREEN OIL: Section 341(a) Meeting Scheduled on May 14
---------------------------------------------------------
A meeting of creditors in the bankruptcy case of Evergreen Oil
Inc. will be held on May 14, 2013, at 1:30 p.m. at RM 1-159, 411 W
Fourth St., Santa Ana, CA 92701.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
About Evergreen Oil
Headquartered in Irvine, California, with facilities located in
Newark and Carson, California, Evergreen Oil Inc. is one of the
largest waste oil collectors in California, and the only oil
re-refining operation in California. Founded in 1984, EOI is also
a major provider of hazardous waste services, offering customers
across California a full range of environmental services to handle
all of their waste management needs.
Evergreen Oil and its parent, Evergreen Environmental Holdings,
Inc., sought Chapter 11 protection (Bankr. C.D. Cal. Case Nos.
13-13163 and 13-13168) on April 9, 2013, in Santa Ana California.
The Debtors on the petition date filed applications to employ
Levene, Neale, Bender, Yoo & Brill L.L.P. as bankruptcy counsel;
Jeffer, Mangels Butler & Mitchell L.L.P. as special corporate
counsel effective; and Cappello Capital Corp. as exclusive
investment banker.
The Debtors each estimated assets and debts of $50 million to
$100 million. According to the docket, the formal schedules of
assets and liabilities are due April 23, 2013.
EXIDE TECHNOLOGIES: Pomerantz Law Files Securities Class Action
---------------------------------------------------------------
Pomerantz Grossman Hufford Dahlstrom & Gross LLP has filed a class
action lawsuit against Exide Technologies and certain of its
officers. The class action filed in United States District Court,
Central District of California, is on behalf of a class consisting
of all persons or entities who purchased or otherwise acquired
securities of Exide Technologies between February 9, 2012 and
April 3, 2013, both dates inclusive. This class action seeks to
recover damages against the Company and certain of its officers
and directors as a result of alleged violations of the federal
securities laws pursuant to Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder.
If you are a shareholder who purchased Exide Technologies
securities during the Class Period, you have until June 14, 2013
to ask the Court to appoint you as Lead Plaintiff for the class.
A copy of the Complaint can be obtained at
http://www.pomerantzlaw.com
To discuss this action, contact Robert S. Willoughby at
rswilloughby@pomlaw.com or 888-476-6529 (or 888.4-POMLAW), toll
free, x237. Those who inquire by e-mail are encouraged to include
their mailing address, telephone number, and number of shares
purchased.
Exide operates in 80 countries, producing, recycling and
distributing lead-acid batteries. The Company's global
transportation and industrial energy groups purported to provide a
range of stored electrical energy products and services for
industrial and transportation applications.
The Complaint alleges that throughout the Class Period, Defendants
made false and/or misleading statements, as well as failed to
disclose material adverse facts about the Company's business,
operations, and prospects. Specifically, defendants failed to
disclose that: (a) Exide was polluting the environment with
potentially fatal levels of arsenic, and exposing almost 110,000
residents near its Vernon, California battery recycling facility
to dangerously high levels of pollutants; (b) Exide knew that
based on actual and projected revenues and expenses it would not
be able to meet its debt repayment obligations and other pledges
and promises under its debt agreements and indentures.
Specifically, the Company knew that it could not satisfy its
obligations under a $200 million revolving facility, a $675
million bond, and a $55.7 million floating rate convertible note
due in September 2013; and (c) as a result, Exide knew its
environmental liabilities, debt obligations and potential
insolvency supported neither Exide's statements to investors
regarding the Company's financials, its quarterly guidance, nor
the inflated share price targets the investment community was
modeling based on Defendants' Class Period statements and
guidance.
On March 22, 2013, one of the Company's recycling facilities in
Vernon, California, located approximately four miles due south of
downtown Los Angeles, was cited by the South Coast Air Quality
Management District as posing a greater cancer risk to residents
of Southern California than any of the more than 450 facilities
the Agency has regulated in the last 25 years.
Following the Agency's citation, on April 3, 2013, Los Angeles
City Council members held a public hearing asking the government
to press charges against the Company to correct the health risk
posed by the Company's environmental contamination.
On April 4, 2013, news source Debtwire.com published a report that
Exide had hired financial advisory firm Lazard and the law firm of
Akin Gump LLP, both bankruptcy experts, to advise on its financial
restructuring after prior restructuring efforts stalled. On this
news, Exide's shares fell $1.24 a share to $1.37 a share (-46%),
on April 4, 2013, before trading in the stock was halted.
The Pomerantz Firm -- http://www.pomerantzlaw.com-- concentrates
its practice in the areas of corporate, securities, and antitrust
class litigation. It has offices in New York, Chicago, Florida,
and San Diego.
About Exide Technologies
Headquartered in Princeton, New Jersey, Exide Technologies
(NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and
distributes lead acid batteries and other related electrical
energy storage products.
The Company filed for Chapter 11 protection (Bankr. Del. Case No.
02-11125) on April 14, 2002. Matthew N. Kleiman, Esq., and
Kirk A. Kennedy, Esq., at Kirkland & Ellis, and James E. O'Neill,
Esq., at Pachulski Stang Ziehl & Jones LLP represented the
Debtors in their successful restructuring. The Court confirmed
Exide's Amended Joint Chapter 11 Plan on April 20, 2004. The
plan took effect on May 5, 2004. While it has emerged from
bankruptcy, reorganized Exide continues to resolve claims filed
against it in the Bankruptcy Court.
FLAT OUT: Gets Final Order to Incur DIP Loan from HillStreet Fund
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York,
in a final order, authorized Flat Out Crazy, LLC, et al., to:
-- obtain postpetition financing in accordance with that
certain Debtor-in-Possession Term Loan Term Sheet entered
among the Debtors and The HillStreet Fund IV L.P.;
-- grant liens, security interests and superpriority
claims; and
-- use cash collateral and grant adequate protection; and
HillStreet serves as assignee from U.S. Bank National Association.
As adequate protection from any diminution in value of the
lender's collateral, the Debtor will grant the lender adequate
protection liens in the real and personal property, but only to
the extent the prepetition lender had, as of the Petition Date, a
superpriority administrative expense claim status subject to carve
out.
Summary of Terms and Conditions
For Senior DIP Credit Facility
Dated Feb. 27, 2013
-------------------------------
Lender: The HillStreet Fund IV, LP or its assigns.
Credit Facility: Debtor-In-Possession Term Loan up to
$1,018,000.
Closing Date: Closing of the DIP Loan with respect to the
Initial Disbursement will occur as soon as
practicable after the entry of the Interim
Order, but no later than two business days
after entry of such order.
Amortization: All DIP Loan Principal will be due on the
Interest Rate: 5% payable monthly in arrears. Interest
will be calculated on actual days earned
over 360 day calendar basis.
Use of Proceeds: Proceeds of the DIP Loan will be utilized
as follows: (i) general working capital and
operational expenses; (ii) administration
of the Bankruptcy Cases (in each case of
(i) and (ii), in accordance with a weekly
cash flow budget prepared by the Debtors,
in form and substance acceptable to the
Lender and the Agent on a lineby-line
basis; and (iii) costs, expenses, closing
payments, and all other payment amounts
contemplated herein.
Term: May 3, 2013, or on the occurrence of an
event of default;
A copy of the terms of the DIP financing is available for free at
http://bankrupt.com/misc/FLATOUT_cashcoll_finalorder.pdf
About Flat Out Crazy
Flat Out Crazy LLC and its affiliates operate two Asian-inspired
restaurant chains that began in Chicago. Flat Top Grill, which
currently has 15 locations, is a full-service fast-casual create-
your-own stir-fry concept. Stir Crazy Fresh Asian Grill, which
has 11 locations, is a full-service casual Asian restaurant
offering the flavors of Chinese, Japanese, Thai and Vietnamese
food. The Debtors have 1,200 employees.
Flat Out Crazy and 13 affiliates sought Chapter 11 protection
(Bankr. S.D.N.Y. Lead Case No. 13-22094) in White Plains, New York
on Jan. 25, 2013. The Debtors have tapped Squire Sanders (US) LLP
as counsel; Kurtzman Carson Consultants, LLC, as claims, noticing
and administrative agent; William H. Henrich and Mark Samson from
Getzler Henrich as their co-chief restructuring officers; and J.H.
Chapman Group, L.L.C, as their investment bankers.
The Debtors disclosed total assets of $28.0 million and
liabilities of $37.5 million as of Nov. 28, 2012.
An official committee of unsecured creditors has been appointed in
the Debtors' cases.
Tracy Hope Davis, the U.S. Trustee for Region 2, appointed Alan
Chapell, as the consumer privacy ombudsman in the Debtors' cases.
GENE CHARLES: Can Access U.S. Bank Cash Collateral Until July 30
----------------------------------------------------------------
In a third interim order, the U.S. Bankruptcy Court for the
Northern District of West Virginia authorized Gene Charles
Valentine Trust to use cash collateral of U.S. Bank National
Association, as Trustee, until July 30, 2013.
On or before the first of each month, beginning on April 1, 2013,
the Debtor will pay from the Cash Collateral to the Lender the
amount of $13,334, being the amount due under the Note each month.
The Court will hold a further hearing on the use of cash
collateral on July 29, 2013, at 9:30 a.m.
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.
GEOKINETICS INC: Modifies Chapter 11 Plan
-----------------------------------------
Geokinetics Inc. and its debtor affiliates modified their Joint
Chapter 11 Plan of Reorganization.
The Plan calls for holders of $300 million in 9.75% senior secured
notes to take ownership in exchange for debt, for a predicted 70%
recovery. Before bankruptcy, holders of 85% of the notes voted
for the plan, as did holders of all the preferred stock. Holders
of $141 million in preferred stock are to receive $6 million in
cash for a 4% recovery, according to the disclosure statement.
Unsecured creditors with up to $13.2 million in claims will be
paid in full. Existing common stock will be canceled.
To fund their exit from bankruptcy, the Debtors will enter into an
Exit Facility Agreement. Upon emergence from bankruptcy,
Reorganized GOK will issue and distribute new common stock to
holders of Allowed Note Claims and DIP Lender Claims.
The Plan also includes exculpation provisions, to which the U.S.
Trustee objected. The Plan provides that each of the Debtors and
the Reorganized Debtors, the Official Committee of Unsecured
Creditors, the DIP Lenders and the DIP Agent, the Credit Facility
Agent, the Notes Indenture Trustee, the Collateral Trustee, the
Consenting Noteholders, and the Consenting Preferred Equity
Holders, will have no liability for any act or omission in
connection with, or arising out of, the formulation, negotiation,
or pursuit of approval of the DIP Facility, the Disclosure
Statement, the Plan, or the solicitation of votes for or
confirmation of the Plan, or the consummation of the Plan, or the
transactions contemplated and effectuated by the Plan or the
administration of the Plan or the property to be distributed under
the Plan, or any other act or omission during the administration
of the Debtors' Estates or in contemplation of the Chapter 11
Cases except for gross negligence or willful misconduct as
determined by a Final Order of the Bankruptcy Court, and in all
respects, will be entitled to rely upon the advice of counsel with
respect to their duties and responsibilities under the Plan.
The U.S. Trustee complained that the Plan is not confirmable
because the exculpation provision is contrary to applicable law in
the District.
A full-text copy of the Modified Plan dated April 10, 2013, is
available for free at:
http://bankrupt.com/misc/GEOKINETICSplan0410.pdf
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.
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.
GIBRALTAR KENTUCKY: Hires Bankruptcy Counsel
--------------------------------------------
Gibraltar Kentucky Development, LLC, seeks authority from the U.S.
Bankruptcy Court for the Southern District of Florida to employ a
counsel to represent it in their Chapter 11 case.
The Debtor originally sought to employ David Lloyd Merrill, Esq. -
- david@ombkc.com -- at Ozment Merrill, in West Palm Beach,
Florida, as its lead attorney, but later stipulated with Mr.
Merrill to replace him with Tina Talarchyk, Esq., at Talarchyk
Merrill, LLC, in West Palm Beach, Florida.
A hearing on the employment application will be held on April 19,
2013, at 1:30 p.m.
About Gibraltar Kentucky
Gibraltar Kentucky Development, LLC, filed a Chapter 11 bankruptcy
petition (Bankr. S.D. Fla. Case No. 12-13289) on Feb. 10, 2012, in
West Palm Beach, Florida. Palm Beach Gardens-based Gibraltar
Kentucky says that it is not a small business debtor under 11
U.S.C. Sec. 101(51D). Documents attached to the petition indicate
that McCaugh Energy LLC owns 42.15% of the "fee simple"
securities. The Chapter 11 case was converted to one under
Chapter 7.
According to the Web site http://www.gibraltarenergygroup.com/
Gibraltar Kentucky is part of the Gibraltar Energy Group. The
various companies of the group are involved with the drilling,
development and production of oil and gas, as well as, the sale of
coal and timber. Offices are in Michigan and Florida and
investments are in Michigan and Kentucky.
Judge Erik P. Kimball presides over the case. The Debtor
disclosed $175,395,449 in assets and $1,193,516 in liabilities as
of the Chapter 11 filing. The petition was signed by Bill Boyd,
as manager.
Steven R. Turner, Trustee for Region 21, has informed the Court
that, until further notice, he will not appoint a committee of
creditors.
GRANITE DELLS: Developer OK'd To Examine Bankrupt Manager
---------------------------------------------------------
Maria Chutchian of BankruptcyLaw360 reported that a creditor of
the bankrupt manager of the also bankrupt Arizona company Granite
Dells Ranch Holdings LLC received court approval Monday to compel
the management company to produce certain financial documents
related to $142 million that it purportedly held in assets in
2008.
According to the report, U.S. Bankruptcy Judge Eddward P.
Ballinger Jr. granted Arizona Eco Development LLC's motion to
compel a representative of Cavan Management Co. LLC to turn over
financial information relating to Cavan Management Services LLC's
2008 tax information.
About Granite Dells Ranch Holdings
Scottsdale, Arizona-based Granite Dells Ranch Holdings LLC filed a
bare-bones Chapter 11 petition (Bankr. D. Ariz. Case No. 12-04962)
in Phoenix on March 13, 2012. Judge Redfield T. Baum PCT Sr.
oversees the case. The Debtor is represented by Alan A. Meda,
Esq., at Stinson Morrison Hecker LLP. The Debtor disclosed
$2.22 million in assets and $157 million in liabilities as of the
Chapter 11 filing.
Cavan Management Services, LLC is the Debtor's manager. David
Cavan, member of the firm, signed the Chapter 11 petition.
Arizona ECO Development LLC, which acquired a $83.2 million 2006
loan by the Debtor, is represented by Snell & Wilmer L.L.P. The
resolution authorizing the Debtor's bankruptcy filing says the
Company is commencing legal actions against Stuart Swanson, AED,
and related entities relating to the purchase by Mr. Swanson of a
promissory note payable by the Company to the parties that sold a
certain property to the Company. According to Law 360, AED sued
Granite Dells on March 6 asking the Arizona court to appoint a
receiver. Arizona ECO is foreclosing on a secured loan backed by
15,000 acres of Arizona land.
The United States Trustee said that an official committee has not
been appointed in the bankruptcy case of Granite Dells because an
insufficient number of unsecured creditors have expressed interest
in serving on a committee.
The Debtor's Plan provides for payment to unsecured creditors
(including any unsecured claim of AED) in quarterly installments
over eight years aggregating $5 million. However, the Plan
provides that a holder of an investment promissory note (estimated
to total $21 million) will be given the option of participating in
the funding of the Reorganized Debtor.
Tri-City Investment & Development, LLC, a 39.25% equity holder in
the Debtor, also filed a Consolidated Supplemental Disclosure in
support of Tri-City's Plan, as amended. Tri-City's consolidated
Disclosure Statement incorporates and restates all material terms
of the Tri-City's previous disclosure statements and incorporates
the terms of the agreement that was reached at the Aug. 20, 2012,
mediation.
Judge Ballinger signed an order on March 27, 2013, confirming the
Joint Plan of Reorganization proposed by the ad hoc committee of
noteholders and Arizona Eco Development LLC for the Debtors. The
Court confirmed the Plan after the Plan Proponents resolved
the confirmation objections raised by the Unofficial Ad Hoc
Committee of Equity Holders; GDRH; Granite Dells Units, LLC; Cavan
Prescott Investors, LLC; Cavan Management Company, LLC, as an
assignee of profit interests of CMS; and Major Cattle Company,
LLC.
GROVES IN LINCOLN: Files Schedules of Assets and Liabilities
------------------------------------------------------------
The Groves in Lincoln, Inc., filed with the U.S. Bankruptcy Court
for the District of Massachusetts, Eastern Division, its schedules
of assets and liabilities disclosing:
A. Real Property $0
B. Personal Property
B.1 Cash on hand 1,875
B.2 Bank Accounts 12,107,709
B.9 Interests in insurance policies Unknown
B.13 Stock and interests Unknown
B.16 Accounts receivable 580,407
B.23 Licenses, franchises & other general intangibles Unknown
B.25 Automobiles, trucks, trailers, and other vehicles 25,000
B.28 Office equipment, furnishings, and supplies Unknown
B.29 Machinery, fixtures, equipment and supplies Unknown
B.30 Inventory 5,637
TOTAL SCHEDULED ASSETS $12,833,360
==============================================================
C. Property Claimed as Exempt N/A
D. Creditors Holding Secured Claims $90,293,586
E. Creditors Holding Unsecured Priority Claims 138,395
F. Creditors Holding Unsecured Nonpriority Claims 20,759,327
TOTAL SCHEDULED LIABILITIES $111,191,309
==============================================================
Full-text copies of the Schedules dated April 8, 2013, are
available for free at http://bankrupt.com/misc/GROVESsal0408.pdf
About Groves in Lincoln
The Groves in Lincoln Inc., along with affiliate The Apartments of
the Grove Inc., sought Chapter 11 protection (Bankr. D. Mass. Case
No. 13-11329) in Boston on March 11, 2013. David C. Turner signed
the petition as president and CEO.
Groves is a Massachusetts not-for-profit corporation organized in
2006 for the purpose of developing and operating a senior
independent living facility in Lincoln, Massachusetts to be known
as The Groves in Lincoln. This facility now consists of 168
independent living units on a 34-acre campus with a mix of
apartments, cottages, and related common areas including community
center, dining rooms, lounges, barbershop/beauty salon, library,
fitness center and pool. Groves has 26 full-time employees and 22
part-time employees as of the bankruptcy filing.
The Debtors tapped Murtha Cullina LLP as counsel, Verdolino &
Lowey, P.C. as accountants and financial advisors, and RBC Capital
Markets LLC as investment banker.
A seven-member official committee of unsecured creditors was
appointed in the Debtor's Chapter 11 case. The Committee members
are E. Laurie Tolman, Vernon R. Alden, Carol B. Caswell, Frank E.
Ferguson, David Ganley, Robert K. Morrison, and Earle R. Rowe.
The Committee is represented by Bowditch & Dewey, LLP, as its
bankruptcy counsel.
HALLWOOD GROUP: Gets NYSE MKT Listing Non-Compliance Notice
-----------------------------------------------------------
The Hallwood Group Incorporated on April 15 disclosed it has
received a notice from the NYSE MKT LLC of potential delisting or
failure to satisfy a continued listing rule or standard.
The Exchange determined the Company's financial condition has
become impaired based upon its review of the Company's Form 10-K
for the fiscal year ended December 31, 2012. As a result of the
Exchange's review and determination, the Company is not in
compliance with one of the Exchange's continued listing standards,
and therefore has become subject to the procedures and
requirements of Section 1009 of the NYSE MKT Company Guide.
Specifically, the Company is not in compliance with Section
1003(a)(iv) of the Company Guide in that it has sustained losses
which are so substantial in relation to its overall operations or
its existing financial resources, or its financial condition has
become so impaired that it appears questionable, in the opinion of
the Exchange, as to whether the Company will be able to continue
operations and/or meet its obligations as they mature.
The letter states that, in order to maintain the Company's listing
with the Exchange, the Company must submit a plan of compliance by
May 13, 2013 addressing how it intends to regain compliance with
Section 1003(a)(iv) by July 15, 2013. If the Company does not
submit a plan, or if the plan is not accepted by the Exchange, the
Company will be subject to delisting proceedings. Furthermore, if
the plan is accepted but the Company is not in compliance with the
continued listing standards of the Company Guide by July 15, 2013,
or if the Company does not make progress consistent with the plan,
the Exchange staff will initiate delisting proceedings in
accordance with Section 1010 and Part 12 of the Company Guide.
ICEWEB INC: Restructures Debt with Sand Hill Finance
----------------------------------------------------
IceWEB, Inc. on April 15 disclosed that on April 12, 2013 the
Company entered into an agreement with Sand Hill Finance, LLC to
amend their existing Financing Agreement by issuing a convertible
debenture to replace IceWEB's existing note payable, in the amount
of $2,139,235. The debenture is convertible into common stock at
a fixed price of $0.075 per share, bears interest at 12% annually,
and has a two year term. In addition, the terms of the note call
for monthly payments of $15,000, which increases to $25,000 in the
event that IceWEB raises $3,000,000 or more in an equity
financing.
"Sand Hill Finance has demonstrated their faith in IceWEB's future
success by restructuring our debt in a way that allows us to no
longer be in default under our financing agreement, improves our
cash flow, and gives us the flexibility to successfully complete
our pending merger between IceWEB and Computers and Tele-Comm,
Inc.," said IceWEB CFO, Mark Lucky.
"We are pleased to have been able to reach such a positive
arrangement with IceWEB, particularly as we believe the company is
so undervalued. We're very excited about their strategy and their
future prospects," said Mark Cameron, President of Sand Hill
Finance.
About IceWEB
Sterling, Va.-based IceWEB, Inc., manufactures and markets
purpose-built appliances, network and cloud-attached storage
solutions and delivers on-line cloud computing application
services. The Company's customer base includes U.S. government
agencies, enterprise companies, and small to medium sized
businesses (SMB).
D'Arelli Pruzansky, P.A., in Boca Raton, Florida, expressed
substantial doubt about IceWEB's ability to continue as a going
concern. The independent auditors noted that the Company had net
losses of $6,485,048 for the year ended Sept. 30, 2012.
The Company reported a net loss of $6.5 million on $2.6 million of
sales in fiscal 2012, compared with a net loss of $4.7 million on
$2.7 million of sales in fiscal 2011.
IMARKETING SOLUTIONS: Seeks Ch. 15 Protection in Delaware
---------------------------------------------------------
Jamie Santo of BankruptcyLaw360 reported that U.S. units of
Canadian telemarketer iMarketing Solutions Group Inc. entered
Chapter 15 in Delaware bankruptcy court Friday and sought
immediate recognition of the insolvency proceedings commenced by
its parent in a Toronto court earlier in the day.
According to the report, counsel for Xentel Inc. and seven other
IMSG subsidiaries appeared in Wilmington hours after the Chapter
15 filing and asked the Delaware court to officially recognize the
foreign proceedings as the company was "gravely concerned" that
U.S. creditors hearing of the Canadian case would otherwise seek
to terminate contracts.
INDIANA BANK CORP: Asks Judge to Approve Speedy Sale of Bank
------------------------------------------------------------
Katy Stech at Dow Jones' DBR Small Cap reports the struggling
holding company behind Bank of Indiana asked a bankruptcy judge to
sign off on a quick sale of the bank's four branches and deposits
to the much larger First Farmers Bank & Trust, which plans to put
its own name on the locations if the deal goes through.
Indiana Bank Corp., a bank holding company, filed for
Chapter 11 protection (Bankr. S.D. Ind. Case No. 13-bk-80388) on
April 9, 2013, in Terra Haute, Indiana.
On April 9, the holding company announced that its four-branch
bank subsidiary Bank of Indiana NA will be sold to First Farmers
Bank & Trust. First Farmers has 24 branches in Illinois and
Indiana. It will acquire "significant assets" and assume
liability to depositors on their accounts. The acquisition should
be completed in the third quarter.
Dana, Indiana-based Indiana Bank Corp. estimated assets and debt
both less than $10 million.
INDIANAPOLIS DOWNS: Reorganization Plan Declared Effective
----------------------------------------------------------
BankruptcyData reported that Indianapolis Downs' Chapter 11 Plan
of Reorganization Plan became effective, and the Company emerged
from Chapter 11 protection. The Court officially confirmed the
Plan on March 20, 2013. The Plan is based on a sale of the
business to rival and casino operator Centaur Gaming Inc. for $500
million. Senior management and equity holders objected to
confirmation of the Plan.
About Indianapolis Downs
Indianapolis Downs LLC operated Indiana Live --
http://www.indianalivecasino.com/-- a combined race track and
casino at a state-of-the-art 283 acre Shelbyville, Indiana site.
It also operates two satellite wagering facilities in Evansville
and Clarksville, Indiana. Total revenue for 2010 was $270
million, representing an 8.7% increase in 2009. The casino
captured 53% of the Indianapolis market share.
In July 2001, Indianapolis Downs was granted a permit to conduct a
horse track operation in Shelvyville, Indiana, and started
operating the track in 2002. It was granted permission to operate
the casino at the racetrack operation in May 2007. The casino
began operations in July 2010.
Indianapolis Downs and subsidiary, Indianapolis Downs Capital
Corp., sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
11-11046) in Wilmington, Delaware, on April 7, 2011. Indianapolis
Downs estimated $500 million to $1 billion in assets and up to
$500 million in debt as of the Chapter 11 filing. According to a
court filing, the Debtor owes $98,125,000 on a first lien debt. It
also owes $375 million on secured notes and $72.6 million on
subordinated notes.
Matthew L. Hinker, Esq., Scott D. Cousins, Esq., and Victoria
Watson Counihan, Esq., at Greenberg Traurig, LLP in Wilmington,
Delaware, have been tapped as counsel to the Debtors. Christopher
A. Ward, Esq., at Polsinelli Shughart PC, in Wilmington, Delaware,
is the conflicts counsel. Lazard Freres & Co. LLC is the
investment banker. Bose Mckinney & Evans LLP and Bose Public
Affairs Group LLC serve as special counsel. Kobi Partners, LLC,
is the restructuring services provider. Epiq Bankruptcy
Solutions is the claims and notice agent.
David W. Carickhoff, Esq., at Blank Rome LLP; and Scott L.
Alberino, Esq., at Akin Gump Strauss Hauer & Feld LLP, in
Washington, DC, represent the Ad Hoc Second Lien Committee.
Thomas M. Horan, Esq., at Womble Carlyle Sandridge & Rice, LLP;
and Brian L. Shaw, Esq., at Shaw Gussis Fishman Wolfson & Towbin
LLC, represent the so-called Oliver Parties. The Oliver Parties
consist of Ross J. Mangano, both individually and as the trustee
of the Jane C. Warriner Trust dated February 26, 1971, the J.
Oliver Cunningham Trust dated February 26, 1971, and the Anne C.
McClure Trust dated February 26, 1971, Troon & Co., John C.
Warriner, Oliver Estate, LLC, and Oliver Racing, LLC.
Matthew Lunn, Esq., at Young Conaway Stargatt & Taylor, LLP; and
Kristopher Hansen, Esq., Stroock & Stroock & Lavan, represent
Fortress Investment.
INSPIREMD INC: Has Exchange Agreement with Debenture Holders
------------------------------------------------------------
InspireMD, Inc., on April 9, 2013, entered into an exchange and
amendment agreement with the holders of the Company's outstanding
senior secured convertible debentures due April 15, 2014.
Pursuant to the Agreement, simultaneously with the closing of the
Company's underwritten public offering of its shares of common
stock and in full satisfaction of the Company's obligations under
the Debentures, the Company agreed with the Holders to:
* repay $8,787,234 of the outstanding indebtedness evidenced by
the Debentures;
* issue those number of shares of Common Stock as a redemption
payment for the remaining indebtedness evidenced by the
Debentures equal to the quotient of (i) the remaining amount
due under the Debentures (after deducting the payment of
$8,787,234 and any accrued and unpaid interest on the
Debentures) divided by (ii) the price per share at which the
Common Stock is sold in the Offering (based on the offering
price of $2.00 per share, the Company will issue 2,159,574
shares of Common Stock to the Holders in full satisfaction of
the Company's obligations to the Holders);
* issue five year warrants to purchase an aggregate of 659,091
shares of Common Stock for $3.00 per share;
* amend the securities purchase agreement pursuant to which the
Debentures were originally issued to prohibit the Company
from issuing securities containing anti-dilution protective
provisions; and
* amend the Company's outstanding April 2012 $7.20 Warrants
that were issued to the Holders simultaneously with the
issuance of the Debentures to (i) eliminate the automatic
incorporation of the terms of any of the Company's securities
that are superior to those of the holders of the warrants,
except with respect to exercise price and warrant coverage
and (ii) provide that upon a fundamental transaction, the
holders of such warrants will have the right to cause the
Company to repurchase the unexercised portion of those
warrants at their Black-Scholes value on the date of that
fundamental transaction, payable in shares of Common Stock,
rather than in cash as was previously provided.
The Company's obligations under the Agreement are conditioned on
(i) the closing of the Offering on or before April 16, 2013, (ii)
the Company's receipt of gross proceeds of at least $20,000,000 in
the Offering, and (iii) a Common Stock per share purchase price of
at least $2.00 per share in the offering. Upon the Company's
satisfaction of the previously described obligations to the
Holders, the Company's obligations under the Debentures will be
deemed satisfied in full and all liens held by the Holders of
those securities will be discharged.
On April 15, 2013, the Company and the Holders entered into a
letter agreement amending certain terms of the $3.00 Warrant to
correspond to the revised terms of the Company's April 2012 $7.20
Warrants.
About InspireMD
InspireMD, Inc., was organized in the State of Delaware on
Feb. 29, 2008, as Saguaro Resources, Inc., to engage in the
acquisition, exploration and development of natural resource
properties. On March 28, 2011, the Company changed its name from
"Saguaro Resources, Inc." to "InspireMD, Inc."
Headquartered in Tel Aviv, Israel, InspireMD, Inc., is a medical
device company focusing on the development and commercialization
of its proprietary stent platform technology, Mguard. MGuard
provides embolic protection in stenting procedures by placing a
micron mesh sleeve over a stent. The Company's initial products
are marketed for use mainly in patients with acute coronary
syndromes, notably acute myocardial infarction (heart attack) and
saphenous vein graft coronary interventions (bypass surgery).
InspireMD reported a net loss of US$17.59 million on US$5.35
million of revenue for the year ended June 30, 2012, compared with
a net loss of US$6.17 million on US$4.67 million of revenue during
the prior year.
Kesselman & Kesselman, in Tel Aviv, Israel, issued a "going
concern" qualification on the consolidated financial statements
for the year ended June 30, 2012. The independent auditors noted
that the Company has had recurring losses, negative cash flows
from operating activities and has significant future commitments
that raise substantial doubt about its ability to continue as a
going concern.
The Company said the following statement in its quarterly report
for the period ended Dec. 31, 2012:
"The Company has had recurring losses and negative cash flows from
operating activities and has significant future commitments. For
the six months ended December 31, 2012, the Company had losses of
approximately $9.4 million and negative cash flows from operating
activities of approximately $5.8 million. The Company's
management believes that its financial resources as of December
31, 2012 should enable it to continue funding the negative cash
flows from operating activities through the three months ended
September 30, 2013. Furthermore, commencing October 2013, the
Company's senior secured convertible debentures (the "2012
Convertible Debentures") are subject to a non-contingent
redemption option that could require the Company to make a payment
of $13.3 million, including accrued interest. Since the Company
expects to continue incurring negative cash flows from operations
and in light of the cash requirement in connection with the 2012
Convertible Debentures, there is substantial doubt about the
Company's ability to continue operating as a going concern. These
financial statements include no adjustments of the values of
assets and liabilities and the classification thereof, if any,
that will apply if the Company is unable to continue operating as
a going concern."
The Company's balance sheet at Dec. 31, 2012, showed US$11.59
million in total assets, US$11.39 million in total liabilities and
a US$204,000 in total equity.
J.C. PENNEY: Fitch Sees Draw on Revolver as Stop-Gap Measure
------------------------------------------------------------
J.C. Penney Co. Inc. on Monday said it drew down $850 million from
its $1.85 billion revolving credit facility. Fitch Ratings views
this as a stop-gap measure before permanent financing is put in
place. "We believe J.C. Penney will need to tap into additional
funding to cover a projected free cash flow (FCF) shortfall of
$1.3 billion to $1.5 billion in 2013, which could begin to strain
its existing sources of liquidity. Upside or downside to our FCF
estimate will depend on the speed and effectiveness of critical
decisions over the next weeks around pricing strategy,
merchandising decisions (what new shops to build out and what to
forego), and capital expenditures.
"While the draw itself has no immediate credit impact, we will
continue to closely monitor the company's liquidity position. We
downgraded the Issuer Default Ratings (IDRs) on J.C. Penney and
J.C. Penney Corporation, Inc. to 'B-' from 'B' on February 28 and
the Rating Outlook is Negative.
"Our primary concern remains with the company's ability to secure
the $1 billion or so needed in permanent financing in 2013 to fund
operations and peak seasonal working capital needs. We expect J.C.
Penney will need to tap into various sources of funding including
equity infusion."
Under its $1.85 billion credit facility, J.C. Penney is permitted
to issue up to $1.75 billion in debt to be secured by a second
lien on the asset-backed revolver collateral and a first lien on
other assets. The company owns 429 stores (including 123 located
on-ground leases), 12.2 million square feet of distribution
center, regional warehouse, and fulfillment center space, and its
Plano Texas headquarters with 240 acres (or 10.5 million square
feet) of adjacent land that are all currently unencumbered. To the
extent that the 1982 indenture governing the 7.125% debentures due
2023 (under which the company has to maintain a ratio of net
tangible assets to senior funded indebtedness of 2.0x and above)
proves to be too restrictive for the company to incur additional
debt, J.C. Penney could potentially use any new debt proceeds to
repay the $255 million in outstanding debt under this indenture.
JEFFERSON COUNTY, AL: Assured Lawsuit Subject to Automatic Stay
---------------------------------------------------------------
Bankruptcy Judge Thomas B. Bennett denied the request of Assured
Guaranty Municipal Corp., f/k/a Financial Security Assurance,
Inc., to proceed with a New York state court lawsuit against
JPMorgan Chase Bank, N.A. and its affiliate, J.P. Morgan
Securities LLC, the underwriter of Jefferson County's sewer bonds.
Judge Bennett said Assured's action is subject to the automatic
stay in the county's Chapter 9 bankruptcy case.
Bond insurers Assured and Syncora Guarantee Inc. commenced
separate lawsuits in state court against JPMorgan in 2010, before
the county's Chapter 9 case began, alleging fraud and aiding and
abetting fraud in connection with the financing of the county's
Sewer System. Both Assured and Syncora hired the same lawyers.
Syncora named Jefferson County as defendant in the lawsuit.
Assured did not.
After failing to dismiss the Assured Action, JPMorgan filed a
third-party complaint against Jefferson County for
indemnification.
Assured, Syncora, JPMorgan, and the County agreed to coordinate
discovery for efficiency purposes in the Assured and Syncora
Actions, but the discovery in these cases was and remains
nonetheless substantial. During the pre-bankruptcy period, the
County agreed to cooperate with Assured's document requests and
produced more than 370,000 pages of documents. On Oct. 6, 2011,
the parties informed the New York court that they had agreed to a
framework for settlement negotiations, and had therefore reached
an informal standstill on the Assured and Syncora Actions. At the
time of this standstill, document discovery was unfinished, third-
party document discovery had been minimal, depositions and expert
discovery had yet to commence, and the parties still had
unresolved discovery disputes. Further, at the time of the
standstill, the County had already spent over $2.5 million from
its limited General Fund to defend itself in the Assured and
Syncora Actions.
In November 2011, the County filed its Chapter 9 petition and
scheduled approximately $4.23 billion dollars of debt, with
approximately $3.14 billion of that debt attributable to the Sewer
System. Assured, Syncora, JPMorgan, and the County informed the
New York court that their informal standstill would continue until
they reached a resolution of whether the stay affects the Assured
and Syncora Actions.
Assured then filed a motion in the County's bankruptcy case for
the Court to determine that the automatic stay does not apply to
the Assured Action, or alternatively, to modify the stay and allow
the Assured Action to continue.
Both the County and JPMorgan objected to the Assured Motion.
"The question presented to this Court is whether the degree of
sameness between these two lawsuits is sufficient for the
automatic stay to apply when the only meaningful difference is
that the County is a defendant in one suit and a third-party
defendant in the other. Viewed from another perspective, the
issue is whether Assured's creative pleading is enough to avoid
application of 11 U.S.C. Sec. 362(a)'s shield. The Court holds
that it is not. The automatic stay applies to Assured's action
against JPMorgan in New York state court . . . and there is no
cause to modify the stay to allow the Assured Action to proceed,"
Judge Bennett said.
"[T]he claims against the County and JPMorgan are inextricably
interwoven, and the County has an indemnification agreement with
JPMorgan that could make it responsible for any recovery Assured
wins against JPMorgan," the judge also pointed out.
A copy of the Court's April 15, 2013 Memorandum Opinion is
available at http://is.gd/UPNS2yfrom Leagle.com.
About Jefferson County
Jefferson County has its seat in Birmingham, Alabama. It has a
population of 660,000.
Jefferson County filed a bankruptcy petition under Chapter 9
(Bankr. N.D. Ala. Case No. 11-05736) on Nov. 9, 2011, after an
agreement among elected officials and investors to refinance
$3.1 billion in sewer bonds fell apart.
John S. Young Jr. LLC was appointed as receiver by Alabama Circuit
Court Judge Albert Johnson in September 2010.
Jefferson County's bankruptcy represents the largest municipal
debt adjustment of all time. The county said that long-term debt
is $4.23 billion, including about $3.1 billion in defaulted sewer
bonds where the debt holders can look only to the sewer system for
payment.
The county said it would use the bankruptcy court to put a value
on the sewer system, in the process fixing the amount bondholders
should be paid through Chapter 9.
Judge Thomas B. Bennett presides over the Chapter 9 case. Lawyers
at Bradley Arant Boult Cummings LLP and Klee, Tuchin, Bogdanoff &
Stern LLP, led by Kenneth Klee, represent the Debtor as counsel.
Kurtzman Carson Consultants LLC serves as claims and noticing
agent. Jefferson estimated more than $1 billion in assets. The
petition was signed by David Carrington, president.
The bankruptcy judge in January 2012 ruled that the state court-
appointed receiver for the sewer system largely lost control as a
result of the bankruptcy. Before deciding whether Jefferson County
is eligible for Chapter 9, the bankruptcy judge will allow the
Alabama Supreme Court to decide whether sewer warrants are the
equivalent of "funding or refunding bonds" required under state
law before a municipality can be in bankruptcy.
U.S. District Judge Thomas B. Bennett ruled in March 2012 that
Jefferson County is eligible under state law to pursue a debt
restructuring under Chapter 9. Holders of more than $3 billion in
defaulted sewer debt had challenged the county's right to be in
Chapter 9.
JEFFERSON COUNTY, AL: Fires Attorney Before Filing of Plan
----------------------------------------------------------
Verna Gates, writing for Reuters, reported that Alabama's
Jefferson County fired its attorney for not working in its best
interests, weeks before the county is expected to present a plan
to emerge from the nation's largest municipal bankruptcy.
According to the report, Jeff Sewell, who was placed on
administrative leave earlier this week, had been in the legal
department for 25 years. More than 800 workers have been let go
since the county filed for bankruptcy in 2011.
The county commissioners said the dismissal on April 12 was due to
directions given by Sewell to the county's outside attorneys "that
were not in the best interests of Jefferson County," Reuters
related. They added that the termination would not affect the
recovery plan, which would detail how the county intends to fix
its debt to exit municipal bankruptcy.
"We have spoken with the creditors and with our outside counsel
concerning if we made a change. Everyone was of the consensus that
we would work together moving forward and it would not impact or
delay our plan of adjustment," County Commissioner Jimmie Stephens
told Reuters.
Reuters related that the federal judge overseeing the $4.2 billion
bankruptcy agreed last week to hold a status hearing on May 9 to
discuss the schedule for filing the plan of adjustment but no hard
deadline has yet been set. Filing a plan of adjustment, which is
being readied as the county negotiates privately on terms with
some creditors and battles in court with others, is a key step
toward ending Jefferson County's landmark 2011 bankruptcy. Any
plan must be approved by a federal judge.
Four out of five county commissioners voted to terminate Sewell on
charges of insubordination and for contacting bankruptcy attorneys
without authorization, according to the report. Reuters related
that five former county commissioners were convicted for
corruption and four went to prison.
About Jefferson County
Jefferson County has its seat in Birmingham, Alabama. It has a
population of 660,000.
Jefferson County filed a bankruptcy petition under Chapter 9
(Bankr. N.D. Ala. Case No. 11-05736) on Nov. 9, 2011, after an
agreement among elected officials and investors to refinance
$3.1 billion in sewer bonds fell apart.
John S. Young Jr. LLC was appointed as receiver by Alabama Circuit
Court Judge Albert Johnson in September 2010.
Jefferson County's bankruptcy represents the largest municipal
debt adjustment of all time. The county said that long-term debt
is $4.23 billion, including about $3.1 billion in defaulted sewer
bonds where the debt holders can look only to the sewer system for
payment.
The county said it would use the bankruptcy court to put a value
on the sewer system, in the process fixing the amount bondholders
should be paid through Chapter 9.
Judge Thomas B. Bennett presides over the Chapter 9 case. Lawyers
at Bradley Arant Boult Cummings LLP and Klee, Tuchin, Bogdanoff &
Stern LLP, led by Kenneth Klee, represent the Debtor as counsel.
Kurtzman Carson Consultants LLC serves as claims and noticing
agent. Jefferson estimated more than $1 billion in assets. The
petition was signed by David Carrington, president.
The bankruptcy judge in January 2012 ruled that the state court-
appointed receiver for the sewer system largely lost control as a
result of the bankruptcy. Before deciding whether Jefferson County
is eligible for Chapter 9, the bankruptcy judge will allow the
Alabama Supreme Court to decide whether sewer warrants are the
equivalent of "funding or refunding bonds" required under state
law before a municipality can be in bankruptcy.
U.S. District Judge Thomas B. Bennett ruled in March 2012 that
Jefferson County is eligible under state law to pursue a debt
restructuring under Chapter 9. Holders of more than $3 billion in
defaulted sewer debt had challenged the county's right to be in
Chapter 9.
JETBLUE AIRWAYS: Moody's Affirms 'B3' CFR; Outlook Positive
-----------------------------------------------------------
Moody's Investors Service affirmed all of its ratings assigned to
JetBlue Airways, Corp.; Corporate Family of B3, Probability of
Default of B3-PD and Speculative Grade Liquidity of SGL-3.
Moody's also affirmed the company's senior unsecured rating of
Caa2 and the ratings it assigns to the company's enhanced
equipment trust certificates ("EETCs"): G-1 and B-1tranches of the
spare parts financing of Baa3 and B1, respectively and G1 or G2
tranches of the aircraft financings of Ba3. The outlook is
positive.
Outlook Actions:
Issuer: JetBlue Airways Corp.
Outlook, Changed To Positive from Stable
Affirmations:
Issuer: JetBlue Airways Corp.
Probability of Default Rating, Affirmed B3-PD
Speculative Grade Liquidity Rating, Affirmed SGL-3
Corporate Family Rating, Affirmed B3
Senior Secured Enhanced Equipment Trust, Spare Parts, G-1
tranche, Affirmed Baa3
Senior Secured Enhanced Equipment Trust, Spare Parts, B-1
tranche, Affirmed B1
Senior Secured Enhanced Equipment Trust, Aircraft, G1 or G2
tranche, Affirmed Ba3
Issuer: New York City Industrial Development Agency, NY
Senior Unsecured Revenue Bonds, Affirmed Caa2
Ratings Rationale:
The positive outlook considers the successful execution of
JetBlue's strategy to expand its route network at airports along
the U.S. East Coast where larger peers do not operate hubs, which
has led to competitive traffic performance and a positive
trajectory of credit metrics, notwithstanding its relatively
smaller size. Moody's anticipates that JetBlue can sustain the
recent improvements in its metrics profile in 2013, which could
lead to an upgrade of the ratings.
The B3 Corporate Family rating balances JetBlue's leading unit
costs, aided by the relatively young fleet and non-union labor
force and recent good traffic results with the sensitivity of
demand to economic fundamentals and of earnings to high fuel
prices. The rating also considers the challenge of maintaining, if
not growing yields, while capacity grows in the mid to high single
digits. JetBlue's smaller size and limited network relative to
those of United Continental Holdings, Inc. (B2, stable) and Delta
Air Lines, Inc. (B2, stable) has been a constraint on its
Corporate Family rating. However, Moody's believes that the
operating and financial benefits accruing from its network
expansion, competitive profit margins, and breakeven to modestly
positive free cash flow generation can lead to stronger credit
metrics and a stronger credit profile. Adequate liquidity supports
the B3 rating. The company has reduced the amount of cash as a
percent of revenue to the mid-teens range because of voluntary
debt repayments and timing of payments to Airbus. However,
according to JetBlue, it has grown a pool of unencumbered assets
aggregating about $500 million in value, including eleven
unencumbered A320s.
The ratings could be upgraded if the company is able to further
strengthen its metrics profile and maintain adequate liquidity.
Sustaining Debt to EBITDA below 5.5 times and FFO + Interest to
Interest above 3.0 times while funding deliveries of new aircraft
could support an upgrade as would unrestricted cash that remains
above 14% of revenue and positive free cash flow generation. A
negative rating action could follow if free cash flow generation
remains negative or if unrestricted cash falls below $500 million.
Deterioration in the company's credit metrics such as Debt to
EBITDA above 7.0 times, Funds from Operations + Interest to
Interest below 2.0 times, or an EBITDA margin of less than 14%
could lead to a downgrade of the ratings.
The principal methodology used in this rating was the Global
Passenger Airlines Industry Methodology published in May 2012 and
Enhanced Equipment Trust and Equipment Trust Certificates
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.
JetBlue Airways Corp., based in Long Island City, New York,
operates a low-cost, point-to-point airline from New York's John
F. Kennedy airport with other focus cities in Boston, Fort
Lauderdale, Los Angeles (Long Beach), San Juan and Orlando.
JetBlue serves 76 cities with 800 daily flights.
KANE & KANE: IRS Gets Favorable Ruling in Avoidance Action
----------------------------------------------------------
Bankruptcy Judge Erik P. Kimball said he'll enter judgment in
favor of the defendant in the adversary complaint MICHAEL R.
BAKST, Trustee in Bankruptcy for KANE & KANE, A PARTNERSHIP,
Plaintiff, v. UNITED STATES OF AMERICA, Defendant, Adv. Proc. No.
10-01022 (EPK) (Bankr. S.D. Fla).
The fourt-count Complaint was filed in 2010 by the Kane & Kane
bankruptcy trustee against the U.S. Internal Revenue Service for
the recovery of alleged fraudulent transfers. The lawsuit focuses
on six monetary transfers, aggregating $727,871, made by the
Debtor to the Defendant between April 14, 2008 and October 17,
2008, for personal income tax obligations.
The parties dispute whether the Debtor received less than
reasonably equivalent value in exchange for the Transfers; whether
the Debtor was insolvent on the dates of the Transfers or became
insolvent as a result of the Transfers; and whether the Debtor was
left with an unreasonably small capital after the Transfers.
Judge Kimball said the plaintiff did not meet its burden on any
component of the Complaint.
A copy of the Bankruptcy Court's March 25, 2013 Memorandum Opinion
is available at http://is.gd/NAXHGefrom Leagle.com.
About Kane & Kane
Kane & Kane, A Partnership, was a law firm formed as a Florida
general partnership. Charles J. Kane and Harley N. Kane, both
members of the Florida Bar, were the only partners in the firm.
In 2004, Stewart Tilghman Fox & Bianchi, P.A., William C. Hearon,
P.A., and Todd S. Stewart, P.A., filed suit against the Debtor and
the Kanes in the Circuit Court of the Fifteenth Judicial Circuit
in and for Palm Beach County, Florida. On April 24, 2008, the
State Court entered its Final Judgment in favor of Stewart et al.
and against the Debtor, Charles Kane and Harley Kane, jointly and
severally, in the amount of $2,000,000 plus pre and post-judgment
interest.
The firm, Charles Kane and Harley Kane each filed voluntary
Chapter 11 petitions on Nov. 17, 2008. The Court dismissed the
three Chapter 11 cases effective March 30, 2009, after the Court
found that they had been filed in bad faith.
The firm filed a voluntary Chapter 7 petition (Bankr. S.D. Fla.
Case No. 09-15556) on March 30, 2009. Michael R. Bakst was
appointed as Chapter 7 Trustee.
Charles Kane and Harley Kane also filed voluntary chapter 7
petitions on the same day.
LDK SOLAR: Fails to Make Full Payment of 2013 Convertible Notes
---------------------------------------------------------------
LDK Solar Co., Ltd., said Tuesday that, due to a temporary cash-
flow shortage, it was not able to make full payments to the
holders of its 4.75% convertible senior notes due 2013 in an
aggregate principal amount of US$23,793,000, plus interest,
otherwise due and payable on their maturity date of April 15,
2013.
LDK Solar has, however, privately and individually negotiated with
two holders of such convertible notes in the aggregate principal
amount of US$16,553,000, and reached settlement with them, shortly
before the maturity date, through a partial payment in cash and
effectively a loan facility to postpone the repayment of the
remaining indebtedness.
LDK Solar had informed The Bank of New York Mellon, as trustee for
the holders of the convertible notes, of such nonpayment. LDK
Solar is nevertheless ready and willing to discuss and reach a
settlement for the remaining convertible notes.
Earlier this month, the Company said it continues to work with the
relevant governmental agencies on the review and approval of the
purchase agreement for LDK Anhui. The purchase agreement was
announced in January with Shanghai Qianjiang Group. According to
the terms of the agreement, Qianjiang Group agreed to purchase all
shares of LDK Anhui, located in Hefei City, for RMB 25 million and
release the guarantee LDK Solar provided to LDK Anhui and its
subsidiaries within 12 months, as well as compensate LDK Solar for
any loss associated with such guarantee, prior to its release. The
planned closing date for this purchase agreement was originally
set for March 31, 2013 subject to relevant governmental approvals.
For more information contact:
Lisa Laukkanen
The Blueshirt Group for LDK Solar
Tel: 415-217-4967
E-mail: lisa@blueshirtgroup.com
About LDK Solar
LDK Solar Co., Ltd. -- http://www.ldksolar.com-- based in Hi-
Tech Industrial Park, Xinyu City, Jiangxi Province, People's
Republic of China, is a vertically integrated manufacturer of
photovoltaic products, including high-quality and low-cost
polysilicon, solar wafers, cells, modules, systems, power
projects and solutions.
LDK Solar was incorporated in the Cayman Islands on May 1, 2006,
by LDK New Energy, a British Virgin Islands company wholly owned
by Xiaofeng Peng, LDK's founder, chairman and chief executive
officer, to acquire all of the equity interests in Jiangxi LDK
Solar from Suzhou Liouxin Industry Co., Ltd., and Liouxin
Industrial Limited.
KPMG in Hong Kong, China, said in a May 15, 2012, audit report,
there is substantial doubt on the ability of LDK Solar Co., Ltd.,
to continue as a going concern. According to KPMG, LDK Solar has
a net working capital deficit and is restricted to incur
additional debt as it has not met a financial covenant ratio
under a long-term debt agreement as of Dec. 31, 2011. These
conditions raise substantial doubt about the Group's ability to
continue as a going concern.
LDK Solar's balance sheet at Sept. 30, 2012, showed
US$5.76 billion in total assets, US$5.41 billion in total
liabilities, US$299.02 million in redeemable non-controlling
interests and US$45.91 million in total equity.
LEGENDS GAMING: Disclosure Statement Hearing Set for May 13
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Louisiana
will convene a hearing on May 13, 2013, at 9:00 a.m., to consider
approval of the adequacy of the disclosure statement explaining
the Plan of Reorganization for Legends Gaming, LLC, and its debtor
affiliates. Objections are due on or before May 8.
The Plan gives ownership to first-lien lenders owed
$181.2 million. For holders of $215.2 million in unsecured
claims, there will be a recovery of 0.2%, although only if the
class votes in favor of the plan.
Under the Plan:
* Senior secured lenders will receive a new $80 million first-
lien term loan on emergence from bankruptcy. Once gambling
regulators give lenders permission to become owners, they can
exercise options to assume stock ownership at a nominal price.
The senior lenders are having a 46% recovery.
* The second-lien claim of $116.3 million will be treated as
an entirely unsecured claim and placed in a class of unsecured
creditors that will also include the deficiency claim of the
first-lien lenders.
* The unsecured creditor class is being offered to $40,000 to
split, for a predicted recovery of 0.2%. If the class votes
against the plan, they receive nothing.
* Holders of interests in Riverboat Gaming will retain their
interests but holders of any preferred interest and common
interests won't get anything.
The casinos were to have been sold to an affiliate of the
Chickasaw Nation for $125 million until the buyer pulled out.
Creditors were voting on a plan when the sale fell apart.
A full-text copy of the Disclosure Statement dated April 4, 2013,
is available at:
http://bankrupt.com/misc/LOUISIANARIVERBOATds0405.pdf
About Legends Gaming
Legends Gaming LLC, owns gaming facilities located in Bossier
City, Louisiana, and Vicksburg, Mississippi, operating under the
DiamondJack's trade name.
Legends Gaming LLC, and five related entities, including Louisiana
Riverboat Gaming Partnership, filed Chapter 11 petitions (Bankr.
W.D. La. Case No. 12-12013) in Shreveport, Indiana, on July 31,
2012, to sell the business for $125 million to Global Gaming
Solutions LLC, absent higher and better offers.
Legends Gaming acquired the business from Isle of Capri Casinos
Inc., in 2006 for $240 million. After breaching covenant with
lenders, the Debtors in March 2008 sought Chapter 11 protection,
jointly administered under Louisiana Gaming Partnership (Case No.
08-10824). The Debtors emerged from bankruptcy in September 2009
and retained ownership and operation of two "DiamondJacks" hotels
and casinos in Bossier City and Vicksburg. The Plan restructured
$162.1 million owed to the first lien lenders and $75 million owed
to secured lien lenders, which would be paid in full, with
interest, over time.
The Debtors' properties comprise 60,000 square feet of gaming
space with 1,913 slot machines, 48 table games and 693 hotel
rooms. Revenues in fiscal 2011 were $99.8 million in Louisiana
and $39.7 million in Mississippi.
As of July 31, 2012, first lien lenders are owed $181.2 million
and second lien lenders are owed $114.7 million. Louisiana
Riverboat Gaming Partnership disclosed $104,846,159 in assets and
$298,298,911 in liabilities as of the Chapter 11 filing.
Attorneys at Heller, Draper, Hayden Patrick & Horn serve as
counsel to the Debtors. Sea Port Group Securities, LLC is the
financial advisor. Kurtzman Carson Consultants LLC as is the
claims and notice agent. The Debtors have tapped Jenner & Block
LLP as special counsel.
The casinos were to have been sold to an affiliate of the
Chickasaw Nation for $125 million until the buyer pulled out.
They are now in litigation.
LEGENDS GAMING: Cash Collateral Use Extended Through June 30
------------------------------------------------------------
Legends Gaming, LLC and its debtor affiliates and the ad hoc group
of first lien lenders agreed to further extend the term of the
Debtors' use of Cash Collateral from March 31, 2013, through June
30, 2013, on the same terms and conditions as provided in the
Final Cash Collateral Order. A full-text copy of the parties'
stipulation with the Cash Collateral Budget from March 31 through
June 30, 2013, is available for free at:
http://bankrupt.com/misc/LEGENDScashcolbudget0328.pdf
About Legends Gaming
Legends Gaming LLC, owns gaming facilities located in Bossier
City, Louisiana, and Vicksburg, Mississippi, operating under the
DiamondJack's trade name.
Legends Gaming LLC, and five related entities, including Louisiana
Riverboat Gaming Partnership, filed Chapter 11 petitions (Bankr.
W.D. La. Case No. 12-12013) in Shreveport, Indiana, on July 31,
2012, to sell the business for $125 million to Global Gaming
Solutions LLC, absent higher and better offers.
Legends Gaming acquired the business from Isle of Capri Casinos
Inc., in 2006 for $240 million. After breaching covenant with
lenders, the Debtors in March 2008 sought Chapter 11 protection,
jointly administered under Louisiana Gaming Partnership (Case No.
08-10824). The Debtors emerged from bankruptcy in September 2009
and retained ownership and operation of two "DiamondJacks" hotels
and casinos in Bossier City and Vicksburg. The Plan restructured
$162.1 million owed to the first lien lenders and $75 million owed
to secured lien lenders, which would be paid in full, with
interest, over time.
The Debtors' properties comprise 60,000 square feet of gaming
space with 1,913 slot machines, 48 table games and 693 hotel
rooms. Revenues in fiscal 2011 were $99.8 million in Louisiana
and $39.7 million in Mississippi.
As of July 31, 2012, first lien lenders are owed $181.2 million
and second lien lenders are owed $114.7 million. Louisiana
Riverboat Gaming Partnership disclosed $104,846,159 in assets and
$298,298,911 in liabilities as of the Chapter 11 filing.
Attorneys at Heller, Draper, Hayden Patrick & Horn serve as
counsel to the Debtors. Sea Port Group Securities, LLC is the
financial advisor. Kurtzman Carson Consultants LLC as is the
claims and notice agent. The Debtors have tapped Jenner & Block
LLP as special counsel.
The casinos were to have been sold to an affiliate of the
Chickasaw Nation for $125 million until the buyer pulled out.
They are now in litigation.
LEGENDS GAMING: Hearing on Proposed Bonuses Set for April 22
------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Louisiana,
Shreveport Division, will convene a hearing on April 22, 2013, at
9:00 a.m., to consider approval of Legends Gaming, LLC's motion to
implement its employee retention and incentive program.
The Plan, which is hinged on the performance of the Company's
employees, is estimated to total up to $779,000, but the amount
could be less depending on attrition and sub-par performance
reviews.
The Plan provides for the following:
(i) a lump sum payment, payable in October 2013, of 3% of each
qualifying employee's annual salary;
(ii) for an employee to qualify for the payment, the following
conditions must be met:
(a) the employee must have been employed as of Jan. 1,
2013;
(b) the employee must be continuously employed by the
Debtors through Sept. 30, 2013;
(c) the employee must receive a "Good" or "Meets
Requirements" on his or her most recent performance
review;
(d) the employee must not be subject to any written
counseling in the six months prior to the date the
bonus is paid; and
(e) the employee must be employed full-time.
The total cost of the proposed bonuses for employees who do not
have executive titles is estimated to total up to $420,000 for the
DiamondJacks Casino in Bossier City, Louisiana, and $268,000 for
the DiamondJacks Casino in Vicksburg, Mississippi. The Debtors
propose to include all full-time, salaried and hourly employees
who do not have executive titles in the Plan.
The total cost of the proposed bonus for 38 employees with
executive titles is estimated to total up to $91,000 and bonuses
are based on the same criteria as are the proposed bonuses for
non- executives. These employees will receive the same 3% bonus
as the employees who do not have executive titles. No bonus to
any employee with an executive title is expected to exceed $6,600.
Though the 38 employees have executive titles, they are not
"insiders" of the Debtors, as defined under Section 101(31) of the
Bankruptcy Code. In fact, no insiders of the Debtors will receive
any bonus under the proposed Plan, the Debtors assure the Court.
The bonus payments will allow the Debtors to keep their existing
employees from quitting. The Debtors related that they are afraid
their employees would jump ship to a competing casino that is to
open soon in Bossier City, Louisiana.
About Legends Gaming
Legends Gaming LLC, owns gaming facilities located in Bossier
City, Louisiana, and Vicksburg, Mississippi, operating under the
DiamondJack's trade name.
Legends Gaming LLC, and five related entities, including Louisiana
Riverboat Gaming Partnership, filed Chapter 11 petitions (Bankr.
W.D. La. Case No. 12-12013) in Shreveport, Indiana, on July 31,
2012, to sell the business for $125 million to Global Gaming
Solutions LLC, absent higher and better offers.
Legends Gaming acquired the business from Isle of Capri Casinos
Inc., in 2006 for $240 million. After breaching covenant with
lenders, the Debtors in March 2008 sought Chapter 11 protection,
jointly administered under Louisiana Gaming Partnership (Case No.
08-10824). The Debtors emerged from bankruptcy in September 2009
and retained ownership and operation of two "DiamondJacks" hotels
and casinos in Bossier City and Vicksburg. The Plan restructured
$162.1 million owed to the first lien lenders and $75 million owed
to secured lien lenders, which would be paid in full, with
interest, over time.
The Debtors' properties comprise 60,000 square feet of gaming
space with 1,913 slot machines, 48 table games and 693 hotel
rooms. Revenues in fiscal 2011 were $99.8 million in Louisiana
and $39.7 million in Mississippi.
As of July 31, 2012, first lien lenders are owed $181.2 million
and second lien lenders are owed $114.7 million. Louisiana
Riverboat Gaming Partnership disclosed $104,846,159 in assets and
$298,298,911 in liabilities as of the Chapter 11 filing.
Attorneys at Heller, Draper, Hayden Patrick & Horn serve as
counsel to the Debtors. Sea Port Group Securities, LLC is the
financial advisor. Kurtzman Carson Consultants LLC as is the
claims and notice agent. The Debtors have tapped Jenner & Block
LLP as special counsel.
LEHMAN BROTHERS: NY AG Loses Renewed Bid For $150MM of E&Y's Fees
-----------------------------------------------------------------
Stewart Bishop of BankruptcyLaw360 reported that a New York judge
refused to revive state Attorney General Eric Schneiderman's
disgorgement claim over $150 million in fees Ernst & Young LLP had
earned for its work with bankrupt Lehman Brothers Holdings Inc.,
finding his December ruling dismissing the claim was proper.
According to the report, in a brief, handwritten order, Judge
Jeffrey Oing said that "a review of the transcript fails to
demonstrate that this court overlooked or misapprehended the law
or facts." Judge Oing dismissed that claim from the broader suit
in December, the report added.
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.
LIBERTY MEDICAL: Creditors Say $40M Asset Deal Should Stay Put
--------------------------------------------------------------
Jamie Santo of BankruptcyLaw360 reported that Liberty Medical
Supply Inc.'s creditors committee asked a Delaware bankruptcy
judge Friday not to reject a prepetition option deal with Alere
Inc. that would cancel a $40 million debt in exchange for certain
assets, saying the assets must be valued through an auction before
a decision is made.
According to the report, while the committee had previously joined
Liberty Medical's motion for rejection of the option agreement,
the company's refusal to enact a sale process for the assets
involved led it to alter its position, the committee says.
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: Can Employ Cole Schotz as Conflicts Counsel
--------------------------------------------------------------
Judge Kevin Gross of the U.S. Bankruptcy Court for the District of
Delaware authorized LCI Holding Company, Inc., et al., to employ
Cole, Schotz, Meisel, Forman & Leonard, P.A., as conflicts
counsel, nunc pro tunc to Feb. 1, 2013.
The Debtors previously retained Young Conaway Stargatt & Taylor,
LLP, as their conflicts counsel, but elected to substitute Cole
Schotz for Young Conaway upon the move of David Hurst, Esq., from
Young Conaway to Cole Schotz in February.
Cole Schotz professionals will be paid at these hourly rates: $365
to $785 for members and special counsel, $210 to $400 for
associates, and $165 to $245 for paralegals. The primary
professionals who will take a lead role in representing the
Debtors are: David R. Hurst, Esq., to be paid $575 per hour,
Sanjay Bhatnagar, Esq., to be paid $345 per hour, and Pauline Z.
Ratkowiak, paralegal, to be paid $235 per hour. The firm will
also be reimbursed for any necessary out-of-pocket expenses.
About LifeCare
LCI Holding Company, Inc., and its affiliates, doing business as
LifeCare Hospitals, operate eight "hospital within hospital"
facilities and 19 freestanding facilities in 10 states. The
hospitals have about 1,400 beds at facilities in Louisiana, Texas,
Pennsylvania, Ohio and Nevada. LifeCare is controlled by Carlyle
Group, which holds 93.4% of the stock following a
$570 million acquisition in August 2005.
LCI Holding Company, Inc., and its affiliates, including LifeCare
Holdings Inc., sought Chapter 11 protection (Bankr. D. Del. Lead
Case No. 12-13319) on Dec. 11, 2012, with plans to sell assets to
secured lenders.
Ken Ziman, Esq., and Felicia Perlman, Esq., at Skadden, Arps,
Slate Meagher & Flom LLP, serve as counsel to the Debtors.
Rothschild Inc. is the financial advisor. Huron Management
Services LLC will provide the Debtors an interim chief financial
officer and certain additional personnel; and (ii) designate
Stuart Walker as interim chief financial officer.
The steering committee of lenders is represented by attorneys at
Akin Gump Strauss Hauer & Feld LLP and Blank Rome LLP. The agent
under the prepetition and postpetition secured credit facility is
represented by Simpson Thacher & Barlett LLP.
The Debtors disclosed assets of $422 million and liabilities
totaling $575.9 million as of Sept. 30, 2012. As of the
bankruptcy filing, total long-term obligations were $482.2 million
consisting of, among other things, institutional loans and
unsecured subordinated loans. A total of $353.4 million is owing
under the prepetition secured credit facility. A total of
$128.4 million is owing on senior subordinated notes. LifeCare
Hospitals of Pittsburgh, LLC, a debtor-affiliate disclosed
$24,028,730 in assets and $484,372,539 in liabilities as of the
Chapter 11 filing.
The Official Committee of Unsecured Creditors is represented by
Pachulski Stang Ziehl & Jones LLP. FTI Consulting, Inc., serves
as its financial advisor.
LOS ANGELES DODGERS: Try to Keep Docs From Former Owner's Ex
------------------------------------------------------------
Eric Hornbeck of BankruptcyLaw360 reported that the Los Angeles
Dodgers asked a Delaware bankruptcy judge Friday to block the ex-
wife of the baseball team's former owner, Frank McCourt, from
getting her hands on documents used in a mediation, as she tries
to build her case that her ex-husband lowballed the team's value
by $1.7 billion.
According to the report, Jamie McCourt has asked a Los Angeles
judge to reconsider her divorce agreement, which gave her a $131
million judgment based on a $294 million valuation of the Dodgers
and other assets.
About Los Angeles Dodgers
Los Angeles Dodgers LLC operates the Los Angeles Dodgers, a
professional Major League Baseball club in the Los Angeles
metropolitan area. Frank McCourt, a Boston real-estate developer
who unsuccessfully bid for the Boston Red Sox, bought the Dodgers
from Rupert Murdoch's Fox Entertainment Group Inc. in 2004 for
$330 million. Mr. McCourt also bought the Dodgers Stadium from
Fox for $100 million.
Los Angeles Dodgers LLC filed for bankruptcy protection (Bankr.
D. Del. Lead Case No. 11-12010) on June 27, 2011, after MLB
Commissioner Bud Selig rejected a television deal with News
Corp.'s Fox Sports, leaving Mr. McCourt unable to make payroll for
June 30 and July 1. Fox Sports has exclusive cable television
rights for Dodgers games until the end of 2013 baseball season.
Chapter 11 filings were also made for LA Real Estate LLC, an
affiliated entity which owns Dodger Stadium, and three other
related holding companies.
According to Forbes, the Dodgers is worth about $800 million,
making it the third most valuable baseball team after the New York
Yankees and the Boston Red Sox.
Judge Kevin Gross presides over the case. Lawyers at Young,
Conaway, Stargatt & Taylor and Dewey & LeBoeuf LLP serve as the
Debtors' bankruptcy counsel. Epiq Bankruptcy Solutions LLC is the
claims and notice agent. Public relations specialist Kekst and
Company has been hired for crisis support. Covington & Burling
LLP serves as special counsel.
An official committee of unsecured creditors has been appointed in
the case. The panel has tapped Lazard Freres & Co. as financial
adviser and investment banker, and Morrison & Foerster LLP and
Pinckney, Harris & Weidinger, LLC as counsel.
The LA Dodgers is the 12th sports team in North America to have
sought bankruptcy protection.
The reorganization is being financed with a $150 million unsecured
loan from the Commissioner of Major League Baseball. The loan
gives the Commissioner few of the controls lenders often demanded
from bankrupt companies.
The Dodgers emerged from bankruptcy on April 30, 2012. The plan
is based on a $2.15 billion sale of the baseball club and Dodger
Stadium to Guggenheim Baseball Management. The plan pays all
creditors in full, with the excess going to Mr. McCourt.
LOS ANGELES DODGERS: Secret Deal Can't Be Used in Divorce
---------------------------------------------------------
Steven Church, writing for Bloomberg News, reported that secret
Major League Baseball documents concerning the $2 billion sale of
the Los Angeles Dodgers can't be used by former team owner Frank
McCourt's ex- wife to challenge their divorce settlement, a judge
ruled.
According to the Bloomberg report, any documents written for use
during confidential mediation sessions between the Dodgers, Frank
McCourt and league officials will remain secret, the judge who
oversaw the team's bankruptcy ruled. By seeking to obtain the
documents, Jamie McCourt tried to evade a federal bankruptcy court
order to keep the mediation confidential, said U.S. Bankruptcy
Judge Kevin Gross in Wilmington, Delaware.
"This is my order and I am enforcing it because it was an
essential ingredient in the success" in ending the Dodgers'
bankruptcy, Gross said, Bloomberg cited.
Bloomberg related that the Dodgers left bankruptcy last year after
Frank McCourt sold the team for a record $2 billion to a group
including Guggenheim Partners and its top executive Mark Walter
and ex-basketball player Magic Johnson.
After the team was sold, Jamie McCourt filed court papers saying
her $131 million divorce settlement was based on fraud and asked
that it be set aside, Bloomberg recalled. In her request,
McCourt, who is an attorney, said Frank McCourt declared under
penalty of perjury in August, 2001 that the fair market value of
their assets was less than $300 million.
About Los Angeles Dodgers
Los Angeles Dodgers LLC operates the Los Angeles Dodgers, a
professional Major League Baseball club in the Los Angeles
metropolitan area. Frank McCourt, a Boston real-estate developer
who unsuccessfully bid for the Boston Red Sox, bought the Dodgers
from Rupert Murdoch's Fox Entertainment Group Inc. in 2004 for
$330 million. Mr. McCourt also bought the Dodgers Stadium from
Fox for $100 million.
Los Angeles Dodgers LLC filed for bankruptcy protection (Bankr.
D. Del. Lead Case No. 11-12010) on June 27, 2011, after MLB
Commissioner Bud Selig rejected a television deal with News
Corp.'s Fox Sports, leaving Mr. McCourt unable to make payroll for
June 30 and July 1. Fox Sports has exclusive cable television
rights for Dodgers games until the end of 2013 baseball season.
Chapter 11 filings were also made for LA Real Estate LLC, an
affiliated entity which owns Dodger Stadium, and three other
related holding companies.
According to Forbes, the Dodgers is worth about $800 million,
making it the third most valuable baseball team after the New York
Yankees and the Boston Red Sox.
Judge Kevin Gross presides over the case. Lawyers at Young,
Conaway, Stargatt & Taylor and Dewey & LeBoeuf LLP serve as the
Debtors' bankruptcy counsel. Epiq Bankruptcy Solutions LLC is the
claims and notice agent. Public relations specialist Kekst and
Company has been hired for crisis support. Covington & Burling
LLP serves as special counsel.
An official committee of unsecured creditors has been appointed in
the case. The panel has tapped Lazard Freres & Co. as financial
adviser and investment banker, and Morrison & Foerster LLP and
Pinckney, Harris & Weidinger, LLC as counsel.
The LA Dodgers is the 12th sports team in North America to have
sought bankruptcy protection.
The reorganization is being financed with a $150 million unsecured
loan from the Commissioner of Major League Baseball. The loan
gives the Commissioner few of the controls lenders often demanded
from bankrupt companies.
The Dodgers emerged from bankruptcy on April 30, 2012. The plan
is based on a $2.15 billion sale of the baseball club and Dodger
Stadium to Guggenheim Baseball Management. The plan pays all
creditors in full, with the excess going to Mr. McCourt.
MCF480 LLC: Laguna Beach Restaurant Has Green Light to Pay Bills
----------------------------------------------------------------
Bryce Alderton, writing for the Los Angeles Times, reports that
Judge Erithe A. Smith has approved the request of Asada Laguna
Beach to pay employee wages and utilities.
Asada Laguna Beach is a Mexican steakhouse and tequila bar at 480
S. Coast Hwy. MCF480, LLC, the umbrella company that Asada
operates under, filed for Chapter 11 bankruptcy (Bankr. C.D. Cal.
Case No. 13-13076) on April 8, 2013, in Santa Ana. Judge Erithe
A. Smith oversees the case. James C. Bastian, Jr., Esq., at
Shulman Hodges & Bastian, LLP, serves as the Debtor's counsel. In
its petition, the Debtor estimated $1 million to $10 million in
both assets and debts. A list of the Company's 20 largest
unsecured creditors filed with the petition is available for free
at http://bankrupt.com/misc/cacb13-13076.pdf The petition was
signed by Scott McIntosh, managing member.
MECHEL OAO: Posts $1.7-Billion Net Loss in 2012
-----------------------------------------------
Mechel OAO on April 15 reported financial results for the full
year 2012.
The net revenue in 2012 decreased by 10.1% and amounted to $11.3
billion compared to $12.5 billion in 2011. The operating loss
amounted to $897.9 million or -8% of the net revenue, compared to
the operating income of $1,840.1 million or 14.7% of the net
revenue in 2011.
In 2012 Mechel's consolidated net loss attributable to
shareholders of Mechel OAO comprised $1.7 billion compared to the
net income of $727.9 million in 2011. Excluding the effects of
impairment of long-lived assets and goodwill, loss from
discontinued operations and provision for amounts due from related
parties (net of deferred taxes related to non controlling
interests) the adjusted net profit amounts to $23.0 million in
2012.
Financial Position
Capital expenditure on property, plant and equipment and
acquisition of mineral licenses for the FY2012 amounted to
$1,028.8 million, of which $612.2 million was invested in the
mining segment, $360.6 million was invested in the steel segment,
$46.3 million was invested in the ferroalloy segment and $9.7
million was invested in the power segment.
As of December 31, 2012, total debt was $9.4 billion. Cash and
cash equivalents amounted to $295 million and net debt amounted to
$9.1 billion (net debt is defined as total debt outstanding less
cash and cash equivalents) at end of 4Q 2012.
Evgeny Mikhel, Mechel OAO's Chief Executive Officer, commented on
the 2012 financial results:
"Last year the Group operated as key markets for mining products
continued to weaken against a background of general world economic
volatility. This is reflected in the worsening of the financial
results of our main activities, as well as the need to book
reserves and make several significant write-offs. At the same
time, with respect to most of our key operational indicators
Mechel demonstrated positive dynamics in 2012. Last year we also
managed to do much for further improvement going forward. It is
important that despite negative pricing trends our efforts at
optimizing our sales and product mix as well as working capital
management lead to a record operating cash flow of more than $1.3
bn, which allowed to finance our entire CAPEX at the same time
repaying some debt.
"In line with the renewed strategy, aimed at deleveraging, we have
already sold a large number of those assets that had the most
negative impact on our financial results. We continue talks on
selling the remainder of our non-strategic assets. We were also
successful in improving our debt structure and continue working on
it by decreasing the share of short-term debt. We are sure that
the steps we are undertaking with a focus on maximizing
shareholder value, will have their positive effect very shortly."
A copy of Mechel's earnings release for the full year ended
December 31, 2012 is available for free at http://is.gd/SZcLdA
Waivers & Amendments
As reported by the Troubled Company Reporter on April 8, 2013,
Mechel on April 4 disclosed that it reached an agreement
with an international syndicate of lender banks on getting
approval for waivers and amendments to certain major credit
facilities. Mechel's talks with over 25 leading international and
Russian banks regarding some financial covenants its subsidiary
Mechel Mining expected to breach under its US$1 billion pre-export
facility due to uncertain market conditions and a period of
decline in market prices for its products, were successfully
completed in a very short time.
About Mechel OAO
Based in Moscow, Russia, Mechel -- http://www.mechel.com-- is one
of the leading Russian companies. Its business includes four
segments: mining, steel, ferroalloy and power. Mechel unites
producers of coal, iron ore concentrate, steel, rolled products,
ferroalloys, hardware, heat and electric power. Mechel products
are marketed domestically and internationally.
* * *
As reported by the Troubled Company Reporter-Europe on March 20,
2013, Moody's Investors Service downgraded Mechel OAO's corporate
family rating and probability of default rating to B3 and B3-PD
from B2 and B2-PD, respectively, and changed the outlook on the
rating to negative from stable. "We have downgraded Mechel's
ratings to B3 and changed the outlook to negative because of the
group's high leverage, its impending breach of financial covenants
and uncertainties surrounding their renegotiation, as well as low
coking coal prices and the challenges this presents for the group
given its limited liquidity and high level of refinancing risk,"
says Denis Perevezentsev, a Moody's Vice President and lead
analyst for Mechel. "The downgrade and outlook change also
reflect our understanding that Mechel's metrics are likely to be
under pressure over the next 12-18 months, and that it will take
some time for the group to implement its strategy regarding the
disposal of non-core assets given the challenging market
conditions."
MINT LEASING: May File for Bankruptcy Over Missed Loan Payment
--------------------------------------------------------------
The Mint Leasing, Inc., may seek bankruptcy protection if it fails
to raise $12 million that would be used to Pay Comerica Bank,
according to a regulatory filing.
Mint Leasing entered into a settlement and limited forbearance
agreement with Comerica Bank on April 8, 2013. The Company agreed
that its outstanding loan facility with Comerica, which dates back
to January 2009 and which was originally in the amount of $33
million, but has since been paid down to $19,063,447 as of Dec.
31, 2012, was in default and Comerica agreed to forbear from
taking any action against the Company to enforce the default until
the earlier of 4 p.m. on April 18, 2013, or the date that a
default occurred under the facility other than in connection with
its failure to repay that facility.
The Company also agreed to pay $500,000 towards the balance of the
facility on April 5, 2013, which funds have been paid to date and
to pay a discounted settlement payment in full satisfaction of the
facility in the amount of $12 million on April 18, 2013, along
with legal fees of Comerica's counsel. The Company also agreed to
release Comerica from and to indemnify Comerica against certain
claims and causes of action.
Over the past approximately 90 days, the Company has been in
discussions with various parties and has entered into various term
sheets regarding potential funding transactions in order to enable
the Company to raise funds sufficient to pay the discounted
Settlement Amount that Comerica has agreed to accept in
satisfaction of the facility. To date, the Company has not
entered into any definitive agreements associated with that
potential funding transactions and does not have sufficient
funding to pay the Settlement Amount when due on April 18, 2013.
In the event that the Company is unable to pay the Settlement
Amount when due, Comerica could take further actions against the
Company to enforce its security interest over its assets, seek
repayment of the full amount due under the facility, seek an
immediate foreclosure of those assets or may take other actions
which will likely have a material adverse effect on the Company's
operations, assets and financial condition. Any of the above
actions by Comerica could force the Company into bankruptcy
protection, or could cause the value of the Company's securities
to decline in value or become worthless.
Mint Leasing
Houston, Texas-based The Mint Leasing, Inc., is a company in the
business of leasing automobiles and fleet vehicles throughout the
United States. Most of its customers are located in Texas and
seven other states in the Southeast. Lease transactions are
solicited and administered by the Company's sales force and staff.
Mint's customers are comprised of brand-name automobile dealers
that seek to provide leasing options to their customers and
individuals, many of whom would otherwise not have the opportunity
to acquire a new or late-model-year vehicle.
The Company's balance sheet at Sept. 30, 2012, showed
$25.3 million in total assets, $24 million in total liabilities,
and stockholders' equity of $1.3 million.
As reported in the TCR on April 17, 2012, M&K CPAS, PLLC, in
Houston, Texas, issued a going concern opinion on Mint Leasing's
audited financial statements for the years ended Dec. 31, 2011,
and 2010. The independent auditors noted that the Company has a
significant amount of debt due within the next 12 months. "The
Company has historically been successful at renegotiating their
loans and renewing such loans. If the Company is not successful
in obtaining renewals or renegotiating its loans these matters
raise substantial doubt about its ability to continue as a going
concern."
MUNICIPAL CORRECTIONS: Looking for New Operator While in Ch. 11
---------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that a privately operated prison in Georgia needs more
time to formulate a reorganization plan because there's no
resolution yet on whether bondholders owed $58.8 million have a
mortgage on the prison or a security interest only on rent.
According to the report, the prison owner said it needs more time
to formulate a plan. If approved by the bankruptcy court in
Atlanta, the deadline would be pushed out 76 days to June 30.
The company plans this week to issue a request for proposals
seeking a new operator for the prison. Responses are due by the
end of May, according to a court filing.
The prison owner said that Irwin County, owed real estate taxes on
the facility, refuses to talk about having a new operator and
wants the facility sold. A new operator may be able to attract
more prisoners from the U.S. Marshals Service and Immigration and
Customs Enforcement, according to Municipal Corrections.
About Municipal Corrections
Hamlin Capital Management, LLC, Oppenheimer Rochester National
Municipals, and UMB, N.A., as indenture trustee -- owed an
aggregate $90 million on a bond debt -- filed an involuntary
Chapter 11 petition for Municipal Corrections, LLC (Bankr. D. Nev.
Case No. 12-12253) on Feb. 29, 2012. Jon T. Pearson, Esq., at
Ballard Spahr LLP, in Las Vegas, Nevada, serves as counsel to the
petitioners.
In August 2012, the bankruptcy judge ruled that the prison is
properly in Chapter 11 to reorganize. A Nevada judge sent the
case to Georgia in December 2012.
Austin E. Carter, Esq., at Stone & Baxter LLP, in Macon, Ga.; and
Lenard E. Schwartzer, Esq., at Schwartzer & McPherson Law Firm, in
Las Vegas, Nev., represent the Debtor as counsel.
The Debtor disclosed $656,378 in assets and $61,769,528 in
liabilities as of the Chapter 11 filing.
As reported in the TCR on Jan. 3, 2013, Bankruptcy Judge Thad J.
Collins granted the request of creditor Irwin County to transfer
the venue of the Debtor's Chapter 11 bankruptcy case to the U.S.
Bankruptcy Court for the Northern District of Georgia.
MUSCLEPHARM CORP: Mark Groussman Held 8.4% Stake at March 28
------------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Mark Groussman and Melechdavid, Inc., disclosed that,
as of March 28, 2013, they beneficially owned 570,000 shares of
common stock of MusclePharm Corporation representing 8.36% of the
shares outstanding (based on 6,816,159 shares of common stock
issued and outstanding as of March 31, 2013). A copy of the
regulatory filing is available at http://is.gd/RIwrMw
About MusclePharm
Headquartered in Denver, Colorado, MusclePharm Corporation
(OTC BB: MSLP) -- http://www.muslepharm.com/-- is a healthy life-
style company that develops and manufactures a full line of
National Science Foundation approved nutritional supplements that
are 100% free of banned substances. MusclePharm is sold in over
120 countries and available in over 5,000 U.S. retail outlets,
including GNC and Vitamin Shoppe. MusclePharm products are also
sold in over 100 online stores, including bodybuilding.com,
Amazon.com and Vitacost.com.
The Company reported a net loss of $23.28 million in 2011,
compared with a net loss of $19.56 million in 2010. The Company's
balance sheet at Sept. 30, 2012, showed $7.81 million in total
assets, $15.10 million in total liabilities, and a $7.29 million
total stockholders' deficit.
In the auditors' report accompanying the consolidated financial
statements for the year ended Dec. 31, 2011, Berman & Company,
P.A., in Boca Raton, Florida, expressed substantial doubt about
the Company's ability to continue as a going concern. The
independent auditors noted that the Company has a net loss of
$23,280,950 and net cash used in operations of $5,801,761 for the
year ended Dec. 31, 2011; and has a working capital deficit of
$13,693,267, and a stockholders' deficit of $12,971,212 at
Dec. 31, 2011.
NET ELEMENT: Incurs $16.4-Mil. Net Loss in 2012
-----------------------------------------------
Net Element International, Inc., filed on April 12, 2013, its
annual report on Form 10-K for the year ended Dec. 31, 2012.
BDO USA, LLP, in Miami, expressed substantial doubt about Net
Element International, Inc.'s ability to continue as a going
concern, citing the Company's recurring losses from operations and
use of substantial amounts of cash to fund its operating
activities.
The Company reported a net loss of $16.4 million on $1.4 million
of revenues in 2012, compared with a net loss of $24.9 million on
$183,179 of revenues in 2011.
The Company's balance sheet at Dec. 31, 2012, showed $28.4 million
in total assets, $11.4 million in total liabilities, and
stockholders' equity of $17.0 million.
A copy of the Form 10-K is available at http://is.gd/dHslrE
Net Element International, Inc. (NASDAQ: NETE) is a global
technology-driven group specializing in electronic commerce and
mobile payments. The Company owns and operates a mobile payments
company, TOT Money, as well as several popular content
monetization verticals. Together with its subsidiaries, Net
Element International enables ecommerce and content-management
companies to monetize their assets in ecommerce and mobile
commerce environments. Its global development centers and high-
level business relationships in the United States, Russia and
Commonwealth of Independent States strategically position the
company for continued growth. The company has U.S. headquarters
in Miami and international headquarters in Moscow.
NEW ENGLAND COMPOUNDING: Meningitis Plaintiffs' Suit Team Named
---------------------------------------------------------------
Gavin Broady of BankruptcyLaw360 reported that a Massachusetts
federal judge established a steering committee in centralized
litigation against the bankrupt New England Compounding Center
over a deadly nationwide meningitis outbreak, naming Thomas Sobol
of Hagens Berman Sobol Shapiro LLP as lead counsel.
According to the report, Sobol will lead the six attorneys named
to the plaintiff's steering committee in wrangling more than 100
lawsuits over injuries allegedly caused by NECC's tainted
steroids, which were consolidated in Massachusetts in February.
The outbreak, which has been linked to contamination at a
Framingham, Mass., NECC facility, the report added.
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.
NEW ENGLAND COMPOUNDING: Bankruptcy Estate to Battle States
-----------------------------------------------------------
Tim McLaughlin, writing for Reuters, reported that the bankruptcy
estate of the pharmacy linked to a deadly U.S. meningitis outbreak
plans to battle nearly 30 states to preserve its right to redeem
several million dollars worth of insurance policies for creditors.
The insurance policies are key assets in New England Compounding
Center's bankruptcy estate.
According to the report, Paul Moore, the trustee for NECC's
bankruptcy estate, requested court approval to hire Collora LLP, a
Boston law firm known for its high-profile defense work. Collora
would battle pharmacy board regulators from at least 28 states and
contend with an ongoing, previously disclosed investigation by the
U.S. Justice Department, according to the trustee, Reuters
related.
Reuters said creditors in the bankruptcy include the victims of
the outbreak, court records show. Their claims, however, are much
larger than NECC's assets, which have been listed at between $1
million and $10 million.
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: Pays Interest to Bondholders
-------------------------------------------------
Northland Resources S.A., together with its subsidiaries, on
April 15 disclosed that together with the administrator it has
agreed to disburse the previously withheld interest on the
outstanding bond loans.
The Company's subsidiary Northland Resources AB has three
outstanding bonds to a combined amount of US$370 million. As
previously announced the Issuer withheld the interest due on
March 6, 2013, under the bond loans due to the ongoing corporate
reorganization process.
As part of the short term liquidity funding, announced on
March 22, 2013, it was decided by the bondholders and agreed that
the Issuer shall pay all outstanding interest payments under the
bonds by a withdrawal from the debt service reserve account, DSRA.
In total approximately US$23.6 million has been paid.
The interest payment does not exhaust to short term funding of the
US$16 million from the bondholders. The remaining balance on the
DSRA is approximately US$33 million.
Default on Disclosure Obligations
As reported by the Troubled Company Reporter on April 3, 2013,
Northland Resources on March 28 disclosed that it expects the
Ontario Securities Commission will note the Company in default of
its continuous disclosure obligations under Ontario securities law
due to the Company not filing by April 2, 2013, its audited
financial statements and associated management discussion and
analysis for the fiscal year ended December 31, 2012.
Since January 2013, Northland has faced serious liquidity issues.
During this period the Company has published its Q4 2012
unaudited interim condensed financial statements. However, since
the negotiations with potential investors are still ongoing,
management of the Company is currently not in a position to
evaluate the potential impacts of these negotiations on the
Annual Financial Statements and to finalize its assessment of the
going concern assumption. As a result, the Company is not in the
position to file its Audited Annual Financial Statements and MD&A
by April 2, 2013.
Northland is a producer of iron ore concentrate, with a portfolio
of production, development and exploration mines and projects in
northern Sweden and Finland. The first construction phase of the
Kaunisvaara project is complete and production ramp-up started in
November 2012. The Company produces high-grade, high-quality
magnetite iron concentrate in Kaunisvaara, Sweden, where the
Company will exploit two magnetite iron ore deposits, Tapuli and
Sahavaara. Northland has entered into off-take contracts with
three partners for the entire production from the Kaunisvaara
project over the next seven to ten years. The Company is also
preparing a Definitive Feasibility Study ("DFS") for its
Hannukainen Iron Oxide Copper Gold ("IOCG") project in Kolari,
northern Finland and for the Pellivuoma deposit, which is located
15 km from the Kaunisvaara processing plant.
OVERSEAS SHIPHOLDING: Affiliates File Schedules of Assets & Debt
----------------------------------------------------------------
Several of Overseas Shipholding Group, Inc.'s debtor-affiliates
filed with the Bankruptcy Court their schedules of assets and
liabilities, disclosing:
Debtor-Entity Assets Liabilities
------------- ----------- -----------
Maremar Tanker LLC $69,017,563 $31,011,259
Maremar Product Tanker Corporation $108,404 $7,932
Marilyn Vessel Corporation $953,026 $0
Maritrans Operating Company L.P. $53,628,973 $6,768
Maritrans General Partner Inc. $0 $146,390
Overseas Martinez LLC $17,857,937 $8,546,717
Milos Product Tanker Corp. $44,120,330 $42,058,738
Mindanao Tanker Corporation $34,553,783 $34,453,783
Mykonos Tanker LLC $96,023,021 $74,289,244
Nedimar Charter Corporation $16,036,260 $24,345,908
Overseas New Orleans LLC $3,928,220 $487,502
OSG New York, Inc. $17,481,438 $26,402,513
Overseas New York LLC $43,417,733 $36,817,623
Overseas Nikiski LLC $42,112,702 $35,268,238
Oak Tanker Corporation $144,320,171 $148,080,362
Ocean Bulk Ships, Inc. $0 $14,701
Oceania Tanker Corporation $167,096,769 $10,669,926
OSG Product Tankers II, LLC $0 $8,467
OSG 192 LLC $30,430,055 $8,116,240
OSG 209 LLC $47,809,883 $11,159,905
OSG 214 LLC $35,826,121 $8,951,308
OSG 215 Corporation $123,589 $123,965
OSG 242 LLC $62,739,188 $8,782,913
OSG 243 LLC $62,489,236 $10,060,706
OSG 244 LLC $44,833,734 $11,471,897
OSG 252 LLC $40,775,737 $1,925,046
OSG 254 LLC $45,584,280 $6,048,083
OSG 300 LLC $83,684 $0
OSG 400 LLC $22,995,752 $6,233,427
OSG America Operating Co. $1,333,558,405 $820,447,263
OSG America LLC $458,517 $0
OSG America L.P. $0 $79,176
OSG Bulk Ships, Inc. $2,523,970,730 $2,658,608,762
Copies of the Schedules are available at:
* Maremar Tanker LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_maremar_sal.pdf
* Maremar Product Tanker Corporation
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_maremarproduct_sal.pdf
* Marilyn Vessel Corporation
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_marilyn_sal.pdf
* Maritrans Operating Company L.P.
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_maritrans_sal.pdf
* Maritrans General Partner Inc.
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_maritransgen_sal.pdf
* Overseas Martinez LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_martinez_sal.pdf
* Milos Product Tanker Corp
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_milos_sal.pdf
* Mindanao Tanker Corporation
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_mindanaosal.pdf
* Mykonos Tanker LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_mykonos_sal.pdf
* Nedimar Charter Corporation
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_nedimar_sal.pdf
* Overseas New Orleans LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_neworleans_sal.pdf
* OSG New York, Inc.
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_newyorkinc_sal.pdf
* Overseas New York LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_newyorkllc_sal.pdf
* Overseas Nikiski LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_nikiski_sal.pdf
* Oak Tanker Corporation
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_oak_sal.pdf
* Ocean Bulk Ships, Inc.
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_oak_sal.pdf
* Oceania Tanker Corporation
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_oceania_sal.pdf
* OSG Product Tankers II, LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osg192_sal.pdf
* OSG 192 LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osg209llc_sal.pdf
* OSG 209 LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osg214_sal.pdf
* OSG 214 LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osg215_sal.pdf
* OSG 215 Corporation
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osg215_sal.pdf
* OSG 242 LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osg242_sal.pdf
* OSG 243 LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osg243_sal.pdf
* OSG 244 LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osg244_sal.pdf
* OSG 252 LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osg252_sal.pdf
OSG 254 LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osg300_sal.pdf
OSG 300 LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osg400_sal.pdf
OSG 400 LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osg_sal.pdf
OSG America Operating Co.
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osgamerica_sal.pdf
OSG America LLC
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osgamericallc_sal.pdf
OSG America L.P.
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osgamericalp_sal.pdf
OSG Bulk Ships, Inc.
http://bankrupt.com/misc/OVERSEAS_SHIPHOLDING_osgbulk_sal.pdf
About Overseas Shipholding
Overseas Shipholding Group, Inc., headquartered in New York, is
one of the largest publicly traded tanker companies in the world,
engaged primarily in the ocean transportation of crude oil and
petroleum products. OSG owns or operates 111 vessels that
transport oil and petroleum products throughout the world.
Overseas Shipholding Group and 180 affiliates filed voluntary
Chapter 11 petitions (Bankr. D. Del. Lead Case No. 12-20000) on
Nov. 14, 2012, disclosing $4.15 billion in assets and $2.67
billion in liabilities. Greylock Partners LLC Chief Executive
John Ray serves as chief reorganization officer. Cleary Gottlieb
Steen & Hamilton LLP serves as OSG's Chapter 11 counsel, while
Chilmark Partners LLC serves as financial adviser. Kurtzman
Carson Consultants LLC is the claims and notice agent.
The Export-Import Bank of China, owed $312 million used for the
construction of five tankers, is represented by Louis R. Strubeck,
Jr., Esq., and Kristian W. Gluck, Esq., at Fulbright & Jaworski
LLP in Dallas; David L. Barrack, Esq., and Beret Flom, Esq., at
Fulbright & Jaworski in New York; and John Knight, Esq., and
Christopher Samis, Esq., at Richards Layton & Finger PA. Chilmark
Partners, LLC serves as financial and restructuring advisor.
Akin Gump Strauss Hauer & Feld LLP, and Pepper Hamilton LLP, serve
as co-counsel to the official committee of unsecured creditors.
FTI Consulting, Inc., is the financial advisor and Houlihan Lokey
Capital, Inc., is the investment banker.
PATRIOT COAL: Peabody Energy Seeks Dismissal of Lawsuit
-------------------------------------------------------
Tiffany Kary, writing for Bloomberg News, reported that Peabody
Energy Corp. (BTU) is seeking dismissal of a Patriot Coal Corp.
(PCXCQ) lawsuit over obligations to retirees, saying the case
isn't "ripe" because it depends on the outcome of Patriot's
negotiations with its union.
According to the Bloomberg report, Patriot's lawsuit, filed in
U.S. Bankruptcy Court in St. Louis in March, shouldn't go forward,
Peabody said in court papers filed April 12. Peabody also said
that Patriot shouldn't blame its financial problems on the 2007
spinoff that split the St. Louis-based companies.
The issues raised by Patriot "do not present an ?actual
controversy' between the parties that is ripe for judicial
resolution," lawyers for Peabody wrote, Bloomberg related. A
hearing on Peabody's request is set for April 29.
Bloomberg noted that under a contract, Peabody has funded part of
Patriot's health-care expenses for specified retirees since the
spinoff. Patriot said that if it succeeds in reducing its
obligations to retirees under a pending motion to reject an
agreement with the United Mine Workers of America, Peabody
shouldn't be able to get out of its own obligations. Because
Patriot hasn't reduced its own obligations yet, the case against
Peabody can't go forward, Peabody said in its motion to dismiss.
Patriot also is seeking permission to investigate its 2007 spinoff
from Peabody, saying the transaction rid Peabody of $600 million
in health-care and environmental liabilities, Bloomberg added.
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.
PATRIOT COAL: Committee Mostly Supports Health Benefit Changes
--------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the Patriot Coal Corp. creditors' committee supports
the latest offer the coal producer made to the union and retirees
for wage concessions and benefit reductions. The committee said
it may object to the revised offer Patriot made last week to give
35% of the revised company's stock on account of the claim
resulting from the reduction in lifetime health benefits for union
retirees. The committee said its own calculations show that 28%
might be an appropriate amount.
The committee said it will continue analyzing the offer and might
later agree with Patriot that 35% is "fair and equitable" to all
creditors, not just the retirees. April 12 was the day for filing
papers in opposition to Patriot's initiative to modify contracts
and benefits. The hearing will take place April 29.
Patriot seeks to save $150 million a year from benefit and wage
reductions.
$959 Million
Tiffany Kary, writing for Bloomberg News, reported that Patriot
Coal Corp. (PCXCQ)'s plan to withdraw from a multi-employer
pension plan might cost it $959 million and harm retired miners
and other companies, two contributors to the plan said.
According to the report, Energy West Mining Co. and Drummond Co.
objected in papers filed in U.S. Bankruptcy Court in St. Louis to
Patriot's proposal to stop contributing to the United Mine Workers
of America 1974 Pension Plan. The 35 other contributing companies
would have to absorb the costs, and the underfunded plan covering
90,000 retires and spouses might fail, they said.
"Some of these employers may be forced to file bankruptcy
themselves, resulting in the potential failure of the 1974 plan,"
wrote lawyers for closely held Energy West, based in Huntington,
Utah, the Bloomberg report related.
Patriot proposed a fifth version of cost-cutting plans to the
United Mine Workers of America, which represents about 42 percent
of its 4,000 employees. The proposal has yet to be reviewed by the
bankruptcy court.
BankruptcyData reported that numerous parties filed with the U.S.
Bankruptcy Court objections to Patriot Coal's motion to reject
collective bargaining agreements and to modify retiree benefits.
UMWA Objection
The United Mine Workers of America 1974 Pension Trust and the
United Mine Workers of America 1993 Benefit Plan objects to the
motion of Patriot Coal Corporation, et al., to reject collective
bargaining agreements and to modify retiree benefits pursuant to
11 U.S.C. Sections 1113, 1114 of the Bankruptcy Code.
The UMMA Plans state that the Debtors have failed to meet their
burden to satisfy the requirements of Sections 1113 and 1114 of
the Bankruptcy Code:
First, the Debtors have failed to show that the proposed
modifications are necessary to permit a successful reorganization.
Instead, the proposed modifications will result in a nearly
$1 billion withdrawal liability claim for which each of the 99
Debtors is jointly and severally liable, and which may preclude
the Debtors' ability to reorganize.
The Debtors have completely excluded the UMMA Plans from
negotiations. Thus, the Debtors cannot show that the proposed
modifications treat all parties, including the Plans, fairly and
equitably.
A copy of the UMMA Plan objection is available at:
http://bankrupt.com/misc/patriotcoal.doc3623.pdf
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.
PATRIOT COAL: US Bank Balks at Trustee Motion/Exclusivity Motion
----------------------------------------------------------------
U.S. Bank National Association, as indenture trustee objects to
senior noteholders' motion for the appointment of a Chapter 11
trustee for the estates of 86 Non-Obligor Debtors in the Patriot
Coal Corporation, et al.'s bankruptcy cases, and Patriot's Second
Exclusivity Motion requesting the extension of the Debtors'
exclusive periods to file and solicit acceptances of a plan to
Sept. 2, 2013, and Nov. 1, 2013, respectively.
U.S. Bank cited that under Section 1121(c) of the Bankruptcy Code,
exclusivity with respect to the Non-Obligor Estates automatically
terminates if the Court grants the Chapter 11 Trustee Motion. "If
the Court appoints a Chapter 11 trustee over the Non-Obligor
Estates and grants exclusivity to the Obligor Estates, the
debtors-in-possession of the Obligor Estates become the only
parties that can propose a plan of reorganization providing for
substantive consolidation of all 99 Debtors," U.S. Bank said.
U.S. Bank added that "granting both Motions would skew the plan
process toward non-consolidation of the 99 Debtors' estates
because countless parties could file non-consolidating plans for
the Non-Obligor Estates, but in contrast only the debtors-in-
possession of the Obligor Estates could file a plan consolidating
all 99 Debtors' estates. Thus, in the event the Court grants the
Chapter 11 Trustee Motion, the Court should also terminate
exclusivity with respect to both the Obligor Estates and the Non-
Obligor Estates to avoid the "risk of a chaotic and skewed process
that may favor one outcome with respect to consolidation versus
non-consolidation."
Creditors Committee and UMMA Also Object to Motions
The Official Committee of Unsecured Creditors and the UMMA also
objected to the Second Exclusivity Motion and the Chapter 11
Trustee Motion.
Committee Objection
The Committee, in its objection to the Second Exclusivity Motion,
cited that the cases need a viable exit strategy, requiring a
third-party to invest enough to (i) repay or refinance the
Debtors' DIP facility, (ii) pay administrative and priority claims
in full, (iii) monetize any equity provided to any VEBA (to the
extent one is created) to pay for retiree medical benefits, and
(iv) provide the Debtors with necessary post-reorganization
working capital. The Committee said that there should be no
impediments to finding such an investor, and, therefore, the
Committee objects to the extension of Exclusivity. "These cases
will be better served if non-Debtors, including the United Mine
Workers of America, the United Mine Workers of America 1974
Pension Plan and Trust, the Senior Noteholders who have sought the
appointment of a Chapter 11 trustee, the Committee and other
parties-in-interest, are permitted to seek out and communicate
with potential investors and, based on those discussions, propose
feasible plan (or plans) of reorganization," the Committee noted.
The Committee, in its objection to the Trustee Motion, said that
the Senior Noteholders' motion is based on two grounds: firstly,
that the appointment of a trustee is in the best interests of the
creditors of the Non-Obligor Debtors under Section 110(a)(2) of
the Bankruptcy Code because it will allow Non-Obligor Debtors to
avoid future defaults under the DIP Facility; and that "cause"
exists under Section 1104(a)(1) based on the Debtors' alleged
"gross mismanagement" and "breach of fiduciary duty" in allegedly
planning to burden Non-Obligor Debtors with UMWA liabilities and
delaying the reorganization of the Non-Obligor Debtors. Neither
ground has merit, the Committee said.
UMMA Objection
The UMMA, in its objection to the Second Exclusivity Motion, said:
"After ten months and one previous extension of exclusivity, the
Debtors have no buyer and no investors, having barely commenced a
search for them, and no plan to reorganize on a standalone basis,
and are poised on the brink of a confrontation with the majority
of their mining workforce." The UMMA noted that the Debtors have
shown no indication that they are finding the path out of
bankruptcy and that "breaking exclusivity may create the
conditions for the buyer or investor or other constituent to step
forward and show the way."
The UMMA, in its objection to the Trustee Motion, said that while
it is a member of the Official Committee of Unsecured Creditors,
it objects separately because it disagrees with the Committee and
the Noteholders in their apparent presumption that the so-called
Non-Obligor Debtors have no retiree healthcare liability to the
retirees who are subject to the Section 1114 motion pending before
the Court. The UMMA noted, among others, that:
1) It is time therefore to see the motion for appointment of a
trustee for what it really is, that is, an attempt by anxious
creditors to insulate themselves from an undesired outcome to a
future motion, which may never be filed, that determines the issue
of substantive consolidation, or the apportionment of the retiree
healthcare liabilities. The Noteholders have no cause for
appointment of a trustee.
2) Granting the Motion will cause all Debtors harm.
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.
PATRIOT COAL: 1974 Plan Balks at Bondholders' Trustee Motion
------------------------------------------------------------
In response to Aurelius Capital Management, LP, and Knighthead
Capital Management, LLC's motion for the entry of an order
directing the appointment of a Chapter 11 Trustee, the United Mine
Workers of America 1974 Pension Trust states that the Aurelius's
and Knighhead's motion relies on the assertion that, because 86
so-called Patriot Coal Corporation Non-Obligor Debtors do not
currently have or historically have legacy relationships with the
UMMA or its retirees, their estates should be administered
separately from the estates of the 13 Obligor Debtors.
The 1974 Plan says that:
1. The Motion fails to address the significant, joint and several
claim against all of the Debtors -- Obligor Debtors and Non-
Obligor Debtors alike -- that would be triggered in the
event that the Debtors withdraw from the 1974 Plan. The Debtors,
as wholly-owned subsidiaries of Patriot Coal Corporation, are
trades or businesses under common control, and are jointly and
severally liable for the withdrawal liability that would be
incurred upon the Debtors' withdrawal from the 1974 Plan. Based
on the foregoing, upon the applicable Obligor Debtors' withdrawal
from the 1974 Plan, the Plan will have a claim in excess of
$959 million against each and every Debtor.
2. Any amount payable to the 1974 Plan with respect to the
Debtors' withdrawal liability obligations is immediately due in a
lump sum with respect to all Debtors, and cannot be paid in
installments, nor reduced to reflect the discounted present value
of such installments. Thus, the Debtors do not "have the option
of satisfying [their] withdrawal obligations through an annual
annuity payment well within Patriot's means."
As reported in the TCR on April 1, 2013, two Patriot Coal Corp.
bondholders, claiming the majority of the Company's 99 units in
bankruptcy don't have obligations to unions and retirees, are
seeking the appointment of a trustee to oversee how assets are
distributed.
Aurelius Capital Management LP and Knighthead Capital Management
LLC, said that the U.S. mining company's bankruptcy is being
mismanaged because it assumes all the units have obligations to
the collective bargaining or retiree health care agreements of the
United Mine Workers of America. Their bid for a trustee sets up a
dispute over how bondholders and unions are treated in the Chapter
11 case.
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.
PENINSULA HOSPITAL: Can Access 1199 Funds Cash Until June 30
------------------------------------------------------------
The Hon. Elizabeth S. Stong of the U.S. Bankruptcy Court for the
Eastern District of New York, in a fourteenth interim order,
authorized Lori Lapin Jones, as Chapter 11 trustee for Peninsula
Hospital Center, et al., to use the cash collateral of the 1199
Funds, until June 30, 2013.
The Trustee will pay the monthly benefits to the 1199 Funds (in
amounts agreed upon between the Trustee and the 1199 Funds each
month) that became due through Feb. 3, 2013, commencing on
March 31, 2013, and continuing through April 30, 2013, in
accordance with the terms of an agreed upon budget. Each of
JPMorgan Chase Bank, NA, Revival Funding Co., LLC, and the
Official Committee of Unsecured Creditors will be advised of any
agreed material modifications to the Budget.
The balance of the amounts owed to the 1199 Funds for the post-
petition period due through Feb. 3, 2013, will be treated as an
allowed administrative expense claim of the 1199 Funds.
The Trustee will be authorized on consent to use the Cash
Collateral of the 1199 Funds in connection with the wind down of
PHC substantially in accordance with the Budget commencing as of
the date of this Order through and including June 30, 2013,
pending further order of this Court.
The Trustee will be authorized on consent to use the Cash
Collateral of the 1199 Funds and Revival in connection with the
ordinary course operations of PGN in amounts not materially
greater than is set forth in the Budget commencing as of the date
of this Order through and including June 30, 2013, pending further
order of the Court. Although a Receiver assumed responsibility to
operate PGN as of Feb. 3, 2013, the budgeted expenses of PGN
include operating costs incurred prior to, and which were
outstanding as of such date and other costs of administering the
PGN Chapter 11 estate.
A complete text of the fourteenth interim cash collateral order is
available at http://bankrupt.com/misc/peninsulahospital.doc969.pdf
About Peninsula Hospital
Wayne S. Dodakian, Vinod Sinha, and Shannon Gerardi filed an
involuntary Chapter 11 bankruptcy protection against Peninsula
Hospital Center -- http://www.peninsulahospital.org/-- (Bankr.
E.D.N.Y. Case No. 11-47056) on Aug. 16, 2011. Judge Elizabeth S.
Stong presides over the case. Marilyn Cowhey Macron, Esq., at
Macron & Cowhey, represents the petitioners.
Peninsula Hospital Center and Peninsula General Nursing Home
Corp., employed Alvarez & Marsal Healthcare Industry Group, LLC,
as financial advisors. The Hospital employed Abrams Fensterman,
et al., as their attorneys. Nixon Peabody served as their special
counsel; GCG, Inc., serves as claims and noticing agent.
Judge Stong appointed Daniel T. McMurray at Focus Management Group
as patient care ombudsman. Neubert, Pepe & Monteith P.C. serves
as PCO's counsel.
Richard J. McCord, Esq., was appointed by the Court as examiner in
the Debtors' cases. His task was to conduct an investigation of
the Debtors' relationship and transactions with Revival Home
Health Care, Revival Acquisitions Group LLC, Revival Funding Co.
LLC, and any affiliates. Certilman Balin, & Hyman, LLP, which
counts Mr. McCord as one of the firm's members, served as counsel
for the Examiner.
CBIZ Accounting, Tax & Advisory of New York, LLC and CBIZ, Inc.,
serve as financial advisors for the Official Committee of
Unsecured Creditors. Robert M. Hirsh, Esq., at Arent Fox LLP, in
New York, N.Y., represents the Committee as counsel.
PEREGRINE FINANCIAL: Customers Blast $1.2 Million Fees
------------------------------------------------------
Jacob Bunge, writing for The Wall Street Journal, reported that a
commodity traders' group on Monday protested more than $1.2
million in fees sought by the trustee liquidating Peregrine
Financial Group Inc., calling the sum "excessive."
According to the WSJ report, the Commodity Customer Coalition Inc.
called on a bankruptcy court judge to rein in the compensation
request to help ensure clients and creditors of Peregrine recoup
as much money as possible.
"Trustees should not be entitled to a windfall at the expense of
creditors simply because they were fortunate enough to be
appointed in a large case with significant assets that did not
require extraordinary efforts to administer," lawyers for the
customer group wrote in an objection filed Monday, WSJ cited.
WSJ recalled that trustee Ira Bodenstein last month claimed $3.7
million in initial compensation for his efforts to unwind
Peregrine. The futures and currency brokerage filed for bankruptcy
protection last July following revelations of a long-running fraud
perpetrated by its founder and chief executive, Russell Wasendorf
Sr. Although Mr. Bodenstein sought to be paid one-third of that
figure, or $1.2 million, up front, the customer group argued
Monday that this request still was overlarge, WSJ said.
Mr. Bodenstein declined comment. The compensation request is due
to be considered by a judge Wednesday, according to WSJ.
WSJ said representatives for the customer group wrote in the
filing that they weren't against Mr. Bodenstein getting paid for
his efforts so far, which the group called "valuable." Lawyers for
the group suggested that the court consider an interim payment
closer to the value of Mr. Bodenstein's services so far, which he
estimated in March at $354,183.75.
About Peregrine Financial
Peregrine Financial Group Inc. filed to liquidate under Chapter 7
of the U.S. Bankruptcy Code (Bankr. N.D. Ill. Case No. 12-27488)
on July 10, 2012, disclosing between $500 million and $1 billion
of assets, and between $100 million and $500 million of
liabilities.
Earlier that day, at the behest of the U.S. Commodity Futures
Trading Commission, a U.S. district judge appointed a receiver and
froze the firm's assets. The firm put itself into bankruptcy
liquidation in Chicago later the same day. The CFTC had sued
Peregrine, saying that more than $200 million of supposedly
segregated customer funds had been "misappropriated." The CFTC
case is U.S. Commodity Futures Trading Commission v. Peregrine
Financial Group Inc., 12-cv-5383, U.S. District Court, Northern
District of Illinois (Chicago).
Peregrine's CEO Russell R. Wasendorf Sr. unsuccessfully attempted
suicide outside a firm office in Cedar Falls, Iowa, on July 9.
The bankruptcy petition was signed in his place by Russell R.
Wasendorf Jr., the firm's chief operating officer. The resolution
stated that Wasendorf Jr. was given a power of attorney on July 3
to exercise if Wasendorf Sr. became incapacitated.
Peregrine Financial is the regulated unit of the brokerage
PFGBest.
PETTERS COMPANY: 3-Member Creditors' Committee Appointed
--------------------------------------------------------
The U.S. Trustee for Region 12 notified the U.S. Bankruptcy Court
for the District of Minnesota that a three-member official
committee of unsecured creditors was appointed in the Chapter 11
cases of Petters Company, Inc., and its debtor affiliates.
The Committee members are:
1. Ronald R. Peterson, as liquidating trustee for Colossus
Capital Fund L.P, Colossus Capital Fund, Ltd., Lancelot
Investors Fund, L.P., Lancelot Investors Fund II, L.P.
Lancelot Investors Fund Ltd., and related entities.
c/o Jenner & Block, LLP
330 North Wabash Avenue
Chicago, IL 60611
Contact: Ronald R. Peterson
Tel: (312) 222-9350
2. Interlachen Harriet Investments Limited
c/o Interlachen Capital Group LP
800 Nicollet Mall,
Suite 2500
Minneapolis, MN 55402
Contact: Lance Breiland
Tel: (612) 659-4416
3. Barry Mukamal, as liquidating trustee for Palm Beach Finance
Partners, L.P. & Palm Beach Finance II, L.P.
One SE Third Avenue, 10th Floor
Miami, FL 33131
Contact: Barry Mukamal
Tel: (305) 995-9600
About Petters Company, Inc.
Based in Minnetonka, Minn., Petters Group Worldwide LLC is a
collection of some 20 companies, most of which make and market
consumer products. It also works with existing brands through
licensing agreements to further extend those brands into new
product lines and markets. Holdings include Fingerhut (consumer
products via its catalog and Web site), SoniqCast (maker of
portable, WiFi MP3 devices), leading instant film and camera
company Polaroid (purchased for $426 million in 2005), Sun Country
Airlines (acquired in 2006), and Enable Holdings (online
marketplace and auction for consumers and manufacturers' overstock
inventory). Founder and chairman Tom Petters formed the company
in 1988.
Petters Company, Inc., is the financing and capital-raising unit
of Petters Group Worldwide.
Thomas Petters, the founder and former CEO of Petters Group, has
been indicted and a criminal proceeding against him is proceeding
in the U.S. District Court for the District of Minnesota.
Petters Company, Petters Group Worldwide and eight other
affiliates filed separate petitions for Chapter 11 protection
(Bankr. D. Minn. Lead Case No. 08-45257) on Oct. 11, 2008. In its
petition, Petters Company estimated its debts at $500 million and
$1 billion. Parent Petters Group Worldwide estimated its debts at
not more than $50,000.
Fruth, Jamison & Elsass, PLLC, represents Douglas Kelley, the duly
appointed Chapter 11 Trustee of Petters Company, Inc., et al. The
trustee tapped Haynes and Boone, LLP as special counsel, and
Martin J. McKinley as his financial advisor.
Petters Aviation, LLC, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed separate petitions for Chapter 11 bankruptcy
protection (Bankr. D. Minn. Case Nos. 08-45136, 08-35197 and
08-35198) on Oct. 6, 2008. Petters Aviation is a wholly owned
unit of Thomas Petters Inc. and owner of MN Airline Holdings, Sun
Country's parent company.
PINNACLE AIRLINES: Plan Exclusivity Extended to Aug. 26
-------------------------------------------------------
U.S. Bankruptcy Judge Robert Gerber extended the exclusive period
for Pinnacle Airlines Corp. to propose a Chapter 11 plan to June
24, and the deadline to solicit votes to Aug. 26. The extension
bars creditors and other parties from filing rival plans and
maintains Pinnacle Airlines' control over its
restructuring.
About Pinnacle Airlines
Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/--
a $1 billion airline holding company with 7,800 employees, is the
parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.;
and Colgan Air, Inc. Flying as Delta Connection, United Express
and US Airways Express, Pinnacle Airlines Corp. operating
subsidiaries operate 199 regional jets and 80 turboprops on more
than 1,540 daily flights to 188 cities and towns in the United
States, Canada, Mexico and Belize. Corporate offices are located
in Memphis, Tenn., and hub operations are located at 11 major U.S.
airports.
Pinnacle Airlines Inc. and its affiliates, including Colgan Air,
Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East
Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr.
S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012.
Judge Robert E. Gerber presides over the case. Lawyers at Davis
Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve
as the Debtors' counsel. Barclays Capital and Seabury Group LLC
serve as the Debtors' financial advisors. Epiq Systems Bankruptcy
Solutions serves as the claims and noticing agent. The petition
was signed by John Spanjers, executive vice president and chief
operating officer.
As of Oct. 31, 2012, the Company had total assets of
$800.33 million, total liabilities of $912.77 million, and total
stockholders' deficit of $112.44 million.
Delta Air Lines, Inc., the Debtors' major customer and post-
petition lender, is represented by David R. Seligman, Esq., at
Kirkland & Ellis LLP.
The official committee of unsecured creditors tapped Morrison &
Foerster LLP as its counsel, and Imperial Capital, LLC, as
financial advisors.
PINNACLE AIRLINES: Wins Overwhelming Creditor Approval of Plan
--------------------------------------------------------------
Pinnacle Airlines Corp. moved a step closer to emerging from
bankruptcy protection after its creditors overwhelmingly approved
its proposed restructuring plan.
According to the official vote tabulation prepared by Epiq
Bankruptcy Solutions LLC, two of the four classes which are
entitled to vote accepted the plan at 100% and 98.88%,
respectively. One class did not submit a ballot and is deemed to
have voted in favor of the plan.
Voting on the plan closed on April 10. A detailed report of the
voting results can be accessed for free at http://is.gd/aNZk9A
In advance of the April 17 hearing on the confirmation of the
plan, Pinnacle filed a revised plan in U.S. Bankruptcy Court for
the Southern District of New York. A copy of the revised plan
dated April 14 is available for free at http://is.gd/1cC3MI
In a related development, the Memphis-Shelby County Airport
Authority and the Atlanta Department of Aviation filed formal
objections to the plan. Both asked U.S. Bankruptcy Judge Robert
Gerber to compel Pinnacle to accurately reflect the cure amount it
needs to pay in connection with the assumption of their contracts.
As reported in the March 12, 2013 edition of the TCR, U.S.
Bankruptcy Judge Robert Gerber approved the Disclosure Statement
and scheduled an April 17 hearing to consider confirmation of the
Plan.
The proposed plan was laid out in an agreement among Delta,
Pinnacle, and the creditors' committee announced on Jan. 3. After
bankruptcy, Pinnacle will continue as a feeder airline for
Atlanta-based Delta operating 81 regional jets with 76 seats.
Currently, Pinnacle is operating about 190 regional jets for
Delta, mostly the 50-seat variety. Under the plan, secured
creditors will be paid in full while union and unsecured creditors
will recover less than 1% on claims. A trust will be created for
general unsecured claims, according to the plan outline.
A copy of the plan outline is available for free at:
http://bankrupt.com/misc/Pinnacle_OrderDS.pdf
About Pinnacle Airlines
Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/--
a $1 billion airline holding company with 7,800 employees, is the
parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.;
and Colgan Air, Inc. Flying as Delta Connection, United Express
and US Airways Express, Pinnacle Airlines Corp. operating
subsidiaries operate 199 regional jets and 80 turboprops on more
than 1,540 daily flights to 188 cities and towns in the United
States, Canada, Mexico and Belize. Corporate offices are located
in Memphis, Tenn., and hub operations are located at 11 major U.S.
airports.
Pinnacle Airlines Inc. and its affiliates, including Colgan Air,
Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East
Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr.
S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012.
Judge Robert E. Gerber presides over the case. Lawyers at Davis
Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve
as the Debtors' counsel. Barclays Capital and Seabury Group LLC
serve as the Debtors' financial advisors. Epiq Systems Bankruptcy
Solutions serves as the claims and noticing agent. The petition
was signed by John Spanjers, executive vice president and chief
operating officer.
As of Oct. 31, 2012, the Company had total assets of
$800.33 million, total liabilities of $912.77 million, and total
stockholders' deficit of $112.44 million.
Delta Air Lines, Inc., the Debtors' major customer and post-
petition lender, is represented by David R. Seligman, Esq., at
Kirkland & Ellis LLP.
The official committee of unsecured creditors tapped Morrison &
Foerster LLP as its counsel, and Imperial Capital, LLC, as
financial advisors.
PINNACLE FOODS: Moody's Rates New $400MM Sr. Unsecured Notes 'B3'
-----------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to $400 million of
proposed eight-year senior unsecured notes being offered by
Pinnacle Foods Finance LLC. The rating outlook is positive.
Net proceeds from the new $400 million senior unsecured notes due
2021 will be used primarily to redeem all $400 million aggregate
principal amount of its existing 8.25% senior unsecured notes due
2017. Moody's estimates that the refinancing will generate at
least $13 million in annual cash interest savings.
Rating Rationale
Pinnacle's B1 Corporate Family Rating reflects the company's
modest leverage and its portfolio of mature brands in the frozen
and shelf stable food categories that generate relatively stable
operating performance, albeit with limited growth potential.
Pinnacle competes directly against food companies with greater
scale, capital resources and pricing power. The rating also
reflects elevated event risk related to Pinnacle's still
concentrated 68% ownership by private equity firm, The Blackstone
Group ("Blackstone"), and its greater capacity to pursue mergers
and acquisitions as a public company.
Pinnacle's Corporate Family rating was upgraded to B1 from B2 on
April 10, 2013 after the company successfully raised $667 million
in an IPO and used the proceeds to reduce debt. The outlook was
also revised to positive.
Ratings Assigned:
Pinnacle Foods Finance LLC
Pinnacle Foods Finance Corp (co-issuer and wholly-owned
subsidiary):
$400 million proposed senior unsecured debt due 2021 at B3 (LGD 6,
90%)
The senior unsecured debt is rated two notches below the Corporate
Family Rating reflecting its junior position in the capital
structure to $1.73 billion of senior secured debt instruments.
A ratings upgrade could occur if Moody's believes that Pinnacle is
likely to reduce debt to EBITDA to below 4.0 times. Conversely,
ratings could be lowered if weak operating performance or a
leveraged acquisition causes Pinnacle's debt/EBITDA to rise above
6.0 times.
The principal methodology used in this rating was the Global
Packaged Goods published in December 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.
Headquartered in Parsippany, New Jersey, Pinnacle Foods Finance
LLC - through its wholly-owned operating company, Pinnacle Foods
Group - manufactures and markets branded convenience food products
in the US and Canada. Its brands include Birds Eye, Voila, Hungry-
Man and Swanson frozen dinners, Vlasic pickles, Mrs. Paul's and
Van de Kamp's frozen prepared sea food, Aunt Jemima frozen
breakfasts, Log Cabin and Mrs. Butterworth's syrup and Duncan
Hines cake mixes. Annual net sales are approximately $2.5 billion.
Pinnacle Foods Finance LLC is controlled by investment funds
associated with or designated by The Blackstone Group, which owns
approximately 68% of the common shares.
PINNACLE FOODS: S&P Rates New $400MM Senior Unsecured Notes 'B-'
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' issue rating
and '6' recovery rating to Pinnacle Foods Finance LLC's proposed
$400 million senior unsecured notes due 2021. S&P is reinstating
the 'B+' corporate credit rating on Pinnacle Foods Finance LLC.
"The ratings on Pinnacle Foods reflect S&P's view that the company
has an 'aggressive' financial risk profile and 'weak' business
risk profile," said Standard & Poor's credit analyst Bea Chiem.
S&P understands that proceeds from the new notes will be used to
refinance the company's existing $400 million 8.25% senior
unsecured notes due 2017.
The ratings are based on preliminary terms and are subject to
final review upon receipt of final documentation. S&P will
withdraw its ratings on the company's existing notes following the
close of the transaction.
Pinnacle Foods Finance LLC is an operating subsidiary of U.S.-
based Pinnacle Foods Inc.
PLYMOUTH OIL: Can Access Bridge Lenders Cash Until June 1
---------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Iowa
authorized Plymouth Oil Company, LLC, to continue to use cash
collateral of Ryan Lake, Steve Vande Brake, Arlon Sandbulte, Dirk
Dorn, and Iowa Corn Opportunities, LLC (the "Bridge Lenders"), and
of Iowa Prairie Bank, Iowa Corn Processors, LC, and FWS Industrial
Projects, USA Inc., through and including June 1, 2013.
The Debtor will be permitted to use Cash Collateral so long as the
Secured Creditors receive adequate protection in the form of the
Replacement Liens, the Adequate Protection Claims, the payments
made by the Debtor, and the other accommodations described in the
order and in the Motion.
The Debtor agrees to make the following payments: The Debtor will
pay the sum of $20,000 on April 20, 2013, and on May 20, 2013, to
the Bridge Lenders, which sums will be allocated among the Bridge
Lenders on a pro-rata basis and applied to the outstanding
balances of each of their respective loans to Plymouth Oil.
A hearing on the Debtor's request for continued authority to use
cash collateral beyond March 27, 2013, is set on March 27, 2012,
at 1:30 p.m.
A copy of the cash collateral order is available at:
http://bankrupt.com/misc/plymouthoildoc127.pdf
A copy of the cash collateral motion is available at:
http://bankrupt.com/misc/plymouthoil.doc109.pdf
About Plymouth Oil
Plymouth Oil Company, LLC, filed a bare-bones Chapter 11 petition
(Bankr. N.D. Iowa Case No. 12-01403) in Sioux City on July 23,
2012. In its amended schedules, the Debtor disclosed $21,623,349
in total assets and $12,891,586 in total liabilities.
Plymouth Oil -- http://www.plymouthoil.com-- has a $30 million
extraction plant located at 22058 K-42 Merrill, Iowa, directly
across from the new Plymouth Energy Ethanol Plant.
Founded by local investors, Plymouth Oil Company, LLC started
operations in February 2010 purchasing raw corn germ and refining
this material into de-oiled germ meal and kosher food-grade
cooking oil. The plant has the capability of pumping out 90 tons
of corn oil each day and about 300 tons of DCGM (defatted corn
germ meal) daily, which is used for hog, poultry and dairy feed.
Bankruptcy Judge Thad J. Collins presides over the case. Bradley
R. Kruse, Esq., at Brown Winick Graves Gross Baskerville &
Schoenebaum, P.L.C., serves as the Debtor's counsel. The petition
was signed by David P. Hoffman, president.
Secured creditors Arlon Sandbulte, Ryan Lake, Dirk Dorn, Steven
Vande Brake, and Iowa Corn Opportunities, LLC, are represented by
lawyers at Baird Holm LLP in Omaha, Nebraska.
PLYMOUTH OIL: Has Plan That Would Pay Creditors in Full Over Time
-----------------------------------------------------------------
Plymouth Oil Company, LLC, has secured additional new investment
from various investors in the amount of $1,500,000 and has now
filed a bankruptcy exit plan.
Plymouth says that the new investment, together with its ongoing
business operations and development of Golden Essence Flour, will
provide it with the means for meeting its obligations under the
Plan.
Under the Plan, the secured claim of bridge lenders Ryan Lake,
Steve Vande Brake, Arlon Sandbulte, Dirk Dorn, and Iowa Corn
Opportunities, LLC (Class 2) will be reinstated and paid in full
over 10 years with fixed interest of 4% or will be exchanged for
equity in the Reorganized Debtor.
General Unsecured Claims will be paid in full: 50% paid within 30
days of the Effective Date; the remaining 50% paid within 180 days
of the Effective Date.
Interest holders (Class 12) will retain their equity interests but
only on a diluted basis reflecting a dilution of 82% to 88% of the
value of their units in the Reorganized Debtor, depending on
whether the holders of allowed claims in Class 2 elect to convert
their Allowed Claim to equity of the Reorganized Debtor.
A copy of the Plan is available at:
http://bankrupt.com/misc/plymouthoil.doc120.pdf
About Plymouth Oil
Plymouth Oil Company, LLC, filed a bare-bones Chapter 11 petition
(Bankr. N.D. Iowa Case No. 12-01403) in Sioux City on July 23,
2012. In its amended schedules, the Debtor disclosed $21,623,349
in total assets and $12,891,586 in total liabilities.
Plymouth Oil -- http://www.plymouthoil.com-- has a $30 million
extraction plant located at 22058 K-42 Merrill, Iowa, directly
across from the new Plymouth Energy Ethanol Plant.
Founded by local investors, Plymouth Oil Company, LLC started
operations in February 2010 purchasing raw corn germ and refining
this material into de-oiled germ meal and kosher food-grade
cooking oil. The plant has the capability of pumping out 90 tons
of corn oil each day and about 300 tons of DCGM (defatted corn
germ meal) daily, which is used for hog, poultry and dairy feed.
Bankruptcy Judge Thad J. Collins presides over the case. Bradley
R. Kruse, Esq., at Brown Winick Graves Gross Baskerville &
Schoenebaum, P.L.C., serves as the Debtor's counsel. The petition
was signed by David P. Hoffman, president.
Secured creditors Arlon Sandbulte, Ryan Lake, Dirk Dorn, Steven
Vande Brake, and Iowa Corn Opportunities, LLC, are represented by
lawyers at Baird Holm LLP in Omaha, Nebraska.
POSEIDON CONCEPTS: Enters Ch. 15 After Earnings Backtrack
---------------------------------------------------------
Matt Chiappardi of BankruptcyLaw360 reported that Calgary-based
oil field services firm Poseidon Concepts Corp. filed for Chapter
15 bankruptcy protection Friday in Colorado bankruptcy court,
three days after petitioning for creditor protection in Canadian
court and nearly two months after announcing it would have to
restate its earnings for three quarters of 2012
According to the report, the firm, which has offices in Denver and
North Dakota, filed for the cross-border Chapter 15 protection,
listing assets of between $100,000 and $500,000, but liabilities
between $50 million and $100 million, and named
PricewaterhouseCoopers as court-appointed monitor.
Headquartered in Calgary, Canada, Poseidon Concepts Corp.,
formerly Open Range Energy Corp., is an oil and natural gas
service and supply company. Poseidon had 170 tanks deployed
across North America as of September 2011. Its modular fracturing
fluid tanks are deployed at unconventional oil and natural gas
plays across North America, from the Eagle Ford in Texas to the
Bakken in North Dakota to the Montney in northeast British
Columbia. Its products include Atlantis, Poseidon and Triton.
POWERWAVE TECHNOLOGIES: Files Schedules of Assets and Liabilities
-----------------------------------------------------------------
Powerwave Technologies, Inc., filed with the U.S. Bankruptcy Court
for the District of Delaware its schedules of assets and
liabilities disclosing:
A. Real Property $0
B. Personal Property
B.1 Cash on hand 1,700
B.2 Bank Accounts 1,020,797
B.3 Security Deposits with public utilities 284,419
B.9 Interests in insurance policies Unknown
B.16 Accounts receivable 31,222,413
B.22 Patents, Copyrights & Other Intellectual Property Unknown
B.25 Automobiles, trucks, trailers, and other vehicles Unknown
B.28 Office equipment, furnishings, and supplies Unknown
B.29 Machinery, fixtures, equipment and supplies Unknown
B.30 Inventory Unknown
B.35 Other personal property 35,399,996
TOTAL SCHEDULED ASSETS $68,179,331
==============================================================
C. Property Claimed as Exempt N/A
D. Creditors Holding Secured Claims $30,000,000
E. Creditors Holding Unsecured Priority Claims 742,074
F. Creditors Holding Unsecured Nonpriority Claims 323,484,166
TOTAL SCHEDULED LIABILITIES $354,226,241
==============================================================
Full-text copies of the Schedules dated April 4 are available for
free at http://bankrupt.com/misc/POWERWAVEsal0404.pdf
A full-text copy of Schedule G - Executory Contracts and Unexpired
Leases is available for free at:
http://bankrupt.com/misc/POWERWAVEsalg0408.pdf
About Powerwave Technologies
Powerwave Technologies Inc. (NASDAQ: PWAV) filed for Chapter 11
bankruptcy (Bankr. D. Del. Case No. 13-10134) on Jan. 28, 2013.
Powerwave Technologies, headquartered in Santa Ana, Cal., is a
global supplier of end-to-end wireless solutions for wireless
communications networks. The Company has historically sold the
majority of its product solutions to the commercial wireless
infrastructure industry.
The Company's balance sheet at Sept. 30, 2012, showed $213.45
million in total assets, $396.05 million in total liabilities and
a $182.59 million total shareholders' deficit.
Aside from a $35 million secured debt to P-Wave Holdings LLC, the
Debtor owes $150 million in principal under 3.875% convertible
subordinated notes and $106 million in principal under 2.5%
convertible senior subordinated notes where Deutsche Bank Trust
Company Americas is the indenture trustee. In addition, as of the
Petition Date, the Debtor estimates that between $15 and $25
million is outstanding to its vendors.
The Debtor is represented by attorneys at Proskauer Rose LLP and
Potter Anderson & Corroon LLP.
Prepetition secured lender, P-Wave Holdings LLC, is represented by
Martin A. Sosland, Esq., and Joseph H. Smolinsky, Esq., at Weil
Gotshal & Manges LLP; and Mark D. Collins, Esq., and John H.
Knight, Esq., at Richards Layton & Finger.
The Official Committee of Unsecured Creditors has retained Sidley
Austin LLP; Young Conaway Stargatt & Taylor LLP; and Zolfo Cooper,
LLC.
POWERWAVE TECHNOLOGIES: Lands Financing Before Auction
------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Powerwave Technologies Inc. didn't have a buyer under
contract when the bankruptcy court scheduled an April 8 auction
for the wireless communications-equipment supplier. Had the sale
gone off on schedule, the company said in a court filing that it
would have been forced to sell the business "for less than full
market value."
According to the report, the company pushed back the auction and
in the meantime arranged a $5 million loan from an affiliate of
Gores Group. Powerwave previously had been operating with cash
representing collateral for secured lenders.
An initial hearing on the loan was held last week, with another
hearing scheduled for April 23. The security interest for the
loan will come ahead of existing debt.
Under the new sale schedule, bids are now due initially on May 9,
followed by a May 13 auction and a sale-approval hearing on
May 15.
Powerwave announced that Chief Executive Officer Ronald J. Buschur
resigned, to be replaced by Chief Technology Officer Khurram
Sheikh.
About Powerwave Technologies
Powerwave Technologies Inc. (NASDAQ: PWAV) filed for Chapter 11
bankruptcy (Bankr. D. Del. Case No. 13-10134) on Jan. 28, 2013.
Powerwave Technologies, headquartered in Santa Ana, Cal., is a
global supplier of end-to-end wireless solutions for wireless
communications networks. The Company has historically sold the
majority of its product solutions to the commercial wireless
infrastructure industry.
The Company's balance sheet at Sept. 30, 2012, showed $213.45
million in total assets, $396.05 million in total liabilities and
a $182.59 million total shareholders' deficit.
Aside from a $35 million secured debt to P-Wave Holdings LLC, the
Debtor owes $150 million in principal under 3.875% convertible
subordinated notes and $106 million in principal under 2.5%
convertible senior subordinated notes where Deutsche Bank Trust
Company Americas is the indenture trustee. In addition, as of the
Petition Date, the Debtor estimates that between $15 and $25
million is outstanding to its vendors.
The Debtor is represented by attorneys at Proskauer Rose LLP and
Potter Anderson & Corroon LLP.
Prepetition secured lender, P-Wave Holdings LLC, is represented by
Martin A. Sosland, Esq., and Joseph H. Smolinsky, Esq., at Weil
Gotshal & Manges LLP; and Mark D. Collins, Esq., and John H.
Knight, Esq., at Richards Layton & Finger.
The Official Committee of Unsecured Creditors has retained Sidley
Austin LLP; Young Conaway Stargatt & Taylor LLP; and Zolfo Cooper,
LLC.
PULSAR PUERTO RICO: Loses Bid to Recoup Centennial Rent Payments
----------------------------------------------------------------
Before the U.S. Bankruptcy Court for the District of Puerto Rico
is a controversy in the bankruptcy case of Pulsar Puerto Rico
Inc., arising from two prepetition lease agreements under which
AT&T installed and operated cellular telecommunication antennae on
the rooftop of the former Diamond Palace Hotel & Casino, a hotel
complex owned by Pulsar PR. The lease agreements are: (1) between
CCPR Services, Inc., now AT&T, and the Debtor dated July 2003 --
the AT&T Lease, and (2) between Centennial Puerto Rico Operations
Corp., now AT&T, and Rodriguez Flores dba Rodriguez International
Corp. dated October 2008 -- the Centennial Lease .
In November 2008, the Debtor filed a voluntary Chapter 11 petition
(Bankr. D. P.R. Case No. 08-07557). On Sept. 13, 2010, the case
was converted to chapter 7 and Wilfredo Segarra Miranda was
appointed as chapter 7 trustee.
On Feb. 14, 2011, AT&T filed an interpleader complaint, seeking to
join co-defendants, the Debtor and Rodriguez Flores, to determine
who has the rightful claim to the rent payments under the lease
agreements.
In mid-2012, motions for summary judgment were filed before the
court on the issue of rights over consigned funds. AT&T requested
the Court to determine the rightful owner of the consigned funds
under the Centennial Lease Agreement. The Trustee requested
withdrawal of the rent payments consigned after the conversion of
the case to chapter 7 as property of the estate, and that any
claim that Rodriguez Flores or Rodriguez International may have or
may have had against these funds is subordinate to the rights of
the Trustee as third party judicial lien holder.
Judge Brian K. Tester opined, "Pulsar and Wilfredo Rodriguez
Flores were the rightful owners of the Diamond Palace Hotel under
the AT&T Lease Agreement. The rent payments due from the AT&T
Lease Agreement after the conversion of the case to chapter 7
would be property of the estate. Therefore, this court concludes
that the consigned funds under the AT&T Lease Agreement are
property of the estate. The payments consigned under the AT&T
Lease Agreement were withdrawn by the Trustee and the future
payments were ordered to be paid to the Trustee. The rent payment
extinguished the lease agreement obligation. Allegations about
bad faith were not proven to the court. However, Debtor is not
part of the Centennial Lease Agreement, and thus the Trustee
cannot claim rights over the rent payments made to the Centennial
Lease Agreement."
The Bankruptcy Court concluded that the payments under the
Centennial Lease Agreement cannot validly be claimed by the
Trustee and, thus, belong to the lessor, Wilfredo Rodriguez Flores
dba Rodriguez International Corp.
Accordingly, the Court granted AT&T's Motion for Summary Judgment
and denied the Trustee's motion for summary judgment.
A copy of Judge Tester's April 5, 2013 Opinion and Order is
available at http://is.gd/JCOc68from Leagle.com.
READER'S DIGEST: Allowed to Sell European Publications
------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Reader's Digest Association won bankruptcy court
approval to sell publications in France, Belgium, Sweden and
Finland, generating $5.8 million in the process.
According to the report, the bankruptcy judge didn't go along with
a proposal from the official creditors' committee that 35% of the
proceeds be held in an escrow account because secured lenders only
have security interests in 65% of the foreign subsidiaries.
The company, the report relates, said it needed to sell the
European operations quickly, and without an auction, to avoid
liabilities that would arise if the offshore operations were
forced to commence their own liquidation proceedings. Reader's
Digest said the offshore publications don't have much value.
Revised Plan
Bloomberg also reports Reader's Digest filed a revised
reorganization plan last week to provide that unsecured creditors
with $380 million in claims will be limited to sharing $500,000
for a recovery of 0.1%. The plan carries out an agreement
negotiated before the Chapter 11 filing with holders of 70% of
what amounts to $475.9 million in second-lien floating-rate notes.
It would reduce debt by 80% from conversion $231 million of the
notes into the new equity.
About Reader's Digest
Reader's Digest is a global media and direct marketing company
that educates, entertains and connects consumers around the world
with products and services from trusted brands. For more than 90
years, the flagship brand and the world's most read magazine,
Reader's Digest, has simplified and enriched consumers' lives by
discovering and expertly selecting the most interesting ideas,
stories, experiences and products in health, home, family,
food, finance and humor.
RDA Holding Co. and 30 affiliates (Bankr. S.D.N.Y. Lead Case No.
13-22233) filed for Chapter 11 protection on Feb. 17, 2013,
with an agreement with major stakeholders for a pre-negotiated
chapter 11 restructuring. Under the plan, the Debtor will issue
the new stock to holders of senior secured notes.
RDA Holding Co. listed total assets of $1,118,400,000 and total
liabilities of $1,184,500,000 as of the Petition Date.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Evercore Group LLC is the investment banker. Epiq
Bankruptcy Solutions LLC is the claims and notice agent.
Reader's Digest, together with its 47 affiliates, first sought
Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09-23529) Aug. 24,
2009 and exited bankruptcy Feb. 19, 2010.
RESIDENTIAL CAPITAL: Seeks to Hire E&Y as Tax Advisor
-----------------------------------------------------
Residential Capital LLC and its debtor affiliates filed with the
U.S. Bankruptcy Court for the Southern District of New York an
application seeking authority to employ Ernst & Young LLP as their
tax advisor, nunc pro tunc to Oct. 1, 2012.
E&Y will be paid the following hourly rates: national tax/
transactions services partner/ principal at $850, partner/
principal/ executive director at 750, senior manager at 650,
manager at 575, senior at 450 and staff at 225.
Howard Tucker, a partner of EY LLP, assures the Court that his
firm is a "disinterested person" as the term is defined in Section
101(14) of the Bankruptcy Code and does not represent any interest
adverse to the Debtors and their estates.
The employment application will be presented in Court for approval
on April 19, 2013, at 12:00 p.m. Objections are due April 18.
About Residential Capital
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
The Bankruptcy Court in November 2012 approved ResCap's sale of
its mortgage servicing and origination platform assets to Ocwen
Loan Servicing, LLC and Walter Investment Management Corporation
for $3 billion; and its portfolio of roughly 50,000 whole loans to
Berkshire Hathaway for $1.5 billion.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Barred From Using Lawyer Advice on Deal
------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Residential Capital LLC notched a victory at the
expense of the U.S. Trustee while the mortgage-servicing
subsidiary of nonbankrupt Ally Financial Inc. lost a scuffle with
the official creditors' committee.
According to the report, U.S. Bankruptcy Judge Martin Glenn wrote
one opinion on April 12 allowing ResCap to adopt a $7.8 million
bonus program for 163 executives and managers. A separate opinion
came down on the side of the official creditors' committee with
regard to evidence in the upcoming hearing for approval of a
$8.7 billion settlement of claims for selling substandard
mortgages into 392 securitization trusts from 2004 to 2007.
The committee, the report relates, filed papers asking Judge Glenn
to preclude ResCap from offering evidence about advice from
lawyers at the hearing on the so-called RMBS settlement. The
committee contended that ResCap blocked factual inquiries into
communications with its lawyers on the ground that advice of
counsel wouldn't be used to justify approval of the settlement.
Judge Glenn sided with the committee by saying that "the
consequence of failing to make full disclosure of the advice" is
that ResCap will be "precluded from offering any evidence of legal
advice" to show a proper exercise of business judgment in deciding
to enter into the RMBS settlement.
Judge Glenn, the report notes, wrote a separate opinion approving
the bonuses. There ended up being no objections to $4.4 million
in bonuses for 155 managers who will earn extra pay for staying
with ResCap so long as they are needed.
The U.S. Trustee, the report discloses, objected to $3.4 million
in bonuses for eight executives. She contended they were
so-called retention bonuses barred by Congress for high-level
executives of bankrupt companies. Judge Glenn overruled the U.S.
Trustee and approved the senior management bonuses. He said the
"preponderance of the evidence" showed the bonuses were
"performance based" and weren't retention bonuses. He said that
the cost was "reasonable" and not "too large" compared with the
$1.6 billion in assets the managers are charged with liquidating.
About Residential Capital
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
The Bankruptcy Court in November 2012 approved ResCap's sale of
its mortgage servicing and origination platform assets to Ocwen
Loan Servicing, LLC and Walter Investment Management Corporation
for $3 billion; and its portfolio of roughly 50,000 whole loans to
Berkshire Hathaway for $1.5 billion.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Settlement With People's Choice Approved
-------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Residential Capital LLC received authority at the end
of last week to settle remaining claims against People's Choice
Financial Corp., a former subprime mortgage originator that won
approval of a liquidating Chapter 11 plan in August 2008.
According to the report, ResCap originally had a $262 million
secured claim against People's Choice arising from a so-called
warehouse loan agreement. The sale of mortgages generated cash to
pay down the warehouse facility, leaving ResCap to assert a claim
of almost $90 million to be dealt with by the plan.
The trustee liquidating People's Choice reached a settlement
whereby ResCap will have approved unsecured claims for about
$65 million, to be paid the same as other unsecured creditors.
Bowing to creditor objection, ResCap terminated a pre-bankruptcy
agreement with Ally intended as the foundation for a Chapter 11
plan. ResCap is also giving creditors the right to sue Ally if
there isn't agreement on a consensual plan by May, when an
examiner will be issuing a report.
About Residential Capital
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
ResCap sold most of the businesses for a combined $4.5 billion.
The remaining assets are worth $1 billion, the company said in a
court filing.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
REVSTONE INDUSTRIES: Seeks to Sell Aluminum Forging Biz
-------------------------------------------------------
Yogita Patel at Dow Jones' DBR Small Cap and Matt Chiappardi of
BankruptcyLaw360 reported that bankrupt auto parts manufacturer
Revstone Industries LLC is looking to sell its aluminum forgings
business at auction next month.
Law360 says the Debtor asked a bankruptcy judge in Delaware on
Friday to approve a plan to sell all the assets of its aluminum
forging affiliate, despite having no lead or stalking horse
bidders in place.
According to the Law360 report, the Kentucky-based auto parts
maker is looking to fetch at least $2 million for all of unit
Greenwood Forgings LLC's assets in its embattled Chapter 11
proceedings, according to a motion in the U.S. Bankruptcy Court
for the District of Delaware.
DBR says the auto-parts maker is under pressure to meet sales
milestones set by the bankruptcy court.
About Revstone Industries, Greenwood Forgings,
& US Tool & Engineering
Lexington, Kentucky-based Revstone Industries LLC, a maker of
truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case
No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon
oversees the case. In its petition, Revstone estimated under
$50 million in assets and debts.
Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del.
Case No. 12-13263) on Dec. 3, 2012.
Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No.
13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No.
13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013.
Judge Shannon also oversees the cases.
A motion for joint administration of the cases has been filed.
Duane David Werb, Esq., at Werb & Sullivan, serves as bankruptcy
counsel to Greenwood and US Tool. Greenwood estimated $1 million
to $10 million in assets and $10 million to $50 million in debts.
US Tool & Engineering estimated under $1 million in assets and
$1 million to $10 million in debts. The petitions were signed by
George S. Homeister, chairman.
RG STEEL: Gets Additional Time to Remove Prepetition Actions
------------------------------------------------------------
U.S. Bankruptcy Judge Kevin Carey issued an order allowing RG
Steel LLC to remove lawsuits until the later of Aug. 26, or 30
days after entry of an order terminating the automatic stay that
was applied to the lawsuits.
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 owned 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. 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 bankruptcy 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.
Kramer Levin Naftalis & Frankel LLP represents the Official
Committee of Unsecured Creditors. Huron Consulting Services LLC
serves as the Committee's 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. CJ Betters Enterprises Inc. paid
$16 million for the Ohio plant.
RG STEEL: to Sell Real Estate to Ohio River for $100,000
--------------------------------------------------------
RG Steel Wheeling LLC said it is selling certain assets to Ohio
River Partners LLC for $100,000.
The assets to be sold consist of the company's right, title, and
interest in and to an unimproved parcel of real estate located in
Martins Ferry, Ohio.
Objections to the proposed sale must be filed on or before April
26.
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 owned 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. 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 bankruptcy 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.
Kramer Levin Naftalis & Frankel LLP represents the Official
Committee of Unsecured Creditors. Huron Consulting Services LLC
serves as the Committee's 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. CJ Betters Enterprises Inc. paid
$16 million for the Ohio plant.
RODEO CREEK: Has Authority to Employ Key Bankruptcy Professionals
-----------------------------------------------------------------
Judge Mike K. Nakagawa of the U.S. Bankruptcy Court for the
District of Nevada authorized Rodeo Creek Gold Inc. and its debtor
affiliates to employ these bankruptcy professionals:
-- Raymond E. Dombrowski, Jr., as chief executive officer, to
be paid $800 per hour; Michael Kang as chief restructuring officer
and chief financial officer, to be paid $700 per hour; and Alvarez
& Marsal North America, LLC, to provide additional restructuring
personnel, to be paid the following hourly rates: $675-$875 for
managing director, $475-$675 for director, and $275-$475 for
analysts/associates;
-- CIBC World Markets Inc. (contact: Michael Stewart) as
financial and restructuring advisor to be paid a monthly advisory
fee of $100,000, a fee for the completion of any sale transaction,
and a fee in connection with any restructuring;
-- Sidley Austin LLP (contact: Jessica C.K. Boelter, Esq. --
jboelter@sidley.com) as lead bankruptcy counsel to be paid $220 to
850 per hour.
-- Maupin, Cox & LeGoy (contact: Donald A. Lattin, Esq., --
dlattin@mclrenolaw.com -- and Christopher D. Jaime, Esq., --
cjaime@mclnrenolaw.com) as local Nevada counsel, to be paid the
following hourly rates: $275-$400 for partners, $175-$225 for
associates, $100-$150 for legal assistants.
About Rodeo Creek and Great Basin
Canada-based The Great Basin Gold Ltd and its subsidiaries are
engaged in the exploration, development, and operation of high-
quality gold properties. The GBG Group's primary projects are a
trial mine and a recently constructed start-up mine, both of which
are located in rich gold-producing regions: the Hollister trial
mine in Nevada and the Burnstone start-up mine in South Africa.
The GBG Group also holds interests in early-stage mineral
prospects located in Canada and Mozambique.
On Sept. 18, 2012, the GBG Group's primary South African operating
subsidiary and owner of the Burnstone Start-up Mine, Southgold
Exploration (Pty) Ltd., commenced business rescue proceedings
under chapter 6 of the South African Companies Act, 2008.
On Sept. 19, 2012, Great Basin Gold Ltd., the ultimate parent
company, applied for protection from its creditors in Canada
pursuant to the Companies' Creditors Arrangement Act, R.S.C. 1985,
c. C-36 in the Supreme Court of British Columbia Vancouver
Registry. GBG arranged -- and the U.S. debtors cross-guaranteed
-- DIP financing from Credit Suisse and Standard Chartered Bank in
the amount of $51 million, of which $10 million was made available
to the U.S. subsidiaries and $25 million for South Africa.
On Feb. 25, 2013, Rodeo Creek Gold Inc., which operates and owns
the Hollister Trial-Mine, along with other U.S. subsidiaries of
Great Basin, filed petitions for Chapter 11 protection (Bankr. D.
Nev. Case No. 13-50301), in Reno, Nevada, as cash ran out before
they could complete the sale of the mine.
Rodeo Creek estimated assets worth less than $100 million and debt
in excess of $100 million. Credit Suisse is the agent under the
Debtors' secured prepetition credit facilities: (i) the Existing
Hollister Credit Facility, under which the Debtors had $52.5
million outstanding at the end of 2012 and (ii) the Canadian DIP
Facility, under which the Debtors had guaranteed $35 million
outstanding as of the Petition Date. The Debtors also had
$13.5 million in outstanding trade debt, in addition to certain
intercompany obligations.
A three-member Official Committee of Unsecured Creditors, composed
of Quality Transportation Inc., Prometheus Energy Group, Inc., and
F & H Mine Supply, was appointed in the Debtors' Chapter 11 cases.
The Committee is represented by Pachulski Stang Ziehl & Jones LLP
as counsel, Armstrong Teasdale LLP as its local Nevada counsel,
and BDO Consulting as its financial advisor.
RODEO CREEK: Committee Taps Pachulski, et al., as Professionals
---------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
Chapter 11 cases of Rodeo Creek Gold, Inc., and its debtor
affiliates seeks authority from the U.S. Bankruptcy Court for the
District of Nevada to retain the following bankruptcy
professionals:
-- Pachulski Stang Ziehl & Jones LLP as its counsel to be paid
the following hourly rates: $915 for Ira D. Kharasch, Esq., $850
for Jeffrey N. Pomerantz, Esq., and $695 for Shirley S. Cho, Esq.,
who will serve as lead attorneys in the firm's representation of
the Committee; and $295 for each of Patricia Jeffries and Felice
Harris, who will serve as lead paralegals;
-- Armstrong Teasdale LLP as its local Nevada counsel to be
paid the following hourly rates: from $180 to $525 for new
associates to senior partners, and from 100 to $275 for
paraprofessionals;
-- BDO Consulting, a division of BDO USA, LLP, as their
financial advisors, to be paid the following hourly rates: $475 to
$795 for Partners/Managing Directors/Presidents, $375 to $550 for
Directors/Sr. Managers/Sr. Vice Presidents, $325 to $425 for
Managers/Vice Presidents, $200 to $350 for Seniors/Analysts, and
$150 to $225 for Additional Staff.
The firms assure the Court that each of them is a "disinterested
person" as the term is defined in Section 101(14) of the
Bankruptcy Code and does not represent any interest adverse to the
Committee's.
A hearing on the retention applications will be held on May 2,
2013, at 1:30 p.m.
Pachulski Stang may be reached at:
Jeffrey N. Pomerantz, Esq.
Ira D. Kharasch, Esq.
Shirley S. Cho, Esq.
PACHULSKI STANG ZIEHL & JONES LLP
10100 Santa Monica Blvd., Suite 1300
Los Angeles, CA 90067
Tel: (310) 277-6910
Fax: (310) 201-0760
Email: jpomerantz@pszjlaw.com
ikharasch@pszjlaw.com
scho@pszjlaw.com
Armstrong Teasdale may be reached at:
Janet L. Chubb, Esq.
Louis M. Bubala III, Esq.
Gordon R. Goolsby, Esq.
ARMSTRONG TEASDALE LLP
3770 Howard Hughes Pkwy., Ste. 200
Las Vegas, NV 89169
Tel: (702) 678-5070
Fax: (702) 878-9995
E-mail: jchubb@armstrongteasdale.com
lbubala@armstrongteasdale.com
ggoolsby@armstrongteasdale.com
BDO Consulting may be reached at:
William Creelman
BDO CONSULTING
3200 Bristol Street, 4th Floor
Costa Mesa, CA 92626
Tel: (714) 668-7324
Fax: (714) 913-2584
E-mail: bcreelman@bdo.com
About Rodeo Creek and Great Basin
Canada-based The Great Basin Gold Ltd and its subsidiaries are
engaged in the exploration, development, and operation of high-
quality gold properties. The GBG Group's primary projects are a
trial mine and a recently constructed start-up mine, both of which
are located in rich gold-producing regions: the Hollister trial
mine in Nevada and the Burnstone start-up mine in South Africa.
The GBG Group also holds interests in early-stage mineral
prospects located in Canada and Mozambique.
On Sept. 18, 2012, the GBG Group's primary South African operating
subsidiary and owner of the Burnstone Start-up Mine, Southgold
Exploration (Pty) Ltd., commenced business rescue proceedings
under chapter 6 of the South African Companies Act, 2008.
On Sept. 19, 2012, Great Basin Gold Ltd., the ultimate parent
company, applied for protection from its creditors in Canada
pursuant to the Companies' Creditors Arrangement Act, R.S.C. 1985,
c. C-36 in the Supreme Court of British Columbia Vancouver
Registry. GBG arranged -- and the U.S. debtors cross-guaranteed
-- DIP financing from Credit Suisse and Standard Chartered Bank in
the amount of $51 million, of which $10 million was made available
to the U.S. subsidiaries and $25 million for South Africa.
On Feb. 25, 2013, Rodeo Creek Gold Inc., which operates and owns
the Hollister Trial-Mine, along with other U.S. subsidiaries of
Great Basin, filed petitions for Chapter 11 protection (Bankr. D.
Nev. Case No. 13-50301), in Reno, Nevada, as cash ran out before
they could complete the sale of the mine.
Rodeo Creek estimated assets worth less than $100 million and debt
in excess of $100 million. Credit Suisse is the agent under the
Debtors' secured prepetition credit facilities: (i) the Existing
Hollister Credit Facility, under which the Debtors had $52.5
million outstanding at the end of 2012 and (ii) the Canadian DIP
Facility, under which the Debtors had guaranteed $35 million
outstanding as of the Petition Date. The Debtors also had
$13.5 million in outstanding trade debt, in addition to certain
intercompany obligations.
RODEO CREEK: Deadline for Creditors to File Claims on May 10
------------------------------------------------------------
Rodeo Creek Gold Inc. and its debtor affiliates sought and
obtained an order from Judge Mike K. Nakagawa of the U.S.
Bankruptcy Court for the District of Nevada establishing May 10,
2013, as the deadline by which each person or entity that holds or
asserts a claim, as defined in Section 101(5) of the Bankruptcy
Code, against any of the Debtors must file a separate Proof of
Claim.
All "governmental units" as defined in Section 101(27) of the
Bankruptcy Code asserting claims against one or more Debtors must
file a Proof of Claim on or before Aug. 26.
About Rodeo Creek and Great Basin
Canada-based The Great Basin Gold Ltd and its subsidiaries are
engaged in the exploration, development, and operation of high-
quality gold properties. The GBG Group's primary projects are a
trial mine and a recently constructed start-up mine, both of which
are located in rich gold-producing regions: the Hollister trial
mine in Nevada and the Burnstone start-up mine in South Africa.
The GBG Group also holds interests in early-stage mineral
prospects located in Canada and Mozambique.
On Sept. 18, 2012, the GBG Group's primary South African operating
subsidiary and owner of the Burnstone Start-up Mine, Southgold
Exploration (Pty) Ltd., commenced business rescue proceedings
under chapter 6 of the South African Companies Act, 2008.
On Sept. 19, 2012, Great Basin Gold Ltd., the ultimate parent
company, applied for protection from its creditors in Canada
pursuant to the Companies' Creditors Arrangement Act, R.S.C. 1985,
c. C-36 in the Supreme Court of British Columbia Vancouver
Registry. GBG arranged -- and the U.S. debtors cross-guaranteed
-- DIP financing from Credit Suisse and Standard Chartered Bank in
the amount of $51 million, of which $10 million was made available
to the U.S. subsidiaries and $25 million for South Africa.
On Feb. 25, 2013, Rodeo Creek Gold Inc., which operates and owns
the Hollister Trial-Mine, along with other U.S. subsidiaries of
Great Basin, filed petitions for Chapter 11 protection (Bankr. D.
Nev. Case No. 13-50301), in Reno, Nevada, as cash ran out before
they could complete the sale of the mine.
Rodeo Creek estimated assets worth less than $100 million and debt
in excess of $100 million. Credit Suisse is the agent under the
Debtors' secured prepetition credit facilities: (i) the Existing
Hollister Credit Facility, under which the Debtors had $52.5
million outstanding at the end of 2012 and (ii) the Canadian DIP
Facility, under which the Debtors had guaranteed $35 million
outstanding as of the Petition Date. The Debtors also had
$13.5 million in outstanding trade debt, in addition to certain
intercompany obligations.
A three-member Official Committee of Unsecured Creditors, composed
of Quality Transportation Inc., Prometheus Energy Group, Inc., and
F & H Mine Supply, was appointed in the Debtors' Chapter 11 cases.
The Committee is represented by Pachulski Stang Ziehl & Jones LLP
as counsel, Armstrong Teasdale LLP as its local Nevada counsel,
and BDO Consulting as its financial advisor.
ROTECH HEALTHCARE: Section 341(a) Meeting Scheduled on May 17
-------------------------------------------------------------
A meeting of creditors in the bankruptcy case of Rotech Healthcare
Inc., et al., will be held on May 17, 2013, at 10:00 a.m. This is
the first meeting of creditors required under Section 341(a) of
the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
meeting of creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
About Rotech Healthcare
Based in Orlando, Florida, Rotech Healthcare Inc. (NASDAQ: ROHI)
-- http://www.rotech.com/-- provides home medical equipment and
related products and services in the United States, with a
comprehensive offering of respiratory therapy and durable home
medical equipment and related services. The company provides
equipment and services in 48 states through approximately 500
operating centers located primarily in non-urban markets.
The Company reported a net loss of $14.76 million in 2011, a net
loss of $4.20 million in 2010, and a net loss of $21.08 million
in 2009.
The Company's balance sheet at Sept. 30, 2012, showed
$255.76 million in total assets, $601.98 million in total
liabilities, and a $346.22 million total stockholders' deficiency.
On April 8, 2013, Rotech Healthcare and 114 subsidiary companies
filed petitions seeking relief under chapter 11 of the Bankruptcy
Code (Bankr. D. Del. Lead Case No. 13-10741) to implement a pre-
arranged plan negotiated with secured lenders.
Attorneys at Proskauer Rose LLP, and Young, Conaway, Stargatt &
Taylor serve as counsel to the Debtors; Foley & Lardner LLP is the
healthcare regulatory counsel; Akin Gump Strauss Hauer & Feld LLP
is the special healthcare regulatory counsel; Barclays Capital
Inc. is the financial advisor; Alix Partners, LLP is the
restructuring advisor; and Epiq Bankruptcy Solutions LLC is the
claims agent.
Prepetition term loan lender and DIP lender Silver Point Capital
and other consenting noteholders are represented by Wachtell,
Lipton, Rosen & Katz, and Richards Layton & Finger PA.
RUSSEL METALS: Moody's Affirms 'Ba1' Rating on C$300MM Sr. Notes
----------------------------------------------------------------
Moody's Investors Service revised the rating outlook for Russel
Metals to negative from stable and affirmed the Ba1 Corporate
Family Rating and Ba1-PD probability of default rating. At the
same time, Moody's affirmed the Ba1 rating on Russel's CA$300
million senior unsecured notes and assigned a Speculative Grade
Liquidity Rating of SGL-2.
Ratings Rationale:
The change in outlook reflects the company's weaker than expected
operating results and credit metrics, which are attributable to an
increase in leverage to pursue acquisitions and softer than
expected end market demand and product pricing. It also reflects
Moody's expectations that the company's operating results are
likely to remain weak in the short term. The company began to
experience a decline in demand and pricing in the second half of
2012 in all of its business segments.
Russel's Metals Service Center and Steel Distributors segments
experienced a decline in shipments versus the second half of 2011
driven by weaker demand from service centers and other industrial
customers that were attempting to lower inventories in the face of
declining steel prices and softening end market demand. The
company's Energy Products segment continued to ship more product
than the second half of 2011 due to increased demand for large
diameter pipe for transmission lines and elevated oil sands
activity. However, all three segments exhibited margin weakness
driven by increased competitive pressure and declining steel
prices, which led to a 13% decline in second half 2012 EBITDA as
margins contracted by approximately 140 basis points on a Moody's
adjusted basis.
The reduced profitability along with the company's decision to
increase its leverage to pursue acquisitions, has led to weaker
than expected credit metrics. The company issued CA$300 million of
senior unsecured notes due 2022 and used the proceeds to retire
$139 million of senior unsecured notes due 2014. The company used
the additional liquidity from the notes issuance along with a
significant portion of its cash balance to complete the
acquisitions of Siemens Laserworks, Alberta Industrial Metals and
Apex Distribution for a combined purchase price of $284 million.
The company also chose to raise its annual dividend to
approximately $85 million from $69 million. As a result, the
company's outstanding debt increased to $571 million at December
31, 2012 on a Moody's adjusted basis from $411 million in the
prior year. Its pro forma leverage ratio (Debt/EBITDA) also
increased to approximately 2.3x from 1.7x in the prior year and
its pro forma interest coverage ratio (EBITDA-CapEx/Interest)
declined to about 4.4x from 5.9x. In addition, the company's pro
forma retained cash flow as a percent of debt declined to
approximately 15.0% from 20.5% due to reduced funds from
operations (FFO) and higher dividend payments. Moody's expects
these ratios to deteriorate slightly in 2013 as the company's pro
forma EBITDA declines modestly.
Russel Metals' Ba1 corporate family rating reflects the company's
size and scale, relatively low leverage and adequate liquidity,
counter-cyclical working capital investment that enhances
liquidity in down markets, and its disciplined and successful
acquisition track record. However, the rating also reflects the
company's acquisitive nature and its exposure to highly cyclical
end-markets and steel price volatility.
The company's outlook could be changed to stable if the company
generates positive free cash flow and end market demand and prices
improve resulting in stronger operating results and credit
metrics. The interest coverage ratio rising to above 4.5x or the
ratio of retained cash flow to debt above 15% could trigger an
outlook change.
Upward pressure on the ratings is unlikely in the intermediate
term given the increase in the company's leverage position,
potential acquisition activity, as well as the exposure to
volatile steel prices and cyclical end markets. Additionally, the
secured nature of Russel Metals' credit facility is an impediment
to an upgrade since Moody's believes that a capital structure with
sizable secured debt, and therefore multiple classes of creditors,
is incompatible with an investment grade rating profile.
Negative rating pressure could occur if the company's leverage
ratio rises above 3.0x, its interest coverage declines below 4.0x
or EBIT margins continue to deteriorate.
The principal methodology used in this rating was the Global
Distribution & Supply Chain Services Industry Methodology
published in November 2011. Other methodologies used include Loss
Given Default for Speculative-Grade Non-Financial Companies in the
U.S., Canada and EMEA published in June 2009.
Russel Metals, headquartered in Mississauga, Ontario, is a leading
North American metal distributor with 66 metals service centers
and 72 energy products locations in Canada and the U.S. The
company operates in three metal distribution segments. Metals
Service Centers (53% of LTM revenue) distributes carbon hot rolled
and cold finished steel, pipe and tubular products, stainless
steel and aluminum products. Energy Tubular Products (35%)
distributes oil country tubular goods, line pipe, valves and
fittings. Steel Distributors (12%) sells steel in large volumes to
steel service centers and large equipment manufacturers. For the
year ending December 31, 2012, the company generated approximately
CA$3.0 billion in revenue, with about 67% of revenue earned in
Canada (all figures are in Canadian dollars unless otherwise
noted).
SAKS INC: Debt Reduction Prompts Moody's to Upgrade CFR to 'Ba2'
----------------------------------------------------------------
Moody's Investors Service upgraded Saks Incorporated's ratings
including its Corporate Family Rating to Ba2 from Ba3. The rating
outlook remains stable.
The upgrade acknowledges Saks' ongoing debt reduction and Moody's
belief that debt levels will be further reduced by its fiscal year
end. In addition, the upgrade reflects Moody's opinion that Saks'
current level of operating income is sustainable, thus Moody's
anticipates Saks' credit metrics to continue to improve as a
result of reduced debt levels. Saks recently redeemed its $230
million 2% convertible notes due 2024 which resulted in a modest
deleveraging. In addition, $28.8 million of the 7.5% convertible
notes due 2024 converted to equity in the fourth quarter of 2012.
The following ratings are upgraded:
Corporate Family Rating to Ba2 from Ba3
Probability of Default Rating to Ba2-PD from Ba3-PD
$91.2 million (originally $120 million) senior unsecured notes to
Ba3 (LGD 5, 84%) from B1 (LGD 5, 71%)
The following rating will be withdrawn upon its repayment in full:
$230 million senior unsecured notes at B1 (LGD 5, 71%)
Ratings Rationale:
Saks' Ba2 rating reflects its low level of funded debt which
results in modest leverage with pro forma debt to EBITDA of about
3.1 times for the year ended February 2, 2013. The rating also
reflects Saks' good liquidity and its sizable portfolio of
unencumbered real estate. The rating acknowledges Saks' well
recognized brand name and that the luxury goods market is somewhat
immune to most pressures facing consumer's namely ongoing high
unemployment, payroll tax increases, and low growth in disposable
income. Moody's notes that increased taxes on upper-income
taxpayers will likely be offset by strength in the equity market.
The rating is constrained by Saks' relatively small scale with
revenues of about $3.1 billion and its geographic concentration in
New York City which accounts for about 22% of its sales. The
rating also considers that Saks' operating margin continues to lag
its peers. In addition, Saks' history of erratic operating
performance prior to the recession remains a rating concern.
The stable outlook reflects the strength in Saks' debt protection
measures, low level of funded debt, and very good liquidity. Given
Saks' concentration in New York City, Moody's expects Saks to
maintain credit metrics which are strong for the rating level.
Moody's acknowledges the ongoing Euro area sovereign and macro-
economic challenges. The Euro area sovereign crisis could
potentially continue to impact tourism in New York City
potentially hurting sales at Saks' flagship store. However,
Moody's believes that the strength in Saks' debt protection
measures and its good liquidity provide it with ample cushion at
the Ba2 rating level.
An upgrade is unlikely in the near term as Moody's would want to
see a long term record of consistently solid operating results and
EBIT margins closer to its industry peers and remain above 7%. A
rating upgrade would also require Saks to maintain good liquidity
along with debt to EBITDA below 3.0 times and EBITA to interest
expense above 3.5 times. In addition, an upgrade would require
Saks to maintain financial policies that would support this level
of credit metrics.
Ratings could be downgraded should operating performance falter or
debt increase such that debt to EBITDA would rise above 4.0 times
or EBITA to interest expense would fall below 2.5 times.
The principal methodology used in this rating was the Global
Retail Industry Methodology published in June 2011. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Saks Incorporated, headquartered in New York, NY, operates about
43 Saks Fifth Avenue Stores in 22 states, 66 OFF 5th off-price
stores across the United States, and an e-commerce operation.
Revenues are about $3.1 billion.
SCHOOL SPECIALTY: To Close Pennsylvania Distribution Center
-----------------------------------------------------------
Todd Hill, writing for the Mansfield News Journal, reports that
School Speciality on Thursday announced plans to close its
distribution center in Mount Joy, Pa., laying off 148 employees.
But centers in Mansfield; Nashua, N.H.; Greenville, Wis.; Fresno,
Calif.; and Salina, Kan., are expected to remain open. The report
says a spokesperson for School Speciality did not return a phone
call seeking comment on Monday.
About School Specialty
Based in Greenville, Wisconsin, School Specialty is a supplier of
educational products for kindergarten through 12th grade. Revenue
in 2012 was $731.9 million through sales to 70% of the
country's 130,000 schools.
School Specialty and certain of its subsidiaries filed voluntary
petitions for reorganization under Chapter 11 (Bankr. D. Del.
Lead Case No. 13-10125) on Jan. 28, 2013. The petition estimated
assets of $494.5 million and debt of $394.6 million.
The Debtors are represented by lawyers at Paul, Weiss, Rifkind,
Wharton & Garrison LLP and Young, Conaway, Stargatt & Taylor, LLP.
Alvarez & Marsal North America LLC is the restructuring advisor
and Perella Weinberg Partners LP is the investment banker.
Kurtzman Carson Consultants LLC is the claims and notice agent.
The ABL Lenders are represented by lawyers at Goldberg Kohn and
Richards, Layton and Finger, P.A. The Ad Hoc DIP Lenders led by
U.S. Bank are represented by lawyers at Stroock & Stroock & Lavan
LLP, and Duane Morris LLP. The lending consortium consists of
some of the holders of School Specialty Inc.'s 3.75% Convertible
Subordinated Notes Due 2026.
The Official Committee of Unsecured Creditors appointed in the
case is represented by lawyers at Brown Rudnick LLP and Venable
LLP.
Bayside is represented by Pepper Hamilton LLP and Akin Gump
Strauss Hauer & Feld LLP.
SCOOTER STORE: Rolls Into Ch. 11 Amid Federal Probes
----------------------------------------------------
Scooter and wheelchair seller The Scooter Store Holdings Inc.
entered Chapter 11 protection Monday following civil and criminal
investigations into its Medicare billing practices, seeking to
sell itself as going concern in about three months, according to
news reports.
Affiliates of Sun Capital Partners Inc. hold a 66.8 percent voting
ownership interest in the Texas-based firm, which was joined in
bankruptcy by 71 subsidiaries and listed debts between $50 million
and $100 million on its bankruptcy petition, Jamie Santo of
BankruptcyLaw360 reported.
"Historical overhangs coupled with an increasingly complex
regulatory environment and mounting economic pressure in the
health-care sector have significantly impacted the company's
ability to operate under its current model," Chief Executive
Officer Martin Landon said in a statement dated April 15.
Scooter Store will use Chapter 11 "to seek to create a new,
financially healthy provider that operates in strict accordance
with all legal, contractual and regulatory requirements," Landon
added.
Dawn McCarty & Phil Milford, writing for Bloomberg News, related
that the company owes more than $19 million to the Centers for
Medicare & Medicaid Services, administrator of the two government
programs, according to court papers. Medicare provides health-care
coverage for the elderly and disabled, funded through a payroll
tax and other federal revenue. Medicaid provides coverage for the
poor, administered by states and funded jointly by state and
federal governments.
Headquarters Searched
According to the Bloomberg report, the company said in an earlier
statement that government representatives searched corporate
headquarters Feb. 20 and Feb. 21 and company officials cooperated
with them. Investigations "have created significant financial
burdens, as well as damaged the debtors' commercial appeal," Chief
Financial Officer Charles Lowrey said in bankruptcy papers.
The company, which has served more than 700,000 older and disabled
customers, is "heavily regulated" by the Medicare and Medicaid
systems, the Justice Department and the inspector general's office
in the Department of Health and Human Services, he said.
A switch by Medicare to "a 13-month capped rental model with
respect to collection of payments" for scooters, negatively
affected debt service, he said.
Also harmful has been a "criminal investigation by the Department
of Justice" into the "former management team," and a civil
investigation into "billing and reimbursement procedures," he
said. The probes are continuing, Lowrey said.
Law Firms
Morgan, Lewis & Bockius LLP and Young Conaway Stargatt & Taylor
LLP are Scooter Store's bankruptcy lawyers, the company said,
Bloomberg related. Morgan Joseph TriArtisan was hired to help with
the asset sales and Lawrence Young of AlixPartners LLP was named
chief restructuring officer.
Affiliates of private equity firm Sun Capital Partners, based in
Boca Raton, Florida, purchased a majority voting interest in the
debtors in 2011, Bloomberg recalled. Presently, Sun "owns
indebtedness, preferred equity, and warrants to purchase a 66.82%
voting ownership interest in the debtors," court papers show.
Creditors without collateral backing their claims include Pride
Mobility Products, with a claim of about $15.9 million, and
Shoprider Mobility Products Inc., with a claim of about $8
million, according to court papers.
The case is In re Scooter Store Holdings Inc., 13-10904, U.S.
Bankruptcy Court, District of Delaware (Wilmington).
SERVICEMASTER COMPANY: CEO Resignation No Impact on Moody's B2 CFR
------------------------------------------------------------------
Moody's Investors Service said ServiceMaster CEO's resignation was
likely borne of continuing poor performance from operations and is
therefore a credit negative. However, Moody's noted that the
management change does not affect ServiceMaster's B2 corporate
family rating or the negative ratings outlook.
The ServiceMaster Company, based in Memphis, TN, is a national
provider of lawn care, termite and pest control, home service
contracts, cleaning and disaster restoration, house cleaning,
furniture repair and home inspection products and services through
company-owned operations and franchise licenses. Brands include:
TruGreen, Terminix, American Home Shield (AHS), ServiceMaster
Clean, Merry Maids, Furniture Medic and AmeriSpec.
SINCLAIR BROADCAST: Fisher Acquisition No Impact on Moody's CFR
---------------------------------------------------------------
Moody's Investors Service said Sinclair Broadcast Group, Inc.
announced its agreement to acquire Fisher Communications, Inc. for
$373.3 million on April 11, 2013. The merger will add 20
television stations in eight markets and three radio stations in
Seattle. The transaction includes another three TV stations with
whom Fisher had previously agreed to provide certain operating
services, pending regulatory approval.
There is no immediate impact to ratings nor the stable outlook as
Moody's expects overall financial metrics and operating
performance to remain within the Ba3 category for the Corporate
Family Rating. Moody's estimates Sinclair's 2-year average debt-
to-EBITDA ratio pro forma for the announced acquisitions of
Barrington, Cox and Fisher to be 5.2x or better at FYE2013 (net of
cash and including Moody's standard adjustments).
The 23 television stations from Fisher include nine CBS, five
Univision, three NBC, two ABC, and two Fox affiliates among others
in eight markets ranked #12 to #160. The transaction brings
attractive west coast markets of Seattle and Portland and is
consistent with Sinclair's recent actions to expand its footprint
with improving geographic, network and market size diversity.
Management expects to achieve meaningful revenue and expense
synergies, including higher retransmission fees, elimination of
expenses related to public filings and reduction of corporate
overhead, to boost free cash flow and help offset the negative
impact of incremental acquisition debt. Closing is expected by the
end of 3Q2013 with the merger subject to FCC approval, antitrust
clearance, the affirmative vote of two-thirds of Fisher's
outstanding shares, and other customary conditions. Funding will
come from cash on hand plus additional bank facilities or new
capital market issuances.
This merger represents continued debt-financed activity by
Sinclair following the purchase of stations from Barrington, Cox,
Newport Television, Freedom Communications, and Four Points Media
among others in the last 18 months. The proposed acquisitions
further expand Sinclair's footprint to an estimated 33.7% of U.S.
television households and bring geographic and network
diversification. Although Sinclair remains one of the largest Fox
affiliate members, going forward, Fox stations will represent only
22% of its total station count.
Sinclair's Ba3 Corporate Family Rating reflects moderately high
leverage with 2-year average debt-to-EBITDA ratios estimated at
roughly 5.2x for December 2013 (including Moody's standard
adjustments) and pro forma for the announced transaction. The
$373.3 million transaction price represents a seller's multiple of
more than 12x average 2011/2012 EBITDA, but estimated working
capital of at least $20 million at closing plus expected synergies
totaling $26.4 million brings the buyer's EBITDA multiple down to
less than 6.5x. Moody's believes Sinclair will continue to
generate mid-single digit free cash flow-to-debt ratios and apply
free cash flow to reduce debt balances, in the absence of
additional acquisitions. Ratings reflect moderately high financial
risk, the inherent cyclicality of the broadcast television
business, and increasing media fragmentation.
Sinclair Broadcast Group, Inc., headquartered in Hunt Valley, MD,
and founded in 1986, is a television broadcaster, operating 134
stations in 69 markets pro forma for the announced transaction.
The station group reaches 33.7% of U.S. television households and
includes 29 FOX, 24 CBS, 21 CW, 20 MNT, 19 ABC, 14 NBC, 5
Univision, one independent and one Azteca affiliates.
SIZZLING PLATTER: Moody's Affirms Caa1 Rating on $118MM Sr. Notes
-----------------------------------------------------------------
Moody's Investors Service affirmed the Caa1 rating on Sizzling
Platter, LLC's $118 million guaranteed senior secured notes due
2016. Moody's also affirmed the company's Caa1 Corporate Family
Rating and B3-PD Probability of Default Rating. The rating outlook
was changed to positive from stable.
Ratings Rationale:
The change in outlook to positive from stable reflects the
company's improved credit metrics and Moody's view that earnings
and credit metrics will gradually improve further driven by new
restaurant additions and steady performance at the company' s
value priced restaurants.
The Caa1 Corporate Family Rating reflects Sizzling Platters
relatively high leverage and modest interest coverage as well as
its small scale in regards to number of restaurants, modest level
of revenues and earnings versus its peers, regional concentration,
limited product offering, and the lack of an external source of
liquidity. Moody's also believes that soft consumer spending and
high levels of promotional activities by competitors will continue
to pressure operating performance. The ratings are supported by
Sizzling Platters reasonable level of brand awareness, affordable
product offering, solid same store sales performance in 2012 and
adequate liquidity.
Ratings affirmed are:
Corporate Family Rating (CFR) at Caa1
Probability of Default Rating (PDR) at B3-PD
$118 million guaranteed senior secured notes due 2016 at Caa1
(LGD 4, 64%)
A higher rating would likely require a material and sustained
strengthening of the company's credit metrics -- EBITA coverage of
interest would have to be greater than 1.25 times -- along with a
demonstrated trend of positive same store sales -- particularly
traffic. An upgrade would also require a sustained improvement in
the company's liquidity profile.
A downgrade could occur if a sustained deterioration in earnings
resulted in EBITA coverage of interest remaining below 1.0 times.
A downgrade could also occur in the event liquidity were to
materially deteriorate for any reason.
The principal methodology used in this rating was the Global
Restaurant Industry Methodology published in June 2011. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Sizzling Platter is headquartered in Murray, Utah and owns and
operates both the quick service and casual dining restaurants.
SPRINT NEXTEL: Moody's 'B1' CFR Still on Review After DISH Offer
----------------------------------------------------------------
Moody's Investors Service will continue the review of Sprint
Nextel Corp.'s ratings but the direction is changed to uncertain
following DISH Network Corp.'s $25.5 billion acquisition bid.
Sprint's ratings, including its B1 corporate family rating were
placed on review for upgrade on October 15, 2012 when Sprint
entered into a series of definitive agreements with SOFTBANK
CORP., where Sprint would sell a 70% stake to SoftBank for $20.1
billion.
Ratings Rationale:
Moody's could upgrade Sprint's ratings if SoftBank is successful
in acquiring its proposed stake and if Moody's believes that
Sprint will improve customer retention and profitability following
investments to simplify and enhance its wireless network. Moody's
could downgrade Sprint's ratings if SoftBank amends its current
proposal to include more debt financing, or if Sprint is not on
track to improve its profitability and generate free cash flow.
Moody's assessment of Sprint's capability to profitably reclaim
market share will be an important factor in the review.
Moody's could lower Sprint's ratings if DISH acquires Sprint and
the post-close legal and capital structure of the company results
in higher leverage, strained liquidity or weaker cash flow.
Moody's will also assess the operational and strategic synergies,
growth opportunities and financial risk associated with the
proposed merger of DISH and Sprint.
Sprint's ratings could be confirmed at their current levels if
either transaction proceeds or if both deals fail to close and
Sprint's pro-forma credit profile does not improve from its pre-
deal state.
The principal methodology used in rating Sprint Nextel was the
Global Telecommunications Industry Methodology published in
December 2010. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
STANFORD GROUP: SEC Now OK With $500,000 SIPC Insurance
-------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the U.S. Securities and Exchange Commission,
"apparently bowing to pressure" from Senator David Vitter,
reversed a position made two years earlier and decided that
victims of the R. Allen Stanford Ponzi scheme should be paid as
much as $500,000 on each claim by the Securities Investor
Protection Corp.
According a brief filed April 12 by SIPC with the U.S. Court of
Appeals in Washington, Vitter, a Republican from Louisiana,
threatened to block appointment of two SEC commissioners unless
the agency intervened to force SIPC into paying Stanford victims.
"We will leave all the comments to the briefs," John Nester, an
SEC spokesman, said in an interview. The SEC sued SIPC in
December 2011 in U.S. District Court in Washington, asking the
court to force SIPC into taking over the liquidation of Stanford's
brokerage firm, Stanford Group Co.
The district judge ruled against the SEC, concluding that
investors in the $7 billion fraud must be content with being paid
from whatever recoveries are realized from a receivership pending
in U.S. District Court in Texas.
The agency appealed and filed its brief in January. SIPC filed
its brief last week, responding to arguments by the SEC and
victims who intervened in the appeal. The agency is to file its
last brief on May 24.
The SEC's 58-page brief in January argued that the district court
was wrong in July in ruling that Stanford investors aren't
entitled to payments from the SIPC fund which would cover as much
as $500,000 a claim.
The question on appeal is whether the Stanford victims qualify as
"customers" of a broker covered by the Securities Investor
Protection Act. The SEC said it believes SIPC is espousing too
narrow an interpretation of who is a "customer."
SIPC takes the position that the investors were customers of an
offshore Stanford bank, not customers of the Stanford brokerage.
Only brokerage customers are covered by the SIPC fund, SIPC
contended.
The SEC argued on appeal that the distinction between the Stanford
brokerage and bank should be disregarded because the companies
"operated as a single fraudulent enterprise that ignored corporate
boundaries."
The appeal is Securities and Exchange Commission v. Securities
Investor Protection Corp., 12-05286, U.S. Court of Appeals for the
District of Columbia Circuit (Washington).
About Stanford Group
The Stanford Financial Group was a privately held international
group of financial services companies controlled by Allen
Stanford, until it was seized by United States (U.S.) authorities
in early 2009.
Domiciled in Antigua, Stanford International Bank Limited --
http://www.stanfordinternationalbank.com/-- is a member of
Stanford Private Wealth Management, a global financial services
network with US$51 billion in deposits and assets under
management or advisement. Stanford Private Wealth Management
served more than 70,000 clients in 140 countries.
On Feb. 16, 2009, the United States District Court for the
Northern District of Texas, Dallas Division, signed an order
appointing Ralph Janvey as receiver for all the assets and
records of Stanford International Bank, Ltd., Stanford Group
Company, Stanford Capital Management, LLC, Robert Allen Stanford,
James M. Davis and Laura Pendergest-Holt and of all entities they
own or control. The February 16 order, as amended March 12,
2009, directs the Receiver to, among other things, take control
and possession of and to operate the Receivership Estate, and to
perform all acts necessary to conserve, hold, manage and preserve
the value of the Receivership Estate.
The case in district court was Securities and Exchange Commission
v. Securities Investor Protection Corp., 11-mc-00678, U.S.
District Court, District of Columbia (Washington).
The U.S. Securities and Exchange Commission, on Feb. 17, charged
before the U.S. District Court in Dallas, Texas, Mr. Stanford and
three of his companies for orchestrating a fraudulent, multi-
billion dollar investment scheme centering on an US$8 billion
Certificate of Deposit program.
A criminal case was pursued against him in June before the U.S.
District Court in Houston, Texas. Mr. Stanford pleaded not
guilty to 21 charges of multi-billion dollar fraud, money-
laundering and obstruction of justice. Assistant Attorney
General Lanny Breuer, as cited by Agence France-Presse News, said
in a 57-page indictment that Mr. Stanford could face up to 250
years in prison if convicted on all charges. Mr. Stanford
surrendered to U.S. authorities after a warrant was issued for
his arrest on the criminal charges.
STOCKTON, CA: Assured Seeks New Ruling on Pre-Bankruptcy Talks
--------------------------------------------------------------
Steven Church, writing for Bloomberg News, reported that Assured
Guaranty Corp., fighting to avoid losses in the bankruptcy case of
Stockton, California, asked a judge to reverse a ruling that it
and other creditors failed to negotiate in good faith with the
city.
According to the report, the insurer asked U.S. Bankruptcy Judge
Christopher M. Klein in Sacramento to reverse his April 1 finding
that so-called capital markets creditors acted as a "stone wall"
during pre-bankruptcy negotiations with the city.
Assured and other creditors had argued that the city should be
thrown out of bankruptcy because it failed to negotiate with them
in good faith, Bloomberg said. The judge rejected their arguments
and found that the creditors were the ones who failed to negotiate
seriously because they "voted with their feet" by quitting the
talks, which the company denied in court papers.
"Assured's decision not to provide a formal written counteroffer
does not demonstrate a lack of good faith," Assured said in its
filing, made public on April 13, Bloomberg related.
The city of 296,000, an agricultural center about 80 miles (130
kilometers) east of San Francisco, is one of three municipalities
in bankruptcy that have said they will try to force creditors,
including bondholders, to take less than the principal they are
owed, Bloomberg noted. The others are San Bernardino, California,
and Jefferson County, Alabama. No city or county since at least
the 1930s has used the power of a U.S. bankruptcy court to force a
reduction in its debt principal, according to Bloomberg.
About Assured Guaranty
Assured Guaranty Ltd. -- http://wwww.assuredguaranty.com--
(together with its subsidiaries, Assured Guaranty or the Company)
is a publicly traded Bermuda-based holding company. Its operating
subsidiaries provide credit enhancement products to the U.S. and
international public finance, infrastructure and structured
finance markets.
About Stockton, Calif.
The City of Stockton, California, filed a Chapter 9 petition
(Bankr. E.D. Cal. Case No. 12-32118) in Sacramento on June 28,
2012, becoming the largest city to seek creditor protection in
U.S. history. The city was forced to file for bankruptcy after
talks with bondholders and labor unions failed. Stockton
estimated more than $1 billion in assets and in excess of
$500 million in liabilities.
The city, with a population of about 300,000, identified the
California Public Employees Retirement System as the largest
unsecured creditor with a claim of $147.5 million for unfunded
pension costs. In second place is Wells Fargo Bank NA as trustee
for $124.3 million in pension obligation bonds. The list of
largest creditors includes $119.2 million owing on four other
series of bonds.
The city is being represented by Marc A. Levinson, Esq., and John
W. Killeen, Esq., at Orrick, Herrington & Sutcliffe LLP. The
petition was signed by Robert Deis, city manager.
Mr. Levinson also represented the city of Vallejo, Cal. in its
2008 bankruptcy. Vallejo filed for protection under Chapter 9
(Bankr. E.D. Cal. Case No. 08-26813) on May 23, 2008, estimating
$500 million to $1 billion in assets and $100 million to $500
million in debts in its petition. In August 2011, Vallejo was
given green light to exit the municipal reorganization. The
Vallejo Chapter 9 plan restructures $50 million of publicly held
debt secured by leases on public buildings. Although the Plan
doesn't affect pensions, it adjusts the claims and benefits of
current and former city employees. Bankruptcy Judge Michael
McManus released Vallejo from bankruptcy on Nov. 1, 2011.
The bankruptcy judge on April 1, 2013, ruled that the city of
Stockton is eligible for municipal bankruptcy in Chapter 9.
TAYLOR BEAN: Ex-Honcho Owes Insurer $1M, 4th Circ. Rules
--------------------------------------------------------
Matt Chiappardi of BankruptcyLaw360 reported that the Fourth
Circuit affirmed a lower court's decision that the convicted ex-
chairman of bankrupt lender Taylor Bean & Whitaker Mortgage Corp.
will have to give back the nearly $1 million his insurance company
laid out for his criminal defense for securities fraud.
According to the report, Lee Bentley Farkas, who was convicted in
April 2011 on 14 counts of fraud and conspiracy for running a
nearly $3 billion bank and securities swindle, is now on the hook
for $929,000 owed to National Union Fire Insurance Co. of
Pittsburgh.
About Taylor Bean
Taylor, Bean & Whitaker Mortgage Corp. grew from a small Ocala-
based mortgage broker to become one of the largest mortgage
bankers in the United States. In 2009, Taylor Bean was the
country's third largest direct-endorsement lender of FHA-insured
loans of the largest wholesale mortgage lenders and issuer of
mortgage backed securities. It also managed a combined mortgage
servicing portfolio of approximately $80 billion. The company
employed more that 2,000 people in offices located throughout the
United States.
Taylor Bean sought Chapter 11 protection (Bankr. M.D. Fla. Case
No. 09-07047) on Aug. 24, 2009. Taylor Bean filed the Chapter 11
petition three weeks after federal investigators searched its
offices. The day following the search, the Federal Housing
Administration, Ginnie Mae and Freddie Mac prohibited the company
from issuing new mortgages and terminated servicing rights.
Taylor Bean estimated more than $1 billion in both assets and
liabilities in its bankruptcy petition
Lee Farkas, the former chairman, was sentenced in June to 30 years
in federal prison after being convicted on 14 counts of conspiracy
and bank, wire and securities fraud in what prosecutors said was a
$3 billion scheme involving fake mortgage assets.
Jeffrey W. Kelly, Esq., and J. David Dantzler, Jr., Esq., at
Troutman Sanders LLP, in Atlanta, Ga., and Russel M. Blain, Esq.,
and Edward J. Peterson, III, Esq., at Stichter, Riedel, Blain &
Prosser, PA, in Tampa, Fla., represent the Debtors. Paul Steven
Singerman, Esq., and Arthur J. Spector, Esq., at Berger Singerman
PA, in Miami, Fla., represent the Committee. BMC Group, Inc.,
serves as the claims and noticing agent.
Unsecured creditors were expected to receive 3.3% to 4.4% under a
Chapter 11 plan approved in July 2011.
WASHINGTON MUTUAL: Circ. Wary Of Noteholders' Bid to Join Suit
--------------------------------------------------------------
Erica Teichert of BankruptcyLaw360 reported that a D.C. Circuit
panel on Friday voiced concern that allowing a group of Washington
Mutual Bank NA noteholders to intervene in Deutsche Bank AG's $10
billion suit over WaMu's allegedly shoddy mortgages could open the
floodgates for an overwhelming amount of intervenors in similar
suits.
According to the report, the noteholders claim a decision in
Deutsche Bank's $10 billion suit against the Federal Deposit
Insurance Corp. and JPMorgan Chase Bank NA could jeopardize
payment on their $1.9 billion in WaMu notes.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- was the holding company for Washington
Mutual Bank as well as numerous non-bank subsidiaries.
Washington Mutual Bank was taken over on Sept. 25, 2008, by U.S.
government regulators. The next day, WaMu and its affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). WaMu owns
100% of the equity in WMI Investment. When WaMu filed for
protection from its creditors, it disclosed assets of
$32,896,605,516 and debts of $8,167,022,695. WMI Investment
estimated assets of $500 million to $1 billion with zero debts.
WaMu is represented by Brian Rosen, Esq., at Weil, Gotshal &
Manges LLP in New York City; Mark D. Collins, Esq., at Richards,
Layton & Finger P.A. in Wilmington, Del.; and Peter Calamari,
Esq., and David Elsberg, Esq., at Quinn Emanuel Urquhart Oliver &
Hedges, LLP. The Debtor tapped Valuation Research Corporation as
valuation service provider for certain assets.
Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Fled LLP in New
York, and David B. Stratton, Esq., at Pepper Hamilton LLP in
Wilmington, Del., represent the Official Committee of Unsecured
Creditors. Stephen D. Susman, Esq., at Susman Godfrey LLP and
William P. Bowden, Esq., at Ashby & Geddes, P.A., represent the
Equity Committee. The official committee of equity security
holders also tapped BDO USA as its tax advisor. Stacey R.
Friedman, Esq., at Sullivan & Cromwell LLP and Adam G. Landis,
Esq., at Landis Rath & Cobb LLP in Wilmington, Del., represent
JPMorgan Chase, which acquired the WaMu bank unit's assets prior
to the Petition Date.
Records filed Jan. 24, 2012, say that Washington Mutual Inc.,
former owner of the biggest U.S. bank to fail, has spent
$232.8 million on bankruptcy professionals since filing its
Chapter 11 case in September 2008.
In March 2012, the Debtors' Seventh Amended Joint Plan of
Affiliated, as modified, and as confirmed by order, dated Feb. 23,
2012, became effective, marking the successful completion of the
chapter 11 restructuring process.
The Plan is based on a global settlement that removed opposition
to the reorganization and remedy defects the judge identified in
September. The plan is designed to distribute $7 billion. Under
the reorganization plan, WaMu established a liquidating trust to
make distributions to parties-in-interest on account of their
allowed claims.
WENTWOOD BAYTOWN: Section 341(a) Meeting Set on May 6
-----------------------------------------------------
A meeting of creditors in the bankruptcy case of Wentwood Baytown,
L.P., will be held on May 6, 2013, at 1:30 p.m. at Houston, 515
Rusk Suite 3401. Creditors have until Aug. 5, 2013, to submit
their proofs of claim.
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.
Wentwood Baytown, L.P., filed a Chapter 11 petition in Houston,
Texas (Bankr. S.D. Tex. Case No. 13-32151) on April 9. The
petition was signed by Gary M. Gray as president of general
partner. The Debtor estimated assets and debts of at least $10
million. Judge Letitia Z. Paul presides over the case. The
Debtor is represented by Matthew Hoffman, Esq., at Law Offices of
Matthew Hoffman, P.C.
The Debtor, which also uses the names Marina Club Apartments,
Briarwood Apartments, and The Dickinson Arms, owns properties in
Bayton and Dickinson, Texas.
WESTERN WOOD: Breached Western Pellets Supply Deal, Court Says
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Mexico, for
purposes of trial, consolidated the adversary complaint WESTERN
WOOD PRODUCTS, INC., A Wyoming profit corporation, Plaintiff, v.
WESTERN PELLET PRODUCTS, LLC, Defendant, Adv. Proc. No. 12-1172
(Bankr. D.N.M.) with Western Wood's motion to reject contract and
unexpired lease with Western Pellet Products, Inc.
Western Wood and Pellet Products are parties to: (1) a supply
agreement for the sale by Western Wood to Pellet Products of wood
by-product material produced by Western Wood in the operation of
its sawmill; and (2) a lease of real property by Western Wood to
Pellet Products on land adjacent to the sawmill. Western Wood
contends that Pellet Products has defaulted under the supply
agreement and the lease, and is in breach of the supply agreement
and lease. Western Wood seeks to reject both the supply agreement
and the lease in connection with its Chapter 11 bankruptcy case.
Pellet Products denies that it failed to perform under the supply
agreement; denies that it is in violation of the lease; and
asserts that Western Wood breached the supply agreement. Pellet
Products intends to exercise its rights under 11 U.S.C. Section
365(h)(1)(A)(ii) and remain in possession of the real property for
the remainder of the term under the lease.
After consideration of the evidence presented at trial, Bankruptcy
Judge Robert H. Jacobvitz held that (1) Pellet Products is not in
default under the terms of the supply agreement or the lease and
has not breached the supply agreement or lease; (2) Western Wood
breached the supply agreement; and (3) Pellet Products is entitled
to damages in the event Western Wood rejects the supply agreement
and lease.
Because the Motion to Reject was premised on Western Wood's belief
that Pellet Products was in breach of the supply agreement and in
default under the lease, Judge Jacobvitz said it cannot make a
determination at present as to whether Western Wood properly
exercised its business judgment in seeking to reject the supply
agreement and the lease. The Court will set a further evidentiary
hearing on the Motion to Reject if Western Wood still wishes to
reject the supply agreement and lease.
A copy of the Bankruptcy Court's April 4, 2013 Memorandum Opinion
is available at http://is.gd/CHidaBfrom Leagle.com.
Western Wood is represented by William F. Davis, Esq., in
Albuquerque.
Western Pellet is represented by William R. Keleher, Esq., --
wrk@modral.com -- and Spencer Lewis Edelman, Esq. --
sle@modrall.com -- of Modrall Sperling also in Albuquerque.
About Western Wood
Western Wood Products Inc. owns and operates a sawmill near Raton,
New Mexico. It has approximately 50 employees. Ray Levengood is
the president of Western Wood, and has been since its inception
about 20 years ago. The company filed a voluntary Chapter 11
petition on Jan. 9, 2012 (Bankr. D. N.M., Case No. 11-12-10057).
It owes approximately $5.2 million to its secured lender,
International Bank. The monthly debt service on the loan is
approximately $35,000, where the company had trouble servicing the
debt since 2008.
WINDSORMEADE OF WILLIAMSBURG: To Seek Plan Approval May 14
----------------------------------------------------------
Judge Kevin R. Huennekens of the U.S. Bankruptcy Court for the
Eastern District of Virginia, Richmond Division, has approved the
disclosure statement explaining Virginia United Methodist Homes of
Williamsburg, Inc.'s Plan of Reorganization and scheduled a
hearing to confirm the Plan on May 14, 2013, at 10:00 a.m. The
deadline to submit ballots accepting or rejecting the Plan is May
9. The deadline to file objections to the confirmation of the
Plan is May 7.
The Disclosure Statement was amended on the eve of the Disclosure
Statement hearing to provide for, among others, the following
modifications:
-- The amount of the Class 2 - Series 2007 A/B Bond Claims is
increased from $48,325,000 to $48,750,833.
-- Class 3 is composed of Series 2007C Bond Claims and L/C
Claims.
-- Holders of Allowed Series 2007 A/B Bond Claims and Series
2007C Bonds Claims and L/C Claims, in full and final
satisfaction and discharge of and in exchange for the
Allowed Claims, will receive the Series 2013A Senior Bonds,
the Series 2013A Subordinate Bonds, and the Series 2013B
Senior Bonds.
Cash considerations necessary for the Reorganized Debtor to make
payments or distributions pursuant to the Plan will be obtained
from (1) existing cash balances in the Reorganized Debtors'
unrestricted accounts, (2) net cash proceeds from the issuance of
the Series 2013C Senior Bonds, (3) the capital contribution of the
Debtor's owner Virginia United Methodist Homes, Inc., and (4)
borrowings under the revolving loan facility that VUMH will
provide to the Debtor to supplement its liquidity after it emerges
from bankruptcy.
All parties asserting claims as defined in Sections 101(5) and 501
of the Bankruptcy Code are required to file proofs of claim on or
before 5:00 p.m. (EST) on April 30, 2013. The General Claims Bar
Date will not apply to any current resident as of the General
Claims Bar Date who holds a claim against the Debtor under his/her
residency agreement.
A blacklined version of the modified Disclosure Statement dated
April 10 is available for free at:
http://bankrupt.com/misc/VIRGINIAUNITEDds0410.pdf
About WindsorMeade of Williamsburg
Virginia United Methodist Homes of Williamsburg, Inc., doing
business as WindsorMeade of Williamsburg, filed a Chapter 11
petition (Bankr. E.D. Va. Case No. 13-31098) on March 1, 2013.
WindsorMeade of Williamsburg is a continuing care retirement
community located on a 105 acre parcel of real property leased by
sponsor Virginia United Methodist Homes Inc. The facility
includes 181 independent living units with an 80% occupancy rate,
14 assisted living apartments with 65% occupancy and 12 skilled
nursing beds with 75% occupancy.
DLA Piper LLP (US) and Hirschler Fleischer, P.C. serve as counsel
to the Debtor. Deloitte Financial Advisory Services LLP serves as
financial advisor. McGuire Woods LLP is special bond counsel.
BMC Group Inc. is the claims agent. The prepetition lender, UMB
Bank, NA, is represented by Christian & Barton, LLP.
The Debtor estimated assets and debts of $100 million to
$500 million.
WINDSORMEADE OF WILLIAMSBURG: Has Final Okay to Use Financing
-------------------------------------------------------------
Judge Kevin R. Huennekens of the U.S. Bankruptcy Court for the
Eastern District of Virginia, Richmond Division, gave Virginia
United Methodist Homes of Williamsburg, Inc., doing business as
WindsorMeade of Williamsburg, a final order authorizing it to
obtain a $3.0 million postpetition financing from Virginia United
Methodist Homes, Inc.
The Debtor previously received interim authority to draw up to
$1.0 from the DIP financing extended by its owner. The final
order allows the Debtor to draw on the remaining $2 million.
The DIP facility will mature Aug. 30, 2013. The DIP loans will
bear interest at 4% per annum.
The obligations owing to the DIP Lender under the Facility will be
secured by a perfected security interest with a valid, binding,
continuing, enforceable, fully-perfected, first priority priming
lien that is senior to any and all security interests in and liens
on the DIP Collateral.
In a separate order, Judge Huennekens also gave the Debtor final
authority to use the cash collateral securing its prepetition debt
obligations with UMB Bank N.A., as trustee.
The Trustee is entitled to adequate protection of its interests in
the Collateral. As security for and solely to the extent of any
diminution in the value of the Trustee's Prepetition Collateral,
the Trustee is granted senior priority replacement liens on all
assets and property of the Debtor; provided, however, that the
Replacement Liens will be subject and subordinate to (a) the
Carve-Out, (b) the Prior Senior Liens, and (c) the liens granted
to Virginia United Methodist Homes, Inc., as DIP Lender. The
Trustee is also granted an administrative claim.
The DIP Liens, Replacement Liens and Super-Priority Administrative
Claim granted to the Trustee will be junior and subordinate to the
following Carve-Out:
(a) all accrued but unpaid fees and expenses of professionals
hired by the Debtor and any statutory committee of
unsecured creditors, allocable to the Debtor under and to
the extent set forth in the Budget and incurred prior to
the delivery of a Termination Notice;
(b) Professional Fees and Expenses in the amount of $100,000
incurred after delivery of a Termination Notice; and
(c) the payment of fees pursuant to Section 1930 of Title 28
of the U.S. Code.
A full-text copy of the Final Cash Collateral Order and
accompanying Budget is available for free at:
http://bankrupt.com/misc/VIRGINIAUNITEDcashcollord0329.pdf
About WindsorMeade of Williamsburg
Virginia United Methodist Homes of Williamsburg, Inc., doing
business as WindsorMeade of Williamsburg, filed a Chapter 11
petition (Bankr. E.D. Va. Case No. 13-31098) on March 1, 2013.
WindsorMeade of Williamsburg is a continuing care retirement
community located on a 105 acre parcel of real property leased by
sponsor Virginia United Methodist Homes Inc. The facility
includes 181 independent living units with an 80% occupancy rate,
14 assisted living apartments with 65% occupancy and 12 skilled
nursing beds with 75% occupancy.
DLA Piper LLP (US) and Hirschler Fleischer, P.C. serve as counsel
to the Debtor. Deloitte Financial Advisory Services LLP serves as
financial advisor. McGuire Woods LLP is special bond counsel.
BMC Group Inc. is the claims agent. The prepetition lender, UMB
Bank, NA, is represented by Christian & Barton, LLP.
The Debtor estimated assets and debts of $100 million to
$500 million.
WINDSORMEADE OF WILLIAMSBURG: Can Hire Lead Ch. 11 Professionals
----------------------------------------------------------------
Judge Kevin Heunnekens of the U.S. Bankruptcy Court for the
Eastern District of Virginia, Richmond Division, authorized
Virginia Methodist Homes of Williamsburg, Inc., doing business as
WindsorMeade of Williamsburg, to employ these firms as lead
bankruptcy professionals.
-- DLA Piper LLP (US) as lead bankruptcy counsel;
-- Hirschler Fleischer, P.C., as local bankruptcy counsel;
-- McGuireWoods as special bond counsel; and
-- Deloitte Financial Advisory Services LLP as restructuring
advisor.
About WindsorMeade of Williamsburg
Virginia United Methodist Homes of Williamsburg, Inc., doing
business as WindsorMeade of Williamsburg, filed a Chapter 11
petition (Bankr. E.D. Va. Case No. 13-31098) on March 1, 2013.
WindsorMeade of Williamsburg is a continuing care retirement
community located on a 105 acre parcel of real property leased by
sponsor Virginia United Methodist Homes Inc. The facility
includes 181 independent living units with an 80% occupancy rate,
14 assisted living apartments with 65% occupancy and 12 skilled
nursing beds with 75% occupancy.
DLA Piper LLP (US) and Hirschler Fleischer, P.C. serve as counsel
to the Debtor. Deloitte Financial Advisory Services LLP serves as
financial advisor. McGuire Woods LLP is special bond counsel.
BMC Group Inc. is the claims agent. The prepetition lender, UMB
Bank, NA, is represented by Christian & Barton, LLP.
The Debtor estimated assets and debts of $100 million to
$500 million.
YOSEN GROUP: Goldman Kurland Raises Going Concern Doubt
-------------------------------------------------------
Yosen Group, Inc., filed on April 12, 2013, its annual report on
Form 10-K for the year ended Dec. 31, 2012.
Goldman Kurland and Mohidin LLP, in Encino, California, expressed
substantial doubt about Yosen Group's ability to continue as a
going concern. The independent auditors noted that the Company
has incurred significant losses from operations for the past two
years. "In addition, the Company's cash position substantially
deteriorated from 2011," the independent auditors said.
The Company reported a net loss of $15.7 million on $21.5 million
of sales in 2012, compared with a net loss of $51.8 million on
$39.0 million of sales in 2011.
The Company's balance sheet at Dec. 31, 2012, showed $4.77 million
in total assets, $4.82 million in total liabilities, and a
stockholders' deficit of $49,000.
A copy of the Form 10-K is available at http://is.gd/znKgRF
Yosen Group, Inc., headquartered in HangZhou City, Zhejiang
Province, China, was incorporated on Aug. 20, 1998, under the laws
of the State of Nevada. As of Dec. 31, 2012, the Company operated
41 "stores in stores", under the brand names Hangzhou Wang Da and
Zhejiang YongXin. Wang Da focuses on distributing domestic brands
mobile phones and some brand name computers. Zhejiang focuses on
distributing Samsung and Apple brand products.
* Fitch Says Weakening Mortgage Volumes Hitting Banks' Top-Lines
----------------------------------------------------------------
An expected weakening of mortgage origination activity and
applications for loans is apparent in earnings reports from the
largest U.S. banks, likely pointing to a source of ongoing revenue
pressure in U.S. mortgage banking this year, according to Fitch.
During the first quarter, both JP Morgan and Wells Fargo reported
sequential declines in mortgage origination, applications, and the
new loan pipeline, with top-line mortgage banking pressure more
evident at JPM, where net revenues related to mortgage banking
fell by $671 million year over year.
"We expected mortgage volumes to continue falling in the quarter,
particularly as borrowers have already refinanced their homes or
are still unable to refinance because of housing values. Some
shift in the mix of mortgage originations, away from refinancing
and toward new purchase loans, could offset some of the volume
pressure over coming quarters -- especially if the housing market
recovers at a somewhat faster pace. However, refinancing still
drives the lion's share of overall mortgage originations. Wells
reported that refinancing made up 65% of total applications in
1Q13, compared with 76% in the year-earlier quarter.
"JPM reported a decline in mortgage banking margins in the
quarter, as gains on sale declined. The margin for Wells remained
near recent highs at 2.56% in 1Q, but we expect some margin
compression to occur this year, as mortgage revenue declines
outpace cost reduction."
Despite the volume pressure, asset quality trends for both banks
improved during the quarter, as net chargeoffs and nonperforming
assets declined. At Wells, the ratio of consumer chargeoffs to
total loans fell to 123 bp, down 45 bp on a linked-quarter basis.
While unlikely to offset much of the declining origination volume,
the two-year extension of the administration's Home Affordable
Refinancing Program (HARP), announced on April 11, should spur
some incremental activity through 2015. The HARP program allows
borrowers that are underwater but current on their mortgages to
refinance if the loans were sold to Fannie Mae or Freddie Mac.
* Not All Shareholder Claims Are Subordinated to Creditors
----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that just because a judgment against a bankrupt company
belongs to shareholders doesn't automatically mean the resulting
claim is subject to mandatory subordination under Section 510(b)
of the Bankruptcy Code. That was the ruling by U.S. District
Judge Sam A. Lindsay in Dallas, who concluded that shareholders'
claims arising from a pre-bankruptcy judgment were properly on the
same footing as claims of unsecured creditors.
The report recounts that shareholders had sued the company for not
holding a shareholders' meeting for several years. There was
settlement before bankruptcy where the company agreed to make
payments over time into a trust for the benefit of shareholders.
After bankruptcy, the shareholders filed a claim. Later, the
judge approved a settlement where the claim was allowed for $8.6
million as a general unsecured claim. A creditor took an appeal
when a Chapter 11 plan was later confirmed and treated the
shareholder claim on the same footing as general unsecured claims.
According to the report, Judge Lindsay upheld the bankruptcy
court. He said that mere ownership of a security doesn't mean
that every related claim is automatically subordinated to
creditors' claims. There was no nexus between the claim and the
purchase of securities, he said. Judge Lindsay pointed out that
the basis for the claim was a settlement for failure to hold a
shareholders' meeting.
The case is Stucki v. Orwig, 12-1064, U.S. District Court,
Northern District of Texas (Dallas).
* Big Banks Must Give Global Exposure Info In 'Living Wills'
------------------------------------------------------------
Evan Weinberger of BankruptcyLaw360 reported that U.S. regulators
on Monday asked large banks to provide more information about
their derivative exposures and potential complications with
international regulators when they submit their next round of so-
called living wills later this year.
According to the report, the Federal Reserve and the Federal
Deposit Insurance Corp. said in a joint release that they wanted
to see an increased focus from the banks that have already
submitted resolution plans on international issues, ranging from
the potential for regulators in other countries to step in in the
case of a major crisis.
* BofA Ordered to Face Claims over Insurance Kickbacks
------------------------------------------------------
Sophia Pearson, writing for Bloomberg News, reported that Bank of
America Corp., the second-largest U.S. lender by assets, must face
claims by homeowners that it took kickbacks from private insurers,
a judge ruled.
According to the report, U.S. District Judge Berle Schiller in
Philadelphia denied the bank's request to toss the lawsuit because
the statute of limitations had expired on the claims. Homeowners
who sued should have the opportunity to develop their argument
that the claims should be allowed because the bank intentionally
concealed its behavior, Schiller said in a ruling on April 12.
"Plaintiffs' allegations that defendants dressed up an illegal
scheme to appear as a legitimate transaction is sufficient to deny
defendants' motion to dismiss," Schiller said, Bloomberg related.
Bloomberg further related that three Pennsylvania homeowners sued
the Charlotte, North Carolina-based bank last year claiming it's
pay-to-play reinsurance scheme cost borrowers $284.7 million
between 2004 and the end of 2011. That's the amount Bank of
America allegedly collected from private mortgage insurers as its
share of insurance premiums for referring borrowers, according to
the complaint.
The homeowners, who obtained mortgage loans from the bank in 2005
and 2007, also named private insurers Radian Guaranty Inc., a unit
of Philadelphia-based Radian Group Inc. (RDN); Richmond, Virginia-
based Genworth Financial Inc. (GNW)'s Genworth Mortgage Insurance
Corp.; and United Guaranty Residential Insurance Co., a subsidiary
of New York-based American International Group Inc. in their
complaint, Reuters said. They sued seeking to represent all
borrowers who obtained residential mortgage loans from Bank of
America since Jan. 1, 2004.
The case is Riddle v. Bank of America Corp. (BAC), 12-cv-01740,
U.S. District Court Eastern District of Pennsylvania
(Philadelphia)
* Citigroup's Costs for Toxic Assets Soar on Legal Fees
-------------------------------------------------------
Donal Griffin, writing for Bloomberg News, reported that Citigroup
Inc. (C), the third-biggest U.S. bank, said expenses at a unit
holding some of its most toxic assets surged as legal costs
mounted.
Bloomberg related that the Special Asset Pool, or SAP, had
operating expenses of $572 million for the three months through
March, compared with $63 million in last year's first quarter,
according to data released today by the New York-based bank. SAP,
which manages a portfolio of securities that Citigroup seeks to
divest, had total expenses (C) of $619 million for all of 2011 and
2012 combined, filings show.
The increase helped boost Citigroup's total expenses by 1 percent
to $12.4 billion, showing that debris left over from the 2008
credit crisis can still put a surprise drag on profit (C),
Bloomberg further related. SAP is one of three divisions at Citi
Holdings, which houses distressed and unwanted assets. SAP's $18
billion of investments includes corporate debt, equity stakes and
subprime mortgage bonds, some worth a fraction of their original
value.
"It's hard to see what's out there that wasn't anticipated or
wasn't known," David Knutson, a credit analyst with Legal &
General Investment Management America, told Bloomberg. "There's
some detail that we're missing."
Moshe Orenbuch, an analyst with Credit Suisse Group AG, had
predicted that Special Asset Pool costs for the quarter would be
$85 million, according to Bloomberg. David Trone, a JMP
Securities LLC analyst, had estimated $75 million, Bloomberg said.
* Economist Eyed for Fannie Mae Watchdog Position
-------------------------------------------------
Nick Timiraos, writing for The Wall Street Journal, reported that
Mark Zandi, a prominent economist, has emerged as a leading
candidate to head the regulator of mortgage-finance companies
Fannie Mae and Freddie Mac amid signs that he would likely attract
support from Senate Republicans, according to people familiar with
the matter.
According to the report, the White House hasn't yet decided who to
nominate as the next director of the Federal Housing Finance
Agency, a position it has struggled to fill. Along with Mr. Zandi,
the Obama administration has also been considering Rep. Mel Watt,
a North Carolina Democrat.
WSJ noted that the FHFA director has become an increasingly
important economic-policy position in Washington, because the
agency serves as the warden of Fannie and Freddie, which own or
guarantee half of all the nation's mortgages.
Mr. Zandi, co-founder of an economic-forecasting firm that was
purchased by Moody's Corp. in 2005, serves as chief economist of
Moody's Analytics, WSJ related. A registered Democrat, he was an
economic adviser to the 2008 presidential campaign of Sen. John
McCain (R., Ariz.). He speaks frequently on the economy, fiscal
issues and housing -- testifying before Congress at least nine
times in the last two years -- and played a key role advising
congressional Democrats on the 2009 economic-stimulus bill.
* Visa, MasterCard Judge Asked to Approve Settlement, Fees
----------------------------------------------------------
Christie Smythe, writing for Bloomberg News, reported that lawyers
for plaintiffs in a Visa Inc. (V) and MasterCard Inc. (MA)
antitrust case over interchange fees asked for final approval of a
settlement along with $720 million in legal fees and $27 million
in expenses.
According to the report, attorneys, representing a class of more
than 7 million merchants, filed papers in Brooklyn, New York,
seeking a final blessing for the accord from U.S. District Judge
John Gleeson.
The settlement, estimated to be the largest ever in an antitrust
case, would provide for about $7.25 billion in cash payouts,
according to a memorandum filed by Robbins Geller Rudman & Dowd
LLP, one of the lead law firms in the case, Bloomberg said.
"With the largest-ever cash relief in an antitrust class action
settlement plus unprecedented rules changes that would enable
merchants to recover their costs of credit card acceptance" the
settlement "is far more than ?fair, adequate, and reasonable,'"
the lawyers wrote, Bloomberg related.
Bloomberg added that in a separate filing, the lawyer said their
request for attorneys' fees is reasonable given the complexity of
the issues and the length of time of the eight-year-long case.
"The settlement will affect as great a segment of the United
States economy as any previous antitrust class action," lawyers
for the plaintiffs said in the filing, noting that about 60 law
firms worked on the case, Bloomberg cited. "Such an extraordinary
settlement could result only from a similarly extraordinary effort
by class counsel and their co-counsel."
A hearing on final approval has been scheduled for September.
The case is In re Payment Card Interchange Fee and Merchant
Discount Antitrust Litigation, 05-md-01720, U.S. District Court,
Eastern District of New York (Brooklyn).
* Ex-Credit Suisse CDO Chief Pleads Guilty to Conspiracy
--------------------------------------------------------
Bob Van Voris, writing for Bloomberg News, reported that Kareem
Serageldin, the ex-global head of Credit Suisse Group AG (CSGN)'s
structured credit trading business, pleaded guilty to conspiracy,
saying that when he discovered subordinates falsifying the value
of mortgage-backed bonds in late 2007, he joined the scheme rather
than stop it.
"Why did you do that?" U.S. District Judge Alvin Hellerstein asked
Serageldin in Manhattan federal court, Bloomberg related.
"To preserve my reputation in the bank at a time when there was
great financial turmoil in the marketplace," he said, Bloomberg
further related.
According to the report, Serageldin, 39, pleaded guilty on April
13 to a single count of conspiracy to falsify Credit Suisse's
books and records, which carries a maximum prison sentence of five
years. Serageldin is scheduled to be sentenced Aug. 2.
Under a plea agreement with the government, Serageldin agreed to
forfeit $1 million as proceeds of the crime, the report said.
Both sides agreed that federal sentencing guidelines, which aren't
binding on the judge, call for Serageldin to get from four years
and nine months to five years in prison.
Sean Casey, Serageldin's lawyer, declined to comment on his
client's guilty plea after the hearing, Bloomberg added.
The cases are U.S. v. Serageldin, 12-00090, U.S. v. Higgs, 12-cr-
00088, and U.S. v. Siddiqui, 12-cr-00089, U.S. District Court,
Southern District of New York (Manhattan).
* California's Largest Cities Incur Exorbitant Litigation Costs
---------------------------------------------------------------
California Citizens Against Lawsuit Abuse (CALA), a nonpartisan
grassroots movement advocating for legal reform, on April 15
released a report calculating that just 17 of California's 482
cities and 58 counties spent more than $1.09 billion on lawsuits
over a four-year period from 2008-2012.
These exorbitant costs came during an era of harsh budgets at the
local level in which revenue fell sharply and public services were
slashed. Since January 2010, three cities in California have
filed for bankruptcy and several other cities and counties remain
on the edge of solvency.
"Unscrupulous attorneys and plaintiffs treat public sector budgets
as a coffer to be raided and file abusive lawsuits against local
governments seeking a quick payday," said Tom Scott, executive
director of CALA. "It is unacceptable for cities and counties to
continue to pay out-of-control legal costs while vital social
service and public safety programs face budget cuts."
The report examined the cost of verdicts, settlements and outside
counsel to some of California's largest cities and counties, and
did not take into account the cost of in-house counsel and other
administrative costs associated with the enormous number of
lawsuits facing cities and counties.
In the four fiscal years examined in the report, several lawsuits
delivered large and unpredictable verdicts against local
jurisdictions, throwing budgets out of balance. For example, in
2012, the City of Anaheim settled a lawsuit for $400,000 after a
man was wrongfully arrested for killing an opossum -- $100,000 for
each hour he was detained.
While some cities and counties are taking steps to fight back
against abusive lawsuits and are saving taxpayer dollars as a
result, the cost of lawsuits continues to be a burden on city and
county budgets.
"The legal system is intended to provide justice for those who
have been injured, not to enrich a handful of plaintiffs and their
attorneys," said Mr. Scott. "Until California's legislature
passes meaningful legal reforms that create balance in our courts
and remove the incentives that encourage lawsuit abuse in the
first place, high litigation costs will likely continue to plague
California's city and county budgets."
California Citizens Against Lawsuit Abuse (CALA) is a nonpartisan,
grassroots organization dedicated to educating the public about
the negative effects of lawsuit abuse and challenging those who
abuse the legal system for personal gain.
* Asha Shravah Joins ERW Law's N.Y. Office as Managing Attorney
---------------------------------------------------------------
The Law Offices of Elizabeth R. Wellborn, P.A. (ERW Law) on
April 15 disclosed that Asha Shravah has joined its Getzville,
N.Y. office as managing attorney and senior counsel. Ms. Shravah
brings more than 12 years of experience representing mortgage
banking creditors throughout New York.
Within the legal community, Ms. Shravah is actively involved in
organizations such as the National Association of Chapter 13
Trustees and the American Legal and Financial Network. She
assisted in developing the bankruptcy loss mitigation program in
the Southern District of New York and is a recognized expert in
this field. Ms. Shravah is also a frequent speaker at industry
conferences and seminars, and is regularly invited by clients to
conduct internal staff training on a range of legal issues.
"Attracting attorneys with high integrity and a strong work ethic
to represent our clients is a key reason our firm has achieved
sustained growth over its ten year history," said Elizabeth
Wellborn, Esq., principal and founder of ERW Law. "Asha is an
outstanding addition to the firm. She brings strong industry
experience, a record of leadership and a commitment to customer
service; we are pleased to welcome her to ERW Law."
A graduate of Hofstra University School of Law and State
University of New York at Stony Brook, Ms. Shravah is admitted to
the New York State Bar and the Eastern, Western, Southern and
Northern Districts of New York. ERW Law has attorneys licensed to
practice law in Florida, New York, Georgia, Texas and the District
of Columbia.
About the Law Offices of Elizabeth R. Wellborn, PA
The law practice Elizabeth R. Wellborn, PA (ERW Law) --
http://www.erwlaw.com-- was founded in 2003 as a creditors'
rights law firm specializing in collections, real estate
foreclosures, bankruptcy, evictions, REO, replevins and mechanic
liens, as well as defense litigation related to each of those
areas. ERW Law employs 300 individuals at offices in Deerfield
Beach, Florida, and Getzville, New York. Principal Elizabeth R.
Wellborn, Esq., has nearly two decades of experience as a
litigator in both commercial and civil actions, and is recognized
as an expert in protecting the rights of clients involved in legal
disputes arising from creditor issues.
* TMA of New York Unveils 2013 Board Members & Pro Bono Initiative
------------------------------------------------------------------
The Turnaround Management Association (TMA) of New York on
April 15 announced its 2013 Board of Directors and Membership
Initiatives, led by incoming Chapter President Teresa Kohl.
Ms. Kohl is joined on the Board's Executive Committee by William
Lenhart, Chairman and Co-Chair of Corporate Governance; John
Lemanski, President-Elect; Frank Grimaldi, Treasurer; and Barry
Seidel, Vice President and General Counsel.
"I look forward to working with this tremendous team to continue
to grow our Chapter and identify ways to support our members
through new initiatives, including our recently launched Pro Bono
and Governance committees and our expanded Academic Relations
committee," Ms. Kohl said. "All of our efforts are focused on
making the TMA NY Chapter a vital resource for restructuring
professionals."
TMA NY's Pro Bono initiative, led by Jeffrey Gaynor was
established to partner with TMA Global and other national
non-profit organizations to provide resources for small businesses
affected by extraordinary circumstances such as Super Storm Sandy.
The Pro Bono committee will also solicit and develop volunteer
opportunities for members in the New York metropolitan area.
Ms. Kohl is a Director for SSG Capital Advisors and has more than
15 years of experience specializing in crisis management and
turnaround advisory. She has completed over 75 restructuring
matters including refinancing and sale transactions for middle
market companies in bankruptcy proceedings and out-of-court
workouts.
"We are so pleased to have Teresa leading us in 2013," said
Mr. Lenhart, the 2012 Chapter President. "Her clear vision,
dedication, creativity, and enthusiasm are truly an asset to the
entire restructuring community."
Mr. Lenhart is a Partner and National Director in the New York
office of BDO Consulting. He is a Certified Public Accountant and
a Certified Fraud Examiner with more than 25 years of experience
practicing accounting and business consulting.
Mr. Lemanski is a Manager in the Valuation & Forensic Services
Practice of Citric Cooperman with over 15 years of litigation
support experience and over 25 years of business experience.
Mr. Grimaldi is a Director with Gordon Brothers Group LLC and is
responsible for developing and maintaining client relationships
for the Appraisal & Valuation Division in the Northeast and Mid-
Atlantic regions.
Mr. Seidel is a Partner in Dickstein Shapiro's Financial
Restructuring & Bankruptcy Practice with more than 30 years of
legal experience representing both debtors and creditors in
bankruptcy courts and boardrooms across the country.
In addition to the members of the Executive Committee, the Chapter
has named a slate of new vice presidents, including Judy Wolf
Weiker, Manewitz Weiker, Chair of Academic Relations; Peter Otto,
Malvern Hill Associates, Chair of Membership; Janine Figueiredo,
Hahn & Hessen LLP, Chair of Programming; and Prof. Edward Altman,
NYU Stern School of Business, Academic Advisor.
The full Board of Directors includes:
Pankaj Amin, SC VenturesMichael Appel, Appel Associates LLCRichard
Bernard, Foley & Lardner LLPKathlene Burke, Weil Gotshal & Manges
LLPScott Chabina, Carl Marks Advisory Group LLCBruce Chesebrough,
Alvarez & MarsalTom Fogarty, GECC-Energy Financial ServicesJeff
Gaynor, TrueNorth Capital Partners LLCSheon Karol, Deloitte
CRGKate Matson, BDO ConsultingClaude Mattessich, CIT Group
IncLorenzo Mendizabel, Epiq Systems IncOmar Mirza, Ernst & Young
Capital Advisors LLCAbby Parsonnet, FTI ConsultingBert Weil,
Getzler Henrich & Associates LLCJohn Weiss, Alston & Bird LLPJosh
Weisser, Gibson Dunn
The Turnaround Management Association --
http://www.turnaround.org-- is the only international non-profit
association dedicated to corporate renewal and turnaround
management.
* 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
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re-mailing and photocopying) is strictly prohibited without prior
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herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
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are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000 or Nina Novak at 202-241-8200.
*** End of Transmission ***