/raid1/www/Hosts/bankrupt/TCR_Public/130719.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, July 19, 2013, Vol. 17, No. 198
Headlines
30DC INC: Late-Filed Financials Show $46K Loss in Q3 of 2012
ABSORBENT TECHNOLOGIES: Hiring Moss Adams as Accountants
ACASTI PHARMA: Incurs C$2-Mil. Net Loss in First Quarter
ACCENTIA BIOPHARMACEUTICALS: Plan Declared Effective July 9
ALLY FINANCIAL: Offering $1MM Notes & $375MM Floating Rate Notes
AMBAC FINANCIAL: Aug. 8 Hearing on Final Fee Applications
AMBAC FINANCIAL: Eugene Bullis Named as Director in Newco
AMBAC FINANCIAL: Dist. Judge Remands AAC Proceedings to State Ct.
AMBAC FINANCIAL: Rehabilitator Seeks Payments on 14 RMBS Policies
AMERICAN AIRLINES: AMR, US Airways Offer Concessions to EU
AMERICAN AIRLINES: Wants Until Sept. 30 to Decide on AA Lease
AMERICAN AIRLINES: Wants to Hire Venable as Special Counsel
AMERICAN AIRLINES: Proposes to Hire Shook Hardy as Counsel
AMERICAN AIRLINES: Daugherty Approved as Special Counsel
AMERICAN AIRLINES: Reports Net Profit of $357 Million in Q2 2013
AMERICAN REALTY: Aug. 22 Hearing on Bank's Bid to Convert Case
AMERICAN REALTY: Seeks to Quash Gene Phillips Subpoena
APERION COMMUNITIES: Voluntary Chapter 11 Case Summary
ARCHDIOCESE OF MILWAUKEE: Estate Don't Own Funds From OneBeacon
ARCHDIOCESE OF MILWAUKEE: Hamilton Seeks $17K for 6 Months' Work
ARMORWORKS ENTERPRISES: US Trustee Names 3-Member Creditors' Panel
ARMORWORKS ENTERPRISES: Panel Retaining Forrester Worth as Counsel
ARMORWORKS ENTERPRISES: Has Interim OK for $1.47-Mil. in DIP Loans
ASPEN GROUP: Delays Transition Report for Fiscal 2013
ATARI INC: Hires Frank Rimerman as Accountants
ATARI INC: Taps Marks Paneth & Shron as 401(k) Plan Auditor
ATP OIL: Gomez Demands Payment of $1MM Claim Plus Interest
ATP OIL: Seeks Extension of Deadline to Decide on Office Leases
ATP OIL: Capital Ventures Gets OK to Issue Conversion Notice
AURA SYSTEMS: Delays Form 10-Q for May 31 Quarter
BAYOU GROUP: Victims of Fraud to Get Another $31 Million
BELLE FOODS: Section 341(a) Meeting Set for August 13
BELLE FOODS: Has Interim Access to Lenders' Cash Until July 22
BERING EXPLORATION: Incurs $5.9 Million Net Loss in Fiscal 2013
BERGENFIELD SENIOR HOUSING: Contemplates September Auction
BERRY PLASTICS: Apollo, et al., to Sell 15MM Common Shares
BLUEJAY PROPERTIES: Cash Collateral Hearing Set for July 22
BOOMERANG SYSTEMS: Obtains $7.7 Million Funding Commitments
BROWNIE'S MARINE: Effects 1,350 to 1 Reverse Stock Split
CASA CASUARINA: Hires SCA Group's Michael Mazzarino as CRO
CHILE MINING: Incurs $4.4 Million Net Loss in Fiscal 2013
COLOREP INC: Case Summary & 21 Largest Unsecured Creditors
COLT DEFENSE: Moody's Alters Outlook to Negative & Keeps Caa1 CFR
COLT DEFENSE: S&P Affirms 'CCC+' CCR & Revises Outlook to Negative
COMPLETELY BARE: Involuntary Chapter 11 Case Summary
CONSOLIDATED TRANSPORT: Aug. 13 Hearing on Plan Outline Approval
COOPER-BOOTH: Hires Devine Law Office as Labor Counsel
COOPER-BOOTH: Can Employ Executive Sounding as Financial Advisors
CORNERSTONE HOMES: Case Summary & 20 Largest Unsecured Creditors
CUBIC ENERGY: Common Stock Delisted From NYSE
DEAN FOODS: S&P Assigns 'BB' Rating to $750MM Sr. Secured Facility
DEEP PHOTONICS: Plan Outline Hearing Continued Until Aug. 5
DETROIT, MI: Files Chapter 9 Municipal Bankruptcy Protection
DETROIT, MI: No Reasonable Alternative to Chapter 9
DETROIT, MI: NLC Comments on Bankruptcy Filing
DETROIT, MI: Retirement Systems Comments on Bankruptcy Filing
DETROIT, MI: Voluntary Chapter 9 Case Summary
DIGITAL ANGEL: Lowers Net Loss to $78,000 in First Quarter
EAST END DEVELOPMENT: Court Approves Auction Sale Procedures
EASTMAN KODAK: Files Copy of Presentation to Potential Lenders
EASTMAN KODAK: Asks for Sept. 30 Deadline to Decide on Lease
EASTMAN KODAK: Defends Assignment of ITT Contract to RED-Rochester
EDISON MISSION: Court Denies Tyche's Bid to Dismiss $4.1MM Suit
ELBIT IMAGING: Bank Hapoalim Withdraws From Standstill Pact
ENDICOTT INTERCONNECT: Case Summary & 20 Largest Unsec. Creditors
ENERGY TRANSFER: Moody's Rates New 2066 Junior Notes 'Ba1'
ENGLOBAL CORP: To Sell Gulf Coast Operations for $21.5 Million
EXCEL MARITIME: U.S. Trustee Appoints Creditors' Committee Members
EXCEL MARITIME: Taps GMP & Miller Buckfire as Fin'l Advisors
EXIDE TECH: EPA Warns of Safety Risk in Bankruptcy Loan Deal
EXIDE TECHNOLOGIES: Can Pay Critical Vendors Up to $10-Mil.
EXIDE TECHNOLOGIES: Can Employ CRO and Other Professionals
FAIRWEST ENERGY: Alberta Court Extends CCAA Stay Until Sept. 30
FINJAN HOLDINGS: Has 258.6 Million Shares Resale Prospectus
FIRST CONNECTICUT: Can Employ Stichter Riedel as Special Counsel
GREAT WOLF: S&P Puts 'B' Corp. Credit Rating on CreditWatch Pos.
GLYECO INC: Semple Marchal Replaces Jorgensen as Accountants
GROVES IN LINCOLN: Files Disclosure Statement to 2nd Amended Plan
GWR OPERATING: Moody's Assigns 'B3' CFR; Outlook Positive
HAMPTON CAPITAL: Files Chapter 11 Plan of Liquidation
HUBBARD RADIO: Moody's Retains Ratings Over Sandusky Acquisitions
HUSTAD INVESTMENT: Withdraws Application to Hire Trek Development
ICEWEB INC: Receives Letter From CTC CEO About Pending Merger
INTELLICELL BIOSCIENCES: Ironridge Holds 9.9% Equity Stake
INTELLIPHARMACEUTICS: RexistaTM Development Program Updates
INTRAOP MEDICAL: Files for Ch. 11, Set for September Auction
JEDD LLC: Court Continues Hearing on Plan Confirmation to Aug. 19
JERRY'S NUGGET: Court Denies US Bank's Motion to End Exclusvity
JFK INTERNATIONAL AIR: Fitch Raises Rating on $1.5BB Bonds to 'BB'
JVMW PROPERTIES: Court Extends Plan Filing Deadline to Aug. 30
K-V PHARMACEUTICAL: Kingdon Capital Held 7.4% A Shares at June 6
LAKELAND INDUSTRIES: "Going Concern Doubt" Removed in 2013 10-K
LEHMAN BROTHERS: Repo Clients Don't Have Customer Claims
LEHMAN BROTHERS: Court Denies Motion to Remand "FRIED II" Suit
LEHMAN BROTHERS: Aurora's Foreclosure Suit v. Arauz Dismissed
MERCER INTERNATIONAL: Moody's Rates New $50MM Notes Offer 'B3'
MIDCONTINENT COMMUNICATIONS: Moody's Rates New Senior Bonds 'B3'
MINT LEASING: Ends Forbearance with Comerica to Pursue Claims
MOTORCAR PARTS: Fenco Bankruptcy Filing Constitutes Default
NATIONSTAR MORTGAGE: S&P Rates New $250MM Sr. Unsecured Notes 'B+'
NMP-GROUP LLC: Case Summary & 18 Largest Unsecured Creditors
OLYMPIC HOLDINGS: Has Accord With JP Morgan; To Dismiss Case
ONCURE HOLDINGS: Sec. 341 Creditors' Meeting Set for Aug. 2
ONCURE HOLDINGS: Hires Ernst & Young as Auditor and Tax Advisor
PRIMCOGENT SOLUTIONS: Files Schedules of Assets and Liabilities
PRIMCOGENT SOLUTIONS: Taps Andrews Kurth as Bankruptcy Counsel
PRIMCOGENT SOLUTIONS: U.S. Trustee Forms Three-Member Committee
PROMMIS HOLDING: Saul Ewing Approved as Committee Co-Counsel
RAVENWOOD HEALTHCARE: Dismissal Hearing Continued to July 26
RESIDENTIAL CAPITAL: Amends Complaint vs. UMB Bank
RESIDENTIAL CAPITAL: Fried Frank Files Rule 2019 Statement
RESIDENTIAL CAPITAL: Willkie Farr Files Rule 2019 Statement
RESIDENTIAL CAPITAL: Nichols Late Filed Counter-Motion Accepted
RHYTHM AND HUES: Hires Fox Rothschild as Special ERISA Counsel
RHYTHM AND HUES: Can Employ O'Connor Davies as Accountants
SCOTTSDALE VENETIAN: Charles Foley Okayed as Accountant
SHOTWELL LANDFILL: Bankruptcy Administrator Unable to Form Panel
SHOTWELL LANDFILL: Janvier Law Firm Okayed as Bankruptcy Counsel
SHOTWELL LANDFILL: Taps David Ball as Accountants
SIERRA NEGRA: Munger Chadwick Approved as Utilities Counsel
SOUTHERN MONTANA: July 29 Hearing on Bid for Valuation
STRADELLA INVESTMENTS: Ch.11 Trustee May Tap Marshack as Counsel
TRANSDIGM INC: Fitch Rates $500MM Subordinated Notes 'B-'
WOOTEN GROUP: Status Hearing Continued Until July 31
* McDonald Hopkins' Manju Gupta Named to Lawyers of Color Hot List
* BOOK REVIEW: Bankruptcy Crimes
*********
30DC INC: Late-Filed Financials Show $46K Loss in Q3 of 2012
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30DC, Inc., had a net loss of $46,195 on $449,739 of total revenue
for the three months ended Sept. 30, 2012, as compared with a net
loss of $235,057 on $415,258 of total revenue for the same period
a year ago, according to 30DC's Form 10-Q filed with the U.S.
Securities and Exchange Commission on July 16, 2013.
As of Sept. 30, 2012, the Company had $2.25 million in total
assets, $2.41 million in total liabilities and a $166,465 total
stockholders' deficiency.
A copy of the Form 10-Q is available for free at:
http://is.gd/wmY2ws
About 30DC Inc.
New York-based 30DC, Inc., provides Internet marketing services
and related training to help Internet companies in operating their
businesses. It operates in two divisions, 30 Day Challenge and
Immediate Edge.
30DC's annual report for the fiscal year ended June 30, 2012,
shows net income of $32,207 on $2.91 million of total revenue as
compared with a net loss of $1.44 million on $1.89 million of
total revenue the year before.
Marcum LLP, in New York, 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 a
working capital deficit and stockholders' deficiency as of
June 30, 2012.
ABSORBENT TECHNOLOGIES: Hiring Moss Adams as Accountants
--------------------------------------------------------
Absorbent Technologies, Inc., disclosed the terms of Moss Adams'
employment as accountant for the Debtor.
Moss Adams will provide professional services in connection with
the administration of the case pursuant, including but not limited
to: (a) review and assistance preparing Rule 2015 reports; (b)
preparation of tax returns for 2010, 2011, and 2012; (c) general
accounting and audit support to the extent necessary to aid in the
anticipated sale of assets; (d) providing necessary accounting and
audit support relevant to the disclosure statement and plan of
reorganization.
The Debtor has agreed to pay Moss Adams' personnel's hourly rate
as:
Pat Richardson, partner $324
Fred Peterson, partner $324
Amy Fleming, manager $180
Jaclyn Heuhn, manager $180
Alyson Austin, staff $120
To the best of the Debtor's knowledge, Moss Adams has no interest
adverse to the Debtor or to the estate in matters on which the
accounting firm is to be engaged.
As reported by the Troubled Company Reporter on July 11, 2013, the
Debtor sought and obtained authority from the Court to employ Moss
Adams as accountant.
Absorbent Technologies
Absorbent Technologies, Inc., filed a Chapter 11 petition (Bankr.
D. Ore. Case No. 13-31286) on March 8, 2013, without citing a
reason. David C. Moffenbeier signed the petition as CEO. Judge
Trish M. Brown presides over the case. The Law Office of Gary U.
Scharff serves as the Debtor's counsel.
The Beaverton, Oregon-based company develops, produces, and
markets starch-based superabsorbent products and ingredients in
the United States and internationally. It offers Zeba, a corn
starch-based polymer that helps farmers grow bigger crops with
less water. Placed near a plant's roots, Zeba serves as a Grape
Nut-sized sponge that holds and distributes water as a plant needs
it.
The Debtor estimated assets and debts of at least $10 million.
The Debtor has a manufacturing facility at 140 Queen Avenue SW,
Albany, Oregon.
Fluffco LLC and Ephesians Equity Group LLC own equity interests in
privately held Absorbent Technologies.
The Debtor is seeking a buyer for its assets and property.
The U.S. Trustee formed a four-member committee of unsecured
creditors. Green & Markley, P.C. represents the Committee.
ACASTI PHARMA: Incurs C$2-Mil. Net Loss in First Quarter
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Acasti Pharma Inc. reported a net loss of C$2.0 million on C$6,388
of sales for the three months ended May 31, 2013, compared with
a net loss of C$1.6 million on C$13,658 of sales for the three
months ended May 31, 2012.
The Company's balance sheet at May 31, 2013, showed C$11.3 million
in total assets, C$3.0 million in total liabilities, and equity of
C$8.3 million.
"The Corporation has incurred operating losses and negative cash
flows from operations since inception. As at May 31, 2013, the
Corporation's current liabilities and expected level of expenses
in the research and development phase of its drug candidate
significantly exceed current assets. The Corporation's
liabilities at May 31, 2013, include amounts due to Neptune of
C$2,366,894. The Corporation plans to rely on the continued
support of Neptune to pursue its operations, including obtaining
additional funding, if required. The continuance of this support
is outside of the Corporation's control. If the Corporation does
not receive the continued financial support from its parent or the
Corporation does not raise additional funds, it may not be able to
realize its assets and discharge its liabilities in the normal
course of business. As a result, there exists a material
uncertainty that casts substantial doubt about the Corporation's
ability to continue as a going concern and, therefore, realize its
assets and discharge its liabilities in the normal course of
business."
A copy of Acasti's interim financial statements for the three
months ended May 31, 2013, is available at http://is.gd/tUWUR3
Laval, Quebec, Canada-based Acasti Pharma Inc. is incorporated
under the Business Corporations Act (Quebec) (formerly Part 1A of
the Companies Act (Quebec)). The Company is an emerging
biopharmaceutical company focused on the research, development and
commercialization of new therapies for abnormalities in blood
lipids, referred to as dyslipidemia, and the treatment and
prevention of cardiovascular disorders. Acasti's products are
derived from krill oil.
ACCENTIA BIOPHARMACEUTICALS: Plan Declared Effective July 9
-----------------------------------------------------------
Biovest International, Inc.'s First Amended Plan of Reorganization
became effective on July 9, 2013. The Bankruptcy Court confirmed
the Plan on June 28, 2013.
Upon the Effective Date, an event of default occurred under the
Company's secured convertible debentures issued to certain holders
in November 2010. An approximate aggregate principal amount of
$6.8 million became due on that date. As a result of the default
under this obligation, the debenture holders have the right to
foreclose upon their lien on certain assets of the Company.
As of July 15, 2013, none of the creditors have taken any action
to foreclose on any collateral securing the obligations and have
not taken any action to secure a judgment against the Company.
The Plan provided for the cancellation of all presently
outstanding Biovest common stock, which common stock will cease to
trade or be recognized as an ownership interest in the Company.
All of the Company's equity interests in Biovest would be deemed
cancelled, annulled, extinguished and surrendered without any
further action by any party and will be of no further force and
effect. In addition, the Plan provided for the conversion of
virtually all prepetition debt into new common stock of the
reorganized Company, as follows:
(i) all outstanding indebtedness due to the Company's senior
secured lenders, Corps Real, LLC, and LV Administrative
Services, totaling approximately $44 million, will be
converted into new equity representing 93 percent of the
issued and outstanding common stock in the reorganized
Company;
(ii) approximately $5.5 million of unsecured indebtedness
outstanding under the Company's prepetition unsecured debt
obligations will be converted and exchanged for new equity
representing 7 percent of the issued and outstanding common
stock in the reorganized Company.
On May 23, 2013, the Company filed its emergency motion to
temporarily allow unsecured claim solely for purposes of accepting
or rejecting the Debtor's First Amended Plan. Pursuant to the
Motion, the Company sought an order from the Bankruptcy Court
allowing its Class 8 Unsecured Claim in the amount of
approximately $4.55 million solely for purposes of voting to
accept or reject the Biovest's First Amended Plan. On May 28,
2013, the Bankruptcy Court heard from all parties regarding the
Motion and allowed the Company to file its Class 8 Ballot in the
amount of $4.55 million, but deferred ruling until the Biovest's
confirmation hearings on whether the Company's Class 8 Ballot
would be allowed for purposes of voting on the Biovest First
Amended Plan.
On June 14, 2013, upon extensive, careful review and discussion of
the merits of the Company's claims with outside bankruptcy
counsel, the Bankruptcy Court's rulings and disposition, and the
Company's limited funding, the Company's independent members of
the Board of Directors and senior management decided the only
viable option would be to withdraw the Company's Complaint along
with its Disputed Ownership Claims.
CSO Quits
The Company accepted Carlos F. Santos, Ph.D.'s resignation, as the
Company's Chief Science Officer On July 9, 2013. Dr. Santos
served without a formal employment agreement and accordingly, his
resignation will not result in any severance compensation or
benefits. The resignation was voluntary and did not result from
any disagreement with the Company known to an executive officer of
the Company on any matter relating to the Company's operations,
policies or practices.
$45,000 Notes Issued
On June 12, 2013, June 18, 2013, and July 2, 2013, Accentia
Biopharmaceuticals, Inc., issued three separate unsecured
promissory notes in the aggregate amount of approximately $45,000
with Hopkins Capital Group II, LLC. HCGII is a shareholder of the
Company. Francis E. O'Donnell, Jr., the Company's Executive
Chairman and shareholder is the manager of HCGII. The Promissory
Notes bear an interest of 4 percent per annum, with accrued
interest payable on the maturity of each of the Promissory Notes.
Each promissory note matures on the 30th day after the date of
that promissory note was issued to HCGII. Those Promissory Notes'
maturity dates have currently been extended through Aug. 31, 2013.
The funds are to be used solely for the operations of the Company.
A copy of the Form 8-K is available for free at:
http://is.gd/y3irLg
About Accentia Biopharmaceuticals
Headquartered in Tampa, Florida, Accentia Biopharmaceuticals, Inc.
(PINK: "ABPI") -- http://www.Accentia.net/-- is a biotechnology
company that is developing Revimmune as a system of care for the
treatment of autoimmune diseases. Through subsidiary, Biovest
International, Inc., it is developing BiovaxID as a therapeutic
cancer vaccine for treatment of follicular non-Hodgkin's lymphoma
(FL) and mantle cell lymphoma (MCL). Through subsidiary,
Analytica International, Inc., it conducts a health economics
research and consulting business, which it market to the
pharmaceutical and biotechnology industries, using its operating
cash flow to support its corporate administration and product
development activities.
Accentia BioPharmaceuticals and nine affiliates filed for
Chapter 11 protection (Bankr. M.D. Fla. Lead Case No. 08-17795) on
Nov. 10, 2008. Accentia emerged from bankruptcy on Nov. 17, 2012,
after receiving confirmation of a reorganization plan on Nov. 2,
2010.
The Company incurred a net loss of $9.18 million for the year
ended Sept. 30, 2012, compared with a net loss of $15.65 million
during the prior year.
The Company's balance sheet at Dec. 31, 2012, showed $2.81 million
in total assets, $89.21 million in total liabilities, and a
$86.39 million total stockholders' deficit.
ALLY FINANCIAL: Offering $1MM Notes & $375MM Floating Rate Notes
----------------------------------------------------------------
Ally financial is offering an aggregate of $1 million 3.500
percent senior guaranteed notes due 2016. Interest on the Notes
is payable semi-annually, in arrears on January 18 and July 18 of
each year, until maturity, commencing Jan. 18, 2014. A copy of
the free writing prospectus is available at http://is.gd/kWhS74
Concurrently, Ally is offering $375,000,000 of its floating rate
senior guaranteed notes due 2016. Interest payments on the Notes
are due on January 18, April 18, July 18, and October 18, provided
that if any interest payment date would otherwise be a day that is
not a business day, the interest payment date will be postponed to
the immediately succeeding day that is a business day, except that
if that business day is in the immediately succeeding calendar
month, the interest payment date will be the immediately preceding
business day.
A copy of the free writing prospectus is available at:
http://is.gd/EnrGA4
Joint Book-Running Managers:
Barclays Capital Inc.
Citigroup Global Markets Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. LLC
Co-Managers:
Credit Agricole Securities (USA) Inc.
Lloyds Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Scotia Capital (USA) Inc.
SG Americas Securities, LLC
U.S. Bancorp Investments, Inc.
CastleOak Securities, L.P.
Lebenthal & Co., LLC
Muriel Siebert & Co., Inc.
The Williams Capital Group, L.P.
One of Ally's key strategic priorities is to repay the investment
the United States Treasury has made in Ally. Ally is exploring a
number of alternatives in furtherance of repaying Treasury and
supporting its Comprehensive Capital Analysis and Review
resubmission to the Federal Reserve Board, including a possible
primary issuance of common stock by Ally, and the use of available
cash to address Treasury's mandatorily convertible preferred
shares. No decision has been made to pursue any approach under
consideration and the implementation of any such approach may
require regulatory and other approvals.
About Ally Financial
Ally Financial Inc., formerly GMAC Inc. -- http://www.ally.com/--
is one of the world's largest automotive financial services
companies. The company offers a full suite of automotive
financing products and services in key markets around the world.
Ally's other business units include mortgage operations and
commercial finance, and the company's subsidiary, Ally Bank,
offers online retail banking products. Ally operates as a bank
holding company.
GMAC obtained a $17 billion bailout from the U.S. government in
exchange for a 56.3% stake. Private equity firm Cerberus Capital
Management LP keeps 14.9%, while General Motors Co. owns 6.7%.
The Company's balance sheet at Dec. 31, 2012, showed
$182.34 billion in total assets, $162.44 billion in total
liabilities, and $19.89 billion in total equity. Ally Financial
Inc. reported net income of $1.19 billion for the year ended
Dec. 31, 2012, as compared with a net loss of $157 million during
the prior year.
* * *
As reported by the TCR on Feb. 27, 2013, Moody's Investors Service
confirmed the B1 corporate family and senior unsecured ratings of
Ally Financial, Inc. and supported subsidiaries and assigned a
positive rating outlook.
In February 2012, Fitch Ratings downgraded the long-term Issuer
Default Rating (IDR) and the senior unsecured debt rating of Ally
Financial and its subsidiaries to 'BB-' from 'BB'. The Rating
Outlook is Negative. The downgrade primarily reflects
deteriorating operating trends in ResCap, which has continued to
be a drag on Ally's consolidated credit profile, as well as
exposure to contingent mortgage-related rep and warranty and
litigation issues tied to ResCap, which could potentially impact
Ally's capital and liquidity levels. In the Feb. 13, 2013,
edition of the TCR, Fitch Ratings has maintained the Rating Watch
Negative on Ally Financial Inc. including the Long-term IDR 'BB-'.
As reported by the Troubled Company Reporter on May 22, 2012,
Standard & Poor's Ratings Services revised its outlook on Ally
Financial Inc. to positive from stable. At the same time,
Standard & Poor's affirmed its ratings, including its 'B+' long-
term counterparty credit and 'C' short-term ratings, on Ally.
"The outlook revision reflects our view of potentially favorable
implications for Ally's credit profile arising from measures the
company announced May 14, 2012, designed to resolve issues
relating to Residential Capital LLC, Ally's troubled mortgage
subsidiary," said Standard & Poor's credit analyst Tom Connell.
In the May 28, 2012 edition of the TCR, DBRS, Inc., has placed the
ratings of Ally and certain related subsidiaries, including its
Issuer and Long-Term Debt rating of BB (low), Under Review
Developing. This rating action follows the decision by Ally's
wholly owned mortgage subsidiary, Residential Capital to file a
pre-packaged bankruptcy plan under Chapter 11 of the U.S.
Bankruptcy Code.
AMBAC FINANCIAL: Aug. 8 Hearing on Final Fee Applications
---------------------------------------------------------
A hearing will be held before the Honorable Shelley C. Chapman of
the U.S. Bankruptcy Court for the Southern District of New York on
August 8, 2013, at 10:00 a.m. (EDT) to consider applications for
allowance of final compensation, reimbursement of expenses, and
payments of held back amounts of 14 professionals rendering
services to Ambac Financial Group, Inc., for the period Nov. 8,
2010 through April 30, 2013.
The professionals and the compensation sought are:
Professional Fees Expenses
------------ ---------- --------
Hogan Lovells US LLP $2,718,096 $37,652
Counsel to Debtor
(2nd Interim/Final Application)
Watchtell, Lipton, Rosen & Katz $1,584,332 $37,006
Special Litigation Counsel to
Debtor
(6th Interim/Final Application)
KPMG LLP $1,400,995 $0
Auditor, Tax Consultant and
Bankruptcy Administration/
Consultant to Debtor
(6th & Final Application)
Blackstone Advisory Partners L.P. $9,801,666 $24,605
Financial Advisor to Debtor
(6th Interim/Final Application)
PricewaterhouseCoopers LLP $566,345 $507
Accounting and Valuation
Advisors to Debtor
(4th Interim/Final Application)
Morrison & Foerster LLP $8,181,047 $78,311
Counsel to the Official Committee
of Unsecured Creditors
(6th Interim/Final Application)
Lazard Freres & Co. LLC $8,695,000 $44,823
Financial Advisor and Investment
Banker to the Committee
(6th Interim/Final Application)
Whyte Hirschboeck Dudek S.C. $87,066 $283
Special Counsel to the Committee
(4th Interim/Final Application)
Winston & Strawn LLP $40,253 $307
Special Litigation Counsel to Debtor
(2nd Interim/Final Application)
Shearman & Sterling LLP $395,300 $5,563
Counsel to Debtor
(2nd Interim/Final Application)
Lathrop & Clark LLP $14,743 $207
Special Counsel to Debtor
(3rd Interim/Final Application)
The Brattle Group, Inc. $453,402 $74
Expert Consultant/Witness
(2nd Interim/Final Application)
Nader Tavakoli, Victor $206,657 $199,915
Mandel and Jeffrey S. Stein
Consultants to Committee
(1st & Final Application)
Mayer Brown LLP $82,244 $975
Special Corporate Counsel to Debtor
(2nd Interim/Final Application)
Objections, if any, to the Fee Applications must be set forth in
writing and filed with the Court so as to be received no later
than July 31, 2013, at 4:00 p.m. (EDT).
Allison H. Weiss, Esq., at Hogan Lovells US LLP, represents the
Debtor.
About Ambac Financial
Ambac Financial Group, Inc., headquartered in New York City, is a
holding company whose affiliates provided financial guarantees and
financial services to clients in both the public and private
sectors around the world.
Ambac Financial filed a voluntary petition for relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No.
10-15973) in Manhattan on Nov. 8, 2010.
Ambac's bond insurance unit, Ambac Assurance Corp., is being
restructured by state regulators in Wisconsin. AAC is domiciled
in Wisconsin and regulated by the Office of the Commissioner of
Insurance of the State of Wisconsin. The parent company is not
regulated by the OCI.
Bank of New York Mellon Corp., as trustee to seven different types
of notes, is listed as the largest unsecured creditor, with claims
totaling about US$1.62 billion.
The Blackstone Group LP is the Debtor's financial advisor.
Kurtzman Carson Consultants LLC is the claims and notice agent.
KPMG LLP is tax consultant to the Debtor.
Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller,
Esq., at Morrison & Foerster LLP, in New York, serve as counsel
to the Official Committee of Unsecured Creditors. Lazard Freres
& Co. LLC is the Committee's financial advisor.
Bankruptcy Judge Shelley C. Chapman entered an order confirming
the Fifth Amended Plan of Reorganization of Ambac Financial Group,
Inc. on March 14, 2012. The Plan provides for the full payment of
secured claims and 8.5% to 13.2% recovery for general unsecured
claims. The second modified version of the confirmed Plan was
declared effective on May 1, 2013, with Ambac obtaining bankruptcy
court approval of a $100+ million claims settlement with the
Internal Revenue Service.
Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY
NEWS. The newsletter tracks the Chapter 11 proceeding undertaken
by Ambac Financial Group and the restructuring proceedings of
Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945-
7000).
AMBAC FINANCIAL: Eugene Bullis Named as Director in Newco
---------------------------------------------------------
Pursuant to the terms of the Second Modified Fifth Amended Plan of
Reorganization of Ambac Financial Group, Inc., the official
committee of unsecured creditors retained the right to nominate
one additional director to the Company's Board of Directors within
60 days of the effective date of the Plan, which occurred on
May 1, 2013. After receiving notice from the Creditors' Committee
that it designated Eugene Bullis as the new board nominee in
accordance with the terms of the Plan, the Company appointed Mr.
Bullis to the Board on May 31, 2013. Other than as described,
there was no arrangement or understanding between Mr. Bullis and
any other person pursuant to which Mr. Bullis was appointed as a
director of the Company. It is anticipated that Mr. Bullis will
be appointed to serve on the Audit Committee. No information is
required to be disclosed with respect to Mr. Bullis pursuant to
Item 404(a) of Regulation S-K of the U.S. Securities and Exchange
Commission.
The information was disclosed by Stephen M. Ksenak, general
counsel and senior managing director at Ambac Financial Group,
Inc., in a June 6, 2013 Form 8-K filing with the SEC.
Departure/Appointment of Board Members
In a separate Form 8-K filing with the SEC, Mr. Ksenak provided
updates on the departure and appointment of certain other officers
of Ambac:
(a) Effective May 1, 2013, the terms of the pre-Effective Date
members of the Company's Board of Directors expired as
provided in the Company's Second Modified Fifth Amended Plan
of Reorganization (i.e., Mses. Jill M. Considine and Laura
S. Unger and Messrs. Michael Callen, Paul R. DeRosa, Philip
N. Duff, Thomas C. Theobald, Henry D. G. Wallace, and
David W. Wallis), except for the term of Diana Adams, the
President and Chief Executive Officer of the Company, which
will continue from and after the Plan Effective Date.
(b) Effective May 1, 2013, in connection with the Company's
emergence from Chapter 11, the following individuals began
serving on the Company's Board of Directors as provided in
the Plan: Victor Mandel, Jeffrey S. Stein and Nader
Tavakoli. In addition, Diana Adams, the Company's President
and Chief Executive Officer, will continue to serve on the
Board.
(c) By-laws of the Company provides that the initial Board of
Directors consist of the Company's Chief Executive Officer
and four interim directors. The Plan provided for three of
the interim directors to be appointed by the Creditors'
Committee and one director to be appointed by a group of
unaffiliated holders of certain senior debt securities of
the Company (the "Informal Group"). Messrs. Mandel and
Tavakoli were appointed by the Creditors' Committee and Mr.
Stein was appointed by the Informal Group. The Creditors'
Committee retained the right to nominate one additional
director to the Company's Board of Directors within 60 days
of the Effective Date.
(d) The following directors are members of the Audit Committee,
Risk Management Committee, Compensation Committee and
Nominating and Governance Committee of the Board of
Directors of the Company: Victor Mandel, Jeffrey S. Stein
and Nader Tavakoli.
About Ambac Financial
Ambac Financial Group, Inc., headquartered in New York City, is a
holding company whose affiliates provided financial guarantees and
financial services to clients in both the public and private
sectors around the world.
Ambac Financial filed a voluntary petition for relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No.
10-15973) in Manhattan on Nov. 8, 2010.
Ambac's bond insurance unit, Ambac Assurance Corp., is being
restructured by state regulators in Wisconsin. AAC is domiciled
in Wisconsin and regulated by the Office of the Commissioner of
Insurance of the State of Wisconsin. The parent company is not
regulated by the OCI.
Bank of New York Mellon Corp., as trustee to seven different types
of notes, is listed as the largest unsecured creditor, with claims
totaling about US$1.62 billion.
The Blackstone Group LP is the Debtor's financial advisor.
Kurtzman Carson Consultants LLC is the claims and notice agent.
KPMG LLP is tax consultant to the Debtor.
Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller,
Esq., at Morrison & Foerster LLP, in New York, serve as counsel
to the Official Committee of Unsecured Creditors. Lazard Freres
& Co. LLC is the Committee's financial advisor.
Bankruptcy Judge Shelley C. Chapman entered an order confirming
the Fifth Amended Plan of Reorganization of Ambac Financial Group,
Inc. on March 14, 2012. The Plan provides for the full payment of
secured claims and 8.5% to 13.2% recovery for general unsecured
claims. The second modified version of the confirmed Plan was
declared effective on May 1, 2013, with Ambac obtaining bankruptcy
court approval of a $100+ million claims settlement with the
Internal Revenue Service.
Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY
NEWS. The newsletter tracks the Chapter 11 proceeding undertaken
by Ambac Financial Group and the restructuring proceedings of
Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945-
7000).
AMBAC FINANCIAL: Dist. Judge Remands AAC Proceedings to State Ct.
-----------------------------------------------------------------
District Judge Barbara B. Crabb granted the Motion to Remand filed
by Theodore K. Nickel, Wisconsin Commissioner of Insurance, and
thus, the case In The Matter of the Rehabilitation of the
Segregated Account of Ambac Assurance Corporation, Case No. 13-cv-
325-bbc, is remanded to the Circuit Court for Dane County,
Wisconsin.
The rehabilitation proceedings for AAC, a Wisconsin insurance
company that insured financial products, were filed in 2010.
Recently, the Commissioner filed a formal motion asking the State
Rehabilitation Court to approve and give force to his right to
direct the trustee of certain trusts that issued bonds insured by
Ambac, Deutsche Bank, to replace OneWest Bank, the current
servicer for the mortgage loans held by the trusts. OneWest
responded by removing the matter to U.S. District Court for the
Western District of Wisconsin on its own, without joining
Deutsche Bank or obtaining its consent. The Commissioner then
moved to remand the dispute to the state circuit court, contending
that it had not been removed properly.
In a 15-page Opinion and Order, Judge Crabb concluded that
OneWest's failure to join Deutsche Bank is fatal to its attempt to
remove the servicing rights dispute to federal court because
Deutsche Bank is an indispensible party. Moreover, the dispute
over OneWest's servicing rights is not an independent controversy
but a relatively routine aspect of the management of the
rehabilitation proceedings, the judge added. According, the judge
granted the Commissioner's Motion to Remand.
The District Court added that Mr. Nickel has until July 31, 2013
to submit his itemized request for fees and costs. OneWest has
until August 14, in which to file its objections to the amount of
fees and costs requested.
A copy of Judge Crabb's July 8, 2013 Opinion and Order is
available at http://is.gd/cOtiNc
About Ambac Financial
Ambac Financial Group, Inc., headquartered in New York City, is a
holding company whose affiliates provided financial guarantees and
financial services to clients in both the public and private
sectors around the world.
Ambac Financial filed a voluntary petition for relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No.
10-15973) in Manhattan on Nov. 8, 2010.
Ambac's bond insurance unit, Ambac Assurance Corp., is being
restructured by state regulators in Wisconsin. AAC is domiciled
in Wisconsin and regulated by the Office of the Commissioner of
Insurance of the State of Wisconsin. The parent company is not
regulated by the OCI.
Bank of New York Mellon Corp., as trustee to seven different types
of notes, is listed as the largest unsecured creditor, with claims
totaling about US$1.62 billion.
The Blackstone Group LP is the Debtor's financial advisor.
Kurtzman Carson Consultants LLC is the claims and notice agent.
KPMG LLP is tax consultant to the Debtor.
Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller,
Esq., at Morrison & Foerster LLP, in New York, serve as counsel
to the Official Committee of Unsecured Creditors. Lazard Freres
& Co. LLC is the Committee's financial advisor.
Bankruptcy Judge Shelley C. Chapman entered an order confirming
the Fifth Amended Plan of Reorganization of Ambac Financial Group,
Inc. on March 14, 2012. The Plan provides for the full payment of
secured claims and 8.5% to 13.2% recovery for general unsecured
claims. The second modified version of the confirmed Plan was
declared effective on May 1, 2013, with Ambac obtaining bankruptcy
court approval of a $100+ million claims settlement with the
Internal Revenue Service.
Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY
NEWS. The newsletter tracks the Chapter 11 proceeding undertaken
by Ambac Financial Group and the restructuring proceedings of
Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945-
7000).
AMBAC FINANCIAL: Rehabilitator Seeks Payments on 14 RMBS Policies
-----------------------------------------------------------------
Wisconsin Commissioner of Insurance Theodore K. Nickel, acting in
his capacity as the court-appointed Rehabilitator of the
Segregated Account of Ambac Assurance Corporation (AAC), is
seeking approval from the Circuit Court for Dane County,
Wisconsin, to disburse cash payments in excess of current 25% of
permitted policy claim amounts with respect to certain insured
securities (Supplemental Payments) in order to maximize
reimbursements to the Segregated Account and thereby increase
claims-paying resources for the benefit of all Segregated Account
policyholders.
In court papers dated July 11, 2013, the Rehabilitator related
that he has identified 14 RMBS transaction policies for which he
believes Supplemental Payments are appropriate.
The 14 insured transactions relate to these residential mortgage
securities transactions:
Harborview Mortgage Loan Trust 2006-7
Harborview Mortgage Loan Trust 2006-9
Harborview Mortgage Loan Trust 2006-14
Harborview Mortgage Loan Trust 2007-2
IMPAC Secured Assets Corp. 2005-2
IMPAC Secured Assets Corp. 2006-3
IMPAC Secured Assets Corp. 2007-2
IMPAC Secured Assets Corp 2007-3
IndyMac INDX Mortgage Loan Trust 2005-AR18
IndyMac INDX Mortgage Loan Trust 2006-AR2
Lehman XS Trust Mortgage 2005-7N
Lehman XS Trust Mortgage 2005-9N
Lehman XS Trust Mortgage 2006-2N
Lehman XS Trust Mortgage 2007-7N
A full-text copy of the Rehabilitator's July 11 Motion for
Supplemental Payments is available at http://is.gd/uNYFcN
The Rehabilitator's request is set to be heard by the Court on
Aug. 2, 2013, at 1:30 p.m. Central Time before the Honorable
William D. Johnston in Darlington, Wisconsin. Any written
objection should be filed with the Court no later than July 29.
Michael B. Van Sicklen, Esq., Jeffrey A. Simmons, Esq., and
Matthew R. Lynch, Esq., at Foley & Lardner LLP, serve as
attorneys for the Rehabilitator.
About Ambac Financial
Ambac Financial Group, Inc., headquartered in New York City, is a
holding company whose affiliates provided financial guarantees and
financial services to clients in both the public and private
sectors around the world.
Ambac Financial filed a voluntary petition for relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No.
10-15973) in Manhattan on Nov. 8, 2010.
Ambac's bond insurance unit, Ambac Assurance Corp., is being
restructured by state regulators in Wisconsin. AAC is domiciled
in Wisconsin and regulated by the Office of the Commissioner of
Insurance of the State of Wisconsin. The parent company is not
regulated by the OCI.
Bank of New York Mellon Corp., as trustee to seven different types
of notes, is listed as the largest unsecured creditor, with claims
totaling about US$1.62 billion.
The Blackstone Group LP is the Debtor's financial advisor.
Kurtzman Carson Consultants LLC is the claims and notice agent.
KPMG LLP is tax consultant to the Debtor.
Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller,
Esq., at Morrison & Foerster LLP, in New York, serve as counsel
to the Official Committee of Unsecured Creditors. Lazard Freres
& Co. LLC is the Committee's financial advisor.
Bankruptcy Judge Shelley C. Chapman entered an order confirming
the Fifth Amended Plan of Reorganization of Ambac Financial Group,
Inc. on March 14, 2012. The Plan provides for the full payment of
secured claims and 8.5% to 13.2% recovery for general unsecured
claims. The second modified version of the confirmed Plan was
declared effective on May 1, 2013, with Ambac obtaining bankruptcy
court approval of a $100+ million claims settlement with the
Internal Revenue Service.
Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY
NEWS. The newsletter tracks the Chapter 11 proceeding undertaken
by Ambac Financial Group and the restructuring proceedings of
Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945-
7000).
AMERICAN AIRLINES: AMR, US Airways Offer Concessions to EU
----------------------------------------------------------
Marietta Cauchi writing for Dow Jones' DBR Small Cap reports that
American Airlines parent AMR Corp. and US Airways Group Inc. have
offered concessions to the European Union's anti-trust regulator
in a bid to win approval for their merger to create the world's
largest airline with a market capitalization of around $11
billion.
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.
In April 2013, AMR filed a Chapter 11 plan of reorganization that
will carry out the merger. By distributing stock in the merged
airlines, the plan is designed to pay all creditors in full, with
interest. The hearing before the Court to consider confirmation of
the Plan is scheduled for Aug. 15, 2013.
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: Wants Until Sept. 30 to Decide on AA Lease
-------------------------------------------------------------
AMR Corp. asked the U.S. Bankruptcy Court in Manhattan to give
the company until Sept. 30 to decide on whether to assume or
reject a maintenance base lease contract between American
Airlines Inc. and AllianceAirport Authority, Inc.
In a related development, the bankruptcy court gave AMR
additional time to decide on whether to assume or reject 11
leases of non-residential real properties located at the Chicago
O'Hare International Airport. The contracts are listed at
http://is.gd/FjGCmX
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.
In April 2013, AMR filed a Chapter 11 plan of reorganization that
will carry out the merger. By distributing stock in the merged
airlines, the plan is designed to pay all creditors in full, with
interest. The hearing before the Court to consider confirmation of
the Plan is scheduled for Aug. 15, 2013.
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: Wants to Hire Venable as Special Counsel
-----------------------------------------------------------
AMR Corp. and its affiliated debtors seek authority from the U.S.
Bankruptcy Court in Manhattan to hire Venable, LLP, as their
special counsel.
The firm was previously hired by AMR to serve as "ordinary
course" professional pursuant to the bankruptcy court's Jan. 17,
2012 order. The firm's aggregate fees, however, have already
exceeded the $500,000 fee cap imposed by the bankruptcy court.
Pursuant to the Jan. 17 order, any OCP is required to file a
separate retention application under Section 327 of the
Bankruptcy Code if payments to that OCP exceed $500,000 over the
course of AMR's bankruptcy case.
Venable will continue to provide legal services related to
lobbying, tax, pension, aviation and security issues in the
ordinary course of business. The firm will charge for its
services on an hourly basis and will seek reimbursement for work-
related expenses. Its hourly rates range from $470 to $1,075 for
partners, $435 to $810 for counsel, $295 to $575 for associates,
and $165 to $340 for paraprofessionals.
Edward Smith, Esq. -- easmith@Venable.com -- a partner at
Venable, disclosed in a court filing that his firm does not
represent any interest adverse to AMR and its affiliated debtors.
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.
In April 2013, AMR filed a Chapter 11 plan of reorganization that
will carry out the merger. By distributing stock in the merged
airlines, the plan is designed to pay all creditors in full, with
interest. The hearing before the Court to consider confirmation of
the Plan is scheduled for Aug. 15, 2013.
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: Proposes to Hire Shook Hardy as Counsel
----------------------------------------------------------
AMR Corp. and its affiliated debtors filed an application seeking
court authority to hire Shook Hardy & Bacon LLP as their special
counsel.
The firm was initially hired by AMR to provide legal services in
the ordinary course of business. Its fees, however, have already
exceeded the $50,000 monthly fee cap, compelling the company to
file the application pursuant to Section 327 of the Bankruptcy
Code.
Shook Hardy will continue to provide the same services related to
various intellectual property issues, including investigation and
prosecution with respect to the infringement of AMR's trademarks
and brand.
The firm will be paid for its services on an hourly basis and
will receive reimbursement for work-related expenses. Its hourly
rates range from $570 to $250 for attorneys, and $205 to $170 for
paraprofessionals.
The firm does not represent any interest adverse to AMR and its
affiliated debtors, according to a declaration by Mark
Moedritzer, Esq. -- mmoedritzer@sbh.com -- a partner at Shook
Hardy.
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.
In April 2013, AMR filed a Chapter 11 plan of reorganization that
will carry out the merger. By distributing stock in the merged
airlines, the plan is designed to pay all creditors in full, with
interest. The hearing before the Court to consider confirmation of
the Plan is scheduled for Aug. 15, 2013.
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: Daugherty Approved as Special Counsel
--------------------------------------------------------
AMR Corp. and its affiliated debtors received the green light
from Judge Sean Lane to hire Daugherty Fowler Peregrin Haught &
Jenson, PC as their special counsel.
The firm will provide legal services, which include examining the
records at the Federal Aviation Administration and the
International Registry, preparing memos and opinions, and closing
transactions with filings with those agencies.
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.
In April 2013, AMR filed a Chapter 11 plan of reorganization that
will carry out the merger. By distributing stock in the merged
airlines, the plan is designed to pay all creditors in full, with
interest. The hearing before the Court to consider confirmation of
the Plan is scheduled for Aug. 15, 2013.
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: Reports Net Profit of $357 Million in Q2 2013
----------------------------------------------------------------
AMR Corporation, the parent company of American Airlines, Inc., on
July 18 reported results for the second quarter ended June 30,
2013. Key highlights include:
-- Consolidated and mainline passenger revenue of $5.6 billion and
$4.9 billion, respectively -- highest passenger revenue for the
second quarter in company history
-- Net profit of $357 million, excluding reorganization and
special items, a $262 million improvement year-over-year
-- Operating profit of $502 million, excluding special items, a
$254 million improvement over second quarter 2012. GAAP operating
profit of $489 million, a $347 million improvement year-over-year
-- Consolidated unit costs, excluding fuel and special items,
improved 5.8 percent year-over-year, marking the third consecutive
quarter of unit cost reduction on that basis
-- American continued its fleet renewal and took delivery of nine
fuel-efficient Boeing 737-800s and three 777-300ERs in the
quarter. For the year, the company has taken delivery of 24 new
aircraft, including six 777-300ERs
-- American and US Airways continue to anticipate closing their
merger in the third quarter of 2013
"American delivered its best financial performance for a second
quarter, excluding special items, in the company's history," said
Tom Horton, AMR's chairman, president and CEO. "And the momentum
is building as we plan for the impending merger with US Airways. I
want to thank the American team, 73,000 strong around the world,
whose hard work and dedication made this possible. Thanks to
them, the new American is taking flight."
In the second quarter of 2013, GAAP net profit was $220 million, a
$461 million improvement compared to the prior-year period.
Excluding reorganization and special items, second quarter 2013
net profit was $357 million, a $262 million improvement compared
to the prior-year period. This record setting quarterly result
was bolstered by a June during which the company recorded its best
monthly profit, excluding reorganization and special items, in its
history. In the quarter, AMR had $137 million of reorganization
and special items, which are detailed below.
Financial Progress
AMR continues to execute on its objectives as it nears the
completion of its restructuring efforts and prepares for its
merger with US Airways. With many financial and operating changes
from its restructuring already in place, it expects to realize
additional improvements as the company continues to implement new
terms negotiated with certain vendors and suppliers. It also
plans to compete more effectively in the future when American
expects to introduce larger regional jets into the operation,
which will enable it to better match aircraft size with demand in
certain markets.
"Through the enormous efforts of people throughout our company,
the financial trajectory of AMR has improved dramatically and its
positive impact can be seen across our business," said Bella
Goren, AMR's chief financial officer. "Looking forward,
additional initiatives we have underway are expected to further
build on our progress."
In the second quarter of 2013, AMR strengthened its liquidity and
reduced interest rates through several key transactions. It
closed on a $1.05 billion term loan and a $1 billion revolving
credit facility. The revolving credit facility will be available
upon emergence from its restructuring. AMR also completed a
private offering of approximately $120 million of enhanced
equipment trust certificates and received gross proceeds of
approximately $216 million from the remarketing of tax-exempt
bonds related to its Tulsa maintenance base.
AMR realized year-over-year cost improvements across its business,
excluding fuel. Furthermore, to position the company for the
future, American is in the midst of a significant renewal and
transformation of its fleet and has taken delivery of 42 new fuel
efficient Boeing 737-800 and 777-300ER aircraft over the past 12
months. During the full year of 2013, American expects to take
delivery of 59 new mainline aircraft.
In one of the most effective major corporate restructurings ever,
AMR's proposed Plan of Reorganization provides the potential for
full recovery for American's unsecured creditors and a recovery of
at least 3.5 percent of the aggregate diluted common stock of the
combined airline for the company's existing shareholders.
Revenue Performance
For the second quarter of 2013, AMR reported consolidated revenue
of approximately $6.4 billion, comparable with AMR's record-
setting consolidated revenue results in the same period last year.
Consolidated and mainline passenger revenue in the second quarter
of 2013 was the highest second quarter passenger revenue result in
company history. Respectively, they increased 0.2 percent to $5.6
billion and 1.1 percent to $4.9 billion, compared to the second
quarter of 2012.
"This quarter's results are solid evidence that our customers
continue to respond positively to improvements in our network,
renewal of our fleet and American's ongoing introduction of
industry-leading amenities," said Virasb Vahidi, American's chief
commercial officer. "We continue to make progress in offering a
customer experience that rivals the best airlines in the world and
provides a strong foundation for the future."
Second quarter 2013 consolidated and mainline capacity were both
up approximately 1.1 percent year-over-over, while consolidated
and mainline passenger revenue per available seat mile (PRASM)
were lower by 0.9 percent and 0.1 percent, respectively.
While a decrease in close-in demand was observed beginning in
March, actions taken in the second quarter to maintain load factor
resulted in sequential PRASM improvement throughout the quarter.
American's mainline load factor, or the percentage of total seats
filled, was 84.8 percent during the second quarter, compared to
85.1 percent in the second quarter of 2012. Mainline passenger
yield, which represents the average fares paid, increased 0.2
percent year-over-year.
Despite revenue headwinds and against the backdrop of a sluggish
economy, AMR was able to drive profitability and significant
margin expansion in the second quarter.
Operating Expense
For the second quarter, AMR's consolidated operating expenses
decreased $350 million, or 5.5 percent, versus the same period in
2012. AMR's mainline and consolidated cost per available seat
mile (unit cost) in the second quarter decreased 7.5 percent and
6.6 percent, respectively. Excluding special items, AMR's
consolidated operating expenses decreased $257 million, or 4.1
percent, year-over-year.
Taking into account the impact of fuel hedging, AMR paid $3.02 per
gallon for jet fuel in the second quarter of 2013 versus $3.24 per
gallon in the second quarter of 2012, a 6.8 percent decrease. The
company paid $70 million less for fuel in the second quarter of
2013 than it did in the prior-year period.
Excluding fuel and special items, mainline and consolidated unit
costs in the second quarter of 2013 decreased 6.5 percent and 5.8
percent year-over-year, respectively, primarily driven by the
company's restructuring efforts. This was the third consecutive
quarter of non-fuel unit cost reduction.
In addition, AMR achieved an operating profit of $502 million and
an operating margin of approximately 7.8 percent, an improvement
of approximately $254 million and 3.9 points, respectively, over
the prior-year period, excluding special items in both periods.
On a GAAP basis, AMR realized an operating profit of $489 million
and an operating margin of approximately 7.6 percent, an
improvement of approximately $347 million and 5.4 points,
respectively, over the prior-year period.
An unaudited summary of second quarter 2013 results, including
reconciliations of non-GAAP to GAAP financial measures, is
available in the tables at the back of this press release.
Cash Position
The company ended the second quarter with approximately $7.1
billion in cash and short-term investments, including a restricted
cash balance of $863 million, compared to a balance of
approximately $5.8 billion in cash and short-term investments,
including a restricted balance of approximately $772 million, at
the end of the second quarter of 2012.
Total cash and short-term investments increased approximately $2.0
billion from the first quarter ended 2013. Approximately $1.2
billion of the increase in cash and short-term investments was
generated from operating activities, while the balance was
significantly bolstered by the financing activities described
above.
Pending Merger with US Airways
American and US Airways made significant progress toward planning
for the closing of the merger and integrating the two airlines.
Led by the Integration Management Office (IMO), integration
planning teams and cross-functional task forces are defining the
manner in which the two companies will combine their commercial,
customer service, operations and corporate functions after the
merger closes. During the quarter, the IMO held two Merger
Planning Summits.
The following merger milestones were achieved in the second
quarter:
-- April 2-3: Integration Planning Kickoff -- 29 planning teams
comprised of leaders from both airlines to plan the integration
-- May 6: IMO Planning Summit - IMO team met to conduct planning
activities required for merger close and beyond
-- May 10: The bankruptcy court presiding over American's
restructuring entered an order approving the merger with US
Airways, subject to confirmation and consummation of American's
Plan of Reorganization (the Plan)
-- June 10: American and US Airways announced the Board of
Directors and senior leadership team responsible for guiding the
combined company, American Airlines Group Inc., effective upon the
closing of the merger
-- June 10: The Securities and Exchange Commission (SEC) Form S-4
Registration Statement was declared effective by the SEC, which
gave US Airways shareholders the opportunity to review the proxy
statement included in the Form S-4 and vote on the proposed merger
at the US Airways annual shareholder meeting on July 12, 2013
-- June 19: American and US Airways jointly testified before the
Senate Subcommittee on Aviation, Operations, Safety, and Security
that the new American Airlines will be a stronger, more
competitive airline that will provide significant benefits to
customers, employees, financial stakeholders and communities of
both airlines
-- June 27- 28: IMO Master Planning Summit -- Individual teams met
to review planning progress and establish the master plan for the
overall integration
-- July 12: US Airways shareholders, at their annual shareholders
meeting, overwhelmingly approved the merger agreement with AMR
"Our teams are keenly focused on developing and implementing a
plan to ensure a good result for our customers when we come
together as one company," said Beverly Goulet, American's Chief
Integration Officer. "Bringing together two airlines is complex
work, but our teams are working exceptionally well together toward
building the world's leading airline."
The merger is conditioned on approval by regulatory authorities,
expiration of statutory waiting periods, other customary closing
conditions, and confirmation and consummation of the Plan in
accordance with the provisions of the Bankruptcy Code. The
combination is expected to be completed in the third quarter of
2013.
Recent Business Highlights
American continued to generate positive momentum throughout its
business, while preparing for emergence from restructuring and its
pending merger with US Airways. Recent highlights include:
-- American strengthened its expanding global network by launching
or announcing new service from its hubs to international
destinations, including Miami-Milan; New York (JFK)-Dublin;
Dallas/Fort Worth-Seoul, South Korea; Chicago O'Hare-Duesseldorf,
Germany; DFW-Lima, Peru; and Miami and the Caribbean (Martinique
and Guadeloupe).
-- Additionally, American significantly enhanced its service from
Los Angeles International Airport (LAX) by launching or announcing
nine new destinations, including new daily non-stop service from
LAX to Sao Paulo beginning on Nov. 21.
-- On July 1, American, British Airways and Iberia welcomed
Finnair to the Atlantic Joint Business.
-- The American Airlines AAdvantage Program was named Airline
Program of the Year at the 2013 Freddie Awards.
-- The new American Airlines identity received a 2013 bronze CLIO
award for best corporate identity design.
-- American Airlines Cargo was named the Best Cargo Airline of the
Americas for the sixth consecutive year by readers of Air Cargo
News, the world's leading air cargo industry publication.
-- American opened its Flagship Check-In for premium customers at
JFK. This is American's third airport offering the expedited and
personalized check-in experience. Chicago's O'Hare airport will
open its Flagship Check-In today, making it American's fourth
airport to offer this enhanced customer experience.
-- In June, American completed the successful rollout of its
industry-leading Electronic Flight Bag program with the
discontinuation of paper revisions to terminal charts, making it
the first major commercial airline to fully utilize tablets in all
cockpits during all phases of flight.
Restructuring Progress
On June 7, 2013, the Court presiding over the Company's Chapter 11
cases entered an order approving American's Disclosure Statement
and authorized the company to begin soliciting approval of the
Plan from AMR's creditors and stockholders. The Plan voting
deadline is July 29, 2013.
The hearing before the Court to consider confirmation of the Plan
is scheduled for Aug. 15, 2013. The effective date of the Plan
and American's emergence from restructuring are expected to occur
simultaneously with the closing of the merger with US Airways.
American and US Airways continue to expect to close their merger
in the third quarter of 2013.
Reorganization and Special Items
AMR's second quarter 2013 results include the impact of $137
million in reorganization and special items.
-- Of that amount, AMR recognized a $124 million loss in
reorganization items resulting from certain of its direct and
indirect U.S. subsidiaries' voluntary petitions for reorganization
under Chapter 11 on Nov. 29, 2011. These items primarily consist
of estimated allowed claim amounts for certain special facility
revenue bonds as well as for professional fees.
-- The company's operating expenses for the second quarter also
include special charges and merger-related expenses of $13
million.
Capacity Guidance
AMR estimates consolidated capacity in the third quarter of 2013
to be up approximately 2.7 percent versus the third quarter of
2012, driven by the combination of a longer average stage length
per operation flown, and by new or increased capacity into South
Korea, Mexico, Central and South America. For the full year 2013,
consolidated capacity is estimated to increase approximately 1.5
percent versus the prior year. This guidance is for independent
AMR Corporation and does not include US Airways.
American continues to make progress in implementing Main Cabin
Extra, providing customers with more leg room in the Main Cabin.
To date, American has completed the retrofit of its MD-80, Boeing
757, 767 fleets and 95 percent of its 737 fleet.
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.
In April 2013, AMR filed a Chapter 11 plan of reorganization that
will carry out the merger. By distributing stock in the merged
airlines, the plan is designed to pay all creditors in full, with
interest. The hearing before the Court to consider confirmation of
the Plan is scheduled for Aug. 15, 2013.
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 REALTY: Aug. 22 Hearing on Bank's Bid to Convert Case
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
approved a stipulation adjourning to Aug. 22, 2013, at 9 a.m., the
hearing to consider Bank of New York Mellon's request to convert
the Chapter 11 case of American Realty Trust, Inc., to one under
Chapter 7 of the Bankruptcy Code, or to appoint a Chapter 11
trustee for the Debtor.
At the hearing, the Court will also consider the so-called
Atlantic Creditors' motion to dismiss the Debtor's case.
Keith Miles Aurzada, Esq., at Bryan Cave, represent Bank of New
York Mellon as counsel.
As reported by the Troubled Company Reporter on May 30, 2013, Bank
of New York Mellon is successor to Bank of New York - Global
Corporate Trust, as trustee for the Registered Certificate Holders
of Commercial Capital Access One, Inc., Commercial Mortgage Bonds,
Series 3 acting through Berkadia Commercial Mortgage, LLC, its
special servicer a creditor, noted that so-called Atlantic
Parties, creditors of the Debtor, filed a motion to dismiss case
as a bad faith filing based on the Debtor's inability to
reorganize, fraud, incompetence, dishonesty, and gross
mismanagement.
According to the Bank, while the Trust agrees that the Atlantic
Parties' motion to dismiss establishes "cause" for relief, the
Trust does not believe that it is in the best interest of the
estate or the Debtor's other creditors to dismiss the case.
Rather, the Trust requests that the Court order the appointment of
a chapter 11 trustee, and the appointment of an examiner.
Keith M. Aurzada, Esq., and John C. Leininger, Esq. --
keith.aurzada@bryancave.com and john.leininger@bryancave.com -- at
Bryan Cave LLP, represent the Bank.
About American Realty Trust
Dallas, Texas-based American Realty Trust, Inc., is a subsidiary
of the real estate giant American Realty Investors Inc. Coping
with a $73 million legal judgment from an apartment purchase that
collapsed more than a decade ago, American Realty Trust, Inc.,
filed for Chapter 11 protection (Bankr. D. Nev. Case No. 12-10883)
in Las Vegas on Jan. 26, 2012. The case was later dismissed on
Aug. 1, 2012, by Judge Mike K. Nakagawa.
Creditors David M. Clapper, Atlantic XIII, LLC, and Atlantic
Midwest, LLC -- Clapper Parties -- sought the dismissal, citing,
among other things, the Debtor has been stripped off of its assets
prepetition and its ownership structure changed 10 days before the
bankruptcy filing in an admitted effort to avoid disclosures to
the Securities and Exchange Commission.
American Realty Trust then filed for Chapter 11 protection (Bankr.
N.D. Ga. Case No. 12-71453) on Aug. 29, 2012, with Bankruptcy
Judge Barbara Ellis-Monro presiding over the case. The case was
later transferred from Atlanta to Dallas (Bankr. N.D. Tex. Case
No. 13-30891) effective Feb. 22, 2013, at the behest of the
Clapper Parties. The Clapper Parties, who won a $72 million
judgment against the Debtor, again has sought to move the case to
Forth Worth and reassign the case to Judge Russell Nelms on
grounds that Judge Nelms has experience with the parties and the
issues raised in the dismissal motion filed by the Atlantic
Parties.
The Debtor has scheduled assets totaling $79,954,551, comprised
of (i) real property valued at $87,884; (ii) equity interests in
affiliated entities of an unknown value; and (iii) litigation
claims valued at $79,866,667. The Debtor has scheduled
liabilities totaling $85,347,587.95, comprised of: (i) $10,437.73
in unsecured priority tax claims; and (ii) unsecured non-priority
claims of $85,336,886.61 (of which at least $77,164,701.14 are
contested litigation claims against the Debtor).
The Bankruptcy Court authorized the Debtor to employ Gerrit M.
Pronske, Esq., and Pronske & Patel, P.C. as counsel.
AMERICAN REALTY: Seeks to Quash Gene Phillips Subpoena
------------------------------------------------------
American Realty Trust filed with the U.S. Bankruptcy Court for the
Northern District of Texas on July 15, 2013, a motion to quash
subpoena and notice of deposition of Gene Phillips pursuant to
Fed. R. Bankr. P. 9014 or, in the alternative, motion for
protective order.
On June 23, 1999, the Debtor and an associated entity, ART
Midwest, Inc., sued David M. Clapper, Atlantic Midwest, LLC, and
Atlantic XIII, LLC, for fraud and declaratory relief stemming from
the termination of a business deal among the parties. The Clapper
Litigation went to trial and the jury found in favor of the Debtor
and ART Midwest. The Atlantic Parties appealed and the Fifth
Circuit Court of Appeals reversed and remanded the case to the
trial court.
On remand, the district court entered judgment against the Debtor
in the amount of approximately $60 Million. The Debtor and ART
Midwest subsequently filed an appeal to the Fifth Circuit Court of
Appeals, where the case awaits an opinion after being argued on
June 5, 2013.
On Oct. 30, 2012, the Atlantic Parties filed their motion to
dismiss the Chapter 11 case of American Realty Trust as a bad
faith filing or for improper venue. The Atlantic Parties allege
that the Debtor engaged in a number of fraudulent transfers
involving several related entities.
On May 20, 2013, the Atlantic Parties served a deposition subpoena
upon Gene Phillips and served a Notice of Deposition of Gene
Phillips Pursuant to Fed. R. Bankr. P. 9014. The Phillips
Subpoena commands Mr. Phillips to attend a deposition in the
above-captioned bankruptcy case on June 18, 2013, at 10:00 a.m. at
the offices of Dykema Gossett, PLLC in Dallas, Texas.
Phillips Subpoena Duplicative
According to American Realty, Mr. Phillips should be relieved of
any requirement to attend a deposition because, as it relates to
the Motion to Dismiss, the Phillips Subpoena is duplicative,
irrelevant, and not likely to lead to the discovery of admissible
evidence. Alternatively, the Debtor requests that the Court enter
a protective order that allows the Atlantic Parties to depose Mr.
Phillips only after they have concluded all of the other noticed
depositions related to the Motion to Dismiss.
American Realty avers that compared to the individuals and
representatives already scheduled for deposition, Mr. Phillips has
limited direct knowledge of the facts and circumstances relevant
to the Motion to Dismiss.
"Yet Mr. Phillips does have extensive knowledge of corporate trade
secrets and other confidential development or commercial
information protected from disclosure under Federal Rule of Civil
Procedure 45. It is very likely that, after concluding the other
scheduled depositions and review of the extensive requested
document production, the remaining purpose in deposing Mr.
Phillips may be to unduly burden or harass Mr. Phillips or to seek
disclosure of protected, confidential trade secrets or other
commercial information. For these reasons, the Debtor requests
that the Court quash the Phillips Subpoena."
Expedited Hearing
The Clapper Parties oppose the motion of the Debtor opposes an
expedited hearing on the Debtor's motion to quash the subpoena
served upon Mr. Phillips.
According to the Clapper Parties, there is no emergency or
necessity for an expedited hearing. Gene Phillips was served a
subpoena on May 20, 2013, two months before the scheduled
deposition of Mr. Phillips was to occur. Thus, the Debtor had
ample time to file a motion before the Court without asking for
extraordinary relief such as an expedited hearing.
About American Realty
Dallas, Texas-based American Realty Trust, Inc., is a subsidiary
of the real estate giant American Realty Investors Inc. Coping
with a $73 million legal judgment from an apartment purchase that
collapsed more than a decade ago, American Realty Trust, Inc.,
filed for Chapter 11 protection (Bankr. D. Nev. Case No. 12-10883)
in Las Vegas on Jan. 26, 2012. The case was later dismissed on
Aug. 1, 2012, by Judge Mike K. Nakagawa.
Creditors David M. Clapper, Atlantic XIII, LLC, and Atlantic
Midwest, LLC -- Clapper Parties -- sought the dismissal, citing,
among other things, the Debtor has been stripped off of its assets
prepetition and its ownership structure changed 10 days before the
bankruptcy filing in an admitted effort to avoid disclosures to
the Securities and Exchange Commission.
American Realty Trust then filed for Chapter 11 protection (Bankr.
N.D. Ga. Case No. 12-71453) on Aug. 29, 2012, with Bankruptcy
Judge Barbara Ellis-Monro presiding over the case. The case was
later transferred from Atlanta to Dallas (Bankr. N.D. Tex. Case
No. 13-30891) effective Feb. 22, 2013, at the behest of the
Clapper Parties. The Clapper Parties, who won a $72 million
judgment against the Debtor, again has sought to move the case to
Forth Worth and reassign the case to Judge Russell Nelms on
grounds that Judge Nelms has experience with the parties and the
issues raised in the dismissal motion filed by the Atlantic
Parties.
The Debtor has scheduled assets totaling $79,954,551, comprised
of (i) real property valued at $87,884; (ii) equity interests in
affiliated entities of an unknown value; and (iii) litigation
claims valued at $79,866,667. The Debtor has scheduled
liabilities totaling $85,347,587.95, comprised of: (i) $10,437.73
in unsecured priority tax claims; and (ii) unsecured non-priority
claims of $85,336,886.61 (of which at least $77,164,701.14 are
contested litigation claims against the Debtor).
Gerrit M. Pronske, Esq., Melanie P. Goolsby, Esq., and Jason P.
Kathman, Esq., at Pronske & Patel, P.C., represent the Debtor in
its restructuring effort.
APERION COMMUNITIES: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Aperion Communities LLLP
7835 East Redfield Road, Suite 102
Scottsdale, AZ 85260
Bankruptcy Case No.: 13-12040
Chapter 11 Petition Date: July 15, 2013
Court: U.S. Bankruptcy Court
District of Arizona (Phoenix)
Judge: Eddward P. Ballinger, Jr.
Debtor's Counsel: Adam E. Hauf, Esq.
THE FORAKIS LAW FIRM PLC
5400 West Northern Avenue, Suite 103
Glendale, AZ 85301
Tel: (623) 252-0742
Fax: (623) 321-2310
E-mail: adamh@forakislaw.com
Estimated Assets: $10,000,001 to $50,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Company did not file a list of creditors together with its
petition.
The petition was signed by David Maniatis, president.
ARCHDIOCESE OF MILWAUKEE: Estate Don't Own Funds From OneBeacon
---------------------------------------------------------------
Judge Susan Kelley of the United States Bankruptcy Court for the
Eastern District of Wisconsin (Milwaukee) issued a supplemental
order on the Archdiocese of Milwaukee's motion to amend her
previous order establishing procedures for interim compensation
and reimbursement of expenses of bankruptcy professionals.
In her supplemental order, Judge Kelley held that the payments
received by the archdiocese's counsel from OneBeacon Insurance
Co. under the reservation of rights are not property of the
estate and are not subject to distribution to other
administrative claimants.
The bankruptcy judge ordered the archdiocese's counsel to account
for all payments received from the insurance company to prevent
any possible double recovery of compensation.
The archdiocese filed the motion on January 24 to amend the order
establishing procedures for interim compensation. On March 26,
Judge Shelley entered an order in which she reserved the issue of
allocation and payment procedures for fees received from
OneBeacon, one of the archdiocese's insurers.
The archdiocese and its official committee of unsecured creditors
filed letter briefs on the issue. In its letter brief, the
committee requested that the payments made by OneBeacon on
account of its duty to defend claims against the archdiocese be
shared pro rata by all administrative creditors. The committee
said those payments as well as OneBeacon's insurance policies are
property of the estate.
In response, the archdiocese said the request violates bankruptcy
law and the Rules of Professional Conduct for Attorneys in
Wisconsin. The archdiocese argued the committee has no right to
an insurer's payments for the cost of defense, pointing out that
the defense cost is unrelated to actual claims coverage under the
insurance policy.
About Archdiocese of Milwaukee
The Diocese of Milwaukee was established on Nov. 28, 1843, and
was elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius
IX. The region served by the Archdiocese consists of 4,758 square
miles in southeast Wisconsin which includes counties Dodge, Fond
du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth,
Washington and Waukesha. There are 657,519 registered Catholics
in the Region.
The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for
Chapter 11 bankruptcy protection (Bankr. E.D. Wis. Case No.
11-20059) on Jan. 4, 2011, to address claims over sexual abuse
by priests on minors.
The Archdiocese became at least the eighth Roman Catholic diocese
in the U.S. to file for bankruptcy to settle claims from current
and former parishioners who say they were sexually molested by
priests.
Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in
Milwaukee, Wisconsin, serves as the Archdiocese's counsel. The
Official Committee of Unsecured Creditors in the bankruptcy case
has retained Pachulski Stang Ziehl & Jones LLP as its counsel, and
Howard, Solochek & Weber, S.C., as its local counsel.
The Archdiocese estimated assets and debts of $10 million to
$50 million in its Chapter 11 petition.
(Catholic Church Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ARCHDIOCESE OF MILWAUKEE: Hamilton Seeks $17K for 6 Months' Work
-----------------------------------------------------------------
Marci Hamilton filed quarterly fee applications for payment of
legal services she provided to the unsecured creditors' committee
in connection with the lawsuit filed by the trustee of the
Archdiocese of Milwaukee's cemetery trust.
The applications, which cover the period Dec. 1, 2012, to May 31,
2013, seek payment of $16,410 in fees and $1,083 in work-related
expenses.
Ms. Hamilton also seeks payment of $2,316, which represents the
20% held back from her fees incurred in November, and $13,186 for
fees and expenses incurred in December related to the so-called
parish deposit fund.
Meanwhile, Pachulski Stang Ziehl & Jones and Whyte Hirschboeck
Dudek S.C., the archdiocese's legal counsel, filed their monthly
fee applications, seeking:
Total Amount of
Professional Fee Period Fees & Expenses
------------ ---------- ---------------
Pachulski Stang Ziehl & Jones 04/01/13 to $86,522
04/30/13
Pachulski Stang Ziehl & Jones 05/01/13 to $88,106
05/31/13
Whyte Hirschboeck Dudek S.C. 05/01/13 to $165,914
05/31/13
Court Approves Fee Applications
Separately, Judge Susan Kelley of the United States Bankruptcy
Court for the Eastern District of Wisconsin (Milwaukee) approved
the fee applications of Pachulski and two other firms:
Professional Fee Period Fees
------------ ---------- ----
Pachulski Stang Ziehl & Jones 01/01/13 to $162,388
03/31/13
Howard Solochek & Weber S.C. 01/01/13 to $42,799
05/31/13
Law Offices of Paul A. Richler 01/01/13 to $22,799
03/31/13
The bankruptcy court also approved the payment to Pachulski of
$99,718 for services rendered during the period Oct. 1 to Dec.
31, 2012. The amount constitutes 20% of the total fees that the
firm billed during the period.
About Archdiocese of Milwaukee
The Diocese of Milwaukee was established on Nov. 28, 1843, and
was elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius
IX. The region served by the Archdiocese consists of 4,758 square
miles in southeast Wisconsin which includes counties Dodge, Fond
du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth,
Washington and Waukesha. There are 657,519 registered Catholics
in the Region.
The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for
Chapter 11 bankruptcy protection (Bankr. E.D. Wis. Case No.
11-20059) on Jan. 4, 2011, to address claims over sexual abuse
by priests on minors.
The Archdiocese became at least the eighth Roman Catholic diocese
in the U.S. to file for bankruptcy to settle claims from current
and former parishioners who say they were sexually molested by
priests.
Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in
Milwaukee, Wisconsin, serves as the Archdiocese's counsel. The
Official Committee of Unsecured Creditors in the bankruptcy case
has retained Pachulski Stang Ziehl & Jones LLP as its counsel, and
Howard, Solochek & Weber, S.C., as its local counsel.
The Archdiocese estimated assets and debts of $10 million to
$50 million in its Chapter 11 petition.
(Catholic Church Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ARMORWORKS ENTERPRISES: US Trustee Names 3-Member Creditors' Panel
------------------------------------------------------------------
Ilene J. Lashinsky, , U.S. Trustee for the District of Arizona,
named three members to the Official Committee of Unsecured
Creditors of ArmorWorks Enterprises, LLC, and TechFiber, LLC.
The committee members are:
1. DISTRIBUTION BY AIR
Richard Golwitzer
5404 N. 99th Street
Omaha, NE 68134
Tel: (420) 657-9821
Fax: (420) 346-1161
E-mail: richg@dbaco.com
2. NORTH 54th STREET VENTURE, LLC
Joseph E. Cotterman, by proxy
Andante Law Group
Scottsdale Financial Center I
4110 North Scottsdale Road, Suite 330
Scottsdale, AZ 85251
Tel: (480) 421-9449
Fax: (480) 522-1515
E-mail: joe@andantelaw.com
3. HISCO
Monty Schlaht
1839 West Drake Drive
Tempe, AZ 85253
Tel: (480) 968-6171
Fax: (480) 966-9634
E-mail: mschlaht@hiscoinc.com
About ArmorWorks Enterprises
Military armor systems provider ArmorWorks Enterprises, LLC, and
affiliate TechFiber LLC sought Chapter 11 protection (Bankr. D.
Ariz. Case Nos. 13-10332 and 13-10333) in Phoenix on June 17,
2013, along with a plan that resolves a dispute with a minority
shareholder and $3.5 million of financing that would save the
company from running out of cash.
ArmorWorks develops advanced survivability technology and designs
and manufactures armor and protective products. ArmorWorks has
produced over 1.25 million ceramic armor and composite armor
protection components for a variety of personnel armor, aircraft,
and vehicle applications.
The Debtors have tapped Todd A. Burgess, Esq., at Gallagher &
Kennedy, as counsel; and MCA Financial Group, Ltd., as financial
advisor. ArmorWorks estimated $10 million to $50 million in
assets and liabilities.
As of May 26, 2012, ArmorWorks had total assets of $30.9 million
and total liabilities of $12.04 million.
The Plan would resolve the ongoing dispute with C Squared by
allowing ArmorWorks to redeem C Squared's 40% minority interest,
or alternatively, allow C Squared to purchase the 60% majority
interest of AWI.
ArmorWorks and TechFiber sought and obtained an order (i)
transferring the In re TechFiber, LLC chapter 11 case to the
Honorable Brenda Moody Whinery, the judge assigned to the
ArmorWorks Chapter 11 case, and (ii) authorizing the joint
administration of the Debtors' cases.
ARMORWORKS ENTERPRISES: Panel Retaining Forrester Worth as Counsel
------------------------------------------------------------------
The Official Committee of Creditors of ArmorWorks Enterprises,
LLC, and TechFiber, LLC, asks the U.S. Bankruptcy Court for the
District of Arizona for authorization to retain Forrester & Worth,
P.L.L.C., as its general counsel, effective as of July 11, 2013.
Forrester & Worth will:
(a) advise the Committee in regard to its duties;
(b) assist the Committee in any investigation that it deems
necessary in regard to the acts, conduct, assets,
liabilities, and financial condition of the debtors, their
business operations, the desirability of the continuation of
those operations, and any other matter relevant to the
cases;
(c) assist the Committee in the analysis of any plan of
reorganization filed in the cases or in the formulation of a
plan by the Committee; and
(d) assist the Committee in requesting the appointment of a
trustee or examiner, should that become necessary; and, (e)
perform such other legal services as may be appropriate in
the discharge of the Committee's duties.
The members of Forrester & Worth are S. Cary Forrester, Esq. and
John R. Worth, Esq.
The current hourly rate for S. Cary Forrester, Esq., is $450 per
hour. The current hourly rate for John R. Worth, Esq., is
$400 per hour. The current hourly rate for the firm's paralegals
is $125 per hour.
To the best of the Committee's knowledge, the members of Forrester
& Worth have no connection with the Debtors, any creditor, any
party in interest, their attorneys and accountants, the United
States Trustee, or any person employed in the office of the United
States Trustee, nor do they hold any claim against the Debtor or
the estate.
Proposed counsel for the Committee can be reached at:
S. Cary Forrester, Esq.
FORRESTER & WORTH, PLLC
3636 North Central Avenue, Suite 700
Phoenix, AZ 85012
Tel: (602) 271-4250
Fax: (602) 271-4300
E-mail: scf@forresterandworth.com
About ArmorWorks Enterprises
Military armor systems provider ArmorWorks Enterprises, LLC, and
affiliate TechFiber, LLC, sought Chapter 11 protection (Bankr. D.
Ariz. Case Nos. 13-10332 and 13-10333) in Phoenix on June 17,
2013, along with a plan that resolves a dispute with a minority
shareholder and $3.5 million of financing that would save the
company from running out of cash.
ArmorWorks develops advanced survivability technology and designs
and manufactures armor and protective products. ArmorWorks has
produced over 1.25 million ceramic armor and composite armor
protection components for a variety of personnel armor, aircraft,
and vehicle applications.
The Debtors have tapped Todd A. Burgess, Esq., at Gallagher &
Kennedy, as counsel; and MCA Financial Group, Ltd., as financial
advisor. ArmorWorks estimated $10 million to $50 million in
assets and liabilities.
As of May 26, 2012, ArmorWorks had total assets of $30.9 million
and total liabilities of $12.04 million.
The Plan would resolve the ongoing dispute with C Squared by
allowing ArmorWorks to redeem C Squared's 40% minority interest,
or alternatively, allow C Squared to purchase the 60% majority
interest of AWI.
ArmorWorks and TechFiber sought and obtained an order (i)
transferring the In re TechFiber, LLC chapter 11 case to the
Honorable Brenda Moody Whinery, the judge assigned to the
ArmorWorks Chapter 11 case, and (ii) authorizing the joint
administration of the Debtors' cases.
ARMORWORKS ENTERPRISES: Has Interim OK for $1.47-Mil. in DIP Loans
------------------------------------------------------------------
In a second interim order dated July 16, 2013, the U.S. Bankruptcy
Court for the District of Arizona granted ArmorWorks Enterprises,
LLC, and TechFiber, LLC, permission to obtain secured postpetition
financing with priority over administrative expenses from Lancelot
Armor, LLC.
The hearing to consider final approval of the DIP facility is
continued to July 19, 2013, at 10:00 a.m.
Pursuant to the Second Interim Order, the "Interim Financing" is
increased from $875,000 to $1,475,000; provided, however, the
Debtors may seek to raise on an expedited basis the Interim
Financing to $1,875,000 in the event that the Interim Financing of
$1,475,000 is not sufficient to cover the cash needs of the
Debtors through conclusion of the Final Hearing.
The DIP Lender has agreed to provide the Interim Financing on the
terms stated in the Interim Order as modified by this Second
Interim Order.
As reported in the TCR on July 9, 2013, the Court granted the
Debtors interim permission to incur debt from Lancelot Armor in
the aggregate principal amount of $875,000.
As they do not have sufficient available sources of working
capital and financing to operate their businesses, maintain their
properties in the ordinary course of business or conduct a
reorganization without the DIP Facility, the Debtors sought an
interim order allowing them to, among other things, obtain on a
final basis up to $3.5 million of secured postpetition financing
from the DIP Lender or its assignee, and on an interim basis
$875,000 through the date of the final hearing.
The interim financing will accrue interest at the non-default rate
of 15% per annum, and after the occurrence of an event of default,
at the default rate of 21% per annum. The Debtors are authorized
and required to pay the principal and all accrued but unpaid
interest, and all of the foregoing amounts will be immediately due
and payable on Dec. 31, 2013.
The Debtors will timely make monthly-interest-only payments at the
applicable default and non-default rates, in arrears, beginning 30
days after the entry of the interim court order, as the payments
become due and without need to obtain further court approval.
As a condition to the extension of credit under the interim court
order, the DIP Lender requires that proceeds of the DIP facility
will be used solely for (a) working capital and other general
corporate purposes, (b) permitted payment of costs of
administration of the Cases, and (c) payment or refinancing of
prepetition expenses as are approved by the Court.
The DIP Lender is granted continuing, valid, binding, enforceable,
non-avoidable and automatically and properly perfected
postpetition security interests in and liens on the collateral,
all real and personal property of the Debtors. The DIP Lender is
also granted an allowed superpriority administrative expense claim
in this case and any successor case for all Interim Financing
under this interim court order. The DIP Liens securing the
interim financing and the DIP superpriority claim will be
subordinate only to the carve-out. The U.S. Trustee carve-out and
the professionals' carve-out will not exceed $250,000 in the
aggregate.
The Court has also authorized the Debtors to use cash collateral
until the earlier to occur of the termination of the automatic
stay after an uncured event of default or the Maturity Date.
About ArmorWorks Enterprises
Military armor systems provider ArmorWorks Enterprises, LLC, and
affiliate TechFiber LLC sought Chapter 11 protection (Bankr. D.
Ariz. Case Nos. 13-10332 and 13-10333) in Phoenix on June 17,
2013, along with a plan that resolves a dispute with a minority
shareholder and $3.5 million of financing that would save the
company from running out of cash.
ArmorWorks develops advanced survivability technology and designs
and manufactures armor and protective products. ArmorWorks has
produced over 1.25 million ceramic armor and composite armor
protection components for a variety of personnel armor, aircraft,
and vehicle applications.
The Debtors have tapped Todd A. Burgess, Esq., at Gallagher &
Kennedy, as counsel; and MCA Financial Group, Ltd., as financial
advisor. ArmorWorks estimated $10 million to $50 million in
assets and liabilities.
As of May 26, 2012, ArmorWorks had total assets of $30.9 million
and total liabilities of $12.04 million.
The Plan would resolve the ongoing dispute with C Squared by
allowing ArmorWorks to redeem C Squared's 40% minority interest,
or alternatively, allow C Squared to purchase the 60% majority
interest of AWI.
ArmorWorks and TechFiber sought and obtained an order (i)
transferring the In re TechFiber, LLC chapter 11 case to the
Honorable Brenda Moody Whinery, the judge assigned to the
ArmorWorks Chapter 11 case, and (ii) authorizing the joint
administration of the Debtors' cases.
ASPEN GROUP: Delays Transition Report for Fiscal 2013
-----------------------------------------------------
Aspen Group, Inc., notified the U.S. Securities and Exchange
Commission regarding the delay in the filing of its annual report
on Form 10-K for the period ended April 30, 2013. The Company's
management was unable to timely complete the transition report on
Form 10-K due to the change in the Company's fiscal year, as well
as due to its appointment of a new Chief Financial Officer.
The Company had revenues of $1,229,096 for the four months ended
April 30, 2013, compared to $745,656 for the four months ended
April 30, 2012. It also had a net loss of ($1,402,982) for the
four months ended April 30, 2013, compared to a net loss of
($2,175,694) for the four months ended April 30, 2012. Both
reported revenue figures exclude the impact of discontinued
operations.
About Aspen Group
Denver, Colo.-based Aspen Group, Inc., was founded in Colorado in
1987 as the International School of Information Management. On
Sept. 30, 2004, it was acquired by Higher Education Management
Group, Inc., and changed its name to Aspen University Inc. On
May 13, 2011, the Company formed in Colorado a subsidiary, Aspen
University Marketing, LLC, which is currently inactive. On
March 13, 2012, the Company was recapitalized in a reverse merger.
Aspen's mission is to become an institution of choice for adult
learners by offering cost-effective, comprehensive, and relevant
online education. Approximately 88 percent of the Company's
degree-seeking students (as of June 30, 2012) were enrolled in
graduate degree programs (Master or Doctorate degree program).
Since 1993, the Company has been nationally accredited by the
Distance Education and Training Council, a national accrediting
agency recognized by the U.S. Department of Education.
Aspen Group incurred a net loss of $6.01 million in 2012, as
compared with a net loss of $2.13 million in 2011. The Company's
balance sheet at March 31, 2013, showed $3.19 million in total
assets, $2.70 million in total liabilities, and $490,101 in total
stockholders' equity.
Salberg & Company, P.A., in Boca Raton, Florida, 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 a net loss allocable to common stockholders
and net cash used in operating activities in 2012 of $6,048,113
and $4,403,361, respectively, and has an accumulated deficit of
$11,337,104 as of December 31, 2012. These matters raise
substantial doubt about the Company's ability to continue as a
going concern.
ATARI INC: Hires Frank Rimerman as Accountants
----------------------------------------------
Atari Inc., et al., ask the U.S. Bankruptcy Court for permission
to employ Frank, Rimerman + Co. LLP as accountant.
Pursuant to the terms of the Engagement Letter, since March 21,
2013, Frank Rimerman has been providing Tax Return Preparation
services to the Debtors to assist the Debtors in remaining
compliant with federal and state tax law requirements.
Specifically, the Tax Return Preparation services provided by
Frank Rimerman include preparing the Debtors' (a) federal income
tax return for the year ended March 31, 2013 and (b) California
state income tax return for the year ended March 31, 2013.
Frank Rimerman attests that the firm is a "disinterested person"
as the term is defined in Section 101(14) of the Bankruptcy Code.
The firm's rates are:
Person Title Hourly Rate
------ ----- -----------
Joseph M. Albero Partner $610
Elaine Leung Director $530
Henry Godsey Associate $180
Counsel to the Debtors can be reached at:
Ira S. Dizengoff, Esq.
Kristine G. Manoukian, Esq.
AKIN GUMP STRAUSS HAUER & FELD LLP
One Bryant Park
New York, New York 10036
Tel: (212) 872-1000
Fax: (212) 872-1002
About Atari Inc.
Atari -- http://www.atari.com-- is a multi-platform, global
interactive entertainment and licensing company. Atari owns
and/or manages a portfolio of more than 200 games and franchises,
including world renowned brands like Asteroids(R), Centipede(R),
Missile Command(R), Pong(R), Test Drive(R), Backyard Sports(R),
and Rollercoaster Tycoon(R).
Atari Inc. and its U.S. affiliates filed for Chapter 11 bankruptcy
(Bankr. S.D.N.Y. Lead Case No. 13-10176) on Jan. 21, 2013, to
break away from their unprofitable French parent company and
secure independent capital.
A day after its American unit filed for Chapter 11 bankruptcy
protection, Paris-based Atari S.A. took a similar measure under
Book 6 of that country's commercial code. Atari S.A. said it
was filing for legal protection because its longtime backer
BlueBay has sought to sell its 29% stake and demanded repayment by
March 31 on a credit line of $28 million that it cut off in
December.
Peter S. Partee, Sr., Esq., and Michael P. Richman, Esq., at
Hunton & Williams LLP, serve as lead counsel for the U.S.
companies in their Chapter 11 cases. BMC Group is the claims and
notice agent. Protiviti Inc. is the financial advisor.
Duff & Phelps Securities LLC serves as financial advisor to the
Official Committee of Unsecured Creditors. Cooley LLP serves as
the Committee's counsel.
ATARI INC: Taps Marks Paneth & Shron as 401(k) Plan Auditor
-----------------------------------------------------------
Atari Inc., et al., ask the U.S. Bankruptcy Court for permission
to employ Marks Paneth of Marks Paneth & Shron LLP as the Debtors'
401(k) Plan Auditor.
The firm will, among other things, provide these services:
a. audit the statement of net assets available for plan
benefits of the Atari, Inc.'s 401(k) Plan as of
Dec. 31, 2012;
b. audit the related statement of changes in net assets
available for plan benefits for the year ended Dec. 31,
2012; and
c. audit the related notes to the financial statements for the
year ended Dec. 31, 2012.
Michael J. Fosorile, partner at the firm, attests that the firm is
a "disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code.
The standard rates are estimated to be between $17,000 and
$20,000.
About Atari Inc.
Atari -- http://www.atari.com-- is a multi-platform, global
interactive entertainment and licensing company. Atari owns
and/or manages a portfolio of more than 200 games and franchises,
including world renowned brands like Asteroids(R), Centipede(R),
Missile Command(R), Pong(R), Test Drive(R), Backyard Sports(R),
and Rollercoaster Tycoon(R).
Atari Inc. and its U.S. affiliates filed for Chapter 11 bankruptcy
(Bankr. S.D.N.Y. Lead Case No. 13-10176) on Jan. 21, 2013, to
break away from their unprofitable French parent company and
secure independent capital.
A day after its American unit filed for Chapter 11 bankruptcy
protection, Paris-based Atari S.A. took a similar measure under
Book 6 of that country's commercial code. Atari S.A. said it
was filing for legal protection because its longtime backer
BlueBay has sought to sell its 29% stake and demanded repayment by
March 31 on a credit line of $28 million that it cut off in
December.
Peter S. Partee, Sr., Esq., and Michael P. Richman, Esq., at
Hunton & Williams LLP, serve as lead counsel for the U.S.
companies in their Chapter 11 cases. BMC Group is the claims and
notice agent. Protiviti Inc. is the financial advisor.
Duff & Phelps Securities LLC serves as financial advisor to the
Official Committee of Unsecured Creditors. Cooley LLP serves as
the Committee's counsel.
ATP OIL: Gomez Demands Payment of $1MM Claim Plus Interest
----------------------------------------------------------
Gomez Hub Pipeline Partners LP asks the U.S. Bankruptcy Court to
enter an order directing ATP Oil & Gas Corporation to pay its
postpetition claim.
Alison L. Smith, Esq., at McDermott Will & Emery LLP, contends
that ATP received substantial benefits postpetition under the
parties' agreements by virtue of the preservation of its rights to
utilize the Pipelines. To date, ATP has not paid Gomez the
$1,194,447 owed under the parties' Agreements, excluding interest,
for the period May 1, 2013, through the June 13, 2013.
Accordingly, pursuant to Section 503(b)(1)(A) of the Bankruptcy
Code, ATP should be ordered to pay Gomez's postpetition $1,194,447
administrative expense claim, plus past due interest, Ms. Smith
asserts.
Gomez is also represented by Timothy W. Walsh, Esq., and Gregory
A. Kopacz, Esq., at McDermott Will & Emery LLP.
About ATP Oil
Houston, Tex.-based ATP Oil & Gas Corporation is an international
offshore oil and gas development and production company focused
in the Gulf of Mexico, Mediterranean Sea and North Sea.
ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case
No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP,
serve as bankruptcy counsel. Munsch Hardt Kopf & Harr, P.C., is
the conflicts counsel. Motley Rice LLC and Fayard & Honeycutt,
APC serve as special counsel. Opportune LLP is the financial
advisor and Jefferies & Company is the investment banker.
Kurtzman Carson Consultants LLC is the claims and notice agent.
ATP disclosed assets of $3.6 billion and $3.5 billion of
liabilities as of March 31, 2012. Debt includes $365 million on a
first-lien loan where Credit Suisse AG serves as agent. There is
$1.5 billion on second-lien notes with Bank of New York Mellon
Trust Co. as agent. ATP's other debt includes $35 million on
convertible notes and $23.4 million owing to third parties for
their shares of production revenue. Trade suppliers have claims
for $147 million, ATP said in a court filing.
An official committee of unsecured creditors has been appointed in
the case. Evan R. Fleck, Esq., at Milbank, Tweed, Hadley &
McCloy, in New York, represents the Creditors Committee as
counsel.
A 7-member panel of equity security holders has also been
appointed in the case. Kyung S. Lee, Esq., and Charles M. Rubio,
Esq. of Diamond McCarthy LLP, in Houston, Texas, serve as counsel
to the Equity Committee.
ATP is seeking court approval to sell substantially all of its
Deepwater Assets and Shelf Property Assets.
ATP OIL: Seeks Extension of Deadline to Decide on Office Leases
---------------------------------------------------------------
ATP Oil & Gas Corporation has filed with the U.S. Bankruptcy Court
an emergency motion seeking an extension of the deadline within
which it must assume or reject its Office Leases from July 31,
2013 through October 31, 2013.
The Debtor's main offices are located at 4550 and 4600 Post Oak
Place in Houston. The Debtor has occupied this space for a number
of years, at what it believes to be market rental rates, and
intends to continue doing so for at least the remainder of this
case. Presently, under Section 365(d)(4)(A)(i) of the Bankruptcy
Code and the prior orders of the Court, the Debtor must decide
whether or not to assume or reject its Office Leases, and thus
whether to remain in its offices, by July 31, 2013.
Counsel for the Debtor, Charles S. Kelley, Esq., of Mayer Brown
LLP, tells the Court that the Current 365(d)(4) Deadline does not
provide sufficient time to complete the pending sale under
Section 363 of the Bankruptcy Code of substantially all of the
Debtor's assets and thereafter conclude the Chapter 11 proceedings
in an orderly fashion.
To address this situation, the Debtor and its Office Lessor
entered into negotiations that recently resulted in an agreement
pursuant to which the Current 365(d)(4) Deadline would be extended
from July 31, 2013 to October 31, 2013, in exchange for the
Debtor's agreement to pay all rent that would otherwise be payable
to the Office Lessor during the Extended 365(d)(4) Period in one
lump-sum payment of $152,088.03, within five business days of the
Court's approval of the Motion.
In light of the Office Lessor's express consent, which is all that
is necessary under Section 365(d)(4)(B)(ii) of the Bankruptcy
Code, the Debtor submits that ample cause exists for granting the
requested extension, which should be sufficient to enable the
Debtor to close on its pending sale, transition its business
operations to the purchaser and facilitate an orderly conclusion
of the Chapter 11 proceedings.
A hearing will be conducted on this matter on July 25, 2013, at
1:30 p.m.
Last month, Judge Marvin Isgur granted the Debtor authority to
reject 66 unexpired leases and executory contracts related to the
Debtor's Remaining Properties, and to relinquish its interests in
the Remaining Properties, or to abandon any continuing interest of
the estate in the subject properties or leasehold interests. The
Court also approved corresponding rejection procedures.
About ATP Oil
Houston, Tex.-based ATP Oil & Gas Corporation is an international
offshore oil and gas development and production company focused
in the Gulf of Mexico, Mediterranean Sea and North Sea.
ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case
No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP,
serve as bankruptcy counsel. Munsch Hardt Kopf & Harr, P.C., is
the conflicts counsel. Motley Rice LLC and Fayard & Honeycutt,
APC serve as special counsel. Opportune LLP is the financial
advisor and Jefferies & Company is the investment banker.
Kurtzman Carson Consultants LLC is the claims and notice agent.
ATP disclosed assets of $3.6 billion and $3.5 billion of
liabilities as of March 31, 2012. Debt includes $365 million on a
first-lien loan where Credit Suisse AG serves as agent. There is
$1.5 billion on second-lien notes with Bank of New York Mellon
Trust Co. as agent. ATP's other debt includes $35 million on
convertible notes and $23.4 million owing to third parties for
their shares of production revenue. Trade suppliers have claims
for $147 million, ATP said in a court filing.
An official committee of unsecured creditors has been appointed in
the case. Evan R. Fleck, Esq., at Milbank, Tweed, Hadley &
McCloy, in New York, represents the Creditors Committee as
counsel.
A 7-member panel of equity security holders has also been
appointed in the case. Kyung S. Lee, Esq., and Charles M. Rubio,
Esq. of Diamond McCarthy LLP, in Houston, Texas, serve as counsel
to the Equity Committee.
ATP is seeking court approval to sell substantially all of its
Deepwater Assets and Shelf Property Assets.
ATP OIL: Capital Ventures Gets OK to Issue Conversion Notice
------------------------------------------------------------
Capital Ventures International sought and obtained a court ruling
granting its motion for an order authorizing the issuance of one
or more conversion notices pursuant to which ATP Oil & Gas
Corporation would deliver to CVI certain shares of its common
stock.
On June 20, 2012, ATP issued a $35 million Note to CVI, and also
entered into a Warrant and Securities Purchase Agreement. The
outstanding principal and interest owed on the Note as of the
Petition Date was approximately $35,474,444.44.
The Note grants CVI the right to convert the principal amount of
its debt, in whole or in part, into shares of ATP's common stock
at any time after a Conversion Notice is issued by CVI to ATP
identifying, inter alia, an amount of principal to be converted.
The initial conversion price under the Note is $4.46 per share,
subject to adjustment. Under the terms of the Note, ATP is
required to reserve authorized shares of its common stock in the
event that Conversion Notices are issued by the note holder. The
shares to be issued to CVI upon presentment of Conversion Notices
were authorized contemporaneously with the issuance of
the Note. CVI is informed that, to date, ATP has reserved a
sufficient number of shares to provide CVI with those shares to be
sought under the Conversion Notices.
CVI seeks to issue one or more Conversion Notices pursuant to the
Note to convert a portion of the remaining principal amount of the
Note into shares of ATP's common stock in accordance with the
terms and conditions of the Note. CVI understands the to-be-issued
stock is not property of the Estate and that neither the delivery
of the Conversion Notices, nor the Debtor's compliance therewith
(or any of the related actions necessary to consummate the
issuance) would implicate Section 362's automatic stay. But, out
of an abundance of caution, CVI sought confirmation of the
inapplicability of, or, to the extent necessary, relief from, the
automatic stay.
Prior to filing its motion, CVI conferred with the Debtor and its
professionals, and secured the Debtor's consent to the relief
requested. The Official Committee of Unsecured Creditors (of which
CVI is a member) has no objection to this request.
Judge Marvin Isgur also approved information blocking procedures
that Capital Ventures International has implemented in connection
with its service on the Official Committee of Unsecured Creditors
in the Debtor's cases that creates a "screening wall" between the
CVI Representative who serves on the Committee and CVI's trading
activities in connection with its ownership of Covered Claims of
ATP, including, inter alia, common stock to be issued pursuant to
the convertible note issued by ATP in favor of CVI.
CVI has implemented and will continue to follow the Information
Blocking Procedures. By following the Information Blocking
Procedures, CVI will not be in violation of any duty arising from
its membership on the Committee.
Both the Debtor and counsel for the Creditors Committee consented
to CVI's request.
Jesse N. Garfinkle, William R. Baldiga, Jeremy B. Coffey, at
Brown Rudnick, LLP, represents Capital Ventures International.
About ATP Oil
Houston, Tex.-based ATP Oil & Gas Corporation is an international
offshore oil and gas development and production company focused
in the Gulf of Mexico, Mediterranean Sea and North Sea.
ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case
No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP,
serve as bankruptcy counsel. Munsch Hardt Kopf & Harr, P.C., is
the conflicts counsel. Motley Rice LLC and Fayard & Honeycutt,
APC serve as special counsel. Opportune LLP is the financial
advisor and Jefferies & Company is the investment banker.
Kurtzman Carson Consultants LLC is the claims and notice agent.
ATP disclosed assets of $3.6 billion and $3.5 billion of
liabilities as of March 31, 2012. Debt includes $365 million on a
first-lien loan where Credit Suisse AG serves as agent. There is
$1.5 billion on second-lien notes with Bank of New York Mellon
Trust Co. as agent. ATP's other debt includes $35 million on
convertible notes and $23.4 million owing to third parties for
their shares of production revenue. Trade suppliers have claims
for $147 million, ATP said in a court filing.
An official committee of unsecured creditors has been appointed in
the case. Evan R. Fleck, Esq., at Milbank, Tweed, Hadley &
McCloy, in New York, represents the Creditors Committee as
counsel.
A 7-member panel of equity security holders has also been
appointed in the case. Kyung S. Lee, Esq., and Charles M. Rubio,
Esq. of Diamond McCarthy LLP, in Houston, Texas, serve as counsel
to the Equity Committee.
ATP is seeking court approval to sell substantially all of its
Deepwater Assets and Shelf Property Assets.
AURA SYSTEMS: Delays Form 10-Q for May 31 Quarter
-------------------------------------------------
Aura Systems, Inc.'s quarterly report on Form 10-Q was not filed
on or before the prescribed due date, July 15, 2013, without
unreasonable effort and expense, as it has not finalized the
narrative disclosures for inclusion in Form 10-Q. The Company
intends to complete the May 31, 2013, Form 10-Q as soon as
possible, but in no event no later than five days from the
original due date.
About Aura Systems
El Segundo, Calif.-based Aura Systems, Inc., designs, assembles,
tests and sells its proprietary and patented Axial Flux induction
machine known as the AuraGen(R) for industrial and commercial
applications and VIPER for military applications.
Aura Systems incurred a net loss of $15.14 million for the fiscal
year ended Feb. 28, 2013, as compared with a net loss of $14.15
million for the year ended Feb. 29, 2012. As of Feb. 28, 2013,
the Company had $3.09 million in total assets, $24.68 million in
total liabilities and a $21.59 million total stockholders'
deficit.
Kabani & Company, Inc., in Los Angeles, California, issued a
"going concern" qualification on the consolidated financial
statements for the year ended Feb. 28, 2013. The independent
auditors noted that the Company has historically incurred
substantial losses from operations, and the Company may not have
sufficient working capital or outside financing available to meet
its planned operating activities over the next 12 months. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern.
BAYOU GROUP: Victims of Fraud to Get Another $31 Million
--------------------------------------------------------
Marie Beaudette writing for Dow Jones' DBR Small Cap reports that
victims of the Bayou Group LLC fraud will receive another $31
million, bringing the total paid out in the case to more than $128
million, federal prosecutors said.
About Bayou Group
Based in Chicago, Illinois, Bayou Group LLC operated and managed
hedge funds. The hedge fund that turned out to be a Ponzi scheme
and a receiver was subsequently appointed. The Company and its
affiliates were sent to Chapter 11 on May 30, 2006 (Bankr.
S.D.N.Y. Lead Case No. 06-22306) to pursue recoveries for the
benefit of defrauded investors. Elise Scherr Frejka, Esq., at
Dechert LLP, represents the Debtors in their restructuring
efforts. Joseph A. Gershman, Esq., and Robert M. Novick, Esq., at
Kasowitz, Benson, Torres & Friedman, LLP, represent the Official
Committee of Unsecured Creditors. Kasowitz, Benson, Torres &
Friedman LLP is counsel to the Unofficial Committee of the Bayou
Onshore Funds. Sonnenschein Nath & Rosenthal LLP represents
certain investors. Bayou Group estimated assets and debts of more
than $100 million in the Chapter 11 petition.
Bayou has filed lawsuits against former investors who allegedly
received fictitious profits and an inequitably large return of
their principal investments. Jeff J. Marwil, Esq., at Jenner &
Block, was appointed on April 28, 2006, as the federal equity
receiver. The receiver commenced adversary proceedings to recover
certain fraudulent transfers made by Bayou Group to investors.
The Bayou fraud resulted in three guilty pleas. Daniel Marino, the
head of finance, was sentence to a 20-year prison term despite his
cooperation with prosecutors. James Marquez, a Bayou co-founder,
was sentenced to four years and three months in prison and told to
pay $6.2 million in restitution. Another founder, Samuel Israel
III, was sentenced to 20 years following his guilty plea in
September 2005.
BELLE FOODS: Section 341(a) Meeting Set for August 13
-----------------------------------------------------
A meeting of creditors in the bankruptcy case of Belle Foods LLC
will be held on Aug. 13, 2013, at 1:00 p.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 Belle Foods
Belle Foods LLC bought 57 stores from Southern Family Markets LLC
in 2012, and put the business into Chapter 11 reorganization
(Bankr. N.D. Ala. Case No. 13-81963) on July 1, 2013, in Decatur,
Alabama.
The chain is owned by a father and son who purchased the operation
with a $4 million secured term loan and $24 million revolving
credit from the seller. The stores are in Florida, Georgia,
Alabama and Mississippi.
The petition shows assets and debt both for more than $10 million.
C&S Wholesale Grocers Inc. is owed about $6 million on secured and
unsecured debt. Belle Foods owes another $8 million to trade
suppliers, according to a court filing.
D, Christopher Carson, Esq., Brent W. Dorner, Esq., and Marc P.
Solomon, Esq., at Burr & Forman, LLP, represent the Debtor as
counsel.
BELLE FOODS: Has Interim Access to Lenders' Cash Until July 22
--------------------------------------------------------------
On July 12, 2013, the U.S. Bankruptcy Court for the Northern
District of Alabama entered an agreed second interim order
authorizing Belle Foods, LLC, to use cash collateral of secured
lenders C&S Wholesale Grocers, Inc., and Southern Family Markets,
LLC, through and until 5:00 p.m. on Monday, July 22, 2013,
pursuant to a budget.
As of the Petition Date, the Debtor was indebted to the secured
lenders in an amount not less than $34,609,449, secured by
substantially all of the Debtor's assets, including cash
collateral. All cash collected by the Debtor during the period in
excess of the cash needs set forth in the budget will be delivered
by wire to the Secured Lender on July 22, 2013, by 4:00 p.m.
As adequate protection for the diminution in value of their
interests in the collateral, including cash collateral, the
secured lenders are granted security interests and replacement
liens upon all property of the Debtor (except for causes of
actions under Chapter 5 of the Bankruptcy Code).
The secured lenders are also granted an allowed superpriority
administrative expense claim pursuant to Bankruptcy Code section
507(b), subject and subordinate to a carve-out for the payment of
accrued and unpaid allowed professional fees and expenses of
Debtor's professionals to the extent of any existing retainers
currently held by any such professionals, and to the extent of any
line items in the Second Interim Budget for any professional fees.
A copy of the Second Agreed Interim Order is available at:
http://bankrupt.com/misc/bellefoods.doc108.pdf
About Belle Foods
Belle Foods, LLC, bought 57 stores from Southern Family Markets
LLC
in 2012, and put the business into Chapter 11 reorganization
(Bankr. N.D. Ala. Case No. 13-81963) on July 1, 2013, in Decatur,
Alabama.
The chain is owned by a father and son who purchased the operation
with a $4 million secured term loan and $24 million revolving
credit from the seller. The stores are in Florida, Georgia,
Alabama and Mississippi.
The petition shows assets and debt both for more than $10 million.
C&S Wholesale Grocers Inc. is owed about $6 million on secured and
unsecured debt. Belle Foods owes another $8 million to trade
suppliers, according to a court filing.
D, Christopher Carson, Esq., Brent W. Dorner, Esq., and Marc P.
Solomon, Esq., at Burr & Forman, LLP, represent the Debtor as
counsel.
BERING EXPLORATION: Incurs $5.9 Million Net Loss in Fiscal 2013
---------------------------------------------------------------
Bering Exploration, Inc., filed with the U.S. Securities and
Exchange Commission its annual report on Form 10-K disclosing
a net loss of $5.89 million on $88,842 of total revenues for the
year ended March 31, 2013, as compared with a net loss of $3.65
million on $79,085 of total revenues during the prior fiscal year.
As of March 31, 2013, the Company had $795,636 in total assets,
$1.68 million in total liabilities and a $884,730 total
shareholders' deficit.
LBB and Associates, Ltd, LLP, in Houston, Texas, issued a "going
concern" qualification on the consolidated financial statements
for the year ended March 31, 2013. The independent auditors noted
that the Company's limited amounts of revenue, recurring losses
from operations and negative working capital 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/KDWsTc
About Bering Exploration
Houston-based Bering Exploration, Inc., primarily focuses its
business on the exploration, acquisition, development, production
and sale of natural gas, crude oil and natural gas liquids from
conventional reservoirs within the United States. In addition,
the Company owns 25 percent of Intertech Bio, which is developing
products to treat cancer, infectious diseases and other medical
conditions associated with compromised immune systems. The
Company is not actively involved in the management of Intertech
Bio.
BERGENFIELD SENIOR HOUSING: Contemplates September Auction
----------------------------------------------------------
Bergenfield Senior Housing, LLC, asks the U.S. Bankruptcy Court
for the District of New Jersey to enter an order approving bid
procedures for the sale of substantially all of the Debtor's
assets. Written objections to the motion must be filed by
July 22, 2013.
The Debtor operates a 90-unit residential apartment building
located at 47 Legion Drive in Bergenfield, New Jersey, which
property is wholly owned by the Debtor.
The hearing on the motion is scheduled to be held on July 29,
2013, at 10:00 a.m.
The proposed procedures contemplate a bid deadline that is 45 days
after the order approving the motion, and an auction date that's
approximately 5 days after the bid deadline.
The Bid Procedures also contain these material provisions:
a) Upon execution of a confidentiality agreement, prospective
buyers will receive a due diligence package with certain material,
public and non-public information regarding the Debtor's property.
b) Parties wishing to purchase the Property must submit a
Qualified Bid, which must, inter alia, include a proposed Modified
APA, identify the bidder, identify which executory contracts and
unexpired leases will be assumed and/or rejected, be a good faith
offer to purchase the Property, contain appropriate evidence of
corporate authority, be not less than $13,500,00, not contain a
break-up fee or other protective provision, and provide for the
payment of a 10% good faith deposit upon being deemed the
Successful Bidder.
c) Overbids at the Auction must be submitted in at least
$25,000 increments.
d) The second-highest bid will be deemed the Back-Up Bidder.
e) A sale to the successful bidder is subject to subsequent
Bankruptcy Court approval, either through a plan or by motion
under Section 363 of the Bankruptcy Code.
About Bergenfield Senior Housing
Bergenfield Senior Housing, LLC, filed a Chapter 11 bankruptcy
petition (Bankr. D.N.J. Case No. 13-19703) in Newark, New Jersey,
on May 2, 2013. Nicholas Rotonda signed the petition as
member/manager. Judge Morris Stern presides over the case.
Aaron Solomon Applebaum, Esq., and Barry D. Kleban, Esq., at
McElroy, Deutsch, Mulvaney & Carpenter, LLP, represent the Debtor
as counsel.
In its schedules, the Debtor disclosed $14,061,100 in assets and
$19,957,026 in liabilities as of the Petition Date.
The Bergenfield, New Jersey-based debtor is a single asset real
estate under 11 U.S.C. Sec. 101(51B) and said total assets and
debts exceed $10 million. The Debtor operates and wholly owns a
90-unit residential apartment building located at 47 Legion Drive,
Bergenfield, New Jersey.
The Debtor's primary secured creditor is Boiling Springs Savings
Bank. The Debtor is indebted to Boiling Springs on account of two
promissory notes, both of which are secured by mortgages on the
Property. Boiling Springs' first-position mortgage secures
indebtedness in the total amount of $12.02 million and the second-
position mortgage secures indebtedness of $575,000.
BERRY PLASTICS: Apollo, et al., to Sell 15MM Common Shares
----------------------------------------------------------
Berry Plastics Group, Inc., has commenced a proposed secondary
public offering of 15,000,000 shares of the Company's common stock
by certain funds affiliated with Apollo Global Management, LLC,
and certain funds affiliated with Graham Partners, Inc. The
underwriters will have a 30-day option to purchase up to an
additional 2,250,000 shares of common stock from the Selling
Stockholders.
The Company itself is not selling any shares and will not receive
any proceeds from the proposed offering, and it will not change
the number of shares of the Company's common stock that are
currently outstanding.
Citigroup, BofA Merrill Lynch, Deutsche Bank Securities, Goldman,
Sachs & Co., Credit Suisse, Baird and Barclays are acting as joint
book-running managers for the offering.
SunTrust Robinson Humphrey, Wells Fargo Securities and Apollo
Global Securities are acting as co-managers for the offering.
The Company's common stock is listed on the New York Stock
Exchange under the symbol "BERY." The last reported closing sale
price of the Company's common stock on July 12, 2013, was $22.21
per share.
A registration statement relating to these securities has been
filed with the Securities and Exchange Commission but has not yet
become effective. A copy of the amended Form S-1 prospectus is
available for free at http://is.gd/aBnQcf
On July 15, 2013, Berry Plastics disclosed certain estimated
financial information related to its results of operations for the
quarter ending on June 29, 2013:
"For the June 2013 quarter, we estimate that net sales declined
to a range of $1,217 to $1,227 million from $1,242 million in
the June 2012 quarter. This decrease of 1% to 2% is primarily
related to soft customer demand. Also, we estimate that
Adjusted EBITDA will be $206 to $211 million for the June 2013
quarter compared to $203 million in the June 2012 quarter.
This increase of 1% to 4% is primarily related to cost
reduction efforts and productivity improvements partially
offset by additional costs associated with organic growth
initiatives. Estimated net debt at June 29, 2013 was $3,917
million. Assuming our initial public offering and 2013 debt
refinancing occurred at the beginning of the period, our
interest expense for the four quarter period ended June 29,
2013 would be approximately $48 million lower. Adjusted
EBITDA is a non-GAAP measure."
A copy of the Form 8-K is available for free at:
http://is.gd/RhXtku
About Berry Plastics
Berry Plastics Corporation manufactures and markets plastic
packaging products, plastic film products, specialty adhesives and
coated products. At Jan. 2, 2010, the Company had more than 80
production and manufacturing facilities, primarily located in the
United States. Berry is a wholly-owned subsidiary of Berry
Plastics Group, Inc. Berry Group is primarily owned by affiliates
of Apollo Management, L.P., and Graham Partners. Berry, through
its wholly owned subsidiaries operates five reporting segments:
Rigid Open Top, Rigid Closed Top, Flexible Films, Tapes/Coatings
and Specialty Films. The Company's customers are located
principally throughout the United States, without significant
concentration in any one region or with any one customer.
On Dec. 3, 2009, Berry Plastics obtained control of 100 percent of
the capital stock of Pliant upon Pliant's emergence from
reorganization pursuant to a proceeding under Chapter 11 for a
purchase price of $602.7 million. Pliant is a leading
manufacturer of value-added films and flexible packaging for food,
personal care, medical, agricultural and industrial applications.
The acquired business is primarily operated in Berry's Specialty
Films reporting segment.
The Company's balance sheet at Dec. 29, 2012, showed $5.05 billion
in total assets, $5.36 billion in total liabilities and a $313
million total stockholders' deficit.
* * *
As reported by the TCR on Feb. 1, 2013, Moody's Investors Service
upgraded the corporate family rating of Berry Plastics to B2 from
B3 and the probability of default rating to B2-PD from B3-PD. The
upgrade of the corporate family rating to B2 from B3 reflects
the improvement in pro-forma credit metrics and management's
publicly stated goal to pursue a less aggressive, more balanced
financial profile.
In November 2011, Standard & Poor's Ratings Services affirmed the
'B-' corporate credit rating on Berry and its holding company
parent, Berry Plastics Group Inc. "The ratings on Berry reflect
the risks associated with the company's highly leveraged financial
profile and acquisition- driven growth strategy as well as its
fair business risk profile," said Standard & Poor's credit analyst
Cynthia Werneth.
In November 2011, Standard & Poor's Ratings Services affirmed the
'B-' corporate credit rating on Berry and its holding company
parent, Berry Plastics Group Inc. "The ratings on Berry reflect
the risks associated with the company's highly leveraged financial
profile and acquisition- driven growth strategy as well as its
fair business risk profile," said Standard & Poor's credit analyst
Cynthia Werneth.
BLUEJAY PROPERTIES: Cash Collateral Hearing Set for July 22
-----------------------------------------------------------
A Court hearing on a motion for Bluejay Properties LLC to use cash
collateral is set for July 22, 2013.
Based in Junction City, Kansas, Bluejay Properties, LLC, doing
business as Quinton Point, filed a bare-bones Chapter 11 petition
(Bankr. D. Kan. Case No. 12-22680) in Kansas City on Sept. 28,
2012. Bankruptcy Judge Robert D. Berger presides over the case.
Todd A. Luckman, Esq., at Stumbo Hanson, LLP in Topeka.
The Debtor owns the Quinton Point Apartment Complex in Kansas City
valued at $17 million. The Debtor scheduled liabilities of
$13,112,325. The petition was signed by Michael L. Thomas of TICC
Prop., managing member.
Bankers' Bank of Kansas, owed approximately $13.08 million, is
represented by Arthur S. Chalmers of Hite, Fanning & Honeyman,
LLP. The University National Bank, owed approximately
$1.2 million, is represented by Edward J. Nazar of Redmond &
Nazar, L.L.P., and Todd Thompson of Thompson Ramsdell & Qualseth,
P.A.
BOOMERANG SYSTEMS: Obtains $7.7 Million Funding Commitments
-----------------------------------------------------------
Boomerang Systems, Inc., and its wholly-owned subsidiaries
Boomerang Sub, Inc., Boomerang USA Corp. and Boomerang MP Holdings
Inc., as borrowers, entered into Amendment No. 1 to the Loan
Agreement with 49 incremental lenders on July 12, 2013. Pursuant
to the Amendment, the additional Lenders committed to fund an
additional $3,025,000 principal amount of loans to the Borrowers,
bringing aggregate commitments under the Loan Agreement to
$7,775,000.
The Borrowers entered into a Loan and Security Agreement dated as
of June 6, 2013. Pursuant to the Loan Agreement, the Lenders
committed to fund $4,750,000 amount of loans to the Borrowers.
The Loan Agreement contemplates that the aggregate principal
amount of borrowings may be increased to $10,000,000 through
commitments from additional Lenders who subsequently become a
party to the Loan Agreement.
A Lender which is not an affiliate of the Company, committed to
fund $3,000,000 principal amount of loans, and 11 Lenders, each of
which is an affiliate of the Company or designated as an affiliate
of the Company for purposes of the Loan Agreement, committed to
fund $1,750,000 principal amount of loans. On the Initial Closing
Date, the Non-Affiliate Lender advanced $1,000,000 to the Company,
for which it received $1,000,000 principal amount of notes and the
Affiliate Lenders advanced $1,000,000 to the Company for which
they received $1,000,000 principal amount of notes.
The Notes bear interest at the rate of 15 percent per annum,
payable upon maturity. The maturity date of the Notes is May 31,
2016, subject to earlier prepayment upon acceleration of the
occurrence of an event of default; provided further that the
Company may prepay the Notes at any time without penalty.
As partial consideration for providing advances under the Loan
Agreement, the Company agreed to issue to each Lender warrants to
purchase 20,000 shares of its common stock for each $100,000
advanced. On the Initial Closing Date, the Company issued
Warrants to purchase an aggregate of 400,000 shares of common
stock. The Warrants are exercisable at $5.00 per share, subject
to full ratchet adjustment for issuance below the exercise price,
subject to certain exceptions.
A copy of the Form 8-K is available for free at:
http://is.gd/IxLWpP
About Boomerang Systems
Headquartered in Morristown, New Jersey, Boomerang Systems, Inc.
(Pink Sheets: BMER) through its wholly owned subsidiary, Boomerang
Utah, is engaged in the design, development, and marketing of
automated racking and retrieval systems for automobile parking and
automated racking and retrieval of containerized self-storage
units.
Boomerang incurred a net loss of $17.42 million for the fiscal
year ended Sept. 30, 2012, compared with a net loss of $19.10
million during the prior year. The Company's balance sheet at
March 31, 2013, showed $4.46 million in total assets, $23.19
million in total liabilities and a $18.73 million total
stockholders' deficit.
Bankruptcy Warning
"Our operations may not generate sufficient cash to enable us to
service our debt. If we were to fail to make any required payment
under the notes and agreements governing our indebtedness or fail
to comply with the covenants contained in the notes and
agreements, we would be in default. Our debt holders would have
the ability to require that we immediately pay all outstanding
indebtedness. If the debt holders were to require immediate
payment, we might not have sufficient assets to satisfy our
obligations under the notes or our other indebtedness. In such
event, we could be forced to seek protection under bankruptcy
laws, which could have a material adverse effect on our existing
contracts and our ability to procure new contracts as well as our
ability to recruit and/or retain employees. Accordingly, a
default could have a significant adverse effect on the market
value and marketability of our common stock," the Company said in
its annual report for the year ended Sept. 30, 2012.
BROWNIE'S MARINE: Effects 1,350 to 1 Reverse Stock Split
--------------------------------------------------------
Brownie's Marine Group, Inc.'s reverse split of 1,350 to 1 took
effect on July 15, 2013, as determined by the Financial Industry
Regulatory Authority.
The Reverse Split had been previously approved and authorized by
the Board of Directors and majority holders of the Company's
common stock and, as a result, (i) every 1,350 shares of the
Company's outstanding common stock will be converted into 1 share
of the Company's common stock, and (ii) the issued and outstanding
common stock of the Company will decrease from 3,423,468,473 to
2,535,903, subject to the "rounding up" of fractional shares to
the nearest whole number.
Effective July 15, 2013 the Company's quotation symbol was changed
to "BWMGD" to reflect the Reverse Split. Approximately 20
business days thereafter the symbol will revert back to "BWMG".
In addition, the Company's CUSIP number will change to 115867202.
A copy of the Articles of Amendment is available for free at:
http://is.gd/6BduO8
About Brownie's Marine
Brownie's Marine Group, Inc., does business through its wholly
owned subsidiary, Trebor Industries, Inc., d/b/a Brownie's Third
Lung, a Florida corporation. The Company designs, tests,
manufactures and distributes recreational hookah diving, yacht
based scuba air compressor and nitrox generation systems, and
scuba and water safety products. BWMG sells its products both on
a wholesale and retail basis, and does so from its headquarters
and manufacturing facility in Fort Lauderdale, Florida. The
Company's common stock is quoted on the OTC BB under the symbol
"BWMG". The Company's Web site is
http://www.browniesmarinegroup.com/
As reported in the TCR on April 2, 2012, L.L. Bradford & Company,
LLC, in Las Vegas, Nevada, expressed substantial doubt about
Brownie's Marine Group's ability to continue as a going concern,
following the Company's results for the fiscal year ended Dec. 31,
2011. The independent auditors noted that the Company has a
working capital deficiency and recurring losses and will need to
secure new financing or additional capital in order to pay its
obligations.
The Company reported a net loss of $1.17 million for the nine
months ended Sept. 30, 2012, as compared with a net loss of $3.14
million for the same period a year ago.
The Company's balance sheet at March 31, 2013, showed
$1.01 million in total assets, $2.44 million in total liabilities,
and a $1.43 million total stockholders' deficit.
Bankruptcy Warning
"If we fail to raise additional funds when needed, or do not have
sufficient cash flows from sales, we may be required to scale back
or cease operations, liquidate our assets and possibly seek
bankruptcy protection," the Company said in its quarterly report
for the period ended Sept. 30, 2012.
CASA CASUARINA: Hires SCA Group's Michael Mazzarino as CRO
----------------------------------------------------------
Casa Casuarina LLC asks the U.S. Bankruptcy Court for permission
to employ SCA Group LLC and Michael Mazzarino as Chief
Restructuring Officer and Manager for the Debtor.
The Debtor desires to employ Michael Mazzarino of the SCA Group
LLC to serve as its Chief Restructuring Officer, and to replace
Peter Loftin as its sole manager.
Subject to Court approval, Michael Mazzarino would serve as the
Debtor's sole officer and manager, and would be responsible for
all day-to-day tasks in the management of the Debtor's affairs,
including, but not limited to, carrying out the debtor-in-
possession's fiduciary duty to the estate and more importantly,
facilitating the sale process and the involvement of all
interested parties.
SCA Group attests that the firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
About Casa Casuarina
Casa Casuarina, LLC, filed a Chapter 11 petition (Bankr. S.D. Fla.
Case No. 13-25645) in Miami on July 1, 2013. Peter Loftin signed
the petition as manager. Judge Laurel M. Isicoff presides over
the case. The Debtor estimated assets of at least $50 million and
debts of at lease $10 million. Joe M. Grant, Esq., at Marshall
Socarras Grant, P.L., serves as the Debtor's counsel.
CHILE MINING: Incurs $4.4 Million Net Loss in Fiscal 2013
---------------------------------------------------------
Chile Mining Technologies Inc. had a net loss of $4.38 million on
$261,089 of sales for the year ended March 31, 2013, as compared
with a net loss of $3.94 million on $433,554 of sales during the
prior fiscal year, according to a Form 10-K filed with the U.S.
Securities and Exchange Commission.
As of March 31, 2013, the Company had $7.71 million in total
assets, $11.82 million in total liabilities and a $4.10 million
stockholders' deficiency.
Schwartz Levitsky Feldman LLP, in Toronto, Ontario, Canada, issued
a "going concern" qualification on the consolidated financial
statements for the year ended March 31, 2013. The independent
auditors noted that the continuance of the Company is dependent
upon its ability to obtain financing and upon future profitable
operations from the production of copper. This raises substantial
doubt about it ability to continue as a going concern.
A copy of the Form 10-K is available for free at:
http://is.gd/QcB1Zy
About Chile Mining
Chile Mining Technologies Inc. is a mineral extraction company
based in the Republic of Chile, with copper as its principal "pay
metal." Its founders, Messrs. Jorge Osvaldo Orellana Orellana and
Jorge Fernando Pizarro Arriagada, have refined the electrowin
process in a way that permits the electrowin process to be used at
a relatively small mine and/or tailings sites. Electrowinning is
a process in which positive and negative electrodes are placed in
an acidic solution containing copper ions, and an electric current
passed through the solution causes the copper to be deposited on
the negative electrodes so that it can be collected.
COLOREP INC: Case Summary & 21 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Colorep, Inc.
dba AirDye Solutions
c/o Law Offices of Joseph P. Bartlett
1900 Avenue of the Stars, 20th Floor
Los Angeles, CA 90067
Bankruptcy Case No.: 13-27689
Chapter 11 Petition Date: July 10, 2013
Court: United States Bankruptcy Court
Central District Of California (Los Angeles)
Judge: Julia W. Brand
Debtor's Counsel: Margreta M. Morgulas, Esq.
STUTMAN TRESITER & GLATT
1901 Ave of the Stars 12th Flr
Los Angeles, CA 90067
Tel: (310) 228-5600
Fax: (310) 228-5788
E-mail: mmorgulas@stutman.com
Estimated Assets: $10,000,001 to $50,000,000
Estimated Debts: $10,000,001 to $50,000,000
The petition was signed by Mark A. Fox, authorized representative.
Debtor's List of 21 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Anthem Blue Cross Health Insurance $362,821
Blue Shield Premiums
P.O. Box 580494
Charlotte, NC 28258
Domstar Corporation Trade Creditor $154,123
Subsidiary of Domtar Ind
1700 Washington Avenue
Port Huron, MI 48060
Dominion Virginia Power Utility Service $135,873
P.O. Box 26019
Richmond,
VA 23260-6019
Krausz Puente, LLC Former Landlord/CA $128,210
11383 Newport Dr Property for Colorep
Rancho Cucamonga,
CA 91730-5536
Stonefield Josephson, Professional $100,000
Inc. Services
5 Park Plaza, Ste 700
Irvine, CA 92614
Susan D'Arcy Trade Creditor/ $96,186
aka SRD International Litigation Claimant
Mimaki USA, Inc. Trade Creditor/ $96,042
Litigation Claimant
Bonnie Julian Debt Issued for $95,000
Deferred Compensation
LH Charney Landlord/NY Office $85,667
Associates LLC
Fish & Associates Professional Services $71,098
Federal Express Corp. Trade Creditor $65,801
Stand Energy Corp. Utility $57,773
Carlo Tenconi Trade Creditor $54,940
Atlantic Paper Company Trade Creditor $50,692
Univar USA, Inc. Trade Creditor $46,891
PBMares/PBGH Professional $41,492
Columbia Gas GTS Account Utility Service $38,953
Chemsolve, Inc. Trade Creditor $38,479
Dupont Company Trade Creditor $36,523
Yazam LLC Trade Creditor $35,140
Nexeo Solutions LLC Trade Creditor $33,949
Affiliate that simultaneously filed a Chapter 11 petition:
Debtor Case No.
------ --------
Transprint USA, Inc. 13-bk-27698
COLT DEFENSE: Moody's Alters Outlook to Negative & Keeps Caa1 CFR
-----------------------------------------------------------------
Moody's Investors Service affirmed Colt Defense LLC's Caa1
Corporate Family Rating and Caa1-PD Probability of Default
Ratings. Concurrently, the company's $250 million senior unsecured
notes due 2017 rating was lowered to Caa2 from Caa1 due to the
additional secured debt incurred to finance the acquisition of New
Colt Holding Corp., the parent company of Colt's Manufacturing
Company LLC. CMC is a manufacturer of firearms for the civilian
and sporting markets. Colt's Speculative Grade Liquidity rating
was also lowered to SGL-3 from SGL-2, reflecting an adequate
liquidity profile. The ratings outlook was changed to stable from
negative.
Proceeds from the recently placed $50 million term loan (not
rated) were used to partially finance the $60.5 million cash
consideration paid for the acquisition of CMC. The rest of the
consideration including payment of transaction-related expenses
was funded through balance sheet cash and an equity infusion.
Ratings affirmed:
Corporate Family Rating at Caa1
Probability of Default Rating at Caa1-PD
Ratings lowered:
$250 million senior unsecured notes due 2017, to Caa2 (LGD-4,
63%) from Caa1 (LGD-4, 56%)
Speculative grade liquidity, to SGL-3 from SGL-2
Outlook, changed to Stable from Negative
Ratings Rationale:
The affirmation of Colt's Caa1 CFR reflects the company's
continued high leverage of approximately 7.0 times pro forma for
the acquisition of CMC counterbalanced by the potential benefits
of operating as a single entity and longer-term revenue visibility
in Colt's commercial firearms end-market sales. The acquisition of
CMC, the entity through which Colt previously resold its
commercial firearms, ensures that Colt can continue selling into
the commercial firearms market under the Colt brand. Prior to the
acquisition, Colt Defense had in place a Memorandum of
Understanding ("MOU") with CMC that had been extended only through
the end of March 2014 allowing it to continue selling firearms
under the Colt brand to the commercial firearms market. Ownership
of CMC eliminates this risk factor. Expectations for maintenance
of the company's adequate liquidity profile for the next twelve
months further supports the affirmation of the ratings.
Colt's Caa1 CFR continues to reflect the beneficial shift in the
company's geographic and product mix over the last two and a half
years positively positioning it to better contend with the
anticipated lower domestic defense spending environment. Credit
metrics are expected to remain at the Caa1 rating category over
the intermediate term. In addition to elevated leverage metrics,
although sales to the U.S. government currently represent less
than 15% of total sales, there continues to be defense and fiscal
budget pressures that could affect sales derived from the U.S.
government and law enforcement markets. Sales to the commercial
end-market and international sales have been the main growth
drivers for the company's improved operating results over recent
periods. The ratings also consider the relatively small revenue
scale of the company that makes its' operating results more
unpredictable from quarter to quarter particularly as they relate
to the international markets where the timing of orders can cause
significant quarterly operating results variances. Although
commercial end-market sales appear to remain favorable over the
near-term, commercial sales tend to be highly cyclical and longer-
term patterns are harder to discern than government-related sales
that are typically based on long-term contracts.
Colt's SGL rating was lowered to SGL-3 from SGL-2 stemming from
Moody's expectation that cash balances over the next twelve to
eighteen months will be lower than historical balances due to
principal amortization requirements from the new term loan and
funds used for capital expenditures post the acquisition as well
as any expenses that could be incurred related to integrating the
businesses.
The SGL-3 rating denotes an adequate liquidity profile
characterized by adequate cash balances, moderately positive free
cash flow generation and availability under the company's asset-
based facility. The dollar amount available under the facility is
restricted by its borrowing base availability. Covenant headroom
is expected to have good cushion over the next twelve to eighteen
months.
The change in outlook to stable from negative is based on the
lower likelihood of a capital restructuring given the recent
refinancing. In addition, the acquisition of CMC provides longer-
term visibility into the ability of Colt to sell firearms into the
commercial end-market under the Colt brand name.
The stable outlook is supported by Colt's expected adequate
liquidity profile and Moody's expectation that credit metrics will
be reflective of the Caa1 rating level over the intermediate term.
Ratings could be upgraded if debt/EBITDA improves to and is
sustained below 6.0 times and interest coverage exceeds 1.0 times.
An expectation of a sustained liquidity profile adequacy would
also be necessary.
Ratings could be downgraded if the company's liquidity position
deteriorates including cash balances declining from current
levels, there is an increased likelihood that the company would
enter into a capital restructuring or credit metrics weaken such
as that debt/EBITDA reaches over 8.0x and interest coverage well
below 1.0 times.
The principal methodology used in this rating was the Global
Aerospace and Defense published in June 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.
Colt Defense LLC, headquartered in West Hartford, CT, manufactures
small arms weapons systems for individual soldiers and law
enforcement personnel for the U.S. military, U.S. law enforcement
agencies, and foreign militaries. Post the July 2013 acquisition
of New Colt Holding Corp., the parent company of CMC, the company
also modifies its rifles and carbines for civilian use and sells
them to the commercial market. Revenues for the last twelve months
ended March 31, 2013 totaled $233 million.
COLT DEFENSE: S&P Affirms 'CCC+' CCR & Revises Outlook to Negative
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'CCC+' corporate
credit rating on Connecticut-based Colt Defense LLC, and revised
the outlook to negative from stable.
At the same time, S&P lowered the rating on the company's
$250 million senior notes to 'CCC-' from 'CCC' and revised its
recovery rating on the notes to '6' from '5'. The '6' recovery
rating indicates S&P's expectation of negligible (0%-10%) recovery
in a payment default scenario.
"The outlook revision is based on a moderate deterioration in
Colt's liquidity profile, because the company's cash balance has
declined in recent months, interest expense will increase as
result of additional debt, and near-term debt maturities have
increased as the new term loan has mandatory amortization prior to
maturity," said Standard & Poor's credit analyst Chris Mooney.
"Still, we believe the company will maintain cash and revolver
availability above $35 million over the next year and a default is
unlikely in that period."
Colt Defense recently acquired Colt Manufacturing for $60 million,
funded largely with $50 million of debt, along with additional
equity and internal cash. S&P believes this transaction will have
a neutral to modestly positive impact on key credit ratios--which
are currently very weak--as the benefit of higher earnings offsets
the impact of higher debt. Historically, Colt Defense sold its
commercial variant of the M4 through Colt Manufacturing. S&P
believes this acquisition will allow Colt to realize synergies and
gain access to a broader distribution network.
S&P views Colt's financial risk as "highly leveraged" due to its
expectation that credit measures will remain very weak given
Colt's operating challenges, high debt levels, and relatively high
interest expense. S&P believes the ratio of debt to EBITDA will
remain above 6x and funds from operations (FFO) to debt below 10%
for the foreseeable future.
S&P's "vulnerable" business risk assessment stems from the
challenge of replacing demand for the company's primary product,
the M4 carbine, from its historically largest customer, the U.S.
military. The acquisition of Colt Manufacturing broadens Colt's
product offering somewhat by adding commercial handguns, but
Colt's product diversity remains limited. Commercial margins
should improve modestly by combining the two entities but S&P
expects overall EBITDA margins to remain well below peak levels of
25% seen in 2009 when Colt's sales consisted primarily of high-
margin U.S. military sales.
S&P has revised its liquidity assessment to "less than adequate"
from "adequate" because the company has less of a cushion against
adverse conditions than in the past.
COMPLETELY BARE: Involuntary Chapter 11 Case Summary
----------------------------------------------------
Alleged Debtor: Completely Bare Distributors, LLC
103 Fifth Avenue, 4th Floor
New York, NY 10003
Bankruptcy Case No.: 13-12321
Involuntary Chapter 11 Petition Date: July 15, 2013
Court: U.S. Bankruptcy Court
Southern District of New York (Manhattan)
Debtor's Counsel: Pro Se
Petitioners' Counsel: Hanh V. Huynh, Esq.
HERRICK, FEINSTEIN, LLP
2 Park Avenue
New York, NY 10016
Tel: (212) 592-1482
Fax: (212) 592-1500
E-mail: hhuynh@herrick.com
Creditors who signed the Chapter 11 petition:
Petitioners Nature of Claim Claim Amount
----------- --------------- ------------
The Chloe 2011 Trust Monies owed $166,010
35 Sawgrass Drive, Suite 2
Bellport, NY 11713
Quality King Distributors, Inc. Monies owed $59,622
35 Sawgrass Drive, Suite 1
Bellport, NY 11713
Five Star Fragrance Company, Inc. Monies owed $113,632
35 Sawgrass Drive, Suite 2
Bellport, NY 11713
GSN Trucking Corp. Monies owed $7,875
35 Sawgrass Drive, Suite 1
Bellport, NY 11713
CONSOLIDATED TRANSPORT: Aug. 13 Hearing on Plan Outline Approval
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Indiana
will convene a hearing on Aug. 13, 2013, at 1:30 p.m., to consider
the adequacy of information in the Amended Disclosure Statement
explaining Consolidated Transport Systems, Inc., et al.'s Amended
Joint Plan of Reorganization dated July 5, 2013. Objections, if
any, are due Aug. 6.
The Amended Disclosure Statement provides that the Debtors'
obligations will be satisfied in full over time by the Debtors'
cash flow from operations, the disposition of the Debtors' tractor
fleet, and the exit financing.
The Plan proposes that the liabilities and assets of the Debtors
be substantively consolidated for the purposes of distributions
under the Plan.
The Plan will be funded by the Reorganized Debtors' (a) assumption
of the DIP Financing; (b) entering into the exit financing with
Marquette, the Debtors' prepetition receivables lender; (c)
disposition of certain collateral pursuant to a fleet disposition
method; and (d) the operation of the Reorganized Debtors'
businesses, which will include the assumption of certain executory
contracts by the Debtors and their subsequent assignment to the
Reorganized Debtors.
A copy of the Amended Disclosure Statement is available for free
at http://bankrupt.com/misc/Consolidated_Transport_AMendedDS.pdf
The Court previously held a hearing to consider adequacy of
information in the original Disclosure Statement. According to
the Debtors' case docket, the Debtors were required to file an
Amended Disclosure Statement by July 5. A copy of the Original
Disclosure Statement is available for free at
http://bankrupt.com/misc/TANDEM_TRANSPORT_ds.pdf
On May 30, the Hon. Harry McDees, Jr. approved the Debtors' second
exclusivity motion which provided that plan filing is extended
until May 17, and solicitation period is extended until July 29,
respectively.
About Consolidated Transport,
Tandem Transport et al.
Michigan City, Indiana-based trucking company Consolidated
Transport Systems, Inc., filed a Chapter 11 petition (Bankr. N.D.
Ind. Case No. 12-32940) on Aug. 16, 2012. Walter G & Carolyn Bay
owns 87.3% of the privately held Debtor.
Tandem Transport Corp., and two affiliates Transport Investment
Corporation, and Tandem Eastern, Inc., sought Chapter 11
protection (Bankr. N.D. Ind. Case Nos. 12-33135 to 12-33137) on
Aug. 31, 2012.
The Companies and their predecessors have provided for-hire
freight services throughout the United States since 1945. The
largest portion (75%) of the Companies' business consists of
hauling building materials, with the balance consisting of
transporting steel (20%) and other miscellaneous freight such as
stone, salt, and machinery (5%). The bulk of the Companies' loads
are received and delivered east of the Mississippi River, although
they have general commodities authority for the lower 48 states.
The Companies have intrastate authority for the states of Georgia,
Illinois, Indiana, Kentucky, Michigan, Missouri, North Carolina,
Ohio, Tennessee and Texas.
The Companies operate as a combined enterprise. Consolidated owns
the fleet of roughly 275 tractors and 330 trailers. It also
employs office staff of 66 employees. The corporate headquarters
is located in Michigan City, Indiana, while their executive office
is located in St. Louis, Michigan. Transport is the operating
company which provides logistics to customers and also brokers
freight. Eastern employs 246 drivers, while Investment employs 10
mechanics.
Consolidated initiated its chapter 11 proceeding to prevent any
actions by equipment lenders such as repossession of equipment
that would threaten the Companies' operations and viability while
they restructure their respective operations. Transport,
Investment and Eastern filed for chapter 11 to obtain the
necessary breathing room provided by the Bankruptcy Code, as well
as a single forum to allow them to effectively restructure their
operations.
Consolidated disclosed $17,207,923 in assets and $11,559,933 in
liabilities as of the Chapter 11 filing and affiliate, Tandem
Eastern, Inc., disclosed $40,652 in assets and $56,119 in
liabilities. Transport Investment estimated less than $50,000 in
assets and up to $50 million in liabilities. Two other entities
that filed are Transport Investment Corporation and Tandem
Eastern, Inc.
Judge Harry C. Dees, Jr. presides over the cases. Jeffrey J.
Graham, Esq., and Jerald I. Ancel, Esq., at Taft Stettinius &
Hollister LLP, in Indianapolis, Indiana, serve as the Debtors'
counsel. O'Keefe & Associates Consulting, LLC, as financial
advisors, The petition was signed by Jeffrey T. Gross, president.
COOPER-BOOTH: Hires Devine Law Office as Labor Counsel
------------------------------------------------------
Cooper-Booth Wholesale Company, L.P. et al., asks the U.S.
Bankruptcy Court for permission to employ Devine Law Offices as
special labor and employment counsel.
The firm, will among other things, provide these services:
(a) commencing an action against the Former Employee;
(b) handling all of the Debtor's labor and employment matters;
(c) concluding litigation against Null's Towing currently
pending in the Court of Common Pleas of Lancaster County
(Case No. 13-02140) and concluding litigation against Tammy
Lyn Aro currently pending in the District Court of Maryland
for Anne Arundel County (Case No. 0702-1560-2013).
As of Petition Date, Devine is owned the approximate amount of
$6,622.50 on account of these pre-Petition Date legal services.
On or within 90 days of the Petition Date, Devine received the sum
of $893.50 from the Debtor on account of pre-Petition Date legal
services which sum is below the cap put forth in 11 U.S.C. Sec.
547(c) (9).
Devine received no other payments from the Debtor on or within 90
days prior to the Petition Date.
Any and all compensation to be paid to Devine for services
rendered on the Debtor's behalf shall be fixed by application to
this Court in accordance with the Administrative Order
Establishing Procedures for Allowance and Payment of Interim
Compensation and reimbursement of Expenses to Professionals dated
May 23, 2013.
The Debtor attests that the firm is a "disinterested person" as
the term is defined in Section 101(14) of the Bankruptcy Code.
About Cooper-Booth Wholesale
Cooper-Booth Wholesale Company, L.P. and two affiliates sought
Chapter 11 protection (Bankr. E.D. Pa. Lead Case No. 13-14519) in
Philadelphia on May 21, 2013, after the U.S. government seized the
Company's bank accounts to recover payments made by a large
customer caught smuggling Virginia-stamped cigarettes into New
York.
Serving the mid-Atlantic region, Cooper is one of the top 20
convenience store wholesalers in the country. Cooper supplies
cigarettes, snacks, beverages and other food items from Hershey's,
Lellogg's, Bic, and Mars to convenience stores. Cooper has been
in the wholesale distribution business since 1865 when the Booth
Tobacco Company was incorporated in Lancaster, Pennsylvania. The
Company has been family owned and operated for three generations.
Aris J. Karalis, Esq., and Robert W. Seitzer, Esq., at Maschmeyer
Karalis, P.C., in Philadelphia, serve as the Debtors' bankruptcy
counsel. Executive Sounding Board Associates, Inc., is the
financial advisor. Blank Rome LLP represents the Debtor in
negotiations with federal agencies concerning the seizure warrant.
Cooper Booth estimated assets of at least $50 million and
liabilities of at least $10 million as of the bankruptcy filing.
As of the Petition Date, the Debtors' total consolidated funded
senior debt obligations were approximately $10.7 million and
consisted of, among other things, $7.72 million owing on a
revolving line of credit facility, $2.83 million owing on a line
of credit for the purchase of equipment, and $166,000 due on a
corporate VISA Card. PNC Bank asserts that a letter of credit
facility is secured by all personal property owned by Wholesale.
Unsecured trade payables totaled $22.8 million as of May 21, 2013.
COOPER-BOOTH: Can Employ Executive Sounding as Financial Advisors
-----------------------------------------------------------------
Cooper-Booth Wholesale Company, L.P. et al., sought and obtained
approval from the U.S. Bankruptcy Court to employ Executive
Sounding Board Associates, Inc., as financial advisors.
Cooper-Booth Wholesale Company, L.P. and two affiliates sought
Chapter 11 protection (Bankr. E.D. Pa. Lead Case No. 13-14519) in
Philadelphia on May 21, 2013, after the U.S. government seized the
Company's bank accounts to recover payments made by a large
customer caught smuggling Virginia-stamped cigarettes into New
York.
Serving the mid-Atlantic region, Cooper is one of the top 20
convenience store wholesalers in the country. Cooper supplies
cigarettes, snacks, beverages and other food items from Hershey's,
Lellogg's, Bic, and Mars to convenience stores. Cooper has been
in the wholesale distribution business since 1865 when the Booth
Tobacco Company was incorporated in Lancaster, Pennsylvania. The
Company has been family owned and operated for three generations.
Aris J. Karalis, Esq., and Robert W. Seitzer, Esq., at Maschmeyer
Karalis, P.C., in Philadelphia, serve as the Debtors' bankruptcy
counsel. Executive Sounding Board Associates, Inc., is the
financial advisor. Blank Rome LLP represents the Debtor in
negotiations with federal agencies concerning the seizure warrant.
Cooper Booth estimated assets of at least $50 million and
liabilities of at least $10 million as of the bankruptcy filing.
As of the Petition Date, the Debtors' total consolidated funded
senior debt obligations were approximately $10.7 million and
consisted of, among other things, $7.72 million owing on a
revolving line of credit facility, $2.83 million owing on a line
of credit for the purchase of equipment, and $166,000 due on a
corporate VISA Card. PNC Bank asserts that a letter of credit
facility is secured by all personal property owned by Wholesale.
Unsecured trade payables totaled $22.8 million as of May 21, 2013.
CORNERSTONE HOMES: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Cornerstone Homes, Inc.
11801 Harrington Drive
Corning, NY 14830
Bankruptcy Case No.: 13-21103
Chapter 11 Petition Date: July 15, 2013
Court: U.S. Bankruptcy Court
Western District of New York (Rochester)
Judge: Paul R. Warren
Debtor's Counsel: David L. Rasmussen, Esq.
DAVIDSON FINK, LLP
28 East Main Street, Suite 1700
Rochester, NY 14614
Tel: (585) 756-5952
Fax: (585) 758-5105
E-mail: drasmussen@davidsonfink.com
Scheduled Assets: $18,561,028
Scheduled Liabilities: $36,248,526
The petition was signed by David Fleet, president.
Debtor?s List of Its 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Agtec, Inc. -- --
852 Webster Drive
State College, PA 16801
Armacost, Michael -- --
39 « Bennett Avenue
Westminster, MC 21157
Ballmer, Adeline -- --
10091 W. Cutcheon Road
Manton, MI 49663
Barber, Robert & Donna -- --
Barcus, John & Alice -- --
Burkholder, John -- --
Capello, Ada -- --
Cusimano Gary -- --
Cusimano Marie -- --
Didier John & Dorothy -- --
Finnigan William -- --
Gabbert Phyllis -- --
Gerber, Carroll -- --
Ginder, Edward & Arlene -- --
Hagen Larry & Edith -- --
Heller, Donald -- --
Herder, LeRoy & Guin -- --
Karcher Ken -- --
Rubio, David & Cindy -- --
Thorne, Michael -- --
CUBIC ENERGY: Common Stock Delisted From NYSE
---------------------------------------------
Cubic Energy, Inc.'s common stock began trading on the OTCQB
Market commencing July 17, 2013. The move to OTCQB does not
change Cubic's SEC reporting obligations under applicable
securities laws. Accordingly, Cubic will continue to file its
quarterly reports on Form 10-Q, annual reports on Form 10-K and
current reports on Form 8-K.
On July 10, 2013, the Company received a letter from NYSE MKT LLC
advising the Company would be delisted based upon the Company's
continued non-compliance with the stockholders' equity
requirements for continued listing as set forth in Sections
1003(a)(i-iii) of the Exchange's Company Guide and the Exchange's
concerns regarding the Company's financial viability with respect
to maturing obligations, as set forth in Section 1003(a)(iv) of
the Exchange's Company Guide.
About Cubic Energy
Cubic Energy, Inc., headquartered in Dallas, Tex., is an
independent upstream energy company engaged in the development and
production of, and exploration for, crude oil and natural gas.
Its oil and gas assets and activities are concentrated in
Louisiana.
Philip Vogel & Co. PC, in Dallas, Texas, 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 experienced recurring net losses from operations and
has uncertainty regarding its ability to meet its loan obligations
which raise substantial doubt about its ability to continue as a
going concern.
For the nine months ended March 31, 2013, the Company incurred a
net loss of $4.39 million on $3.01 million of total revenues, as
compared with a net loss of $8.84 million on $5.99 million of
total revenues for the same period a year ago. The Company's
balance sheet at March 31, 2013, showed $17.24 million in total
assets, $28.88 million in total liabilities, all current, and a
$11.63 million total stockholders' deficit.
Bankruptcy Warning
"Our debt to Wells Fargo, with a principal amount of $25,865,110,
is due on March 31, 2013, and the Wallen Note, with a principle
amount of $2,000,000, is due April 1, 2013, and both are
classified as current debt. As of December 31, 2012, we had a
working capital deficit of $26,312,271.
Our ability to make scheduled payments of the principal of, to pay
interest on or to refinance our indebtedness depends on our
ability to obtain additional debt and/or equity financing, which
is subject to economic and financial factors beyond our control.
Our business will not generate cash flow from operations
sufficient to pay our obligations to Wells Fargo and under the
Wallen Note. We may be required to adopt one or more
alternatives, such as selling assets, restructuring debt or
obtaining additional equity capital on terms that may be onerous
or highly dilutive. Our ability to refinance our indebtedness
will depend on the capital markets and our financial condition in
the immediate future, as well as the value of our properties. We
may not be able to engage in any of these activities or engage in
these activities on desirable terms, which could result in a
default on our debt and have an adverse effect on the market price
of our common stock.
"We may not be able to secure additional funds to make the
required payments to Wells Fargo. If we are not successful, Wells
Fargo may pursue all remedies available to it under the terms of
the Credit Facility including but not limited to foreclosure on
our assets or force the Company to seek protection under
applicable bankruptcy laws. If either of those were to occur, our
shareholders might lose their entire investment," the Company said
in its quarterly report for the period ended Dec. 31, 2012.
"We will continue negotiating with Wells Fargo and Mr. Wallen to
either payoff or paydown these debts and extend their respective
maturity dates," the Company said.
DEAN FOODS: S&P Assigns 'BB' Rating to $750MM Sr. Secured Facility
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' debt rating
to Dallas-based Dean Foods Co.'s new $750 million senior secured
revolving credit facility due 2018. The recovery rating on the
credit facility is '1', indicating S&P's expectation of very high
recovery (90%-100%) in the event of a payment default. All other
ratings on Dean Foods remain unchanged. The new revolver replaces
Dean Foods' former $1.0 billion revolving credit facility due
2014. S&P is withdrawing its ratings on this prior facility.
Dean Foods recently announced it had entered into a loan agreement
involving two unsecured short-term term loans aggregating
$626.75 million with final maturity dates of Aug. 12, 2013, and
Sept. 9, 2013. The company stated that it established the credit
facility in anticipation of the possible monetization of its
remaining shares of Class A common stock of former subsidiary The
WhiteWave Foods Co. Although this cash will not be held in
escrow, the loan agreement requires the company to maintain cash
in an amount at least equal to the outstanding term loan balances.
Given the short window of time that the term loans will remain
outstanding, S&P will net the loans' cash proceeds against the
short-term term loans until the WhiteWave transaction is completed
(including repayment of these term loans) or the term loans
mature. In the event the maturity dates of these loans are
extended, S&P would consider an outlook revision to stable and
consider reevaluating our current recovery ratings.
The ratings on Dean Foods Co. reflects S&P's view of the company's
"aggressive" financial risk profile, based on its moderated
leverage, expected lower future margins resulting from the recent
divestitures of its higher-margin businesses, adequate free
operating cash flows, and adequate liquidity. The ratings also
reflect the company's "fair" business risk profile, which
incorporates its position as the leading national dairy company in
the U.S., its exposure to volatile U.S. dairy industry conditions,
and its reduction in product and customer diversity from sales of
its higher-margin operating segments.
RATINGS LIST
Dean Foods Co.
Corporate credit rating B+/Positive/--
New Ratings
Dean Foods Co.
Senior secured
$750 mil. revolver BB
Recovery rating 1
DEEP PHOTONICS: Plan Outline Hearing Continued Until Aug. 5
-----------------------------------------------------------
The Bankruptcy Court continued until Aug. 5, 2013, at 11 a.m., the
hearing to consider the adequacy of information in the Disclosure
Statement explaining Deep Photonics Corporation's proposed Plan of
Reorganization.
As reported by the Troubled Company Reporter on June 20, 2013,
Maria Chutchian of BankruptcyLaw360 said Deep Photonics' Plan
relies on the proceeds of pending litigation in Oregon against its
former CEO as well as future company profits to repay its general
unsecured creditors in full. According to the report, the company
owes about $3.2 million to its unsecured creditors, about $1.9
million of which is held by the defendants in the state litigation
against former CEO Joseph G. LaChapelle, other former employees, a
competitor and a former customer.
About Deep Photonics
Deep Photonics Corporation filed a Chapter 11 petition (Bankr. D.
Ore. Case No. 12-35626) on July 20, 2012. Deep Photonics designs
and manufactures innovative solid-state fiber lasers. The Debtor
scheduled $75,111,128 in assets and $4,917,393 in liabilities.
Bankruptcy Judge Trish M. Brown presides over the case. Timothy
J. Conway, Esq., at Tonkon Torp LLP, serves as the Debtor's
counsel. The petition was signed by Theodore Alekel, president.
DETROIT, MI: Files Chapter 9 Municipal Bankruptcy Protection
------------------------------------------------------------
The city of Detroit, Michigan, weighed down by more than $18
billion in accrued obligations, sought municipal bankruptcy
protection Thursday, July 18, by filing a voluntary Chapter 9
petition (Bankr. E.D. Mich. Case No. 13-53846). Detroit listed
more than $1 billion in both assets and debts.
Kevyn Orr, who was appointed in March in this year as Detroit's
emergency manager, signed the petition. Detroit is represented by
lawyers at Jones Day and Miller Canfield Paddock and Stone PLC.
Michigan Governor Rick Snyder authorized the bankruptcy filing.
Mr. Orr on July 16 sought approval from Gov. Snyder of the
emergency manager's recommendation to commence municipal
bankruptcy proceedings. State law requires that any such
recommendation must first be approved by the Governor before the
emergency manager may take that step.
In approving the recommendation, Gov. Snyder acknowledged in his
approval letter to Mr. Orr dated July 18 that "it is clear that
the financial emergency in Detroit cannot be successfully
addressed outside of" a Chapter 9 filing and "it is the only
reasonable alternative that is available.
Summer or Fall 2014 Exit Seen
Matt Helms, Nancy Kaffer and Stephen Henderson, writing for
Detroit Free Press, report that Mr. Orr, who appeared with City
Mayor Dave Bing at an evening news conference, said he hopes to
get through the bankruptcy process by late summer or fall of next
year. He did not answer questions about what impact he expects
bankruptcy to have on thousands of city retirees or creditors of
the city, saying those talks are ongoing. Mr. Orr said he
believes the city has been negotiating in good faith.
According to Free Press, the filing makes Detroit the largest
American city to seek bankruptcy, in terms of population and the
size of the debts and liabilities involved. Free Press calls the
move "historic" and "sure to ignite complex battles in coming
months with creditors, pensioners and unions who stand to lose
significantly as the state tries to rescue a drowning city."
The report notes bankruptcy experts said the outcome is sure to
have sweeping impact on how other troubled cities around the
country resolve financial difficulties.
The Free Press report relates Mayor Bing, who called it a
difficult day, said Mr. Orr called him in the afternoon to tell
him about the filing. "One of the things that I want to say to
our citizens is that as tough as this is, I really didn?t want to
go in this direction," Mr. Bing said. "But now that we are here,
we have to make the best of it. I think Kevyn and the team that he
brought together has a lot of history of succeeding. This is very
difficult for all of us, but if it's going to make services better
off, then this is a new start for us."
Race to the Courthouse
According to the Free Press report, Detroit's two pension funds
(which have claims to $9.2 billion in unfunded pension and retiree
health care liabilities) filed suit in state court this week to
prevent Mr. Orr from slashing retiree benefits as part of a
bankruptcy restructuring. Ambac Assurance Guaranty, which insures
some of the city?s general obligation bonds, has also objected to
Mr. Orr's plan to treat those bonds as "unsecured. Ambac, and
other creditors, have threatened to file suit.
According to the report, pensioners and their pension funds made a
last-ditch effort Thursday to stop the bankruptcy filing but were
beaten to the courthouse by minutes. Free Press recounts that an
attorney for the pension funds said he felt blindsided because he
agreed to delay an emergency hearing by five minutes at the
request of attorneys for Gov. Snyder. He was seeking a temporary
restraining order in Ingham County to block the bankruptcy filing.
During those five minutes, he said, attorneys filed the bankruptcy
petition in Detroit, which generally results in a stay in all
other pending lawsuits involving the city.
Free Press reports that Ingham County Judge Rosemarie Aquilina
later issued a temporary restraining order preventing further
actions to cut pension benefits, but said she would have issued
one to stop the bankruptcy filing altogether, if given the chance.
The judge said the bankruptcy filing was made at 4:06 p.m., five
minutes before her emergency hearing began.
Free Press relates attorney Ronald King, representing Detroit's
General Retirement System and the Detroit Police and Fire
Retirement System, was furious. Mr. King said he agreed to a
five-minute delay that he believes was not requested in good
faith. "There's no denying this was a race to the courthouse this
afternoon and yet another example of usurping the will of the
people,: King said.
According to Free Press, Gov. Snyder, in a telephone conference
with reporters, declined comment on Mr. King's accusations, citing
ongoing litigation. He conceded that recent lawsuits may have
affected the timing of the bankruptcy filing by "a day or so," but
said the filing was imminent regardless.
According to Free Press, sources agreed that Mr. Orr's deal with
creditors, widely reported to be Bank of America Corp. and UBS AG,
to pay a $344-million swap with a $255-million debtor-in-
possession loan, is instrumental in the timing of the potential
bankruptcy filing. The deal gives the city access to $11 million
a month in casino tax revenues that Mr. Orr has said is key to
maintaining city services while negotiations, in or out of
bankruptcy court, take their course with other creditors and
unions.
Cash Crunch
In a proposal to creditors submitted on June 14, Mr. Orr stated
that, absent ongoing cash intervention (primarily in the form of
payment deferrals and cost cutting), Detroit would have run out of
cash before the end of fiscal year 2013:
-- The City had negative cash flows of $115.5 million in
FY 2012, excluding the impact of proceeds from short-term
borrowings. In March 2012, to avoid running out of cash,
the City borrowed $80 million on a secured basis (of which
the City spent $50 million in FY 2012).
-- The City is projecting to have positive cash flows of
$4.0 million in FY 2013 after deferring approximately
$120 million of current and prior year pension
contributions and other payments.
-- Absent intervention and/or restructuring, the City is
projecting to have negative cash flows of $198.5 million
in FY 2014.
-- As of the end of May 2013, the City had $68 million of
cash before property tax distributions, but had
outstanding deferrals and amounts due to other funds and
entities of approximately $216 million. These are
effectively borrowings and must be repaid.
Detroit has deferred payment of its year-end Police and Fire
Retirement System contributions (and finances such deferrals at a
rate of 8%). According to the June 14 Proposal, as of May 2013,
the City had deferred approximately $54 million in pension
contributions related to current and prior periods and was to
defer approximately $50 million on June 30, 2013 for current year
PFRS pension contributions. Therefore, by fiscal year end the
City will have deferred over $100 million of pension
contributions.
Detroit also did not make a scheduled $39.7 million payments due
on its pension-related certificates of participation on June 14,
2013.
According to the June 14 Proposal, as of the close of the City's
2013 fiscal year (i.e. , June 30, 2013), the City will have
liabilities reflected on its balance sheet of approximately $9.05
billion, including approximately:
$5.85 billion in special revenue obligations
(e.g. Enterprise Fund debt);
$1.43 billion in pension-related Certificate of
Participation liabilities;
$0.34 billion in marked-to-market swap liabilities related
to COPs (as of May 31, 2013 valuation);
$1.13 billion in unlimited and limited tax general obligation
bond liabilities and notes and loans payable;
and
$0.30 million in other liabilities.
According to the June 14 Proposal, Detroit proposes to spend
approximately $1.25 billion over the next 10 years to, among other
things, (i) improve the performance and infrastructure of its
Police, Fire, EMS and Transportation Departments, (ii)
comprehensively address and remediate urban blight, (iii)
modernize its information technology systems on a City-wide basis
and (iv) address lingering issues plaguing the City's electrical
grid and lighting.
A copy of the June 14 Proposal to Creditors is available at
http://www.freep.com/assets/freep/pdf/C4206913614.PDFfrom Detroit
Free Press.
DETROIT, MI: No Reasonable Alternative to Chapter 9
---------------------------------------------------
Kevyn Orr, the Emergency Manager for the City of Detroit, on
July 18 disclosed that Detroit has commenced a chapter 9
bankruptcy case in the United States Bankruptcy Court for the
Eastern District of Michigan. This step was authorized by the
Governor Rick Snyder upon the recommendation of Mr. Orr, who
concluded that "no reasonable alternative to rectifying the City's
financial emergency exists other than confirmation of a plan of
adjustment for the City's debts under chapter 9 of the United
States Bankruptcy Code."
Restructuring Detroit through a court-supervised process is the
best and most efficient way to secure a viable, strong future for
Detroit. Through the "automatic stay" provisions of the
Bankruptcy Code, the chapter 9 filing provides a unique
opportunity and a breathing spell during which the City can focus
on restructuring and continue the process of sorely needed
reinvestment. It also allows the City to continue to pursue
restructuring agreements with its vast and fragmented creditor
groups and, if necessary, to bind non-consenting creditors to a
debt adjustment plan. Detroit will continue to pay its employees
and maintain contracts with vendors that provide the City with
essential goods and services. The goal remains to resolve
Detroit's dire and untenable financial situation and make the City
a safe and attractive place in which to live, work, invest and do
business. While in chapter 9, the primary goals of the Emergency
Manager remain to protect the health, safety and welfare of the
City's residents and to find a long-term solution to Detroit's
dire financial situation.
"My focus since Day One has been to do whatever it takes to
improve the financial condition of Detroit and the lives of its
700,000 citizens," said Mr. Orr. "We worked tirelessly and in
good faith with our creditor groups to explore an out-of-court
restructuring, but it has become clear that the City cannot
rectify its financial emergency in a timely manner without the
commencement of a chapter 9 case. We will continue to work
cooperatively with all Detroit's major creditor groups within the
federal bankruptcy court process to maximize their recoveries
consistent with legal priorities and our plan for revitalization.
"We can now focus on the restructuring and reinvestment process.
We will continue moving ahead with the speed, discipline and
efficiency of a corporate restructuring. Through this process,
Detroit will finally be able to get its house in order and regain
its place among America's great and vibrant cities. This process
may at times be difficult, but Detroit's residents should look
forward to a brighter, more sustainable future."
The chapter 9 filing will not interfere with the City's delivery
of essential services to its 700,000 residents. Current vendor
contracts for essential goods and services will be maintained, and
the City expects to continue paying suppliers of goods and
services provided during the bankruptcy period on a regular basis.
Additionally, City employees will not see any disruption of their
paychecks, medical coverage and vacation allowances.
Background
On June 14, 2013, the Emergency Manager and his advisors presented
a comprehensive restructuring proposal to the City's creditors.
Since then, Mr. Orr and his team have negotiated in good faith
with all major creditors willing to engage in discussions through
a series of meetings and exchanges of information. Unfortunately,
after more than a month of negotiations, it became clear that out-
of-court agreements could not be reached in a timely manner, or at
all, with certain groups of creditors, including certain retiree
and bondholder groups. In some cases, there was no way to
feasibly organize or bind creditor groups outside of a court
process. In other cases, creditor representatives made clear that
they could not, or would not, agree to the fundamental changes
needed by the City to implement a sustainable restructuring. Even
where the City made progress in negotiating agreements with
certain financial counterparties, disagreements erupted, and the
City was forced to begin a lawsuit just to maintain access to its
casino tax revenues.
Under these circumstances, continuing the negotiation process out
of court would be futile. With cash dwindling, the City does not
have the time or resources to wait longer to pursue its financial
future through the chapter 9 process.
The reasons that Detroit is on the brink of financial and
operational ruin are well documented, as are the many difficult
issues that the City currently faces. Detroit is insolvent. Its
debt and legacy liabilities -- exceeding $18 billion -- are
unsustainable. Servicing these obligations consumes a greater and
greater percentage of the City's diminishing cash and prevents
reinvestment in the City's services and infrastructure needed to
protect its residents and provide an improved quality of life.
Even without fixing the City's core problems, the City simply does
not have, and is not projected to have, the cash to meet its
current and accrued obligations. Nor does the City have the
ability to access the capital markets or raise revenue through
additional taxes. The City cannot borrow its way out of this
problem as it has tried to do in the past.
The restructuring proposal that the Emergency Manager and his team
presented to creditors on June 14, 2013, is the best plan to
resolve Detroit's financial problems and put the City on the path
of fiscal sustainability for the future. The Emergency Manager's
proposal will:
-- Ensure delivery of essential services that are critical to the
health, safety and welfare of residents, as well as to the City's
quality of life and future stability and growth.
-- Devote resources for much-needed reinvestment in the City and
its infrastructure.
-- Maximize recoveries for creditors consistent with their legal
priorities and the City's financial wherewithal and overall
restructuring needs.
-- Establish affordable pension and health insurance benefits for
the City's 30,000 current and retired employees.
The City will continue to pursue these critical initiatives in
chapter 9.
Detroit's situation is unique and should not affect the credit-
worthiness of other municipalities in Michigan or of the State
itself. A stabilized and financially sound Detroit can only
benefit Detroit's surrounding communities and the State.
The June 14 proposal to creditors, which provides detail on the
issues affecting Detroit and Mr. Orr's proposed solutions, remains
available in the Emergency Manager section of Detroit's website at
http://www.detroitmi.gov
This website also contains information and links relating to the
chapter 9 case. Bankruptcy Court filings are available online,
free of charge, at http://kccllc.net/Detroit
Miller Buckfire & Co., Jones Day, Ernst & Young LLP and Conway
MacKenzie Inc. are advising the City of Detroit on its
restructuring.
DETROIT, MI: NLC Comments on Bankruptcy Filing
----------------------------------------------
The following statement can be attributed to the National League
of Cities' Executive Director, Clarence Anthony:
"We are disappointed that Detroit has to file for bankruptcy
today. This is not unexpected, but is unfortunate for the
residents and businesses of the community. While the city's
eligibility for bankruptcy protection still needs to be approved,
bankruptcy offers the city a chance to restructure its debt to
find a sustainable path forward. We can only hope that all
parties will come to quick agreement.
"It is important to note that municipal bankruptcy is extremely
rare. There were only 54 filings from 1970 to 2009 and only four
of those were cities or counties. Many of those cities had unique
circumstances, combined with poor management practices. Detroit
is also facing long-term structural issues like a dramatic drop in
population.
"NLC research has shown that cities nationally are better off
financially than they were just several years ago. Detroit should
not be seen as emblematic of cities or as a harbinger of what's to
come.
"As cities continue to face post-recession financial stress, the
question is not about declaring bankruptcy but about the types and
depth of services they offer. The vast majority of cities
continue to make the difficult, yet prudent financial decisions
that keep their cities in sound financial shape and in good
standing. Outside of bankruptcy, they renegotiate contracts, draw
on rainy day funds, form public private partnerships, and reduce
health care and pension benefits.
"City leaders are generally finding ways to invest in their local
communities so they can grow and prosper."
The National League of Cities is dedicated to helping city leaders
build better communities. NLC is a resource and advocate for
19,000 cities, towns and villages, representing more than 218
million Americans.
DETROIT, MI: Retirement Systems Comments on Bankruptcy Filing
-------------------------------------------------------------
The Retirement Systems of the City of Detroit are very dismayed at
the Emergency Manager's decision to file for bankruptcy since no
good faith discussions have occurred with the pension funds or
major creditors, the Boards said in a joint statement.
"At a meeting with creditors on July 11, Mr. Orr said that the
mere filing of a Chapter 9 petition doesn't preclude parties from
continuing negotiations thereafter," said Robert Gordon, a Clark
Hill attorney representing the city's retirement systems. "This
position appears to ignore the Bankruptcy Code's requirement that
a municipality engage in robust, good-faith negotiations before
seeking Chapter 9 relief. While the Retirement Systems look
forward to such negotiations, these have not yet occurred."
"While this action is very disappointing, we remain open to
engaging in good faith negotiations at the earliest opportunity.
From our perspective the door has not been closed to talks to help
resolve the city's deficit issues," said George Orzech, Chairman
of the Police and Fire Retirement System of the City of Detroit.
Mr. Gordon, the lead counsel in the restructuring effort says the
Retirement Systems and many other creditors are still in a "due
diligence" phase of evaluation of the numbers. Critically
important, Mr. Gordon has pointed out that there is significant
additional financial information that is not currently available
and that is essential to enabling parties to negotiate. He said
the next step would be "conceptual discussions" with the EM's team
on options and then they could engage in good faith negotiations
at the earliest opportunity.
In response to assertions that the Chapter 9 filing might occur,
the Retirement Systems filed a lawsuit in Ingham County to block
Gov. Rick Snyder from authorizing a filing that might override
state constitutional protections for retiree pension benefits.
"We are surprised and disappointed that Emergency Manager ("EM")
would file a Chapter 9 petition before he has had substantial
negotiations with the Retirement Systems and other significant
creditor constituencies," Mr. Gordon said. "To be clear, the EM's
team and the Retirement Systems have not engaged in in-depth
negotiations to date -- nor could they, since there is a
significant amount of financial information not yet available that
is critical to engage in such negotiations. The Retirement
Systems and many other creditor groups are still in the due-
diligence stage, working hard to gather and analyze information."
Mr. Gordon added that the fact due diligence is still underway is
not surprising, nor reflective, of any dilatory behavior by any
party. The Retirement Systems remain committed to a negotiation
process.
"Any expectation that, within 30 days of having received access to
the EM's data room, creditors could have fully completed their
analyses as well as in-depth negotiations regarding a highly-
complex restructuring of the City's finances, would be entirely
unrealistic," he added.
DETROIT, MI: Voluntary Chapter 9 Case Summary
---------------------------------------------
Chapter 9 Debtor: City of Detroit, Michigan
2 Woodward Avenue, Suite 1126
Detroit, MI
Bankruptcy Case No: 13-53846
Chapter 11 Petition Date: July 18, 2013
Court: U.S. Bankruptcy Court
Eastern District of Michigan
Bankruptcy Judge: TBD
Debtors' Counsel: David G. Heiman, Esq.
Heather Lennox, Esq.
JONES DAY
North Point
901 Lakeside Avenue
Cleveland, OH 44114
Tel: 216-586-3939
Fax: 216-579-0212
E-mail: dgheiman@jonesday.com
hlennox@jonesday.com
- and -
Bruce Bennett, Esq.
JONES DAY
555 South Flower Street, 50th Floor
Los Angeles, CA 90071
Tel: 213-243-2382
Fax: 213-243-2539
E-mail: bbennett@jonesday.com
- and -
Jonathan S. Green, Esq.
Stephen S. LaPlante, Esq.
MILLER CANFIELD PADDOCK AND STONE PLC
150 West Jefferson, Suite 2500
Detroit, MI 48226
Tel: 313-963-6420
Fax: 313-496-7500
E-mail: green@millercanfield.com
laplante@millercanfield.com
Estimated Assets: More than $1 billion
Estimated Liabilities: More than $1 billion
The petition was signed by Kevyn Orr, Detroit's emergency manager.
DIGITAL ANGEL: Lowers Net Loss to $78,000 in First Quarter
----------------------------------------------------------
Digital Angel Corporation filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of $78,000 on $0 of revenue for the three months ended
March 31, 2013, as compared with a net loss of $3.84 million on $0
of revenue for the same period during the prior year.
As of March 31, 2013, the Company had $1.85 million in total
assets, $3.89 million in total liabilities and a $2.04 million
total stockholders' deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/TWoERv
About Digital Angel
Headquartered in New London, Connecticut, Digital Angel
Corporation has two business segments, Digital Games and Signature
Communications. Digital Games designs, develops and plans to
publish consumer applications and mobile games for tablets,
smartphones and other mobile devices. Signature Communications is
a distributor of two-way communications equipment in the U.K.
Products offered range from conventional radio systems used by the
majority of SigComm's customers, for example, for safety and
security uses and construction and manufacturing site monitoring,
to trunked radio systems for large scale users, such as local
authorities and public utilities.
Digital Angel reported a net loss of $6.38 million on $0 of
revenue for the year ended Dec. 31, 2012, as compared with a net
loss of $10.33 million on $0 of revenue during the prior year.
EisnerAmper LLP, in New York, 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 incurred recurring net losses, and at Dec. 31,
2012, had negative working capital and a stockholders' deficit.
These events and conditions raise substantial doubt about the
Company's ability to continue as a going concern.
EAST END DEVELOPMENT: Court Approves Auction Sale Procedures
------------------------------------------------------------
Judge Robert E. Grossman of the U.S. Bankruptcy Court for the
Eastern District of New York approved East End Development, LLC's
auction sale procedures, including the opening credit bid of
Amalgamated Bank as Trustee of Longview Ultra Construction Fund
and the right of Amalgamated to credit bid up to the amount of the
indebtedness due to Amalgamated from the Debtor, which
indebtedness is estimated to be approximately $32,061,312.
The Auction will take place at a date and time to be determined by
the Debtor in consultation with its broker, marketer and/or
auctioneer.
The Auction Sale is being conducted under and in accordance with
the Debtor's Third Amended Plan of Reorganization and,
accordingly, the Sale and all transfers of money or property will
be deemed a transfer under the Plan, and the sale, transfer and
delivery of all instruments of transfer in connection with the
sale will not be taxed under any Transfer Taxes permitted by
Section 1146(a) of the Bankruptcy Code as interpreted by the
Supreme Court in Florida Department of Revenue v. Piccadilly
Cafeterias, Inc., 128 S.Ct. 2326 (2008).
The Continued Confirmation Hearing will be held on Aug. 26, 2013
at 1:30 p.m. for purposes of (i) considering approval of the
results of the Auction of the Sale Assets; (ii) fixing the amount
of Amalgamated's Class 4 deficiency claim; and (iii) other and
further matters as the Court deems appropriate.
About East End Development
East End Development, LLC, the owner of a 90% completed
condominium in Sag Harbor, New York, filed a Chapter 11 petition
(Bankr. E.D.N.Y. Case No. 12-76181) in Central Islip, New York, on
Oct. 12, 2012. Tracy L. Klestadt, Esq., at Klestadt & Winters
LLP, in New York, N.Y., represents the Debtor in its restructuring
efforts. Edifice Real Estate Partners, LLC serves as its
construction consultant. The Debtor disclosed $27,300,207 in
assets and $35,344,416 in liabilities in its schedules.
John E. Westerman, Esq., and Mike M. Hennessey, Esq., at Westerman
Ball Ederer Miller & Sharfstein, LLP, in Uniondale, N.Y.,
represents Lender Amalgamated Bank as counsel.
EASTMAN KODAK: Files Copy of Presentation to Potential Lenders
--------------------------------------------------------------
Eastman Kodak Company provided a presentation to certain potential
lenders participating in a meeting regarding the Company's
previously announced exit term loan facilities.
The Presentation includes pro forma historical financial
information and estimated financial information and projections
for the Company after giving effect to dispositions and other
transactions that have occurred during the Company's
reorganization and that are expected to occur at the time of or
prior to the Company's emergence from Chapter 11.
Additionally, the Presentation includes financial information for
the five months ended May 31, 2013, and May 31, 2012, which is
unaudited and has not been subjected to the same level of
accounting review and testing that the Company applies in the
preparation of its quarterly and annual financial information in
accordance with GAAP.
A copy of the Presentation is available for free at:
http://is.gd/Mkmwql
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.
At the end of April 2013, Kodak filed a proposed reorganization
plan offering 85 percent of the stock to holders of the remaining
$375 million in second-lien notes. The other 15 percent is for
unsecured creditors with $2.7 billion in claims and retirees who
have a $635 million claim from the loss of retirement benefits.
EASTMAN KODAK: Asks for Sept. 30 Deadline to Decide on Lease
------------------------------------------------------------
Eastman Kodak Co. asked U.S. Bankruptcy Judge Allan Gropper to
give the company until Sept. 30 to decide on whether to assume or
reject its lease contract with the County of Monroe.
Kodak signed the contract on June 30, 1987 to lease a
nonresidential real property located at the Greater Rochester
International Airport, in Rochester, New York.
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.
At the end of April 2013, Kodak filed a proposed reorganization
plan offering 85 percent of the stock to holders of the remaining
$375 million in second-lien notes. The other 15 percent is for
unsecured creditors with $2.7 billion in claims and retirees who
have a $635 million claim from the loss of retirement benefits.
EASTMAN KODAK: Defends Assignment of ITT Contract to RED-Rochester
------------------------------------------------------------------
Eastman Kodak Co. asks U.S. Bankruptcy Judge Allan Gropper to
overrule an objection from ITT Space Systems, LLC to the
assignment of their contract to RED-Rochester, LLC.
ITT filed an objection last week to the proposed assignment of the
contract as part of the sale of Kodak's utility operations at
Eastman Business Park to RED-Rochester.
The tech firm accused Kodak of violating the anti-assignment
provisions of the contract as well as certain provisions of the
Bankruptcy Code.
In a July 17 filing, Kodak defended the proposed assignment of the
contract, saying it is consistent with Section 365 of the
Bankruptcy Code, which makes the anti-assignment provisions of the
contract "unenforceable."
"Section 365(f) provides that anti-assignment provisions contained
in a lease are not enforceable in an assignment conducted in
accordance with Section 365," Kodak said in the court filing.
Kodak and ITT signed the contract on Sept. 30, 2005, under which
the tech firm agreed to lease to the company approximately 2,200
square feet of land for a 50-year term. The contract contains
provisions, which prohibit the assignment, sublet, or use of the
contract without prior consent of ITT.
ITT Space Systems LLC is represented by:
Shawn R. Fox, Esq.
McGUIREWOODS LLP
1345 Avenue of the Americas
Seventh Floor
New York, NY 10105-0106
Phone: 212-548-2100
Fax: 212-548-2150
- and -
David I. Swan
J. Robertson Clarke
McGUIREWOODS LLP
1750 Tysons Boulevard, Suite 1800
Tysons Corner, VA 22102
Phone: 703-712-5000
Fax: 703-712-5050
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.
At the end of April 2013, Kodak filed a proposed reorganization
plan offering 85 percent of the stock to holders of the remaining
$375 million in second-lien notes. The other 15 percent is for
unsecured creditors with $2.7 billion in claims and retirees who
have a $635 million claim from the loss of retirement benefits.
EDISON MISSION: Court Denies Tyche's Bid to Dismiss $4.1MM Suit
---------------------------------------------------------------
Judge Jacqueline P. Cox of the U.S. Bankruptcy Court for the
Northern District of Illinois, Eastern Division, denied Tyche
Power Partners LLC's motion to dismiss and motion to lift the
automatic stay to proceed with the dismissal of a civil court
action involving contract rights to an escrow account.
Prior to the Petition Date, Edison Mission Energy sued Tyche in
the Supreme Court of the State of New York seeking release of the
funds in the escrow account, which was created pursuant to a 2002
stock purchase agreement under which Tyche agreed to buy the
ownership interests in a partnership which owned the Brooklyn Navy
Yard Cogeneration Project from EME for $42 million. Under an
escrow agreement, $23.3 million of Tyche's funds were withheld
from the purchase price. The Escrow Account currently holds $4.1
million.
In April 2013, the Debtor sued Tyche and escrowed J.P. Morgan
Chase in an adversary proceeding seeking declaratory judgment that
the outstanding escrow amount is its property. In response, Tyche
argues that the adversary proceeding should be dismissed for
improper venue, citing provisions in the SPA and Escrow Agreement,
which state that "all actions or proceedings arising in connection
with this Agreement shall be tried and litigated exclusively in
the state or federal courts located in the Borough of Manhattan,
State of New York."
Judge Cox ruled that Tyche's reasons to have the matter resolved
in New York state court are not compelling. "Tyche's claims can
be adjudicated herein along with other creditors' claims. The
court acknowledges a strong national policy of handling all
matters in a bankruptcy cases together and recognizes that this
implicates the vital bankruptcy function of collecting estate
assets," Judge Cox explained.
Moreover, Judge Cox concluded that the adversary proceeding
concerns a matter over which the Bankruptcy Court has core
jurisdiction based on Section 157(b(2)(E) of Title 28 of the U.S.
Code, which provides that an order to turn over the property of
the estate is a core proceeding. In addition, now that Tyche has
submitted a proof of claim in the Debtor's bankruptcy proceeding,
the process of resolving its claim will necessarily involve the
adversary proceeding as each matter involves the same issue: which
party owns the $4.1 million in the Escrow Account.
On Tyche's request to lift the automatic stay, Judge Cox stated,
"[l]ifting the automatic stay would delay and impede the Debtor's
restructuring efforts as resolution of the New York matter could
then require this court to determine whether an implied right to
setoff is viable in the bankruptcy context, such that a New York
state court's resolution would probably not be final and
determinative of the parties' rights and obligations." Judge Cox
added, "[a]llowing Tyche to proceed in the New York action could
elevate its status from that of an unsecured creditor to that of a
secured creditor to the detriment of other unsecured creditors."
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.
EME said it doesn't plan to emerge from Chapter 11 until December
2014 to receive benefits from a tax-sharing agreement with parent
Edison International Inc.
ELBIT IMAGING: Bank Hapoalim Withdraws From Standstill Pact
-----------------------------------------------------------
The Bank Hapoalim B.M notified Elbit Imaging Ltd. that the Bank's
management did not approve the standstill agreement and hence, it
did not enter into force. The Bank's management did not specify
the reason of the disapproval.
Elbit Imaging has filed a motion with the Tel Aviv District
Court to convene meetings of its unsecured creditors and
shareholders for the approval of the proposed restructuring of its
unsecured financial debt pursuant to a plan of arrangement under
Section 350 of the Israeli Companies Law, 5759-1999. The terms
and conditions of the Arrangement resulted from discussions with
holders of the various series of the Company's outstanding Series
1 and Series A to Series G notes, including York Capital
Management Global Advisors, LLC, and Davidson Kempner Capital
Management LLC, other creditors and Mordechay Zisser, the
Company's Chief Executive Officer and Executive President, member
of the Company's board of directors and indirect controlling
shareholder of the Company.
The respective representatives of the Company and the Bank agreed
upon a form of a written standstill agreement subject to
effectiveness of the "Company Proposal" with respect to the plan
of arrangement, for the period ending on Nov. 30, 2013, which was
subject to the approval of the Bank's management.
In addition, the Company's board of directors has resolved to make
further adjustments to the "Company's Proposal" and file an
amended plan of arrangement. The adjustments include the increase
of the equity stake that would be issued to the holders of the
Company's unsecured financial debt from 90 percent to 95 percent
of the Company's outstanding share capital and certain wording and
technical clarifications that were made at the request of the note
holders' trustees. The adjustments follow previous adjustments to
the "Company Proposal" which include the increase of the principal
amount of the second series of new notes (maturating on the eight
anniversary of the date of issuance thereof), to be issued by the
Company as part of the Arrangement, by NIS 70 million
(approximately $ 19.4 million) to NIS 170 million (approximately $
47.2 million), such that the entire aggregate principal amount of
new notes, to be issued by the Company as part of the Arrangement
will be NIS 570 million (approximately $ 158.3 million).
A copy of the press release is available for free at:
http://is.gd/TXqHj0
Extraordinary Meeting Set on August 19
Elbit Imaging has scheduled an extraordinary meeting of
shareholders to be held on Monday, Aug. 19, 2013, at 9:00 a.m.
(Israel time), at the offices of the Company, located at 5
Kinneret Street, Bnei Brak, Israel. The record date for the
meeting is July 17, 2013. However, as contemplated by a Court
ruling in connection with the Company's proposed debt arrangement,
the votes of shareholders that hold shares through a member of the
Tel Aviv Stock Exchange Clearinghouse are required to be received
by 12:00 p.m. (Israel time) on July 18, 2013. For this purpose,
the Company has filed a form of written ballot via MAGNA, the Web
site of the Israel Securities Authority.
The agenda of the meeting is as follows:
1. To approve the Company's proposed plan of arrangement of its
unsecured financial debt, and the transactions contemplated
thereby, including amendments to the Company's Articles of
Association and Memorandum of Association; and
2. To approve the proposed plan of arrangement of the Unsecured
Financial Debt presented by some representatives of the
Company's Series C to Series G and Series 1 note holders, and
the transactions contemplated thereby.
A copy of the Notice to Shareholders is available at:
http://is.gd/1IrDEn
About Elbit Imaging
Tel-Aviv, Israel-based Elbit Imaging Ltd. (TASE, NASDAQ: EMITF)
hold investments in real estate and medical companies. The
Company, through its subsidiaries, also develops shopping and
entertainment centers in Central Europe and invests in and manages
hotels.
Elbit Imaging disclosed a loss of NIS455.50 million on NIS671.08
million of total revenues for the year ended Dec. 31, 2012, as
compared with a loss of NIS247.02 million on NIS586.90 million of
total revenues for the year ended Dec. 31, 2011. The Company's
balance sheet at Dec. 31, 2012, showed NIS7.09 billion in total
assets, NIS5.67 billion in total liabilities, NIS309.60 million in
equity to holders of the Company and NIS1.11 billion in
noncontrolling interest.
Brightman Almagor Zohar & Co., in Tel-Aviv, Israel, expressed
substantial doubt about Elbit Imaging's ability to continue as a
going concern following the financial results for the year ended
Dec. 31, 2012.
The Certified Public Accountants noted that in the period
commencing Feb. 1, 2013, through Feb. 1, 2014, the Company is to
repay its debenture holders NIS 599 million (principal and
interest). "Said amount includes NIS 82 million originally
payable on Feb. 21, 2013, that its repayment was suspended
following a resolution of the Company's Board of Directors. The
Company's Board also resolved to suspend any interest payments
relating to all the Company's debentures. In addition, as of
Dec. 31, 2012, the Company failed to comply with certain financial
covenants relating to bank loans in the total amount as of such
date of NIS 290 million.
ENDICOTT INTERCONNECT: Case Summary & 20 Largest Unsec. Creditors
-----------------------------------------------------------------
Debtor: Endicott Interconnect Technologies, Inc.
1093 Clark Street
Endicott, NY 13760
Bankruptcy Case No.: 13-61156
Chapter 11 Petition Date: July 10, 2013
Court: United States Bankruptcy Court
Northern District of New York (Utica)
Judge: Diane Davis
Debtor's Counsel: Stephen A. Donato, Esq.
BOND, SCHOENECK & KING, PLLC
One Lincoln Center
Syracuse, NY 13202-1355
Tel: (315) 218-8000
Fax: (315) 218-8100
E-mail: sdonato@bsk.com
Estimated Assets: $10,000,001 to $50,000,000
Estimated Debts: $50,000,001 to $100,000,000
The petition was signed by David W. Van Rossum, chief
restructuring officer.
Debtor's List of 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
IBM Corporation Money loaned and $5,459,372
2455 South Road materials purchased
Poughkeepsie, NY 12601
Arrow Electronics, Inc. Trade debt $3,662,607
35 Upton Drive
Wilmington, MA 01887
Avnet Electronics Trade debt $3,574,180
Marketing
245 Kenneth Drive
Rochester, NY 14623
Maryland Procurement Inventory purchased $3,465,647
Office
9800 Savage Road
Suite 6623
Fort George G Meade,
MD 20755-662
Acbel Polytech Inc. Trade debt $2,493,268
No. 159, Sec. 3,
Danjin Road
Danshui Dist.
New Taipei City 251
Taiwan
Cadence Design Systems, Trade debt $1,707,156
Inc.
2670 Seely Avenue,
Building 11
San Jose, CA 95134
World Express Trade debt $1,577,911
Electronics, Inc.
200 Stage Road
Vestal, NY 13850
Meisei and Company Ltd. Trade debt $811,937
4F Tokyo Tatemono NO. 3
Tokoyo Japan
Anaren Microwave Inc. Money loaned $686,440
6635 Kirkville Road
East Syracuse, NY 13057
AAVID Thermalloy LLC Trade debt $612,090
70 Commercial Street 200
Concord, NH 03301
Computer Crafts, Inc. Trade debt and $499,479
57 Thomas Road judgment entered
Hawthorne, NJ 07507 February 2013
Stock-It Corporation Trade debt $429,218
25 North Mall
Plainview, NY 11803
Orbotech Inc. Trade debt $405,503
44 Manning Road
Billerica, MA 01821
Tyco Electronics Corp. Trade debt $369,472
2100 Paxton Street
Harrisburg, PA 17111
Vicor Corporation Trade debt $287,724
25 Frontage Road
Andover, MA 01810
Hinman Howard & Kattell Services provided $252,437
700 Security Mutual
Building
80 Exchange Street
Binghamton, NY 13902
High Performance Trade debt $240,736
Copper Foil
2555 W. Fairview
Street, Suite 103
Chandler, AZ 85224
Compeq Manufacturing Co., Trade debt $228,016
Ltd.
91, Lane 814, TaHsin Road
LuChu Hsiang,
Taoyuan Hsien
Taiwan
Amphenol Intercon Trade debt $213,170
Systems, Inc.
2800 Commerce Drive
Harrisburg, PA 17110
Matrix USA Inc. Trade debt $211,307
1124 Midway Boulevard
Mississauga,
Ontario L5T 2C1
Canada
Affiliate that simultaneously filed a Chapter 11 petition:
Debtor Case No.
------ --------
EI Transportation Company, LLC 13-bk-61157
ENERGY TRANSFER: Moody's Rates New 2066 Junior Notes 'Ba1'
----------------------------------------------------------
Moody's Investors Service rated Energy Transfer Partners, L.P.'s
newly issued 2066 floating rate junior subordinated notes Ba1.
These notes were issued subject to a previously announced exchange
offer and consent solicitation by ETP to exchange existing
Southern Union Company (SUG, Baa3 stable) notes into new ETP notes
(the "exchange notes"), which closed effective June 24, 2013.
ETP's Baa3 senior unsecured ratings were affirmed, and its outlook
was maintained as stable.
Ratings Rationale:
Moody's regards the proposed exchange of SUG notes into ETP as
another incremental positive step in the progression of moves
undertaken by ETP and to simplify its organizational and financial
structure. The exchange will have no material impact on Moody's
assessment of ETP's overall debt leverage, reflecting the full
consolidation of wholly-owned SUG into ETP for financial reporting
purposes and its analytical assessment. However, with the exchange
ETP will eliminate a certain amount of double leverage and will
gain more direct access to SUG generated cash flows.
The principal methodology used in this rating was Global Midstream
Energy published in December 2010.
Energy Transfer Partners, L.P. is a publicly traded midstream
master limited partnership headquartered in Dallas, Texas.
ENGLOBAL CORP: To Sell Gulf Coast Operations for $21.5 Million
--------------------------------------------------------------
ENGlobal Corporation has signed a definitive agreement under which
ENGlobal's Gulf Coast engineering and in-plant operations will be
sold to Furmanite America, Inc., a subsidiary of Furmanite
Corporation. The total value of the transaction to ENGlobal is
expected to be approximately $21.5 million, consisting primarily
of cash at closing and a $3.5 million promissory note issued with
a parent company guarantee.
ENGlobal's Gulf Coast engineering operations consist of its
Beaumont, TX, Baton Rouge, LA, Lake Charles, LA, Deer Park, TX,
and Freeport, TX offices, which primarily perform work for
downstream clients across the region. The Company will retain its
Engineering operations and the entirety of its Automation
operations located in Houston, TX, Tulsa, OK, Mobile, AL, Denver,
CO, and Chicago, IL, which primarily perform midstream and
downstream related projects.
ENGlobal intends to use the net proceeds from this transaction to
repay its outstanding debt. The transaction has been approved by
the boards of directors for both companies, and is expected to
close within 60 days, subject to lender approval and the
completion of customary conditions. In addition, the companies
have agreed to facilitate a smooth transition of corporate service
functions and to support each company's business development
efforts. Under terms of the agreement, approximately 900
employees will transfer from ENGlobal to Furmanite.
"The transaction with Furmanite, representing approximately half
of our business, has stood out among all alternatives as making
the most sense for our employees, clients and shareholders," said
William A. Coskey, P.E., Founder, Chairman and Chief Executive
Officer. "The ongoing ENGlobal operations will become
strategically focused, well positioned for growth, and essentially
free of bank debt. We will continue to build on the expertise of
our heritage Engineering and Automation segments and also expect
to target specific engineered solutions, utilizing both in-house
and third party intellectual property."
Mr. Coskey continued, "We are pleased to announce that throughout
our turnaround plan over the last year - and through Closing of
this transaction, we will have reduced our debt and vendor
obligations by approximately $50.0 million. The resulting
revitalized Company with 500 employees will become the foundation
from which to rebuild ENGlobal."
The Company expects that this transaction will substantially
complete its review of strategic alternatives. In October 2012,
ENGlobal announced its plan to explore strategic alternative
options, which included raising capital, selling a portion of the
Company's assets, and the possible sale or merger of ENGlobal,
among other alternatives. Since that time, the Company
discontinued its Electrical Services division and divested its
Land/Right of Way and Midstream Inspection divisions.
About ENGlobal
Headquartered in Houston, Texas, ENGlobal --
http://www.ENGlobal.com-- is a provider of engineering and
related project services principally to the energy sector
throughout the United States and internationally. ENGlobal
operates through two business segments: Automation and Engineering
& Construction. ENGlobal's Automation segment provides services
related to the design, fabrication and implementation of process
distributed control and analyzer systems, advanced automation, and
related information technology. The Engineering & Construction
segment provides consulting services relating to the development,
management and execution of projects requiring professional
engineering as well as inspection, construction management,
mechanical integrity, field support, quality assurance and plant
asset management. ENGlobal currently has approximately 1,400
employees in 11 offices and 9 cities.
The Company's balance sheet at March 30, 2013, showed $70.79
million in total assets, $43.51 million in total liabilties, all
current, and $27.28 million in total stockholders' equity.
Going Concern
"The Company has been operating under difficult circumstances
since the beginning of 2012. For the year ended December 29,
2012, the Company reported a net loss of approximately $33.6
million that included a non-cash charge of approximately $16.9
million relating to a goodwill impairment and a non-cash charge of
approximately $6.8 million relating to a valuation allowance
established in connection with the Company's deferred tax assets.
During 2012, our net borrowings under our revolving credit
facilities increased approximately $10.5 million to fund our
operations. Due to challenging market conditions, our revenues
and profitability declined during 2012 and continued to weaken
through the first quarter of 2013. As a result, we have failed to
comply with several financial covenants under our credit
facilities resulting in defaults. Although we have sold assets,
reduced debt and decreased personnel in an attempt to improve our
liquidity position, we cannot assure you that we will be
successful in obtaining the cure or waiver of the defaults under
our credit facilities. If we fail to obtain the cure or waiver of
the defaults under the facilities, the lenders may exercise any
and all rights and remedies available to them under their
respective agreements, including demanding immediate repayment of
all amounts then outstanding or initiating foreclosure or
insolvency proceedings. In such event and if we are unable to
obtain alternative financing, our business will be materially and
adversely affected, and we may be forced to sharply curtail or
cease our operations. As a part of our efforts to improve our
cash flow and restore our financial relationship with our lenders
under the PNC Credit Facility, we engaged an investment banking
firm to pursue strategic alternatives on behalf of the Company and
a consulting firm to assist the Company with cost cutting efforts.
These circumstances raise substantial doubt about the Company's
ability to continue as a going concern," according to the
Company's quarterly report for the period ended March 30, 2013.
EXCEL MARITIME: U.S. Trustee Appoints Creditors' Committee Members
------------------------------------------------------------------
Tracy Hope Davis, the United States Trustee for Region 2, has
appointed five members to the official committee of unsecured
creditors in the Chapter 11 cases of Excel Maritime Carriers Ltd.,
et al.
The members are:
1. Zazove Associates, LLC
235 Montgomery Street, Suite 440
San Francisco, California 94104
Attn: Nicholas Brown, CFA
Tel: (847) 239-7100
2. Deutsche Bank Trust Company Americas
c/o Deutsche Bank National Trust Company
100 Plaza One, 6th Floor
Jersey City, New Jersey 07311
Attn: Stan Burg, Vice President
Tel: (201) 593-4749
3. Fidelity Investments
82 Devonshire Street, V13H
Boston, Massachusetts 02109
Attn: Nate Van Duzer, Managing Director
Tel: (617) 392-8129
4. Silverback Asset Management, LLC
1414 Raleigh Road, Suite 250
Chapel Hill, North Carolina 27517
Attn: Jason Ham, Analyst
Tel: (919) 969-9300
5. Kayne Anderson Capital Advisors, L.P.
1800 Avenue of the Stars
Los Angeles, California 90403
Attn: Eri Nosaka, Research Analyst
Tel: (310) 284-6461
The U.S. Trustee is represented by Paul K. Schwartzberg, Esq.,
Trial Attorney, in New York.
About Excel Maritime
Based in Athens, Greece, Excel Maritime Carriers Ltd. --
http://www.excelmaritime.com/-- is an owner and operator of dry
bulk carriers and a provider of worldwide seaborne transportation
services for dry bulk cargoes, such as iron ore, coal and grains,
as well as bauxite, fertilizers and steel products. Excel owns a
fleet of 40 vessels and, together with 7 Panamax vessels under
bareboat charters, operates 47 vessels (5 Capesize, 14 Kamsarmax,
21 Panamax, 2 Supramax and 5 Handymax vessels) with a total
carrying capacity of approximately 3.9 million DWT. Excel Class A
common shares have been listed since Sept. 15, 2005, on the New
York Stock Exchange (NYSE) under the symbol EXM and, prior to that
date, were listed on the American Stock Exchange (AMEX) since
1998.
The company blamed financial problems on low charter rates.
The balance sheet for December 2011 had assets of $2.72 billion
and liabilities totaling $1.16 billion. Excel owes $771 million
to secured lenders with liens on almost all assets. There is $150
million owing on 1.875 percent unsecured convertible notes.
Excel Maritime, filed a Chapter 11 petition (Bankr. S.D.N.Y. Case
No. 13-bk- 23060) on July 1, 2013, in New York after signing an
agreement where secured lenders owed $771 million support a
reorganization plan filed alongside the petition.
Excel, which sought bankruptcy with a number of affiliates, has
tapped Skadden, Arps, Slate, Meagher & Flom LLP, as counsel;
Miller Buckfire & Co. LLC, as investment banker; and Global
Maritime Partners Inc., as financial advisor.
EXCEL MARITIME: Taps GMP & Miller Buckfire as Fin'l Advisors
------------------------------------------------------------
Excel Maritime Carriers LTD., et al., seek authority from the U.S.
Bankruptcy Court for the Southern District of New York to employ
Global Maritime Partners, Inc., and Miller Buckfire & Co., LLC, as
their financial advisors, effective as of the Petition Date.
GMP Engagement Terms
As financial advisor, GMP will:
(a) advise and assist in the restructuring of the Company's
obligations, including but not limited to, substantial
recapitalization and restructuring of all outstanding
liabilities, which include syndicate bank debt, bilateral
bank debt, bond debt, bareboat charters, secured and
unsecured swaps, and trade debt;
(b) provide financial advice to the Company and its advisors
with respect to analyzing, developing and negotiating with
Company stakeholders in the course of its preparation for
any restructuring;
(c) review and analyze the Company's assets and its operating
and financial strategies;
(d) evaluate the Company's debt capacity and assist in the
determination of an appropriate capital structure for the
Company;
(e) advise the Company and its counsel on the risks and
benefits of considering, initiating and consummating any
restructuring;
(f) assist the Company in negotiations of services agreements
with other advisors regarding the restructuring; and
(g) other financial advisory services as may be agreed upon by
GMP and the Company, and that is within the scope of the
engagement.
The Debtors will pay GMP a monthly retainer fee of $30,000 per
month until December 2012, and $80,000 per month after December
2012. The Debtors will also pay GMP a success fee upon
consummation of a Restructuring as follows:
-- $1,900,000 if consummation of Restructuring takes place
until December 2012; or
-- $1,150,000 if consummation of Restructuring takes place on
December 2012 or afterwards.
Miller Buckfire's Engagement Terms
Miller Buckfire will provide the following services:
(a) if the Debtors determine to undertake a "transaction" as
the term is defined in its engagement letter, advising and
assisting the Debtors in structuring and effecting the
financial aspects of that transaction;
(b) advising and assisting the Debtors in developing and
seeking approval of a restructuring plan;
(c) advising and assisting the Debtors in structuring any new
securities to be issued under a Plan;
(d) assisting with and participating in negotiations with
potential investors and entities or groups affected by a
Plan;
(e) assisting the Debtors with administrative obligations
arising out the Chapter 11 filing, including preparing
management for any organizational or ongoing meetings of
creditors; and
(f) participating in hearings before the bankruptcy court with
respect to the matters upon which Miller Buckfire has
provided advice, including as relevant, coordinating with
the Debtors' counsel with respect to testimony in
connection therewith.
Miller Buckfire will be paid a monthly financial advisory fee of
$125,000, a portion of which will be credited against any
Transaction Fee of $4,000,000, which is contingent upon (x) the
consummation of any Transaction or (y)(1) the entering into of an
agreement in principal, definitive agreement or Plan to effect a
Transaction and (2) concurrently therewith or at any time
thereafter, the consummation of any Transaction.
Firms' Disinterestedness
The firms assure the Court that they are disinterested persons
pursuant to Section 101(14) of the Bankruptcy Code and do not
represent any interest adverse to the Debtors and their estates.
GMP, however, disclosed that it has collaborated with Investments
& Finance Ltd. on several transactions due to the synergies that
exist between GMP and Investments & Finance. GMP and Investments
& Finance likely will continue to collaborate in the future. Mr.
Apostolos Kontoyannis, a member of the Board of Directors of
Excel, is also a principle of Investments & Finance, but Mr.
Kontoyannis is not an owner or principal of GMP, the firm says.
Miller Buckfire also disclosed that during the 90 days immediately
prior to the Petition Date, it received total monthly fees of
$500,000, and expense reimbursements of $78,016, including amounts
received as part of an expense retainer of $75,000 that was
replenished by the Debtors prior to the Petition Date. In total,
Miller Buckfire received monthly fees of $1,375,000, and expense
reimbursements of $233,016, during the one year period prior to
the Petition Date. As of the Petition Date, the Debtors did not
owe Miller Buckfire for any fees or expenses incurred prior to the
Petition Date.
Employment of 2 Firms Warranted
According to the Debtors, due to the size and complexity of their
bankruptcy proceedings, the specific and respective expertise of
Miller Buckfire and GMP, and the anticipated services that the
Debtors have or are able to request Miller Buckfire to perform,
the retention of Miller Buckfire in addition to GMP is warranted.
The services that have been provided by and will be provided by
Miller Buckfire have not and will not duplicate the services that
have been provided by and will be provided by GMP, the Debtors
assure the Court. Rather, the two firms' industry experience have
complemented each other over the course of their current
engagement and have enabled the Debtors and their estates to
benefit from the dovetailing of both firms' services.
About Excel Maritime
Based in Athens, Greece, Excel Maritime Carriers Ltd. --
http://www.excelmaritime.com/-- is an owner and operator of dry
bulk carriers and a provider of worldwide seaborne transportation
services for dry bulk cargoes, such as iron ore, coal and grains,
as well as bauxite, fertilizers and steel products. Excel owns a
fleet of 40 vessels and, together with 7 Panamax vessels under
bareboat charters, operates 47 vessels (5 Capesize, 14 Kamsarmax,
21 Panamax, 2 Supramax and 5 Handymax vessels) with a total
carrying capacity of approximately 3.9 million DWT. Excel Class A
common shares have been listed since Sept. 15, 2005, on the New
York Stock Exchange (NYSE) under the symbol EXM and, prior to that
date, were listed on the American Stock Exchange (AMEX) since
1998.
The company blamed financial problems on low charter rates.
The balance sheet for December 2011 had assets of $2.72 billion
and liabilities totaling $1.16 billion. Excel owes $771 million
to secured lenders with liens on almost all assets. There is $150
million owing on 1.875 percent unsecured convertible notes.
Excel Maritime, filed a Chapter 11 petition (Bankr. S.D.N.Y. Case
No. 13-bk- 23060) on July 1, 2013, in New York after signing an
agreement where secured lenders owed $771 million support a
reorganization plan filed alongside the petition.
Excel, which sought bankruptcy with a number of affiliates, has
tapped Skadden, Arps, Slate, Meagher & Flom LLP, as counsel;
Miller Buckfire & Co. LLC, as investment banker; and Global
Maritime Partners Inc., as financial advisor.
A five-member official committee of unsecured creditors was
appointed by the U.S. Trustee.
EXIDE TECH: EPA Warns of Safety Risk in Bankruptcy Loan Deal
------------------------------------------------------------
Peg Brickley writing for Dow Jones' DBR Small Cap reports that the
U.S. Environmental Protection Agency added its voice to the chorus
of regulators worried battery maker Exide Technologies Inc.'s
bankruptcy loan poses a threat to public health and safety.
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.
Exide first sought Chapter 11 protection (Bankr. Del. Case No.
02-11125) on April 14, 2002 and exited bankruptcy two years after.
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.
Exide Technologies returned to Chapter 11 bankruptcy (Bankr. D.
Del. Case No. 13-11482) on June 10, 2013.
For the new case, Exide has tapped Anthony W. Clark, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, and Pachulski Stang
Ziehl & Jones LLP as counsel; Alvarez & Marsal as financial
advisor; Sitrick And Company Inc. as public relations consultant
and GCG as claims agent.
The Debtor disclosed $1.89 billion in assets and $1.14 billion in
liabilities as of March 31, 2013.
Exide's international operations were not included in the filing
and will continue their business operations without supervision
from the U.S. courts.
EXIDE TECHNOLOGIES: Can Pay Critical Vendors Up to $10-Mil.
-----------------------------------------------------------
Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District
of Delaware gave Exide Technologies final authority to pay
critical vendor claims in an amount not to exceed $10 million.
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.
Exide first sought Chapter 11 protection (Bankr. Del. Case No.
02-11125) on April 14, 2002 and exited bankruptcy two years after.
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.
Exide Technologies returned to Chapter 11 bankruptcy (Bankr. D.
Del. Case No. 13-11482) on June 10, 2013.
For the new case, Exide has tapped Anthony W. Clark, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, and Pachulski Stang
Ziehl & Jones LLP as counsel; Alvarez & Marsal as financial
advisor; Sitrick And Company Inc. as public relations consultant
and GCG as claims agent.
The Debtor disclosed $1.89 billion in assets and $1.14 billion in
liabilities as of March 31, 2013.
Exide's international operations were not included in the filing
and will continue their business operations without supervision
from the U.S. courts.
EXIDE TECHNOLOGIES: Can Employ CRO and Other Professionals
----------------------------------------------------------
Exide Technologies sought and obtained authority from Judge Kevin
J. Carey of the U.S. Bankruptcy Court for the District of Delaware
to employ Alvarez & Marsal, LLC, and designate Robert M. Caruso as
chief restructuring officer.
The Debtor also sought and obtained Judge Carey's authority to
employ Skadden, Arps, Slate, Meagher & Flom LLP as bankruptcy
counsel; Lazard Freres & Co. LLC as investment banker; and KPMG
LLP as auditor.
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.
Exide first sought Chapter 11 protection (Bankr. Del. Case No.
02-11125) on April 14, 2002 and exited bankruptcy two years after.
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.
Exide Technologies returned to Chapter 11 bankruptcy (Bankr. D.
Del. Case No. 13-11482) on June 10, 2013.
For the new case, Exide has tapped Anthony W. Clark, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, and Pachulski Stang
Ziehl & Jones LLP as counsel; Alvarez & Marsal as financial
advisor; Sitrick And Company Inc. as public relations consultant
and GCG as claims agent.
The Debtor disclosed $1.89 billion in assets and $1.14 billion in
liabilities as of March 31, 2013.
Exide's international operations were not included in the filing
and will continue their business operations without supervision
from the U.S. courts.
FAIRWEST ENERGY: Alberta Court Extends CCAA Stay Until Sept. 30
---------------------------------------------------------------
FairWest Energy Corporation on July 18 disclosed that an Order was
obtained on July 16, 2013 from the Court of Queen's Bench of
Alberta extending the stay of proceedings granted to FairWest
under the Companies' Creditors Arrangement Act to September 30,
2013.
On July 16, 2013, the Court also approved certain amendments to
the debtor-in-possession financing provided by Supreme Group Inc.
to FairWest. The maximum amount of financing available to
FairWest was increased to $2,325,000 and the maturity date of the
financing was extended to September 30, 2013. The DIP Financing
is also subject to additional events of default which, if
triggered, could result in SGI withdrawing its funding from
FairWest prior to September 30, 2013.
About FairWest Energy
FairWest is a Calgary, Alberta based junior oil and gas company
engaged in the acquisition, exploration, development and
production of crude oil, natural gas and natural gas liquids in
the provinces of Alberta and Saskatchewan.
FairWest an Initial Order on Dec. 12, 2012 from the Court of
Queen's Bench of Alberta granting relief to FairWest under the
Companies' Creditors Arrangement Act ("CCAA") and appointing
PricewaterhouseCoopers Inc. as the monitor.
FINJAN HOLDINGS: Has 258.6 Million Shares Resale Prospectus
-----------------------------------------------------------
Finjan Holdings, Inc., registered with the U.S. Securities and
Exchange Commission up to 258,677,287 shares of common stock, par
value $0.0001 per share, to be sold by BCPI I, L.P., Israel Seed
IV, L.P., HarbourVest International Private Equity Partners IV
Direct Fund L.P., et al.
The Company will not receive any of the proceeds from the sale of
shares of its common stock sold in this offering. The selling
stockholders will receive all the net proceeds.
The Company's common stock is quoted on the OTC Bulletin Board and
OTC Markets - OTCQB tier under the symbol "FNJN." On July 10,
2013, the last reported closing bid price for the Company's common
stock as reported on the OTCQB tier of the OTC Markets was $1.00
per share. These over-the-counter quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may
not necessarily represent actual transactions.
A copy of the Form S-1 registration statement is available at:
http://is.gd/cjauT2
About Finjan
Finjan is a leading online security and technology company which
owns a portfolio of patents, related to software that proactively
detects malicious code and thereby protects end-users from
identity and data theft, spyware, malware, phishing, trojans and
other online threats. Founded in 1997, Finjan is one of the first
companies to develop and patent technology and software that is
capable of detecting previously unknown and emerging threats on a
real-time, behavior-based basis, in contrast to signature-based
methods of intercepting only known threats to computers, which
were previously standard in the online security industry.
Converted Organics disclosed a net loss of $8.42 million in 2012,
as compared with a net loss of $17.98 million in 2011. The
Company's balance sheet at March 31, 2013, showed $2.66 million in
total assets, $5.19 million in total liabilities, and a $2.53
million total stockholders' deficit.
Moody, Famiglietti & Andronico, LLP, in Tewksbury, Massachusetts,
issued a "going concern" qualification on the consolidated
financial statements for the year ended Dec. 31, 2012, citing
recurring losses and negative cash flows from operations and an
accumulated deficit that raises substantial doubt about the
Company's ability to continue as a going concern.
FIRST CONNECTICUT: Can Employ Stichter Riedel as Special Counsel
----------------------------------------------------------------
First Connecticut Holding Group, L.L.C., sought and obtained
permission from the U.S. Bankruptcy Court to employ Stichter
Riedel Blaim & Prosser P.A. as special litigation counsel.
The Debtor said local counsel in the State of Florida is required
to defend a motion which was filed seeking to transfer venue from
New Jersey to Florida. Stichter Riedel is a local counsel in
Florida and has expertise in handling these types of cases.
The Debtor said the firm is asking for $2,500 and will bill at
its professional hourly rates at $350 per hour for partners and
$175 per hour for associates.
Stichter Riedel attests it is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
About First Connecticut Holding
First Connecticut Holding Group, L.L.C. IV filed a Chapter 11
petition (Bankr. D.N.J. Case No. 13-13090) on Feb. 15, 2013, in
Newark, New Jersey. Lorraine Mocco signed the petition as
managing member. The Debtor's scheduled assets were $12,287,218
and scheduled liabilities were $68,655,579. Judge Donald H.
Steckroth presides over the case.
GREAT WOLF: S&P Puts 'B' Corp. Credit Rating on CreditWatch Pos.
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B' corporate credit
rating on Great Wolf Resorts Inc. on CreditWatch with positive
implications. S&P expects to raise the corporate credit rating
one notch to 'B+' from 'B' upon the close of the proposed
transactions. In addition, S&P expects that the rating outlook
will be stable, reflecting its expectation that Great Wolf can
sustain credit measures within the thresholds for a 'B+' rating
over the intermediate term. These measures are total debt to
EBITDA below 6x and EBITDA coverage of interest expense in the
low-2x area and above.
At the same time, S&P assigned the company's proposed $100 million
senior secured revolver due 2018 and proposed $320 million senior
secured term loan due 2020 its 'BB-' issue-level rating (one notch
above the expected corporate credit rating following the close of
the transaction), with a recovery rating of '2'. The '2' recovery
rating reflects S&P's expectation for substantial (70% to 90%)
recovery for lenders in the event of a payment default.
The company will use proceeds from the proposed term loan to repay
approximately $230 million in outstanding first mortgage notes,
$48 million outstanding under the Concord mortgage loan, and debt
breakage costs, fees, and expenses.
The positive CreditWatch listing reflects S&P's expectation that
EBITDA coverage of interest expense, pro forma for the proposed
refinancing, is likely to improve to the 3x area in 2013, and
S&P's reassessment of the company's liquidity profile as "strong"
following the addition of the proposed revolving credit facility.
In addition, S&P anticipates good operating performance over the
next two years should result in total debt to EBITDA improving to
the low-5x area by 2014. Nonetheless, this level of leverage is
aligned with a "highly leveraged" financial risk profile,
according to S&P's criteria.
Great Wolf is the largest licensor, operator, and developer of
resorts featuring indoor water parks in North America. Its
portfolio consists of 11 Great Wolf lodges, of which seven are
wholly owned, three are owned by third parties, and one is 49%
owned by Great Wolf through a joint venture with The Confederated
Tribes of the Chehalis Reservation. In May 2012, an affiliate of
Apollo Global Management LLC completed its acquisition of Great
Wolf's outstanding shares for $262 million, and assumed Great
Wolf's outstanding debt at the time. S&P believes Apollo's all-
equity contribution for the acquisition is not intended to be
temporary capital.
GLYECO INC: Semple Marchal Replaces Jorgensen as Accountants
------------------------------------------------------------
The Board of Directors of GlyEco, Inc., appointed Semple, Marchal
& Cooper, LLP, to be the Company's independent registered public
accountant for the fiscal year ending Dec. 31, 2013. Concurrent
with the appointment of Semple Marchal, the Board dismissed
Jorgensen & Co., which served as the Company's independent
registered public accountant for the fiscal years ended Dec. 31,
2012, and Dec. 31, 2011.
The reports provided by Jorgensen & Co. in connection with the
Company's financial statements for the fiscal years ended
Dec. 31, 2012, and Dec. 31, 2011, did not contain any adverse
opinion or disclaimer of opinion, nor were those reports qualified
or modified as to uncertainty, audit scope, or accounting
principles, except that they contained an explanatory paragraph in
respect to the substantial doubt of the Company's ability to
continue as a going concern.
There was one disagreement between the Company and Jorgensen & Co.
in connection with the audit of the Company's financial statements
for the fiscal year ended Dec. 31, 2012. The disagreement
concerned the fair value of shares issued in non-monetary
transactions. The view of Jorgensen & Co. was that market
conditions for the cash sale of securities (at $0.50) weighed
heavily in the valuation of the shares, notwithstanding
contractual agreements (at $1.00) for the parties to the non-
monetary exchanges. The Board did not directly discuss the
subject matter of the disagreement with Jorgensen & Co., and the
disagreement was ultimately resolved to the satisfaction of
Jorgensen & Co. The Company has authorized Jorgensen & Co. to
respond fully to any inquiries of Semple Marchal concerning the
subject matter of the disagreement.
During the two most recent completed fiscal years and through
July 15, 2013, neither the Company nor anyone on its behalf
consulted with Semple Marchal.
About GlyEco, Inc.
Phoenix, Ariz.-based GlyEco, Inc., is a green chemistry company
formed to roll-out its proprietary and patent pending glycol
recycling technology that transforms waste glycols, a hazardous
material, into profitable green products.
Glyeco disclosed a net loss of $1.86 million on $1.26 million of
net sales for the year ended Dec. 31, 2012, as compared with a net
loss of $592,171 on $824,289 of net sales for the year ended Dec.
31, 2011. The Company's balance sheet at March 31, 2013, showed
$9.16 million in total assets, $2.63 million in total liabilities
and $6.53 million in total stockholders' equity.
Jorgensen & Co., in Lehi, UT, 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 not yet achieved profitable operations and is
dependent on its ability to raise capital from stockholders or
other sources and other factors to sustain operations. These
factors, among other matters, raise substantial doubt that the
Company will be able to continue as a going concern.
GROVES IN LINCOLN: Files Disclosure Statement to 2nd Amended Plan
-----------------------------------------------------------------
Groves in Lincoln, Inc., et al., filed a Disclosure Statement
dated July 9, 2013, describing their Second Amended Chapter 11
Plan.
The Plan provides that subject to payment of expenses of the
Dbetors' Chapter 11 cases, all proceeds from the sale of the
Debtors' assets -- together with funds held by the Debtors and by
Wells Fargo as trustee of the Debtors' bondholders -- will be paid
to the Debtors' creditors, the majority of which are bondholders.
The Disclosure Statement reveals that the Debtors got a stalking
horse bid for the Assets from BSL Lincoln, Inc. They did not
receive any higher or better offers for the Assets by the June 3
bid submission deadline. The Court approved the sale on June 12
and the sale of the Assets to BSL Lincoln for $30 million was
successfully closed on June 28.
Under the Plan, payments to bondholders will be made by the Bond
Trustee. Payments to other creditors will be made by a Plan
Trustee appointed to administer the Plan.
Distributions are projected as follows:
* For bondholders, the funds wired to or retained by the Bond
Trustee are projected to yield 48% to 63% (based on the series
of Bonds owned) in the event that Contingent Payment is made by
BSL in the maximum amount provided by the Asset Purchase
Agreement, and 44% to 57% (based upon the series of Bonds owned)
in the event the Contingent Payment is not made.
* Holders of an administrative claim or other type of priority
claim, or a secured claim other than Bonds, will be paid the
full amount you are owed.
* General unsecured claims will receive a pro rata share of the
General Unsecured Fund. The General Unsecured Fund will be
funded in an amount equal to 50% of the total amount of Allowed
General Unsecured Claims, but not in an amount greater than
$32,500. The Debtors forecast that the Allowed General
Unsecured Claims will total approximately $68,000. If the
forecast is correct, the holder of Allowed General Unsecured
Claims will be paid 48% of the Allowed Amount of their Claims.
However, the inherent difficulties of forecasting Allowed Claims
in any bankruptcy case mean that creditors should not rely on
this forecast. Holders of General Unsecured Claims will not
receive any interest on account of their Allowed Claims.
The Plan was signed by Toby Shea, chief financial officer of The
Groves in Lincoln, Inc. and The Apartments at the Groves, Inc.
A full-text copy of the Disclosure Statement dated July 9 is
available for free at:
http://bankrupt.com/misc/GROVESinLINCOLN_DSJul9.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.
GWR OPERATING: Moody's Assigns 'B3' CFR; Outlook Positive
---------------------------------------------------------
Moody's Investors Service upgraded GWR Operating Partnership,
L.L.L.P's Corporate Family Rating to B3 from Caa1, Probability of
Default Rating to B3 --PD from Caa1-PD and First Mortgage notes to
B2 (LGD3, 43%) from B3 (LGD3, 42%).
In addition, Moody's assigned a B3 rating to Great Wolf Resorts,
Inc.'s proposed $320 million guaranteed senior secured term loan
and $100 million guaranteed senior secured revolver. The SGL-3
Speculative Grade Liquidity rating of GWR was affirmed. The rating
outlook is positive.
Ratings Rationale:
Proceeds from the proposed $320 million of guaranteed senior
secured term loan will be used to repay GWR's $230 million First
Mortgage notes, $48 million Concord property loan, and fees and
expenses. Moody's ratings are subject to review of final
documentation.
Ratings assigned are:
Great Wolf Resorts, Inc.
$100 million guaranteed senior secured revolver due July 2018,
rated B3 (LGD 3, 44%)
$320 million guaranteed senior secured term loan due July 2020,
rated B3 (LGD3, 44%)
Ratings upgraded are:
GWR Operating Partnership, L.L.L.P.
Corporate Family Rating raised to B3 from Caa1
Probability of Default Rating raised to B3-PD from Caa1-PD
$230 million guaranteed First Mortgage Notes due April 2017,
raised to B2 (LGD3, 43%) from B3 (LGD3, 42%)
Ratings affirmed are:
Speculative Grade Liquidity Rating of SGL-3
The upgrade of GWR's Corporate Family Rating to B3 reflects the
steady improvement in operating performance from both higher
occupancy and room rates along with a continued focus on managing
its cost structure which has enabled the company to improve
operating earnings and margins. GWR reported an increase in
occupancy, average daily rate and Total RevPAR of 1.3%, 6.8% and
7.8% for the 1Q13 and 4.9%, 0.6% and 6% for full year 2012 versus
prior year. As a result, GWR's leverage declined to around 6.0
times while EBITDA less capex to total interest increased to
around 1.6 times for the twelve month period ending March 31,
2013.
The B3 CFR reflects GWR's high leverage, modest coverage, small
scale, earnings concentration by property, limited
diversification, and high operating leverage given its fixed cost
base. The ratings also reflect GWR's improved operating
performance as well as its solid brand recognition, good asset
value relative to funded debt levels, and adequate liquidity.
The positive outlook reflects Moody's view that overall operating
performance and earnings should improve if higher operating
metrics and cost saving initiatives at existing resorts are
realized and more resort properties are opened and new management
agreements are entered into overtime.
Factors that could result in a higher rating include a sustained
improvement in operating metrics and cost structure at existing
resorts and the addition of new resort properties and management
agreements that generate stronger earnings and debt protection
metrics. Specifically, an upgrade would require debt to EBITDA of
under 5.25 times and EBITDA minus capital expenditures to gross
interest above 2.25 times on a sustained basis. A higher rating
would also require good liquidity.
Factors that could result in negative ratings pressure include a
deterioration in operating metrics or inability to reduce costs at
existing resort properties or the absence of new revenue sources
through new management agreements or resort properties that caused
a sustained deterioration in credit metrics or liquidity.
Specifically, a downgrade could occur if debt to EBITDA migrated
towards 6.5 times or EBITDA less capex fell below 1.5 times on a
sustained basis.
Once the proposed transaction is successfully completed as
expected, the B3 Corporate Family and B3-PD Probability of Default
ratings will be withdrawn from GWR Operating Partnership, LLC and
assigned to Great Wolf Resorts, Inc., the top level entity in the
capital structure with rated debt. At the same time the ratings on
the $230 million guaranteed First Mortgage Notes will also be
withdrawn. In addition, Moody's would likely assign Great Wolf a
Speculative Grade Liquidity Rating of SGL-2 due in part to the
addition of an alternate source of liquidity with the $100 million
revolving credit facility, which Moody's expects to be largely
undrawn.
The principal methodology used in this rating was the Global
Lodging & Cruise Industry Rating 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.
GWR Operating Partnership, L.L.L.P.'s is a wholly owned subsidiary
of Great Wolf Resorts, Inc., which owns, operates, and/or manages
hotel resort properties specializing in in-door water parks.
Annual revenues are approximately $320 million. GWR is owned by
affiliates of Apollo Management VII, LP.
HAMPTON CAPITAL: Files Chapter 11 Plan of Liquidation
-----------------------------------------------------
Hampton Capital Partners, LLC, dba Gulistan Carpet, filed with the
U.S. Bankruptcy Court for the Middle District of North Carolina a
Plan of Liquidation and accompanying Disclosure Statement dated
July 8, 2013.
The Plan contemplates that the best disposition of the Debtor's
estate would involve (i) the appointment of trustee on or before
the Effective Date, (ii) the sale and/or collection of any
remaining property of the Estate, and (iii) the pursuit of any
causes of action or claims held by the Debtor's estate, followed
by distribution of cash and net sale proceeds to creditors.
The Plan provides for the appointment of a trustee by the
Bankruptcy Administrator, subject to approval by the Court. The
Debtor recommends the appointment of Sara A. Conti as trustee. If
the Plan is confirmed, a claims review and reconciliation process
is anticipated to take approximately between 60 and 180 days
after the Effective Date, although resolution of the Ronile
Secured Claim may take additional time to complete.
The Plan classifies and provides treatment for six classes of
claims against and interests in the Debtor:
* Class 1: Secured Claim of Ronile. The Claim will be limited
to the value of the Debtor's interest in the Aberdeen Facility
and in the Wagram Facility or the respective Net Sale Proceeds
of it.
* Class 2: Secured Claim of Scotland County. Scotland County
will retain its lien on the Wagram Facility and in the event
of a sale of the Facility, the Class 2 Claim will be paid in
full, with inerest.
* Class 3: Priority Unsecured Wage Claims and Class 4: Priority
Unsecured Benefit Claims. These claims wil be paid within 60
days of the Plan Effective Date after payment of all Allowed
Administrative and Priority Tax Claims.
* Class 5: Unsecured Claims. These claims will be paid in one
or more pro rata distributions of Available Cash 60 days after
the Effecitve Date after payment of all Allowed
Administrative, Priority Tax, Class 3 and Class 4 Claims.
* Class 6 Interests will be terminated and holders will receive
no distribution.
Full-text copies of the Liquidation Plan and Disclosure Statement
dated July 8 are available at:
http://bankrupt.com/misc/HAMPTONCAPITAL_PlanDSJul8.PDF
The Court is set to convene a hearing on Sept. 12, 2013 to
consider adequacy of the Disclosure Statement. Objections are due
no later than Aug. 15.
John A. Northen, Esq., and Vicki L. Parrot, Esq., of Northen Blue,
LLP, also serve as counsel to the Debtor.
About Hampton Capital Partners
Hampton Capital Partners, LLC, an Aberdeen, N.C.-based
manufacturer of residential and commercial tufted carpets under
the Gulistan name, filed a Chapter 11 petition (Bankr. M.D.N.C.
Case No. 13-bk-80015) on Jan. 7, 2013.
The Company has been producing carpet under the Gulistan name
since 1924, although it traces its roots back to 1818, when an
Armenian textile importer established a business in Turkey. The
company began manufacturing carpet in Aberdeen in 1957, and was
acquired by J.P. Stevens & Co. Inc. in 1964. Over the last 25
years, Gulistan Carpet has undergone several ownership changes.
In addition to its headquarters and manufacturing operations in
Aberdeen, the company has a plant in Wagram, N.C.
John Paul H. Cournoyer, Esq., at Northen Blue, LLP, serves as
counsel to the Debtor. Getzler Henrich & Associates LLC is the
financial consultant.
Five creditors have been appointed to serve on the Official
Committee of Unsecured Creditors. The Committee tapped Lowenstein
Sandler LLP as its counsel and Wilson and Ratledge PLLC as its
North Carolina counsel. The Committee also tapped BDO Consulting,
a division of BDO USA LLP, as its financial advisors.
HUBBARD RADIO: Moody's Retains Ratings Over Sandusky Acquisitions
-----------------------------------------------------------------
Moody's Investors Service views the planned acquisition of radio
stations by Hubbard Radio, LLC as being credit positive given the
transaction will add incremental revenues, or scale, as well as
provide greater geographic diversity.
On July 16, 2013, Hubbard announced that it entered into an asset
purchase agreement to acquire 10 radio stations from Sandusky
Radio, adding five radio stations in Seattle and five in Phoenix,
for approximately $85.5 million. With the addition of Seattle and
Phoenix, the acquisition enhances Hubbard's reach across 30
stations and alleviates its dependence on two markets, Washington
and Chicago, for roughly two-thirds of total revenues. Despite the
expected increase in debt balances as a result of the transaction,
there is no immediate impact to ratings nor the stable outlook
based on Moody's expectations that overall financial metrics and
operating performance will remain within the B1 category for the
Corporate Family Rating.
In May 2013, Hubbard extended the maturity of its 1st lien term
loan to April 2019 from April 2017 and relaxed the 1st lien
secured leverage incurrence ratio to 4.75x from 4.25x, which
enhanced the company's ability to access the uncommitted $75
million incremental facility. By increasing scale with the
addition of 10 stations in two top 20 markets and reducing revenue
concentration, Hubbard is taking steps to address two of the key
risks that Moody's has highlighted. The transaction is expected to
close by the end of 2013 and is subject to Hart-Scott-Rodino
consent and FCC approval.
Formed in 2011, Hubbard Radio, LLC is a family controlled, and
privately held media company that will own and operates 30 radio
stations in seven top 30 markets, including Chicago, Washington,
D.C., Minneapolis/St. Paul, St. Louis, Cincinnati, Seattle and
Phoenix. Headquartered in St. Paul, MN, the company is affiliated
with Hubbard Broadcasting Inc., a television and radio
broadcasting company that was started in 1923. Net revenues for
the 12 months ending March 2013 for Hubbard on a standalone basis
was roughly $181 million.
On May 28, 2013, Moody's assigned a B1 rating to Hubbard Radio's
proposed $358 million 1st lien term loan. All other existing
ratings, including the B1 Corporate Family Rating (CFR), are
unchanged and the outlook remained stable as of that date.
HUSTAD INVESTMENT: Withdraws Application to Hire Trek Development
-----------------------------------------------------------------
Hustad Investment Corporation, et al., have withdrawn their motion
seeking approval to engage Trek Development, Inc., to provide
development and real estate brokerage services.
As reported by the Troubled Company Reporter on May 31, 2013,
according to the Debtor, Trek is an insider of the Debtor. The
president and sole shareholder of Trek is Elisabeth Hustad who is
also the president and a director of Debtors Hustad Investment
Company and Hustad Real Estate Company. In addition, Elisabeth
Hustad owns 15% of the stock of Hustad Investment Company.
Trek has been representing the Debtor since Trek was established
in 1997.
The Debtors had agreed to Trek's compensation arrangement
reflected in the attached contracts:
a. Development Services Contracts:
-- Markets at Rush Creek -- 5% of the gross sales price
upon the closing of the sale of a portion of the
project or the Land, except for land that is sold "raw"
or undeveloped.
-- Bluff Country Village -- 5% of the gross sales price
upon the closing of the sale of a portion of the
project or the Land.
b. Listing Contracts:
-- Markets at Rush Creek -- If there is a cooperating
Broker, 6% of the price for which the property is sold
or exchanged. If there is not a cooperating Broker,
4% of the price for which the property is sold or
exchanged.
-- Hamlets of Rush Creek -- 5% of the price for which
the property is sold or exchanged.
-- Bluff Country Village -- 6% of the price for which
the property is sold or exchanged.
-- Hustad/Schommer, Maple Grove -- 6% of the price for
which the property is sold or exchanged.
-- Mill Creek, Eden Prairie -- 6% of the price for which
the property is sold or exchanged.
The Debtor expects that during 2013, the Hamlets at Rush Creek,
the grocery pad in the Markets at Rush Creek, and the convenience
store sale to Geller in Bluff Country Village will close. The
development and brokerage fees payable to Trek in those
transactions will total approximately $708,500, assuming target
sale prices are reached. About $511,000 of that sum is brokerage
commission and $197,500 is developer fee. The Debtor and Trek are
proposing that the portion of the developer fee attributable to
prepetition services be deferred until creditors are paid. That
amount is estimated to be $68,000. The Debtor expects that a plan
will be confirmed in this case by the end of 2013.
About Hustad Investment
Hustad Investment Corp., Hustad Investments LP, and Hustad Real
Estate Company sought Chapter 11 protection (Bankr. D. Minn. Lead
Case No. 13-40789) in Minneapolis on Feb. 20, 2013.
The Debtors are engaged in the business of real estate investment.
The Debtors own, among others, a commercial development consisting
of 8 acres in Eden Prairie, Minnesota, called Bluff Country
Village, and a mixed-use development consisting of 110+/- acres in
Maple Grove, Minnesota.
The majority of Bluff Country Village is owned by HIC, but some of
that property is owned by HRE. The Maple Grove Property is owned
by HILP.
Both Bluff Country Village and the Maple Grove Property are
subject to a first mortgage in favor of BMO Harris Bank, N.A.
securing a debt of approximately $12.4 million. The Chapter 11
cases were filed on the eve of a sheriff's sale scheduled by BMO
in connection with foreclosure of its mortgage.
HILP estimated less than $50 million in assets and liabilities.
HRE estimated less than $10 million in assets and less than $50
million in liabilities. HIC disclosed $12,941,736 in assets and
$15,022,204 in liabilities as of the Chapter 11 filing.
The Debtors are represented by Michael L. Meyer, Esq., at Ravich
Meyer Kirkman McGrath Nauman, in Minneapolis.
ICEWEB INC: Receives Letter From CTC CEO About Pending Merger
-------------------------------------------------------------
IceWEB Storage Corporation, a subsidiary of IceWEB, Inc., provided
the following update regarding the pending acquisition of
Computers & Telecom, Inc., and KC NAP, the companies that IceWEB
has been in the process of acquiring.
"Mr. Gibson's letter spells out in detail many of the reasons why
we are excited about this acquisition, why it has been a lengthy
process to complete, and shows the enthusiastic commitment of
CTC/KC-NAP's team to become part of IceWEB as a Complete Cloud
Services Company," said Rob Howe, IceWEB CEO.
An Open Letter to IceWEB
July 7th, 2013
Management & Stockholders:
I felt it would be useful for both IceWEB's management and its
stockholders to hear from us as we wind down the process of
getting through the due diligence & audit and soon prepare to be
an IceWEB owned pair of companies. It has been a difficult
process, as we have had to completely explain two very complex
private closely held companies, with unique assets for which there
are no readily available comparable public firms for appraisal or
evaluation. After all, there are only 45 NAP's in the world, most
run as closed subsidiaries of telephone companies or real-estate
investment trusts that do not publish independent data. Add to
this the fact that many of the vendor relationships of both CTC
and the NAP are not based on dollar denominated payments, but
trades for roof rights or bandwidth exchanges, and we have had the
auditors and IceWEB's CFO hopping in casting the financials to
GAAP standards.
However, that being said, here is what soon will happen: IceWEB
will add to its portfolio some 300 high quality commercial
customers most with recurring revenue. This includes firms like
American Century Investments, Crown Center, Dairy Farmers of
America, Hallmark, Holiday Inn, JE Dunn, Marriott Hotels and
Sheraton Hotels. Most of our revenue is based on contracts
ranging from 24 to 60 months and our sales efforts lock in long
term stable revenue. This is one of the brightest aspects of our
future together. Rob Howe, IceWEB's CEO, has extensive marketing
and sales experience and we give him a virtual smorgasbord of new
services to sell that complement the current offerings in every
way. For example, now when an IceBOX system is sold, IceWEB not
only gets the one time sale and the recurring revenue of license
renewals, but also the additional revenue of client co-location
and bandwidth sales, or the greater revenue of a fully-managed
services system. We also get the opportunity to sell the client
additional services of data bandwidth, phones, intercompany
private networking, mail and web services.
More importantly, IceWEB clients moving to the cloud finally have
the availability from one company of the services of a systems
manufacturer, a domain registrar, a premium ISP and bandwidth
exchange, a full services data center, a systems integrator, a
VoIP and Video provider, and a disaster recovery facility. Most
customers to secure these services would be working with a minimum
of 3-5 different firms with the corresponding workload of
coordinating these services. In selling this broad mix of
services we make the customers very "sticky," as one vendor
usually cannot deliver this full range. We will save them that
headache and together ride the rising tide of recurring revenue
generated in the process.
So I hope you all see this is much more than IceWEB's buying just
a multi-million dollar asset in the data center alone. It is in
fact buying that and a metro spanning two state wholly owned
wireless network encompassing 50 cities, and the capacity to bring
dark fiber and unlimited bandwidth to over 350 multi-tenant
buildings near or along our fiber rings with the ability to expand
this to a national offering covering thousands of sites as we tap
additional regional assets. We see a very bright future as we
help broaden and enhance the base of the company while mutually
sharing in the growth of top line revenue. We look forward to
both the challenge and the opportunity.
Graeme Gibson, CDP, MCSE
President and CEO
CTC, Inc. and KC NAP, LLC
Ivy League University Adopts Icebox
IceWEB Storage, a Unified Data Storage appliance provider for
cloud and virtual environments, as well as the highly secure,
scalable IceBOX BYOD (Bring Your Own Device) Private Digital Cloud
Solution, has secured an order from an Ivy League University for
up to 5,000 users.
The University chose an IceWEB 2200 2U IceBOX storage appliance
with 4TB capacity expandable to 48TB.
"The Ivy League is the gold standard for colleges and universities
in the US. Their administrators, faculty, and students require
the latest and most secure way to collaborate in a BYOD
environment. To have been able to meet their exacting
requirements with our IceBOX private cloud collaboration platform
is particularly gratifying. As we continue to transition
customers of all sizes from traditional ways of unsecure file
sharing to IceBOX and BYOD, we're also building a more aggressive
recurring revenue model for our company," said Rob Howe, CEO.
IceBOX provides:
* Industry leading 256 bit encryption;
* Unmatched data protection with a built-in backup utility and
DR replication capability in our 2000 models;
* The broadest BYOD support; Apple, Blackberry, Windows Mobile
& Kindle; and
* The ability to present existing Windows network file shares
via the IceBOX Cloud Platform
Obtains $75,000 Loan
Between July 9, 2013, and July 12, 2013, IWEB Growth Fund lent
IceWEB an aggregate of $75,000 under the terms of three separate
Confession of Judgment Promissory Notes. These notes are for a
one year term and bear interest at 12 percent per annum payable at
maturity. Embodied in each of the notes is a confession of
judgment which means that should the Company defaults upon the
payment of the note, the Company has agreed to permit IWEB Growth
Fund to enter a judgment against the Company in the appropriate
court in Virginia before filing suit against the Company for
collection of the amounts. These loans were made pursuant to the
Loan Agreement with IWEB Growth Fund that was entered into on
Nov. 9, 2012. The cumulative borrowing under the Loan Agreement
with IceWEB Growth Fund is $186,000. The Company is using the net
proceeds from these loans for general working capital.
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.
The Company's balance sheet at March 31, 2013, showed $1.47
million in total assets, $3.39 million in total liabilities and a
$1.91 million total stockholders' deficit.
INTELLICELL BIOSCIENCES: Ironridge Holds 9.9% Equity Stake
----------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Ironridge Global IV, Ltd., and its affiliates
disclosed that, as of July 15, 2013, they beneficially owned
12,000,000 shares of common stock of Intellicell Biosciences,
Inc., representing 9.99% of the shares outstanding. A copy of the
regulatory filing is available for free at http://is.gd/h0RaAz
About Intellicell Biosciences
Intellicell BioSciences, Inc., headquartered in New York, N.Y.,
was formed on Aug. 13, 2010, under the name "Regen Biosciences,
Inc." as a pioneering regenerative medicine company to develop and
commercialize regenerative medical technologies in large markets
with unmet clinical needs. On Feb. 17, 2011, the company changed
its name from "Regen Biosciences, Inc." to "IntelliCell
BioSciences Inc". To date, IntelliCell has developed proprietary
technologies that allow for the efficient and reproducible
separation of stromal vascular fraction (branded
"IntelliCell(TM)") containing adipose stem cells that can be
performed in tissue processing centers and in doctors' offices.
The Company has incurred losses since inception resulting in an
accumulated deficit of $43,079,590 and a working capital deficit
of $3,811,024 as of March 31, 2012, respectively. However, if the
non-cash expense related to the Company's change in fair value of
derivative liability and stock based compensation is excluded then
the accumulated deficit amounted to $4,121,538. Further losses
are anticipated in the continued development of its business,
raising substantial doubt about the Company's ability to continue
as a going concern.
The Company's balance sheet at Sept. 30, 2012, showed
$4.15 million in total assets, $7.31 million in total liabilities
and a $3.16 million total stockholders' deficit.
INTELLIPHARMACEUTICS: RexistaTM Development Program Updates
-----------------------------------------------------------
Intellipharmaceutics International Inc. provided an update on the
following events in its RexistaTM oxycodone development program:
(1) The results of the current stage of development and physico-
chemical tests to assess abuse-deterrent properties of its
RexistaTM oxycodone
(2) Stability studies
(3) Successful Phase I clinical trial of its RexistaTM abuse-
deterrent oxycodone, designed around its proprietary drug
delivery system.
The physico-chemical tests were conducted on either an intact,
pulverized or microwaved RexistaTM oxycodone and included:
Crush resistance studies conducted to evaluate the potential
for abuse by chewing and licking of RexistaTM oxycodone;
Alcohol challenge studies conducted to evaluate the potential
for "dose dumping" related to inadvertent or deliberate co-
administration of RexistaTM oxycodone with alcohol;
Extraction studies in beverages, aqueous and non-aqueous media
conducted to evaluate the potential for abuse related to oral
administration of oxycodone obtained from dissolved Rexista?
oxycodone;
Vaporization studies conducted to evaluate the potential for
abuse related to insufflation of oxycodone obtained from
heating of RexistaTM oxycodone; and
Syringeability and injectability studies conducted to evaluate
the potential for abuse related to intravenous administration
of oxycodone obtained from dissolved, pulverized or microwaved
RexistaTM oxycodone.
Results from those physico-chemical studies suggest that:
RexistaTM oxycodone should be difficult to abuse through
crushing, chewing or licking;
Release of oxycodone from RexistaTM oxycodone is likely to be
slower or not instantaneous in a range of beverages and
solvents;
RexistaTM oxycodone should not "dose dump", or instantaneously
release the entire dose of oxycodone, in the presence of
ethanol over a range of concentrations;
RexistaTM oxycodone when pulverized and reduced to particles
should be difficult and time consuming to syringe or inject in
the form and volume suitable for intravenous administration;
Release of oxycodone should be insignificant or inefficient
via heating and vaporization;
Extraction of oxycodone from RexistaTM oxycodone which has
been microwaved should be difficult or inefficient; and
RexistaTM oxycodone when pulverized or reduced to particles
should be difficult or inefficient to snort or inhale.
"The study suggests that utilization of the technology platform in
our formulation of RexistaTM oxycodone does not interfere with the
bioavailability of oxycodone, and promotes the stability of
RexistaTM oxycodone," stated Dr. Isa Odidi, CEO and Co-Founder of
Intellipharmaceutics. "We believe that our RexistaTM oxycodone is
also sufficiently differentiated from currently available
commercial oxycodone hydrochloride extended-release products, both
in its design architecture and by having the release of the active
substance, oxycodone, show a point of divergence in a dissolution
profile and/or a bioavailability profile. This represents a point
or segment in a plasma concentration timeline where the history of
the dissolution or release rate changes from a higher release rate
during onset of action to another lower rate during the phase of
controlled release or sustained action."
The Company plans to seek a Special Protocol Assessment from the
United States Food and Drug Administration to assist the Company
in its plans to conduct a pivotal Phase III study in preparation
for a New Drug Application 505(b)(2) application. The purpose of
the SPA is to reach an agreement with the FDA regarding the study
design, endpoints and statistical analyses needed to support
approval of RexistaTM oxycodone prior to initiating the Phase III
study. The Company will also be seeking a licensing partner for
the Phase III studies. Intellipharmaceutics' previously announced
development goals for 2013 included the completion of Phase I
studies of RexistaTM oxycodone. The Company currently expects to
carry out additional Phase I studies by the 4th quarter of 2013,
and to initiate Phase III trials by the first half of 2014.
For the SPA, the Company intends to propose a pivotal Phase III
study designed as a randomized, double-blinded, placebo-
controlled, multi-center study to evaluate the analgesic efficacy
of RexistaTM oxycodone in comparison to a placebo over a 12-week
treatment period in patients having pain intensity scores
corresponding to moderate-to-severe pain. There can be no
assurance that additional clinical trials will meet the expected
outcomes, or that the Company will be successful in submitting an
NDA 505(b)(2) filing with the FDA, that the FDA will approve this
product candidate for sale in the U.S. market, or that it will
ever be successfully commercialized.
A copy of the Form 8-k is available for free at:
http://is.gd/wBs2Sf
Toronto, Canada-based Intellipharmaceutics International Inc. is
incorporated under the laws of Canada. Intellipharmaceutics is a
pharmaceutical company specializing in the research, development
and manufacture of novel and generic controlled-release and
targeted-release oral solid dosage drugs. Its patented
Hypermatrix(TM) technology is a multidimensional controlled-
release drug delivery platform that can be applied to the
efficient development of a wide range of existing and new
pharmaceuticals. Based on this technology, Intellipharmaceutics
has a pipeline of product candidates in various stages of
development, including filings with the FDA in therapeutic areas
that include neurology, cardiovascular, gastrointestinal tract,
diabetes and pain.
The Company's balance sheet at May 31, 2013, showed $3.6 million
in total assets, $5.4 million in total liabilities, and a
stockholders' deficiency of $1.8 million.
Going Concern Uncertainty
"In order for the Company to continue operations at existing
levels, the Company expects that for at least the next twelve
months the Company will require significant additional capital.
While the Company expects to satisfy its operating cash
requirements over the next twelve months from cash on hand,
collection of anticipated revenues resulting from future
commercialization activities, development agreements or marketing
license agreements, through managing operating expense levels,
funds from senior management through the convertible debenture
described elsewhere herein, equity and/or debt financings, and/or
new strategic partnership agreements funding some or all costs of
development, there can be no assurance that the Company will be
able to obtain any such capital on terms or in amounts sufficient
to meet its needs or at all," the Company said in its quarterly
report for the period ended May 31, 2013.
INTRAOP MEDICAL: Files for Ch. 11, Set for September Auction
------------------------------------------------------------
IntraOp Medical Corporation (OTC: IOPD.PK), a provider of
technology solutions for the treatment and eradication of cancer,
announced that it has reached an agreement through which an entity
backed by a group of institutional investors will acquire
substantially all of its assets in a transaction valued at
approximately $15 million, plus the assumption of certain
liabilities. To facilitate the sale, on July 15, 2013, IntraOp
Medical filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code in U.S. Bankruptcy Court for the Northern District
of California.
The agreement with the Bidder comprises the initial stalking horse
bid in the Court-supervised auction process under Section 363 of
the Bankruptcy Code. IntraOp Medical expects to complete the
process in approximately 90 days, pending receipt of the necessary
approvals from the Bankruptcy Court.
"IntraOp Medical had a strong fiscal year in 2012, with 13
machines shipped and positive earnings over $1 million before
taxes and depreciation, but was unable to produce sufficient free
cash flow to service its existing debt," said John Powers, CEO of
IntraOp Medical. "In addition, the company did not have the cash
resources to counteract a slowdown in 2013 driven by the decline
in the European economy and uncertainty over Healthcare reform in
the United States."
IntraOp Medical expects to continue to operate its business as
usual during the restructuring. In addition to the stalking horse
bid, the Bidder has committed to provide debtor in possession
("DIP") financing to provide sufficient liquidity for ongoing
operations through the process. IntraOp Medical expects to pay
suppliers in the normal course for all goods and services
delivered on and after July 15, 2013, and will continue
to process orders and ship and service its units worldwide.
Payment for goods and services delivered prior to the filing will
be addressed through the Chapter 11 process.
Customers will continue to be fully supported through the process
and better served in the long run.
Looking ahead, IntraOp Medical believes that it is strongly
positioned for the emerging Intra-Operative Electron Radiation
Treatment (IOERT) market. In 2013, Medicare (CMS) approved
reimbursement for IOERT, which IntraOp believes will assist in
driving future use of the Company's Mobetron IOERT device. In
addition, the second generation Mobetron, introduced in 2011, has
proven to be much more efficient from a cost and performance
perspective, improving the potential for long-term profitability.
This will be increasingly important as hospitals comply with the
Affordable Healthcare Act and move toward capitated rate
structures. The Mobetron will be able to provide clinically
proven, improved outcomes at lower costs for every indication on
which it is used, saving both the hospitals and insurers money.
IntraOp Medical is confident that this restructuring will put the
business in a strong position long-term to positively impact
millions of cancer patients in the future.
About IntraOp
IntraOp Medical Corporation provides innovative technology
solutions for the treatment and eradication of cancer. Founded in
1993, IntraOp is committed to providing the tools doctors need to
administer IOERT safely and effectively for all cancer patients.
The Mobetron is the first IOERT device designed for use in
existing operating rooms and has been used to treat over 20
different cancer indications. Mobetron benefits include:
increased survival rates, better local tumor control, shorter
treatment cycles, and happier patients with fewer side effects.
Leading hospitals and clinics throughout the world use the
Mobetron as a vital part of their comprehensive cancer program.
For more information:
E-mail: info@intraopmedical.com
Tel: 408-636-1020 x128.
JEDD LLC: Court Continues Hearing on Plan Confirmation to Aug. 19
-----------------------------------------------------------------
The U.S. Bankruptcy for the Middle District of Tennessee continued
the hearing to consider the confirmation of JEDD, LLC's Chapter 11
Plan to Aug. 19, 2013, at 9:30 a.m.
JERRY'S NUGGET: Court Denies US Bank's Motion to End Exclusvity
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Nevada has denied
the motion of U.S. Bank to terminate Jerry's Nugget, Inc., and
Spartan Gaming, LLC's exclusive period for filing and confirming a
Plan of Reorganization.
In the same order denying U.S. Bank's motion to terminate
exclusivity, the Court extended the Debtors' exclusive period to
secure acceptance of their plan until Aug. 30, 2013. The Court
ordered, however, that if the Debtors' plan is not confirmed by
Aug. 30, 2013, plan exclusivity will be terminated. Additionally,
the Court will consider the appointment of a Chapter 11 trustee or
examiner under Sections 1112(b)(4)(J), 1104(a)(3) and 1104(c)(1).
As reported in the TCR on June 13, 2013, U.S. Bank said that it
would be impossible for the Debtors to obtain acceptance of a plan
prior to the June 10 expiration of their exclusivity period. U.S.
Bank also stated that the Debtors have been dilatory in seeking
plan confirmation and the Debtors are mismanaged. U.S. Bank
stressed that terminating the Debtors' exclusivity period
will not prevent the Debtors from seeking confirmation of their
own plan.
About Jerry's Nugget and Spartan Gaming
Jerry's Nugget Inc., operates Jerry's Nugget, a casino consisting
of approximately 87,187 square feet of building area and 24,511
square fee of casino floor space with approximately 630 slot and
video poker machines and 9 table games. Jerry's Nugget also
contains a sports book, a keno area and a small live pit.
Jerry's Nugget Inc. and affiliate Spartan Gaming LLC sought
Chapter 11 protection (Bankr. D. Nev. Lead Case No. 12-19387) in
Las Vegas, Vegas, on Aug. 13, 2012. Jerry's Nugget, owned by the
Stamis family, has a 9.1-acre casino property in North Las Vegas.
The property consists of 87,187 square feet of building area and
24,511 square feet of casino floor space, with 630 slot and video
poker machines and 9 table games. Jerry's Nugget also contains a
sports book, a keno area, and a small live pit. There are two
restaurants the Uncle Angelo's Pizza Joint and Jerry's Famous
Coffee shop as well as Uncle Angelo's Bakery, a locals' favorite.
Net revenues totaled $22.5 million, including $15.3 million in
gaming revenue, in the year ended Dec. 31, 2011. Spartan Gaming
owns 12 parcels of real property in Nevada. Two of the parcels
provide parking access for Jerry's Nugget.
Judge Mike K. Nakagawa presides over the case. Gerald M. Gordon,
Esq., Talitha Gray Kozlowski, Esq., Teresa M. Pilatowicz, Esq.,
and Mark M. Weisenmiller, Esq., at Gordon Silver, represent the
Debtors. Jerry's Nugget estimated assets and debts of $10 million
to $50 million. Jerry's Nugget said its current going concern
value is at least $8 million. Spartan Gaming estimated $1 million
to $10 million in assets and debts. The petitions were signed by
Jeremy Stamis, president.
In its schedules, Jerry's Nugget disclosed $12,378,944 in assets
and $10,771,442 in liabilities as of the Petition Date.
JFK INTERNATIONAL AIR: Fitch Raises Rating on $1.5BB Bonds to 'BB'
------------------------------------------------------------------
Fitch Ratings has upgraded the rating on the Port Authority of
New York and New Jersey JFK International Air Terminal's (JFK IAT)
approximately $1.5 billion parity special project bonds series 6
and series 8 to 'BBB' from 'BB'. The Rating Outlook is Stable.
Rating Rationale
The upgrade reflects the substantial removal of construction risk
related to the USD1 billion expansion project recently completed,
delivered on time and on budget. Since the project began in 2010,
JFK IAT has consistently outperformed its base case in terms of
enplanements, revenue and cost management, and is now well-
positioned to experience significant growth as Delta Airlines Inc.
(Delta; 'B+'/Outlook Positive) expands services from the terminal.
Initial problems with the new baggage system have now largely been
remedied and, although it remains to be seen whether Delta can
seamlessly complete its transition into the terminal, an inability
to do so should have a negligible impact on JFK IAT's financial
position.
KEY RATING DRIVERS
-- Competition Exists Serving Strong Market: Despite inherent
strength of its New York and tri-state area catchment,
Terminal 4, John F. Kennedy International Airport (JFK) faces
a high degree of competition from the other independently
operated JFK terminals as well as from from Newark Liberty
International Airport (EWR) and LaGuardia Airport (LGA).
Exposure to competition is partly mitigated by limited capacity
in the air traffic system as a whole, particularly at peak
times. Furthermore, the terminal's performance during the 2008-
2010 down turn was reasonably robust, with enplanements
enduring a peak-to-trough fall of 2.8% from 2009 to 2010. The
2009 peak of 4.5 million is expected to be surpassed in 2013.
Revenue - Volume: Midrange
-- Pricing Power is Reasonable: JFK IAT's agreement with Delta
essentially functions as a blend of cost recovery methodology
and a traditional lease, and agreements with contract carriers
reflect negotiated pricing based on market conditions. IAT's
pricing power benefits from Terminal 4 being the only facility
at JFK with a 24 hour Federal Inspection Service facility,
making it desirable for international traffic. Airline cost per
enplanement (CPE) is comparatively high, and has remained in
the USD45-USD50 range over the past few years; however, this
should be viewed in the context of high international ticket
prices and limited cheaper alternatives for airlines wishing to
serve the region. Revenue - Price: Midrange
-- Well-Structured Debt Protects Noteholders: All IAT debt is
fixed rate maturing prior to the expiration of the Port
Authority of New York and New Jersey's (PANYNJ) lease with the
City of New York. All reserves are cash funded at their
required amounts. Debt Structure: Stronger
-- Moderate Leverage Well Contained: The 2010 series 8 issuance
doubled JFK IAT's outstanding senior debt and the resulting
increase in leverage was viewed by Fitch as amplifying the
effect of construction risks on JFK IAT's credit profile. In
the context of completed construction JFK IAT can be considered
moderately leveraged, and Fitch expects net debt to cash flow
available for debt service (CFADS) to fall steadily from just
over 7.0x currently to around 5.0x by 2020. The Fitch base case
envisages that JFK IAT's debt service coverage ratio (DSCR)
will be maintained in the 1.30x-1.50x range, whilst cutting
airlines' CPE to below USD40 over the period 2013-2020. Debt
Service & Counterparty: Midrange
-- Limited Facility Renewals Ahead: As a result of the recently
completed expansion project, terminal facilities are in
excellent condition and not expected to require major renewal
in the foreseeable future. Nevertheless, teething problems
being experienced with the new baggage system will need to be
rectified in the near term. Furthermore, it is expected that
IAT's facilities will be subjected to a second phase of
expansion works, although it is envisaged that these will
solely be the responsibility of Delta from both a project
management and financing perspective, and should not interfere
with the terminal's operations - this project is not yet
committed. Infrastructure & Renewal Risk: Midrange
RATING SENSITIVITIES
-- If Delta enplanements are at least as strong as expected and if
other airlines remain largely committed to the terminal,
further upgrade could be considered.
-- Conversely, a sharp fall in enplanements driven either by a
reduction in services offered by Delta or other airlines could
put downward pressure on the rating.
-- Should JFK IAT raise debt to fund any significant additional
construction works, again increasing its leverage profile,
this would likely cause the rating to fall back below
investment grade.
SECURITY
The bonds are secured by a facility rental payment made to the
Port Authority of New York and New Jersey, by JFK IAT, in an
amount sufficient to cover the required debt service obligations
annually through to maturity, and by a leasehold mortgage pledged
to the trustee in the leased premises.
CREDIT UPDATE
JFK IAT has just completed a major expansion project which
included construction of a linear extension to concourse B, adding
nine new aircraft contact gates to the 16 it had previously. The
project also included work related to passenger hold-rooms,
baggage systems, airline club and operational space, and new space
for retail concessions. The total project budget was $950 million.
The project was delivered on time and to budget, allowing Delta to
meet its planned grand opening on May 24, 2013. Prior to start of
the project, Delta entered into an anchor tenant agreement with
JFK IAT under which it agreed to rent 16 of the terminal's 25
gates on a long term basis to May 2043. Under the lease agreement,
Delta's payments for use of the allocated space comprise
approximately 65% fixed rental payments, with the remaining
amounts linked to passenger throughput utilizing a cost-recovery
residual methodology. Fitch understands that Delta plans to fund a
further expansion of the terminal that will allow it to further
consolidate its JFK services into Terminal 4.
JFK IAT has experienced some teething problems with respect to the
baggage system since launch that have caused delays in baggage
handling and have led to a sharp increase in missed baggage rates.
Fitch understands, however, that the resolution of these issues
has now largely been achieved; in any case, JFK would be sheltered
from any persisting financial impact, which would be borne by
Delta.
Traffic at terminal 4 has remained resilient in recent years,
reasonably stable at between 4.4 million-4.5 million enplanements
per year since 2009. Furthermore, performance in terms of
enplanements, revenue, O&M and debt service has consistently been
better than sponsor base case at the time of the start of the
project. Enplanements are projected to rise to over 6 million
following Delta's ramp-up, which is expected to account for
approximately 45% of terminal enplanements in 2013. Coinciding
with Delta's expansion in the terminal, a few other airlines
including Qatar, TAM, LAN and Aer Lingus, have been lost.
Nevertheless, Fitch expects JFK IAT to maintain a diverse mix of
carriers going forward, with no one carrier other than Delta
accounting for more than 10% of enplanements.
JFK IAT is ultimately owned by N.V. Luchthaven Schiphol, the owner
and operator of, amongst other things, Amsterdam Airport Schiphol.
In April 2010, Delta acquired Class B membership interest in JFK
IAT Member LLC in anticipation of the 2010 expansion project.
JVMW PROPERTIES: Court Extends Plan Filing Deadline to Aug. 30
--------------------------------------------------------------
The Hon. Enrique S. Lamoutte Inclan of the U.S. Bankruptcy Court
for the District of Puerto Rico has extended, at the behest of
JVMW Properties Management Corp., the deadline for the Debtor to
file a plan of reorganization and accompanying disclosure
statement until Aug. 30, 2013.
As reported by the Troubled Company Reporter on July 11, 2013, the
Debtor's counsel, Wigberto Lugo Mender, Esq., at Lugo Mender &
Co., said that the principal reason that triggered the request for
continuance has to do with the recent negotiation and settlement
reached with Banco Popular de Puerto Rico. Upon a settlement
agreement filed with the principal secured creditor of the
Debtor's estate, the Debtor is currently in the process of working
on a feasible settlement proposal to be negotiated with Banco
Popular de Puerto Rico. The time period set forth per the
stipulation to conclude in the proposal is 90 days. The
settlement proposal to be presented to BPPR is an integral
part of the Disclosure Statement and Plan of Reorganization to be
filed in the Debtor's case, Mr. Lugo Mender stated.
About JVMW Properties
JVMW Properties Management Corp filed a Chapter 11 petition
(Bankr. D.P.R. Case No. 13-02532) on April 1, 2013. The petition
was signed by Julio Blanco D'Arcy, as president. The Debtor
scheduled assets of $15,694,947 and liabilities of $25,782,161.
K-V PHARMACEUTICAL: Kingdon Capital Held 7.4% A Shares at June 6
----------------------------------------------------------------
In a Schedule 13D filing with the U.S. Securities and Exchange
Commission, Kingdon Capital Management, L.L.C., and Mark Kingdon
disclosed that as of June 6, 2013, they beneficially owned
3,640,000 shares of Class A common stock of K-V Pharmaceutical
Company representing 7.43 percent of the shares outstanding. A
copy of the regulatory filing is available at http://is.gd/pH7MQh
About K-V Pharmaceutical
K-V Pharmaceutical Company (NYSE: KVa/KVb) --
http://www.kvpharmaceutical.com/-- is a fully integrated
specialty pharmaceutical company that develops, manufactures,
markets, and acquires technology-distinguished branded and
generic/non-branded prescription pharmaceutical products. The
Company markets its technology distinguished products through
ETHEX Corporation, a subsidiary that competes with branded
products, and Ther-Rx Corporation, the company's branded drug
subsidiary.
K-V Pharmaceutical Company and certain domestic subsidiaries on
Aug. 4, 2012, filed voluntary Chapter 11 petitions (Bankr.
S.D.N.Y. Lead Case No. 12-13346, under K-V Discovery Solutions
Inc.) to restructure their financial obligations.
K-V employed Willkie Farr & Gallagher LLP as bankruptcy counsel,
Williams & Connolly LLP as special litigation counsel, and SNR
Denton as special litigation counsel. In addition, K-V tapped
Jefferies & Co., Inc., as financial advisor and investment banker.
Epiq Bankruptcy Solutions LLC is the claims and notice agent.
The U.S. Trustee appointed five members to serve in the Official
Committee of Unsecured Creditors. Kristopher M. Hansen, Esq.,
Erez E. Gilad, Esq., and Matthew G. Garofalo, Esq., at Stroock &
Stroock & Lavan LLP, represent the Creditors Committee.
Weil, Gotshal & Manges LLP's Robert J. Lemons, Esq., and Lori R.
Fife, Esq., represent an Ad Hoc Senior Noteholders Group.
LAKELAND INDUSTRIES: "Going Concern Doubt" Removed in 2013 10-K
---------------------------------------------------------------
Lakeland Industries, Inc., has filed an amendment no.1 to its
annual report on Form 10-K for the fiscal year ended Jan. 31,
2013. The amendment updated and modified the original filing for
a subsequent event related to the Company's new financing
arrangement that combined a $15 million senior credit facility
with AloStar Bank of Commerce and a $3.5 million subordinated term
loan, together with a warrant for common stock, with LKL
Investments, LLC.
In pertinent part, the risk factor section was amended to include
additional risk factors related to the Company's loan transactions
and the risk factors were also placed in their correct order as
certain of the risk factors were inadvertently misplaced
throughout the Risk Factor section of the Original Filing. Also,
as a result of the proceeds received by the Company in the
financing transactions, the going concern qualification contained
in the auditor's opinion and in the Notes to the financial
statements of the Original Filing were revised to reflect the
Company's renewed ability to continue as a going concern for at
least the next 12 months from Feb. 1, 2013.
The proceeds from those financings have been used to fully repay
the Company's former financing facility with TD Bank, N.A., in the
amount of approximately US$13.7 million. Also repaid upon closing
of the financings was the warehouse loan in Canada with a balance
of C$1,362,000 Canadian dollars (approximately US $1,320,000),
payable to Business Development Bank of Canada. The Company
believes that the conditions that were reported in its Annual
Report resulting in doubts about the Company's ability to continue
as a going concern have now been resolved as a result of the
closing of the financing and the repayment of debts.
A copy of the Amended Form 10-K is available for free at:
http://is.gd/DGA5Ze
About Lakeland Industries
Ronkonkoma, N.Y.-based Lakeland Industries, Inc., manufactures and
sells a comprehensive line of safety garments and accessories for
the industrial protective clothing market.
The Company reported a net loss of $26.3 million on $95.1 million
of net sales for the year ended Jan. 31, 2013, compared with a net
loss of $376,825 on $96.3 million of sales for the year ended
Jan. 31, 2012.
LEHMAN BROTHERS: Repo Clients Don't Have Customer Claims
--------------------------------------------------------
Judge James Peck issued an opinion on a June 25 ruling that
creditors holding repurchase agreements with Lehman Brothers Inc.,
the brokerage subsidiary of Lehman Brothers Holdings Inc., don't
have so-called customer claims.
The contested matter before the Court is the latest in a series
of similar proceedings brought by James W. Giddens, in his
capacity as trustee for the liquidation of LBI under the
Securities Investor Protection Act of 1970, as amended, to
advance the process of case administration by seeking judicial
approval of his determinations that certain categories of claims
do not satisfy the definition of customer claims in LBI's case.
The LBI Trustee has brought a motion to confirm his determination
that claims asserted by counterparties in relation to repurchase
agreements do not qualify for treatment as customer claims under
SIPA.
Judge Peck's 21-page opinion adopted arguments made by the LBI
Trustee. The Court agreed with the LBI Trustee's determination
that these claims are not entitled to customer status and
approved that determination based on the requirement that cash or
securities must be entrusted with a broker-dealer in order to
qualify for customer protection under SIPA. In this instance,
the Representative Claimants do not have customer claims against
LBI because their delivery-versus-payment accounts at LBI did not
hold any securities on September 19, 2008, the date of
commencement of LBI's case, and they are unable to show that the
agreements governing the repurchase transactions in question
contemplated the entrustment to LBI of the securities that were
transferred under the terms of the applicable agreements, Judge
Peck noted.
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
pointed out that the effect of the opinion is considerable,
because Mr. Giddens is paying customers' claims in full. The LBI
Trustee has yet to say how large the recovery will be on
noncustomer claims, Mr. Rochelle noted. The opinion, the
Bloomberg report further noted, was in a test case involving
Hudson City Savings Bank and the Federal Deposit Insurance Corp.
as receiver for a failed bank, among others.
From Lehman's perspective, the transactions were reverse repos
with the creditors delivering securities to Lehman under an
agreement where the creditors were obligated to repurchase the
securities at a later date at a specified price, Bloomberg said.
The agreements didn't require Lehman to hold or segregate the
securities. The agreements allowed Lehman to use the securities
for its own purposes until the repurchase date. Because Lehman
wasn't holding the creditors' securities at bankruptcy, they only
have general claims, not customer claims, Judge Peck ruled. The
judge rejected several argument made by the creditors, saying the
definition of "customer" must be given a "narrow reading."
A full-text copy of Judge Peck's Decision is available for free
at http://bankrupt.com/misc/LBI_RepoORDjune25.pdf
Michael E. Salzman, Esq., at Hughes Hubbard & Reed LLP, in New
York, for the LBI Trustee.
Hugh M. McDonald, Esq., at SNR Denton US LLP, in New York, and
Kym Rogers, Esq., at SNR Denton US LLP, in Dallas, Texas, for
Hudson City Savings Bank.
Peter Feldman, Esq., and John Bougiamas, Esq., at Otterbourg,
Steindler, Houston & Rosen, P.C., in New York, for the FDIC, as
receiver of Westernbank Puerto Rico.
Luc A. Despins, Esq., Jodi A. Kleinick, Esq., and Bryan R.
Kaplan, Esq., at Paul Hastings LLP, in New York, for CarVal
Investors UK Limited, as manager of Assignee of Doral Bank and
Doral Financial Corporation.
Josephine Wang, Esq., General Counsel, and Kenneth J. Caputo,
Esq., Senior Associate General Counsel, in Washington, D.C., for
Securities Investor Protection Corporation.
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 was set for March 30, 2013. The brokerage is
yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates.
LEHMAN BROTHERS: Court Denies Motion to Remand "FRIED II" Suit
--------------------------------------------------------------
Following the dismissal of a related matter ("Fried I"), Barbara
J. Fried, et al., filed a second action in the Supreme Court of
the State of New York, pleading various federal and state law
claims against Lehman Brothers Real Estate Associates III, L.P.,
et al., arising from failed investments. In 2011, the Defendants
removed the lawsuit to the U.S. District Court for the Southern
District of New York, and moved to stay the action pending the
outcome of Plaintiffs' appeal of Fried I. The Plaintiffs moved
the District Court to remand for lack of subject matter
jurisdiction. The District Court denied the motion to remand,
and entered a stay pending the Second Circuit's decision in
Fried I. The Second Circuit summarily affirmed the dismissal of
Fried I.
The Plaintiffs now renew their motion to remand, or in the
alternative, move the District Court to abstain from hearing the
case. The Plaintiffs argue that two intervening changes have
divested the District Court of subject matter jurisdiction: (1)
the Chapter 11 bankruptcy proceedings of Lehman Brothers
Holdings, Inc., is now in the post-confirmation stage, allegedly
removing "related to" jurisdiction over the case, and (2) the
Plaintiffs amended their Complaint on February 28, 2013, removing
any federal statutory claims and references to federal statutes
that might give this Court federal question jurisdiction.
In a May 30, 2013, decision penned by District Judge Lorna G.
Schofield, the Plaintiffs' motion to remand for lack of subject
matter jurisdiction was denied and the Plaintiffs' motion that
the District Court abstain from exercising jurisdiction was
granted.
Judge Schofield disagreed with the Plaintiffs' contention that
the end of the bankruptcy protection for the LHI estate divests
the District Court of jurisdiction as a matter "related to" the
LHI bankruptcy proceeding. Judge Schofield explained that the
instant case could have a conceivable effect on the Lehman
bankruptcy estate. That LHI has emerged from bankruptcy
protection, and the Lehman Plan is in the implementation stage
under the continued jurisdiction of the Bankruptcy Court, does
not change the analysis, Judge Schofield added.
"When a plan provides for liquidating assets, rather than
reorganizing the company as a going concern, 'related to'
jurisdiction remains broad because two of the justifications for
narrower jurisdiction at the post-confirmation stage do not
apply. In a liquidation setting, the reorganized debtor does not
require 'emancipation' from the constraints of bankruptcy
protection to proceed with its business; nor is a liquidating
debtor unfairly advantaged in the marketplace by the continued
protections of bankruptcy court," Judge Schofield said, citing In
re Refco, Inc. Sec. Litig., 628 F.Supp.2d 432, 441-42 (S.D.N.Y.
2008), citing In re Boston Reg'l Med. Ctr., Inc., 410 F.3d 100,
106 (1st Cir. 2005).
On the abstention request, Judge Schofield found that abstention
is warranted on under 28 U.S.C. Sec. 1334(c)(2), discretionary
abstention under 28 U.S.C. Sec. 1334(c)(1), or permissive
abstention. Judge Schofield pointed out that the Amended
Complaint is based entirely on state law, and there are no
bankruptcy or other federal issues; the Plaintiffs commenced the
action in state court; the parties are entitled to a jury trial,
which would be unavailable in the bankruptcy court; the sole
basis for federal jurisdiction is "related to" jurisdiction under
28 U.S.C. Sec. 1334; state adjudication will not impede the
efficient administration of the bankruptcy estate; and neither
LHI nor any of the other former debtors is a party to this
action.
The case is BARBARA J. FRIED et al, Plaintiffs, v. LEHMAN
BROTHERS REAL ESTATE ASSOCIATES III, L.P. et al, Defendants, NO.
11 CIV. 04141 (LGS)(S.D.N.Y.). A full-text copy of Judge
Schofield's Decision is available at http://is.gd/IBoya3from
Leagle.com.
Barbara J. Fried, Altitude Partners, LLC, Richard D. Maltzman,
Jefforeed Partners, L.P., Zelfam, LLC, Plaintiffs, are
represented by Arthur Daniel Russell, Arthur Russell, Esq. &
Robert Ted Parker, Parker Law Firm.
Lehman Brothers Real Estate Associates III, L.P., Lehman Brothers
Private Equity Advisers, LLC, Real Estate Private Equity, Inc.,
Defendants, are represented by Jonathan D. Polkes, Esq. --
jonathan.polkes@weil.com -- at Weil Gotshal & Manges LLP.
Silverpeak Real Estate Partners, L.P., Repe CP Manageco, LLC,
Mark A. Walsh, Mark H. Newman, Brett Bossung, Rodolpho Amboss,
and Kevin Dinnie, Defendants, are represented by Richard A.
Rosen, Esq. -- Paul, Weiss, Rifkind, Wharton & Garrison LLP -- at
Paul, Weiss, Rifkind, Wharton & Garrison LLP.
Michael J. Odrich, Christopher M. O'Meara, and Thomas Russo,
Defendants, are represented by Alexander Simkin, Esq. --
asimkin@stblaw.com -- Erika Hannelore Burk, Esq. --
eburk@stblaw.com -- Mary Elizabeth McGarry, Esq. --
mmcgarry@stblaw.com -- at Simpson Thacher & Bartlett LLP.
Richard S. Fuld, Jr., Defendant, is represented by Patricia M.
Hynes, Esq. -- patricia.hynes@allenovery.com -- and Todd Steven
Fishman, Esq. -- todd.fishman@allenovery.com -- at Allen & Overy,
LLP.
Joseph M. Gregory, Defendant, is represented by Israel David,
Esq. -- israel.david@friedfrank.com -- at Fried, Frank, Harris,
Shriver & Jacobson.
Erin Callan, Defendant, is represented by Dietrich L. Snell, Esq.
-- dsnell@proskauer.com -- Mark Edward Davidson, Esq. --
mdavidson@proskauer.com -- Robert J. Cleary, Esq. --
rjcleary@proskauer.com -- and Seth David Fier, Esq. --
sfier@proskauer.com -- at Proskauer Rose LLP.
Ian Lowitt, Defendant, is represented by Diarra Mari Guthrie,
Esq. -- dguthrie@cgsh.com -- and Lewis J. Liman, Esq. --
lliman@cgsh.com -- at Cleary Gottlieb Steen & Hamilton, LLP; and
Martin Joel Auerbach, Esq., at Law Offices of Martin J. Auerbach,
Esq.
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 was set for March 30, 2013. The brokerage is
yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates.
LEHMAN BROTHERS: Aurora's Foreclosure Suit v. Arauz Dismissed
-------------------------------------------------------------
The Supreme Court, Kings County, dismissed with prejudice an
action arising from the foreclosure upon a primary mortgage lien
after the owner of a property defaulted under both a promissory
note and a mortgage for $500,000.
According to the State Supreme Court, Aurora has admitted that
multiple mistakes occurred in processing the transaction selling
the property after the occurrence of the default. Aurora,
however, argued that mutual mistakes were made between the
parties. Aurora, to prove mutual mistake, faces harsh case law
which warns that "to overcome the heavy presumption that a
deliberately prepared and executed written instrument manifested
the true intention of the parties, evidence of a very high order
is required," the State Supreme Court said, citing see George
Backer Mgt. Corp. v Acme Quilting Co., 46 N.Y.2d 211, 219
[1978]).
In the proffered facts that Aurora cites concerning what the
property owner and the property buyer knew or should have known
when the initial mistake occurred clearly do not meet this high
standard, the State Supreme Court ruled. Moreover, the State
Supreme Court pointed out several other factors that merit
consideration such as (1) the property's drastic decline in value
from the June 2007 closing of the sale; (2) that Aurora's parent
company, Lehman Brothers, filed for Chapter 11 Bankruptcy
Liquidation on September 15, 2008; months before the letter
denying the offer for the property; (3) that six months had
passed, during which time Fannie Mae went into receivership and
instituted its HOPE NOW program, similar to the Treasury
Department's Home Affordable Mortgage Program which also started
during this period; and (4) that there is no proof that Aurora
otherwise notified the property owner and the property buyer of
its inclination to accept the $360,000 offer for the property.
The case is AURORA LOAN SERVICES, LLC, Plaintiff, v. HUMBERTO
ARAUZ, HUGO VACCARIS, CARNEGIE CAPITAL, LLC, MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC AS NOMINEE FOR LEHMAN BROTHERS BANK,
FSB, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY
PARKING VIOLATIONS BUREAU, NEW YORK CITY TRANSIT ADJUDICATION
BUREAU, JOHN DOE (SAID NAME BEING FICTITIOUS, IT BEING THE
INTENTION OF Plaintiff TO DESIGNATE ANY and ALL OCCUPANTS OF
PREMISES BEING FORECLOSED HEREIN, and ANY PARTIES, CORPORATIONS
OR ENTITIES, IF ANY, HAVING OR CLAIMING AN INTEREST IN OR LIEN
UPON THE MORTGAGED PREMISES.), Defendants, 32973/09 (N.Y. Sup.).
A full-text copy of the Decision is available at
http://is.gd/RUbS2Afrom Leagle.com
Jordan Smith, Esq. -- jordan.smith@akerman.com -- at Akerman
Senterfitt, LLP, in New York, for the Plaintiff. Paladino Law
Group, P.C., in Garden City South, New York, for Defendant.
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 was set for 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.
MERCER INTERNATIONAL: Moody's Rates New $50MM Notes Offer 'B3'
--------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to Mercer
International, Inc.'s proposed $50 million add-on senior unsecured
note offering maturing 2017. The company's B2 corporate family
rating, B2-PD probability of default rating and SGL-2 speculative-
grade liquidity rating are affirmed. The outlook remains stable.
Issuer: Mercer International Inc.
Assignments:
$50M 9.5% Senior Unsecured Regular Bond/Debenture Assigned B3
(LGD4, 69 %)
$500M Senior Unsecured Shelf, Assigned (P)B3
Affirmations:
Probability of Default Rating, Affirmed B2-PD
Speculative Grade Liquidity Rating, Affirmed SGL-2
Corporate Family Rating, Affirmed B2
The proceeds from the note offering will be used for general
corporate purposes, including repaying amounts outstanding under
the company's revolving credit facilities (estimated to be about
$14 million). The company's pro-forma adjusted leverage will
increase slightly to 7.3x from 6.7x (March 2013 -- using Moody's
standard adjustments). The B3 rating on the senior unsecured notes
reflects structural subordination to the unrated secured working
capital facilities and all indebtedness and liabilities of the
operating subsidiaries. The notes do not possess operating
subsidiary guarantees. The ratings are subject to the conclusion
of the proposed transaction and Moody's review of final
documentation.
Ratings Rationale:
Mercer's B2 CFR reflects the company's small scale and significant
exposure to the volatile market pulp industry. With only two
operating assets in the rated restricted group, the company's
ratings are also constrained by its lack of diversity. Operating
margins have fluctuated significantly over the past several years
due to the cyclical nature of the pulp industry, as well as
foreign exchange fluctuations (pulp sales denominated in $ with
assets in Canada and Germany and financial reporting in Euros).
Factors supporting the rating include the company's large and
efficient mills that produce a premium grade of pulp and excess
renewable energy. The company also has a track record of paying
down debt and an ability to generate significant cash flow during
periods of cyclical strength. Credit metrics are expected to be
soft for the rating category over the next 12 to 18 months with
financial leverage (adjusted total debt / EBITDA) around 6 times
and interest coverage ((EBITDA-CapEx)/Interest) below 1 times.
Mercer's SGL-2 rating reflects the company's good liquidity
position within the restricted group. The company had
approximately EUR 52 million of cash (March 2013) and availability
of CND22 million on the company's committed CND40 million
revolving credit facility at its Celgar mill (due May 2016) and
EUR 24 million of availability on the company's committed EUR 25
million revolving credit facility at its Rosenthal mill (due
October 2016). Proforma for the proposed $50 million add-on note
offering, Mercer's cash should increase to EUR 81 million and
availability under the company's Celgar revolving credit facility
should increase to CND36 million. Moody's expects modestly
positive free cash flow over the next 12 months. The company does
not have any significant debt maturities until the bank lines
mature in 2016 and the senior unsecured notes mature in 2017. Most
of the company's assets are encumbered.
The stable rating outlook reflects Moody's expectations that
Mercer will be able to maintain good liquidity through volatile
industry conditions. Mercer's credit protection measures are
expected to remain relatively soft for the rating category over
the next 12 to 18 months. The ratings may be upgraded if the
company is able to diversify its operations with additional mill
sites, while maintaining adequate credit protection metrics
through the cycle. Mercer's ratings could face downward ratings
pressure if pulp market conditions deteriorate, leading to a
significant deterioration in liquidity arrangements. Shareholder-
friendly activities of significance or an adverse change in
expected mid-cycle credit measures could also have negative rating
implications.
The principal methodology used in this rating was the Global Paper
and Forest Products Industry Methodology published in September
2009. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Mercer International, Inc. produces northern bleached softwood
kraft pulp. Moody's ratings cover only the restricted group
comprised of the Celgar Mill in western Canada and the Rosenthal
Mill in eastern Germany. The company's 75%-owned Stendal Mill in
eastern Germany is not included in the restricted group and has
significant non-recourse project financing which is 80% backed by
the German government. Annual production capacity for the rated
restricted group is approximately 850 thousand air-dried metric
tons. Incorporated in the State of Washington and headquartered in
Vancouver, B.C., Mercer generated approximately EUR 442 million of
revenue for the twelve months ended March 2013.
MIDCONTINENT COMMUNICATIONS: Moody's Rates New Senior Bonds 'B3'
----------------------------------------------------------------
Moody's Investors Service affirmed the B1 corporate family rating
of Midcontinent Communications, assigned a Ba3 rating to its
proposed first lien credit facility, and a B3 rating to its
proposed senior unsecured bonds. The company plans to use
proceeds, consisting of $350 million of first lien term loans and
$250 million of bonds, to refinance existing debt. The transaction
includes a proposed $125 million revolver, which is expected to be
undrawn at close. Moody's maintained the stable outlook.
The leverage neutral transaction favorably extends the maturity
profile. Moody's also upgraded the probability of default rating
to B1-PD from B2-PD to reflect the proposed capital structure
containing a mix of bank debt and bonds compared to the existing
all first lien debt structure.
Midcontinent Communications
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Upgraded to B1-PD from B2-PD
Senior Secured Bank Credit Facility, Assigned Ba3, LGD3, 31%
Senior Unsecured Bonds, Assigned B3, LGD5, 85%
Ratings Rationale:
Pro forma for the transaction and based on results for the twelve
months through March 31, Moody's estimates leverage at
approximately 3.9 times debt-to-EBITDA, in line with current
leverage since the company is not meaningfully altering the amount
of debt. Since its August 2011 refinancing in conjunction with the
acquisition of assets from US Cable, Midcontinent successfully
integrated the cable systems and repaid approximately $75 million
of debt, evidence of management's commitment to maintaining a
strong credit profile relative to many of its B1 rated cable
peers.
First lien bank lenders would benefit from junior capital provided
by the unsecured bonds, supporting the Ba3 rating on this
facility, one notch above the B1 corporate family rating.
Lack of scale constrains Midcontinent's B1 CFR, though the
company's cost structure currently benefits some from Comcast
Corporation's (Comcast, A3 Positive) size due to Comcast's 50%
ownership. However, the potential for Comcast to sell its
ownership stake to Midcontinent under the mutual buy/sell
provision of their partnership agreement weighs negatively on the
rating, since such an event would likely result in an increase in
leverage and future margin erosion as Midcontinent would lose the
cost benefits related to the partnership. Moody's expects
leverage, currently 3.9 times debt-to-EBITDA, to decline to the
mid-3 times range over the next year, low relative to many
comparably rated high yield cable peers. Management's commitment
to the credit profile and expectations for continued allocation of
free cash flow to debt reduction support the rating.
Midcontinent does not overlap with FiOS or uVerse but does compete
with overbuilders, primarily WideOpenWest (WOW, B2 Stable), in
about one-third of its market, and also faces formidable
competition for its mature, core video product from direct
broadcast satellite (DBS) operators. Nevertheless, the less urban
markets insulate Midcontinent somewhat from both video and high
quality broadband competition from telecom operators, and Moody's
expects Midcontinent's high speed data subscriber base to continue
to expand, which, along with growth of the commercial business,
should facilitate continued organic EBITDA growth.
The stable outlook incorporates expectations for positive free
cash flow and EBITDA margins above 35%. Moody's also expects
management to remain committed to debt reduction, though the B1
rating could tolerate acquisitions in line with the company's
historic pattern.
Lack of scale and the overhang of the Comcast relationship
somewhat limit upward ratings momentum, and an upgrade is unlikely
prior to the October 2014 mutual buy/sell option for Comcast to
sell its ownership stake to Midcontinent. However, with more
clarity on the likely resolution of this relationship and the
impact of its possible dissolution on the cost structure, Moody's
would consider a positive rating action based on expectations for
sustained high single digit free cash flow to debt, sustained
leverage around 3.5 times, and maintenance of good liquidity. An
upgrade would also require expectations for subscriber trends to
remain in line with or better than peers and continued commitment
to maintaining a strong credit profile.
Downward action is less likely given the strength of the metrics
for the B1 corporate family rating. Moody's would consider a
downgrade based on expectations for leverage sustained above 5.5
times debt-to-EBITDA or free cash flow-to-debt sustained below 2%,
whether due to deteriorating operating performance or incurrence
of incremental debt to fund the repurchase of Comcast's interest.
The principal methodology used in this rating was Global Pay
Television - Cable and Direct-to-Home Satellite Operators
published in April 2013. 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 Minneapolis, Minnesota, Midcontinent
Communications provides video, high speed data, and voice services
to residential and commercial customers in the states of North
Dakota, South Dakota, Minnesota and Wisconsin. Comcast Corporation
(A3 Positive) owns a 50% indirect common equity interest in
Midcontinent. Midcontinent's revenue for the trailing twelve
months ended March 31 was approximately $400 million.
MINT LEASING: Ends Forbearance with Comerica to Pursue Claims
-------------------------------------------------------------
The Mint Leasing, Inc., elected to not continue with performance
under a forbearance agreement with Comerica Bank because doing so
would result in a release of the Company's meritorious claims
against Comerica, all of which have been brought in a litigation.
Mint Leasing has filed claims against Comerica in the 281st
Judicial District in Harris County, Texas, bearing case number
2013-33154. The Company is seeking damages for breach of
contract, tortious interference with contract, conversion and
possibly, through future amendment of the pleadings, additional
claims for damages associated with defamation, usury and other
potential causes of action under Texas law. Comerica has pled
claims for breach of contract under the applicable matured note.
The Court has not appointed a receiver over the Company's assets.
The Company continues to operate business in the same manner and
form as it had done prior to the litigation. The Company has been
engaged in ongoing discussions with various parties and has
entered into various term sheets regarding potential funding
transactions in order to enable it to raise funds sufficient to
pay any settlement with Comerica. To date, the Company has not
entered into any definitive financing agreements; however, the
Company is currently a party to a pending term sheet subject to
certain conditions precedent. The Court has ordered the parties
to mediate a resolution of their dispute through the appointment
of a facilitator. The Court has ordered that this facilitation be
completed by August 2013.
About Mint Leasing
Houston, Texas-based The Mint Leasing, Inc., is in the business of
leasing automobiles and fleet vehicles throughout the United
States.
In its report on the consolidated financial statements for the
year ended Dec. 31, 2012, M&K CPAS, PLLC, in Houston, Texas,
expressed substantial doubt about Mint Leasing's ability to
continue as a going concern. The independent auditors noted that
Mint Leasing has a significant amount of debt due within the next
12 months, and may not be successful in obtaining renewals or
renegotiating its loans.
The Company reported a net loss of $238,969 on $10.0 million of
revenues in 2012, compared with a net loss of $1.6 million on
$10.8 million of revenues in 2011.
The Company's balance sheet at March 31, 2013, showed $23.52
million in total assets, $23.30 million in total liabilities and
$221,300 in total stockholders' equity.
Bankruptcy Warning
"Over the past approximately one-hundred and twenty days, we have
been in discussions with various parties and have entered into
various term sheets regarding potential funding transactions in
order to enable us to raise funds sufficient to pay the discounted
Settlement Amount that Comerica has previously agreed to accept in
satisfaction of the Renewal. To date, we have not entered into
any definitive agreements associated with such potential funding
transactions and do not have sufficient funding to pay the
Settlement Amount or to satisfy our other obligations under the
Renewal. In the event that we are unable to pay the Settlement
Amount (or the full amount of the Renewal, if required by
Comerica) or are unable to come to terms on a further forbearance
or extension of the Renewal, Comerica could take further actions
against us to enforce its security interest over our assets, seek
immediate repayment of the full amount due under the facility,
seek an immediate foreclosure of such assets and/or may take other
actions which have a material adverse effect on our operations,
assets and financial condition or force us to seek bankruptcy
protection," according to the Company's quarterly report for the
period ended March 31, 2013.
MOTORCAR PARTS: Fenco Bankruptcy Filing Constitutes Default
----------------------------------------------------------
Motorcar Parts of America, Inc., on July 9, 2013, received notice
from Wanxiang America Corporation, the lender and supplier to
Fenwick Automotive Products Limited, a former wholly owned
subsidiary of the Company, under the Revolving Credit/Strategic
Cooperation Agreement, dated Aug. 22, 2012, among Fenco, the
Company and WAC, that the filing of the voluntary petition for
relief under Chapter 7 of Title 11 of the United States Code in
the U.S. Bankruptcy Court for the District of Delaware by Fenco
constituted an "Event of Default" under the WAC Agreement.
Under the terms of the WAC Agreement, as a result of the Event of
Default, all amounts outstanding under that certain revolving
credit line extended by WAC to Fenco pursuant to the WAC Agreement
for purchases of automotive parts and components by Fenco from
WAC, together with all accrued interest thereon and all other
amounts payable in connection therewith, automatically became
immediately due and payable subject to the terms of the
subordination agreement. In addition, subject to certain
adjustments, the interest rate applicable to all amounts remaining
unpaid will increase, to the extent permitted by law, to 1.25
percent per month, compounding monthly, on Dec. 10, 2013, and to
1.50 percent per month, compounding monthly, on June 10, 2014. As
of March 31, 2013, there was approximately $19,000,000 outstanding
under the Fenco Credit Line. Under the terms of the WAC
Agreement, in connection with the Event of Default, Fenco is also
responsible for WAC's reasonable attorneys' fees and expenses.
Pursuant to an agreement between the Company and WAC, the Company
guarantees the obligations of Fenco under the WAC Agreement,
subject to the limitations. In addition, pursuant to a
subordination agreement between WAC and the lender, Cerberus
Business Finance, LLC, under the Company's credit line, WAC may
not take any enforcement action against the Company until the
earlier of July 31, 2018, or the date on which all obligations
under the Company Credit Line are satisfied, and any payments made
by the Company pursuant to the Guarantee are subject to that
subordination agreement for the benefit of Cerberus under the
Company Credit Line.
About Motorcar Parts
Torrance, California-based Motorcar Parts of America, Inc.
(Nasdaq: MPAA) is a remanufacturer of alternators and starters
utilized in imported and domestic passenger vehicles, light trucks
and heavy duty applications. Motorcar Parts of America's products
are sold to automotive retail outlets and the professional repair
market throughout the United States and Canada, with
remanufacturing facilities located in California, Mexico and
Malaysia, and administrative offices located in California,
Tennessee, Mexico, Singapore and Malaysia.
The Company reported a net loss of $91.5 million on $406.3 million
of sales in fiscal 2013, compared to a net loss of $48.5 million
on $363.7 million of sales in fiscal 2012. The Company's balance
sheet at March 31, 2013, showed $367.1 million in total assets,
$370.6 million in total liabilities, and a stockholders' deficit
of $3.5 million.
Ernst & Young LLP, in Los Angeles, California, noted that the
Company's wholly owned subsidiary Fenwick Automotive Products
Limited has recurring operating losses since the date of
acquisition and has a working capital and an equity deficiency.
"In addition, Fenco has not complied with certain covenants of its
loan agreements with its bank. These conditions relating to Fenco
coupled with the significance of Fenco to the Consolidated
Companies, raise substantial doubt about the Consolidated
Companies' ability to continue as a going concern."
NATIONSTAR MORTGAGE: S&P Rates New $250MM Sr. Unsecured Notes 'B+'
------------------------------------------------------------------
Standard & Poor's Ratings Services said it assigned its 'B+'
rating to Nationstar Mortgage LLC's proposed $250 million five-
year senior unsecured notes. The senior unsecured notes will rank
pari passu to the firm's existing senior unsecured debt.
Nationstar will use the proceeds for general corporate purposes,
which may include future acquisitions and transfers of servicing
portfolios.
Lewisville, Texas-based Nationstar Mortgage LLC operates two
related business lines from its headquarters near Dallas. It
services $415 billion (pro forma for the Bank of America
transaction) in residential mortgages, including high-touch
servicing for troubled loans. The company also originates mostly
agency-conforming residential mortgages for sale. S&P bases its
rating on Nationstar Mortgage LLC on the firm's significant debt,
dependence on market funding, and operational risk from rapid
growth. The offsetting positive rating factors include the firm's
low credit risk, good risk-management practices, and favorable
market conditions.
RATINGS LIST
Nationstar Mortgage LLC
Issuer Credit Rating B+/Stable/--
New Rating
Nationstar Mortgage LLC
Nationstar Capital Corp.
$250 mil. senior unsecured notes B+
NMP-GROUP LLC: Case Summary & 18 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: NMP-Group, LLC
172-179 Madison Avenue
New York, NY 10016
Bankruptcy Case No.: 13-12269
Chapter 11 Petition Date: July 10, 2013
Court: United States Bankruptcy Court
Southern District of New York (Manhattan)
Judge: Robert E. Gerber
Debtor's Counsel: Ilana Volkov, Esq.
COLE, SCHOTZ, MEISEL, FORMAN &LEONARD PA
25 Main Street
Hackensack, NJ 07601
Tel: (201) 525-6269
Fax: (201) 489-1536
E-mail: ivolkov@coleschotz.com
Estimated Assets: $50,000,001 to $100,000,000
Estimated Debts: $50,000,001 to $100,000,000
The petition was signed by Luiza Dubrovsky, manager.
Debtor's List of 18 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
SLCE Architects $169,578
1359 Broadway
New York, NY 10018
Yates Restoration $117,272
Group Ltd.
36 Bruckner Blvd.
Bronx, NY 10454
HRH Construction LLC $100,000
50 Main Street
15th Floor
White Plains, NY 10606
Gateway Demolition Inc. $60,014
Jenkins & Huntington $18,750
Israel Berger & Associates $11,962
SCAPE $10,202
Mueser Rutledge $8,820
Cosentini Associates $7,218
Vibranalysis $3,450
DeSimone Consulting $3,108
Metropolis $350
Clevenger Frable $48
Blane Fergus Unknown
Juscor Inc. Unknown
Meridian Capital Group Unknown
Pasargad Carpets, Inc. Unknown
Robert L. Blessey Law Unknown
OLYMPIC HOLDINGS: Has Accord With JP Morgan; To Dismiss Case
------------------------------------------------------------
Olympic Holdings, LLC, asks the U.S. Bankruptcy Court for the
Central District of California to approve a settlement with
secured creditor JP Morgan Chase Bank, N.A.
JPMC has first priority lien on the Debtor's real property.
By the settlement, the Debtor will enter into an agreed upon Loan
Modification with JPMC which results in a cure of the obligation
to JPMC and a final resolution of all pending issues between the
parties.
As part of the settlement, the Debtor has agreed that JMPC will
have relief from stay in rem for two years. Upon approval of the
motion, the Debtor will file a motion to dismiss the case. The
Debtor has agreed that if the case is dismissed, it will be with a
six month bar on refilling a new case under Chapter 11.
A copy of the settlement is available for free at
http://bankrupt.com/misc/OLYMPICHOLDINGS_stay_compromise.pdf
About Olympic Holdings
Beverly Hills, California-based Olympic Holdings, LLC, filed
a bare-bones Chapter 11 petition (Bankr. C.D. Cal. Case No.
12-32707) on June 29, 2012, in Los Angeles. The Debtor estimated
assets and liabilities at $10 million to $50 million.
Affiliates of the Debtor that filed separate Chapter 11 petitions
in the same Court are Wooton Group, LLC (Case No. 12-31323, filed
June 19, 2012) and Golden Oak Partners, LLC (Case No. 12-33650
filed July 9, 2012). M. Jonathan Hayes, Esq. at Simon Resnik
Hayes LLP represents the Debtor as counsel.
The Debtor is a California Limited Liability Company formed in
1996 which owns and manages real property. This is a single asset
case. The Debtor owns property comprised of three (3)
continguous, multi-tenant industrial/warehouse buildings located
at 4851 S. Alameda Street, in Los Angeles, California.
ONCURE HOLDINGS: Sec. 341 Creditors' Meeting Set for Aug. 2
-----------------------------------------------------------
The U.S. Trustee will convene a meeting of creditors pursuant to
11 U.S.C. 341(a) in the Chapter 11 case of OnCure Holdings, Inc.
on Aug. 2, 2012, at 11:00 a.m. The meeting will be held at
J. Caleb Boggs Federal Building, Room 5209, 844 King Street, in
Wilmington, Delaware.
Headquartered in Englewood, Colorado, OnCure Holdings, Inc. --
http://www.oncure.com/-- provides management services and
facilities to oncology physician groups throughout the country.
OnCure Holdings and its affiliates filed Chapter 11 bankruptcy
petitions (Bankr. D. Del. Case Nos. 13-11540 to 13-11562) in
Wilmington on June 14, 2013. Bradford C. Burkett signed the
petition as CEO.
On the Petition Date, the Debtors disclosed total assets of
$179,327,000 and total debts of $250,379,000. There's at least
$15 million owing on a first-lien term loan facility, as well as
$210 million on prepetition secured notes.
Paul E. Harner, Esq., and Keith A. Simon, Esq., at Latham &
Watkins LLP, in New York, serve as the Debtors' lead bankruptcy
counsel. Daniel J. DeFranceschi, Esq., at Richards, Layton &
Finger P.A., in Wilmington, Delaware, serves as the Debtors' local
Delaware counsel. Kurtzman Carson Consultants is the claims and
notice agent. Match Point Partners LLC provides management
services to OnCure.
The Debtors have signed a deal to sell the business to Radiation
Therapy Services Holdings Inc. for $125 million, absent higher and
better offers. RTS's offer comprises $42.5 million in cash (plus
covering certain expenses and subject to certain working capital
adjustments) and up to $82.5 million in assumed debt. Secured
noteholders are supporting the RTS deal.
Millstein & Co., Kirkland & Ellis LLP, Alvarez & Marsal and
Deloitte advised Radiation Therapy in connection with the
transaction.
Promptly before the bankruptcy filing, the Debtors entered into a
restructuring support agreement with the members of an ad hoc
committee of its secured notes, constituting 100% of the lenders
under the first lien term loan credit agreement and approximately
73% of the secured notes, pursuant to which they have agreed to
support a stand-alone restructuring of the Debtors, subject to an
auction process for a sale of substantially all of the Debtors'
assets or the equity of the reorganized Debtors pursuant to a
chapter 11 plan.
ONCURE HOLDINGS: Hires Ernst & Young as Auditor and Tax Advisor
---------------------------------------------------------------
OnCure Holdings, Inc. et al., ask the U.S. Bankruptcy Court for
permission to employ Ernst & Young LLP as auditor and tax advisor.
Bradford C. Burkett attests that the firm is a "disinterested
person" as the term is defined in Section 101(14) of the
Bankruptcy Code.
The firm, will among other things, provide these services:
a. auditing and reporting on the consolidated financial
statements of OnCure Holdings, Inc. for the year ended
Dec. 31, 2013;
b. reviewing the Company's unaudited interim financial
information for the quarterly periods ending June 30, 2013
and September 30, 2013; and
c. performing such other audit related services as are more
fully described in Exhibit A to the Audit Engagement Letter.
Pursuant to the terms and conditions of the Audit Engagement
Agreement, EY LLP intends to charge for the Audit Services as
follows:
a. For the 2013 Financial Statement Audit Services, a fixed
fee of $330,000, billed in monthly installments of $41,250
beginning in August 2013;
b. For the Quarterly Review Services, a fixed fee of $70,000,
billed in two $35,000 installments on July 15, 2013 and
October 15, 2013; and
c. For the Audit Related Services, the following agreed and
discounted hourly rates:
Title Rate Per Hour
----- -------------
Partner $635
Senior Manager $530
Manager $485
Senior $395
Staff $263
Headquartered in Englewood, Colorado, OnCure Holdings, Inc. --
http://www.oncure.com/-- provides management services and
facilities to oncology physician groups throughout the country.
OnCure Holdings and its affiliates filed Chapter 11 bankruptcy
petitions (Bankr. D. Del. Case Nos. 13-11540 to 13-11562) in
Wilmington on June 14, 2013. Bradford C. Burkett signed the
petition as CEO.
On the Petition Date, the Debtors disclosed total assets of
$179,327,000 and total debts of $250,379,000. There's at least
$15 million owing on a first-lien term loan facility, as well as
$210 million on prepetition secured notes.
Paul E. Harner, Esq., and Keith A. Simon, Esq., at Latham &
Watkins LLP, in New York, serve as the Debtors' lead bankruptcy
counsel. Daniel J. DeFranceschi, Esq., at Richards, Layton &
Finger P.A., in Wilmington, Delaware, serves as the Debtors' local
Delaware counsel. Kurtzman Carson Consultants is the claims and
notice agent. Match Point Partners LLC provides management
services to OnCure.
The Debtors have signed a deal to sell the business to Radiation
Therapy Services Holdings Inc. for $125 million, absent higher and
better offers. RTS's offer comprises $42.5 million in cash (plus
covering certain expenses and subject to certain working capital
adjustments) and up to $82.5 million in assumed debt. Secured
noteholders are supporting the RTS deal.
Millstein & Co., Kirkland & Ellis LLP, Alvarez & Marsal and
Deloitte advised Radiation Therapy in connection with the
transaction.
Promptly before the bankruptcy filing, the Debtors entered into a
restructuring support agreement with the members of an ad hoc
committee of its secured notes, constituting 100% of the lenders
under the first lien term loan credit agreement and approximately
73% of the secured notes, pursuant to which they have agreed to
support a stand-alone restructuring of the Debtors, subject to an
auction process for a sale of substantially all of the Debtors'
assets or the equity of the reorganized Debtors pursuant to a
chapter 11 plan.
PRIMCOGENT SOLUTIONS: Files Schedules of Assets and Liabilities
---------------------------------------------------------------
Primcogent Solutions LLC, filed with the U.S. Bankruptcy Court for
the Northern District of Texas its schedules of assets and
liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $0
B. Personal Property $82,490,751
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $11,323,415
E. Creditors Holding
Unsecured Priority
Claims $565,507
F. Creditors Holding
Unsecured Non-priority
Claims $15,347,098
----------- -----------
TOTAL $82,490,751 $27,236,020
A copy of the schedules is available for free at
http://bankrupt.com/misc/PRIMCOGENT_SOLUTIONS_sal.pdf
About Primcogent Solutions
Primcogent Solutions, LLC, is a supplier and distributor of
medical equipment and services in North America. Primcogent
operates as the exclusive North American (and, through its
European subsidiaries, Western European) seller or distributor of
equipment manufactured by Erchonia Corporation, pursuant to
exclusive license and supply agreements. Products sold include
Erchonia's non-invasive body-contouring laser technology
trademarked under the name Zerona(R), including the Zerona Body
Laser.
Primcogent was formed in late 2011 following the acquisition
of the business of Santa Barbara Medical Innovations LLC for
$18 million. Although the Erchonia agreement gave Primcogent
perpetual rights to sell Erchonia products, Erchonia declared in
March 2013 that the agreement has been terminated due to
Primcogent's alleged failure to perform and starting that time
stopped servicing Primcogent's products. Primcogent, on the other
hand, claims Erchonia has committed fraud, breached the agreement
and tortiously interfered with Primcogent's business. Primcogent
cites, among other things, Erchonia's failure to obtain FDA
clearance of Lunula, a laser technology used to treat or cure toe
fungus.
Primcogent also claims ORIX, its secured lender, is working in
concert with Erchonia. A default in the Erchonia agreement
triggered a cross-default in the credit agreement, and the secured
lender has already seized control of Primcogent's cash account and
is attempting to control warehouse inventory.
Primcogent filed a bare-bones Chapter 11 petition (Bankr. N.D.
Tex. Case No. 13-42368) in Ft. Worth, Texas, on May 20, 2013. The
petition was signed by David Boris, chairman of board of managers
of managing member. The Debtor disclosed $82,490,751 in assets
and $27,236,020 in liabilities as of the Chapter 11 filing. Judge
Michael Lynn presides over the case. Jason Napoleon Thelen, Esq.,
at Andrews Kurth, LLP, serves as the Debtor's counsel.
ORIX is represented by Robert W. Jones, Esq., and Brian Smith,
Esq., at Patton Boggs, LLP.
Erchonia is represented by Ira M. Schwartz, Esq., and Lawrence D.
Hirsh, Esq., at Deconcini McDonald Yetwin & Lacy, P.C., and J.
Michael Sutherland, Esq., and Lisa M. Lucas, Esq., at Carrington,
Coleman, Sloman & Blumenthal, LLP.
The Official Committee of Unsecured Creditors is represented by
Looper Reed & McGraw P.C., as counsel.
PRIMCOGENT SOLUTIONS: Taps Andrews Kurth as Bankruptcy Counsel
--------------------------------------------------------------
Primcogent Solutions LLC asks the U.S. Bankruptcy Court for the
Northern District of Texas for permission to employ Andrews Kurth
LLP as counsel.
Andrews Kurth will, among other things:
a) advising the Debtor concerning its powers and duties
as debtor-in-possession in the continued operation of its
business and management of its properties;
b) act to help protect and preserve the value of the Debtor's
estate, including but not limited to the pursuit of
litigation, if necessary; and
c) prepare all necessary motions, applications, reports, and
pleadings in connection with the Debtor's chapter 11 case.
Andrews Kurth has been paid $123,568 by the Debtor for all
invoices for tabulated and recorded services rendered, and
expenses incurred, through the time of filing of the Debtor's
chapter 11 petition. Andrews Kurth holds $51,431 towards fees for
postpetition services and expense reimbursements. The hourly
rates of Andrews Kurth personnel are:
Attorneys $275 - $1,090
Paralegals $180 - $355
The professionals at Andrews Kurth primarily responsible for the
matter and their hourly rates are:
Paul N. Silverstein $1,090
Michelle V. Larson $600
Jeremy B. Reckmeyer $590
To the best of the Debtor's knowledge, Andrews Kurth is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About Primcogent Solutions
Primcogent Solutions, LLC, is a supplier and distributor of
medical equipment and services in North America. Primcogent
operates as the exclusive North American (and, through its
European subsidiaries, Western European) seller or distributor of
equipment manufactured by Erchonia Corporation, pursuant to
exclusive license and supply agreements. Products sold include
Erchonia's non-invasive body-contouring laser technology
trademarked under the name Zerona(R), including the Zerona Body
Laser.
Primcogent was formed in late 2011 following the acquisition
of the business of Santa Barbara Medical Innovations LLC for
$18 million. Although the Erchonia agreement gave Primcogent
perpetual rights to sell Erchonia products, Erchonia declared in
March 2013 that the agreement has been terminated due to
Primcogent's alleged failure to perform and starting that time
stopped servicing Primcogent's products. Primcogent, on the other
hand, claims Erchonia has committed fraud, breached the agreement
and tortiously interfered with Primcogent's business. Primcogent
cites, among other things, Erchonia's failure to obtain FDA
clearance of Lunula, a laser technology used to treat or cure toe
fungus.
Primcogent also claims ORIX, its secured lender, is working in
concert with Erchonia. A default in the Erchonia agreement
triggered a cross-default in the credit agreement, and the secured
lender has already seized control of Primcogent's cash account and
is attempting to control warehouse inventory.
Primcogent filed a bare-bones Chapter 11 petition (Bankr. N.D.
Tex. Case No. 13-42368) in Ft. Worth, Texas, on May 20, 2013. The
petition was signed by David Boris, chairman of board of managers
of managing member. The Debtor disclosed $82,490,751 in assets
and $27,236,020 in liabilities as of the Chapter 11 filing. Judge
Michael Lynn presides over the case. Jason Napoleon Thelen, Esq.,
at Andrews Kurth, LLP, serves as the Debtor's counsel.
ORIX is represented by Robert W. Jones, Esq., and Brian Smith,
Esq., at Patton Boggs, LLP.
Erchonia is represented by Ira M. Schwartz, Esq., and Lawrence D.
Hirsh, Esq., at Deconcini McDonald Yetwin & Lacy, P.C., and J.
Michael Sutherland, Esq., and Lisa M. Lucas, Esq., at Carrington,
Coleman, Sloman & Blumenthal, LLP.
The Official Committee of Unsecured Creditors is represented by
Looper Reed & McGraw P.C., as counsel.
PRIMCOGENT SOLUTIONS: U.S. Trustee Forms Three-Member Committee
---------------------------------------------------------------
William T. Neary, the U.S. Trustee for Region 6, has appointed
three creditors to serve on the official committee of unsecured
creditors in the Chapter 11 case of Primcogent Solutions, LLC.
The Committee consists of:
1. Scott James
Trans Trade, Inc.
1040 Trade Ave. #106
DFW Airport, Texas 75261
Tel: (972) 456-1572
Fax: (972) 456-1555
2. Jason Winocour
Hunter Public Relations, LLC
41 Madison Avenue, Floor S
New York, NY 10010
Tel: (212) 679-4746
3. Shawn Hiscott
Canadian Medical Distributors
724 Waterstone Run
Hammonds Plains, NS B4B 1X7
Canada
Tel: (902) 830-4488
About Primcogent Solutions
Primcogent Solutions, LLC, is a supplier and distributor of
medical equipment and services in North America. Primcogent
operates as the exclusive North American (and, through its
European subsidiaries, Western European) seller or distributor of
equipment manufactured by Erchonia Corporation, pursuant to
exclusive license and supply agreements. Products sold include
Erchonia's non-invasive body-contouring laser technology
trademarked under the name Zerona(R), including the Zerona Body
Laser.
Primcogent was formed in late 2011 following the acquisition
of the business of Santa Barbara Medical Innovations LLC for
$18 million. Although the Erchonia agreement gave Primcogent
perpetual rights to sell Erchonia products, Erchonia declared in
March 2013 that the agreement has been terminated due to
Primcogent's alleged failure to perform and starting that time
stopped servicing Primcogent's products. Primcogent, on the other
hand, claims Erchonia has committed fraud, breached the agreement
and tortiously interfered with Primcogent's business. Primcogent
cites, among other things, Erchonia's failure to obtain FDA
clearance of Lunula, a laser technology used to treat or cure toe
fungus.
Primcogent also claims ORIX, its secured lender, is working in
concert with Erchonia. A default in the Erchonia agreement
triggered a cross-default in the credit agreement, and the secured
lender has already seized control of Primcogent's cash account and
is attempting to control warehouse inventory.
Primcogent filed a bare-bones Chapter 11 petition (Bankr. N.D.
Tex. Case No. 13-42368) in Ft. Worth, Texas, on May 20, 2013. The
petition was signed by David Boris, chairman of board of managers
of managing member. The Debtor disclosed $82,490,751 in assets
and $27,236,020 in liabilities as of the Chapter 11 filing. Judge
Michael Lynn presides over the case. Jason Napoleon Thelen, Esq.,
at Andrews Kurth, LLP, serves as the Debtor's counsel.
ORIX is represented by Robert W. Jones, Esq., and Brian Smith,
Esq., at Patton Boggs, LLP.
Erchonia is represented by Ira M. Schwartz, Esq., and Lawrence D.
Hirsh, Esq., at Deconcini McDonald Yetwin & Lacy, P.C., and J.
Michael Sutherland, Esq., and Lisa M. Lucas, Esq., at Carrington,
Coleman, Sloman & Blumenthal, LLP.
The Official Committee of Unsecured Creditors is represented by
Looper Reed & McGraw P.C., as counsel.
PROMMIS HOLDING: Saul Ewing Approved as Committee Co-Counsel
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
Prommis Holdings, LLC, et al., to employ the law firm of Saul
Ewing LLP as co-counsel.
The Debtors said Saul Ewing and co-counsel Hahn & Hessen will
avoid any unnecessary duplication of services.
The hourly rates of Saul Ewing's personnel are:
Partners $350 - $750
Special Counsel $300 - $495
Associates $245 - $425
Paraprofessionals $160 - $275
Mark Minuti, Esq., a partner at the firm, assures the Court that
the firm is a "disinterested person" as that term is defined in
Section 101(14) of the Bankruptcy Court.
About Prommis Holdings
Atlanta, Georgia-based Prommis Holdings, LLC, and its 10
affiliates delivered their petitions for voluntary bankruptcy
under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case
No. 13-10551) on March 18, 2013.
Three subsidiaries -- EC Closing Corp., EC Closing Corp. of
Washington, and EC Posting Closing Corp. -- sought Chapter 11
protection (Bankr. D. Del. Case Nos. 13-11619 to 13-11621) on
June 25, 2013.
Judge Brendan Linehan Shannon presides over the case. Steven K.
Kortanek, Esq., at David S. Meyer at Womble Carlyle Sandridge &
Rice, LLP, serves as the Debtors' counsel, while Kirkland & Ellis
LLP serves as co-counsel. The Debtors' restructuring advisor is
Huron Consulting Services, LLC. Donlin Recano & Company, Inc., is
the Debtors' claims agent.
The petition estimated the lead Debtors' assets to range between
$10 million and $50 million and the lead Debtor's debts between
$50 million and $100 million. Prommis Solutions, LLC, a debtor-
affiliate disclosed $18,488,803 in assets and $260,232,313 in
liabilities as of the Chapter 11 filing. The petitions were
signed by Charles T. Piper, chief executive officer.
The U.S. Trustee for Region 3 appointed three creditors to serve
in the Official Committee of Unsecured Creditors. The Committee
tapped Saul Ewing LLP and Hahn & Hessen as its co-counsels, and
FTI Consulting, Inc., as its financial advisor.
RAVENWOOD HEALTHCARE: Dismissal Hearing Continued to July 26
------------------------------------------------------------
The hearing to consider a motion to dismiss the Chapter 11 case of
Ravenwood Healthcare, Inc., or, alternatively, convert the case to
a liquidation under Chapter 7 of the Bankruptcy Code has been
continued for July 27, 2013.
Ravenwood Healthcare, Inc. filed a Chapter 11 petition (Bankr.
M.D. La. Case No. 12-10612) on April 27, 2012, in its home-town in
Baton Rouge. Ravenwood Healthcare is a not-for-profit corporation
which owns and operates the Harborside Nursing and Rehabilitation
Center, a 165-bed skilled care facility in Baltimore, Maryland.
It has 134 hourly rate based and 11 salaried rate based employees.
Bankruptcy Judge Douglas D. Dodd oversees the case. William E.
Steffes, Esq., and Noel Steffes Melancon, Esq., at Stefes,
Vingiello & McKenzie, LLC, serve as the Debtor's counsel.
In its petition, the Debtor estimated $10 million to $50 million
in both assets and debts. The petition was signed by Richard T.
Daspit, Sr., president.
RESIDENTIAL CAPITAL: Amends Complaint vs. UMB Bank
--------------------------------------------------
Residential Capital LLC filed a first amended complaint against
UMB Bank, N.A., in its capacity as indenture trustee for the
9.625% Junior Secured Guaranteed Notes due 2015 issued by Debtor
ResCap, Wells Fargo Bank, N.A., in its capacity as third priority
collateral agent and collateral agent for the Notes; and the Ad
Hoc Group of Junior Secured Noteholders.
The Debtors, through the complaint, seek a declaratory judgment
that:
(i) the JSNs' lien on general intangibles does not include
any lien on the proceeds of, or value attributed to, the
sale of the Debtors' assets to Ocwen Loan Servicing,
LLC, or Walter Investment Management Corp.;
(ii) the JSNs are not entitled to an adequate protection
replacement lien because (a) there has been no diminution
in the value of the Defendants' collateral during the
pendency of the Chapter 11 Cases, and (b) the Debtors'
use of cash collateral will not result in a diminution in
the value of the Defendants' collateral;
(iii) the JSNs are not entitled to a lien on the assets that
secure the Ally Financial Inc. Letter of Credit or any
other assets that have been released from the JSNs'
collateral;
(iv) the JSNs are not entitled to a lien on any proceeds from
avoidance actions prosecuted on behalf of the Debtors'
estates; and
(v) the JSNs are undersecured in the aggregate; separately
and independently, are not oversecured at any individual
Debtor entity; and, as a result, are not entitled to
postpetition interest either at the contractual rate or
the contractual default rate.
"The Ad Hoc Group is advancing a position ostensibly on behalf of
a group of significantly undersecured JSNs who are aggressively
vying to wrest control of these Chapter 11 Cases through the plan
process. To accomplish this task, the Ad Hoc Group -- in
pleadings filed in this Court and in correspondence with the
Debtors' advisors -- attempt to manufacture an oversecured
position that allegedly entitles the JSNs to postpetition interest
through the misguided creation of collateral value that is
premised upon factual and legal fallacies," Gary S. Lee, Esq., at
Morrison & Foerster LLP, in New York, argued on behalf of the
Debtors.
According to the complaint, the JSNs collectively assert secured
claims in the amount of $2.22 billion, including principal and
accrued prepetition interest. The Debtors believe that the value
of the collateral securing the Notes is approximately $1.511
billion. The Debtors' valuation is based on (i) the value
attributed to those assets by their purchasers, Ocwen, Walter, and
Berkshire Hathaway Inc.; and (ii) the value ascribed to those
assets by the Debtors and their financial advisors.
As such, the Debtors assert that the JSNs are not entitled to
receive postpetition interest because they are undersecured, even
without giving effect to the pending adversary proceeding
commenced by the Official Committee of Unsecured Creditors, which
could potentially reduce the JSNs' secured claim by hundreds of
millions of dollars.
The Debtors are also represented by Lorenzo Marinuzzi, Esq.,
Stefan W. Engelhardt, Esq., Todd M. Goren, Esq., and Samantha
Martin, Esq., at MORRISON & FOERSTER LLP, in New York; and Steven
J. Reisman, Esq., and Michael Moscato, Esq., at CURTIS, MALLET-
PREVOST, COLT & MOSLE LLP, in New York.
Noteholders File Counterclaims
The JSNs, the Indenture Trustee, and the Agent, in response to the
Debtors' complaint, asserted counterclaims seeking declaratory
judgments, which would lead to findings that (i) the value of all
collateral securing the JSN Claims is at least $1.776 billion at
an assumed effective date of December 15, 2013, and (ii) the
entire amount of the JSN Claims, including those claims pertaining
to prepetition principal and interest, as well as postpetition
interest, default interest, fees, costs and charges through the
effective date of any Chapter 11 plan of reorganization, must be
allowed and must be paid as secured claims against the Debtors.
Residential Capital, LLC, as borrower, issued $4.01 billion in
face principal amount of Junior Secured Notes under the JSN
Indenture. Interest accrues on the Notes at the annual interest
rate of 9.625%. On June 13, 2013, the Debtors made a payment of
principal owing in respect of the Junior Secured Notes in the
amount of $800 million, leaving a remaining prepetition secured
claim against the Debtors in the amount of $1.422 billion, plus
all unpaid postpetition interest, default interest, fees, costs
and charges accrued or accruing under the JSN Indenture until paid
in full, as such claim may be reduced from time to time pursuant
to further interim distributions of principal.
J. Christopher Shore, Esq., Dwight Healy, Esq., Douglas Baumstein,
Esq., and Julia Winters, Esq., at WHITE & CASE LLP, in New York;
and Gerard Uzzi, Esq., and Dennis O'Donnell, Esq., at MILBANK,
TWEED, HADLEY & MCCLOY LLP, in New York, for the Ad Hoc Committee.
Daniel H. Golden, Esq., David Zensky, Esq., and Deborah J. Newman,
Esq., at AKIN GUMP STRAUSS HAUER & FELD LLP, in New York, for UMB.
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 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: Fried Frank Files Rule 2019 Statement
----------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy
Procedure, Gary L. Kaplan, Esq. -- gary.kaplan@friedfrank.com --
at Fried, Frank, Harris, Shriver & Jacobson, LLP, in New York,
discloses that his firm represents holders of indemnity and
contribution claims in their capacity as RALI Certificate
Underwriters.
In October 2008, certain RALI Certificate Underwriters, in their
capacities as underwriters in connection with certain Residential
Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through
Certificates offered by certain RALI trusts, engaged Fried Frank
to represent them in connection with the securities class action
entitled New Jersey Carpenters Health Fund, et al. v. Residential
Capital, LLC, et al., filed in the Supreme Court of the State of
New York and subsequently removed to the U.S. District Court for
the Southern District of New York (Civ. No. 08-8781(HB)).
The RALI Certificate Underwriters hold claims against the Debtors'
estates arising from certain underwriting agreements pursuant to
which certain Debtors, agreed to indemnify the RALI Certificate
Underwriters against certain claims, losses, damages and
liabilities. The RALI Certificate Underwriters also have claims
against the Debtors based on their rights of subrogation,
contribution, indemnity and similar remedies.
The RALI Underwriters are:
Name of Creditor Nature & Amount of Economic Interest
---------------- ------------------------------------
Citigroup Global * Claim Nos. 5032, 5036, 5038, 5043,
Markets, Inc. 5044, 5045, 5046, 5049, 5050, 5074
and 5075
* $6,587,500 face amount of the
5.125% Senior Unsecured Notes due
2012
* $14,348,000 face amount of the
6.5% Senior Unsecured Notes due
2013
* $1,148,000 face amount of the
9.625% Junior Secured Notes due
2015
Deutsche Bank * Claim Nos. 1707, 1708, 1709, 1710,
Securities Inc. 1711, 1712 and 1713
* $245,000 face amount of the 9.625%
Junior Secured Notes due 2015
Goldman, Sachs & Co. * Claim Nos. 5076 and 5077
* $12,279,000 face amount of the
9.625% Junior Secured Notes due
2015
* $785,841 face amount of the 8.875%
Senior Unsecured Notes due 2015
* $30,000 face amount of the 6.5%
Senior Unsecured Notes due 2012
* $54,140,000 face amount of the
6.5% Senior Unsecured Notes due
2013
* $19,518,000 face amount of the
7.125% Senior Unsecured Notes due
2012
UBS Securities, LLC * Claim Nos. 4447, 4450 and 4457
* $34,382,000 face amount of the
9.625% Junior Secured Notes due
2015
The RALI Underwriters are also represented by William G.
McGuinness, Esq. -- william.mcguinness@friedfrank.com -- and
Israel David, Esq. -- israel.david@friedfrank.com -- at FRIED,
FRANK, HARRIS, SHRIVER & JACOBSON LLP, in New York.
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 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: Willkie Farr Files Rule 2019 Statement
-----------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy
Procedure, Paul Shalhoub, Esq. -- pshalhoub@willkie.com -- at
Willkie Farr & Gallagher LLP, in New York, disclosed that his firm
represents the following creditors:
RMBS Certificate Holdings
Name Current Face
---- -------------------------
Bayview Fund Management LLC $602,933,712
CQS ABS Alpha Master Fund Limited
and CQS ABS Master Fund Limited $393,750,252
Monarch Alternative Capital LP $402,572,740
Stonehill Capital Management LLC $32,582,699
Marc Abrams, Esq. -- mabrams@willkie.com -- Joseph T. Baio, Esq.
-- jbaio@willkie.com -- and Mary Eaton, Esq. -- meaton@willkie.com
-- at Willkie Farr & Gallagher LLP, in New York, also represent
the investment advisors.
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 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: Nichols Late Filed Counter-Motion Accepted
---------------------------------------------------------------
Defendant GMAC Home Mortgage Corporation accelerated a mortgage
loan held by Plaintiffs Carl Nichols, III, and Liese Nichols and
initiated foreclosure proceedings. The Plaintiffs sued GMAC to
prohibit the foreclosure. After filing for Chapter 11 bankruptcy,
GMAC moves for partial summary judgment on all of the Plaintiffs'
claims not subject to the automatic stay under Section 362(a) of
the Bankruptcy Code. The Plaintiffs cross-move for partial
summary judgment, alleging that GMAC wrongfully refused to accept
a September 15, 2012 mortgage payment and wrongfully accelerated
the mortgage loan. GMAC moves to strike the Plaintiffs' counter-
motion for partial summary judgment, arguing that the motion was
untimely filed.
On December 21, 2012, the U.S. District Court for the Western
District of Tennessee granted the Plaintiffs' motion to accept
their late-filed counter-motion for partial summary judgment.
Accordingly, in a June 19, 2013, opinion and order, District Judge
Robert H. Cleland denied GMAC's motion to strike the Plaintiffs'
counter-motion for partial summary judgment. Furthermore, Judge
Cleland denied the Plaintiffs' counter-motion for partial summary
judgment and granted GMAC's motion for partial summary judgment.
The case is CARL G. NICHOLS, III, and LIESE M. NICHOLS,
Plaintiffs, v. GMAC HOME MORTGAGE CORPORATION, Defendant, CASE NO.
10-02072 (W.D. Tenn.). A full-text copy of Judge Cleland's
Decision is available at http://is.gd/V7Dz2Xfrom Leagle.com.
Carl G. Nichols, III, and Leise M. Nichols, Plaintiffs, are
represented by Ralph T. Gibson, Esq. -- ralph@batemangibson.com
-- at BATEMAN GIBSON & CHILDERS, in Memphis, Tennessee.
GMAC Home Mortgage Corporation, Defendant, is represented by
Christopher E. Thorsen, Esq. -- cthorsen@babc.com -- at BRADLEY
ARANT BOULT CUMMINGS, LLP, in Nashville, Tennessee.
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 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).
RHYTHM AND HUES: Hires Fox Rothschild as Special ERISA Counsel
--------------------------------------------------------------
Rhythm and Hues, Inc. et al., ask the U.S. Bankruptcy Court to
employ Fox Rothschild LLP as special ERISA and benefits counsel.
Fox Rothschild has been engaged to assist the Debtor with the
ERISA and benefit issues implicated by the wind-down of the
Debtor's employee benefit programs, or otherwise, including but
not limited to, the Debtor's self-insured medical program,
flexible spending program and 401(k) program.
Fox Rothschild's rates are:
Professional Staff
------------ -----
professional staff $315
attorneys $210 - $800
Jeremy M. Pelphrey, Esq., a partner with Fox Rothschild, is the
main attorney expected to render services in this case, and his
hourly rate is $450. Mr. Pelphrey attests the firm is a
"disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code.
The Debtor's general bankruptcy attorneys can be reached at:
Brian L. Davidoff, Esq.
C. John M. Melissinos, Esq.
Courtney E. Pozmantier, Esq.
GREENBERG GLUSKER FIELDS CLAMAN & MACHTINGER LLP
1900 Avenue of the Stars, 21st Floor
Los Angeles, CA 90067-4590
Tel: 310-553-3610
Fax: 310-553-0687
E-mail: BDavidoff@GreenbergGlusker.com
JMelissinos@GreenbergGlusker.com
CPozmantier@GreenbergGlusker.com
About Rhythm and Hues
Rhythm and Hues, Inc., aka Rhythm and Hues Studios Inc., filed its
Chapter 11 petition (Bankr. C.D. Cal. Case No. 13-13775) in Los
Angeles on Feb. 13, 2013, estimating assets ranging from $10
million to $50 million and liabilities ranging from $50 million to
$100 million. Judge Neil W. Bason oversees the case. Brian L.
Davidoff, Esq., C. John M Melissinos, Esq., and Claire E. Shin,
Esq., at Greenberg Glusker, serve as the Debtor's counsel.
Houlihan Lokey Capital Inc., serves as investment banker.
The petition was signed by John Patrick Hughes, president and CFO.
R&H provided visual effects and animation for more than 150
feature films and has received Academy Awards for Babe and the
Golden Compass, an Academy Award nomination for The Chronicles of
Narnia and Life of Pi. R&H owned a 135,000 square-foot facility
in El Segundo, California, and had more than 460 employees.
Key clients Universal City Studios LLC and Twentieth Century Fox,
a division of Twentieth Century Fox Film Corporation, provided DIP
financing. They are represented by Jones Day's Richard L. Wynne,
Esq., and Lori Sinanyan, Esq.
The Official Committee of Unsecured Creditors tapped Stutman,
Treister & Glatt Professional Corporation as its counsel.
At the end of March 2013, the Debtor sold the business to 34x118
Holdings Inc., an affiliate of competitor Prana Studios Inc. The
buyer agreed to pay $1.2 million cash, take over payment of the
loan financing the Chapter 11 effort, pay defaults on contracts
going along with the sale, and assume liabilities to employees for
as much as $5 million. On May 24, 2013, the Debtor obtained Court
permission to change its corporate name to AWTR Liquidation, Inc.
RHYTHM AND HUES: Can Employ O'Connor Davies as Accountants
----------------------------------------------------------
Rhythm and Hues, Inc., sought and obtained permission from the
Bankruptcy Court for permission to employ O'Connor Davies, LLP as
general bankruptcy accountants.
The firm will provide various services, including:
a. Preparing the Debtor's federal consolidated and California
corporate income tax returns for 2012 and 2013 and such
other years as may be required;
b. Working with the IRS on the on-going audit, and assisting
the Debtor with the resolution of the proof of claim filed
by the IRS in connection therewith; and
c. Preparing a federal net operating loss carryback refund
claim for the Debtor.
The firm's rates are:
Professional Position Hourly Rate
------------ -------- -----------
Dean M. Hottle II Partner $410
Tim Desmond Partner $400
Patrick Halloran Partner $350
Erika Prakasam Manager $290
Matt Corona Manager $280
Dean M. Hottle II attests that the firm is a "disinterested
person" as the term is defined in Section 101(14) of the
Bankruptcy Code.
About Rhythm and Hues
Rhythm and Hues, Inc., aka Rhythm and Hues Studios Inc., filed its
Chapter 11 petition (Bankr. C.D. Cal. Case No. 13-13775) in Los
Angeles on Feb. 13, 2013, estimating assets ranging from $10
million to $50 million and liabilities ranging from $50 million to
$100 million. Judge Neil W. Bason oversees the case. Brian L.
Davidoff, Esq., C. John M Melissinos, Esq., and Claire E. Shin,
Esq., at Greenberg Glusker, serve as the Debtor's counsel.
Houlihan Lokey Capital Inc., serves as investment banker.
The petition was signed by John Patrick Hughes, president and CFO.
R&H provided visual effects and animation for more than 150
feature films and has received Academy Awards for Babe and the
Golden Compass, an Academy Award nomination for The Chronicles of
Narnia and Life of Pi. R&H owned a 135,000 square-foot facility
in El Segundo, California, and had more than 460 employees.
Key clients Universal City Studios LLC and Twentieth Century Fox,
a division of Twentieth Century Fox Film Corporation, provided DIP
financing. They are represented by Jones Day's Richard L. Wynne,
Esq., and Lori Sinanyan, Esq.
The Official Committee of Unsecured Creditors tapped Stutman,
Treister & Glatt Professional Corporation as its counsel.
At the end of March 2013, the Debtor sold the business to 34x118
Holdings Inc., an affiliate of competitor Prana Studios Inc. The
buyer agreed to pay $1.2 million cash, take over payment of the
loan financing the Chapter 11 effort, pay defaults on contracts
going along with the sale, and assume liabilities to employees for
as much as $5 million. On May 24, 2013, the Debtor obtained Court
permission to change its corporate name to AWTR Liquidation, Inc.
SCOTTSDALE VENETIAN: Charles Foley Okayed as Accountant
-------------------------------------------------------
The Hon. George B. Nielsen of the U.S. Bankruptcy Court for the
District of Arizona authorized, in an amended order, Scottsdale
Venetian Village LLC to employ Charles B. Foley, CPA, PLLC as
accountant.
As reported by the Troubled Company Reporter on June 7, 2013, Mr.
Foley will assist the Debtor with the bookkeeping and accounting
services in connection with the preparation of information and
reports required by the Bankruptcy Code and requested by creditors
during the pendency of the Debtor's bankruptcy case and
preparation of applicable federal and state income tax returns.
Mr. Foley will be paid $175 per hour.
To the best of the Debtor's knowledge, Mr. Foley is a
"disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code.
About Scottsdale Venetian
Scottsdale Venetian Village, LLC, operates the Days Hotel located
at 5101 N. Scottsdale Road, in Scottsdale, Arizona. The company
also operates Papi Chulo's Mexican Grill & Cantina, located
immediately adjacent to the hotel. The hotel consists of 211
guest rooms and, among other things, facilities for meetings and
banquets.
Scottsdale Venetian Village filed a Chapter 11 petition (Bankr. D.
Ariz. Case No. 13-02150) on Feb. 19, 2013, in Phoenix, estimating
at least $10 million in assets and less than $10 million in
liabilities.
The Debtor is represented by John J. Hebert, Esq., at Polsinelli
Shughart, P.C., in Phoenix.
The Plan of Reorganization provides for the payment of outstanding
obligations by the proceeds from the continued operation of Days
Hotel located at 5101 N. Scottsdale Road, in Scottsdale, Arizona,
and the adjacent Papi Chulo's Mexican Grill & Cantina.
SHOTWELL LANDFILL: Bankruptcy Administrator Unable to Form Panel
----------------------------------------------------------------
The Bankruptcy Administrator for the Eastern District of North
Carolina has notified the Bankruptcy Court that it was unable to
appoint an official committee of unsecured creditors in the
Chapter 11 case of Shotwell Landfill, Inc.
The Bankruptcy Administrator explained that sufficient indications
of willingness to serve on a committee of unsecured creditors were
not received from persons eligible to serve on a committee.
About Shotwell Landfill, Inc.
Raleigh, North Carolina-based Shotwell Landfill, Inc., filed a
Chapter 11 petition (Bankr. E.D.N.C. Case No. 13-02590) in
Wilson on April 19, 2013. The Debtor estimated $10 million to
$50 million in assets and liabilities. William P. Janvier, Esq.
at the Janvier Law Firm, PLLC, represents the Debtor as counsel.
SHOTWELL LANDFILL: Janvier Law Firm Okayed as Bankruptcy Counsel
----------------------------------------------------------------
The Hon. Stephani W. Humrickhouse of the U.S. Bankruptcy Court for
the Eastern District of North Carolina has authorized Shotwell
Landfill, Inc. to employ William P. Janvier and the Janvier Law
Firm, PLLC as counsel.
As reported by the Troubled Company Reporter on April 30, 2013,
the Debtor selected Mr. Janvier for the reason that he has
considerable experience in Chapter 11 reorganization matters. Mr.
Janvier attests that neither he nor his firm represents or holds
any adverse interest to the Debtor or the estate.
On March 6, the Debtor provided the firm with a $5,000 retainer
for payment of services relating to the Chapter 11 preparation and
filing. The Debtor provided an additional $30,000 on March 28.
Shotwell's invoices for services and expenses, including the
filing fee in the amount of $18,900, were paid from the retainer.
About Shotwell Landfill, Inc.
Raleigh, North Carolina-based Shotwell Landfill, Inc., filed a
Chapter 11 petition (Bankr. E.D.N.C. Case No. 13-02590) in
Wilson on April 19, 2013. The Debtor estimated $10 million to
$50 million in assets and liabilities.
The Bankruptcy Administrator for Eastern District of North
Carolina was unable to form an official committee of unsecured
creditors in the Debtor's case.
SHOTWELL LANDFILL: Taps David Ball as Accountants
-------------------------------------------------
Shotwell Landfill, Inc. has filed papers with the U.S. Bankruptcy
Court for the Eastern District of North Carolina seeking
permission to employ David W. Ball, CPA and the firm of Ball &
Minor, CPA, PA, as certified public accountants.
The firm will, among other things:
a. assist the Debtor in preparing their federal and state
corporate income tax returns;
b. perform business consulting; and
c. perform any other mutually agreed upon accounting services
needed by the Debtor as part of the bankruptcy proceedings.
The firm will be paid on an hourly basis which is $180, subject to
Court approval.
To the best of the Debtor's knowledge, the firm does not represent
any interest adverse to the Debtor or the estate in the matters
upon which they are to be engaged for Debtor.
The firm is owed $1,325 by the Debtor for work performed
prepetition.
The firm and Mr. Ball have historically provided tax services to
these entities which have a relationship with the Debtor: Salt
Creek Partners, LLC, Shotwell Transfer Station, Inc., Shotwell
Transfer Station II, Inc., Shotwell Trucking, LLC, Capital
Recycling Company, LLC fka Dynasty Holdings, LLC, Kings Grading,
Inc., Debris Removal Partners, LLC, Capitol Waste Transfer, LLC,
Allied Installations, LLC.
About Shotwell Landfill, Inc.
Raleigh, North Carolina-based Shotwell Landfill, Inc., filed a
Chapter 11 petition (Bankr. E.D.N.C. Case No. 13-02590) in
Wilson on April 19, 2013. The Debtor estimated $10 million to
$50 million in assets and liabilities.
The Bankruptcy Administrator for Eastern District of North
Carolina was unable to form an official committee of unsecured
creditors in the Debtor's case.
SIERRA NEGRA: Munger Chadwick Approved as Utilities Counsel
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Nevada authorized
Sierra Negra Ranch LLC to employ Munger Chadwick PLC as special
utilities counsel.
Las Vegas, Nevada-based Sierra Negra Ranch, LLC, is a limited
liability company organized in November 2004 to purchase an
aggregate of approximately 2,757.5 acres of undeveloped land in
the Tonopah area of incorporated Maricopa County, west of Phoenix,
Arizona. It filed a bare-bones Chapter 11 petition (Bankr. D.
Nev. Case No. 12-19649) in Las Vegas on Aug. 21, 2012. Candace C.
Clark, Esq., and Gerald M. Gordon, Esq., at Gordon Silver, in Las
Vegas, Nev., represent the Debtor as counsel.
In its amended schedules, the Debtor disclosed $26,197,986 in
total assets and $4,801,931 in total liabilities. The Debtor is
"Single Asset Real Estate" as defined in 11 U.S.C. Sec 101(51B)
and its asset is located in Maricopa County, Arizona.
SOUTHERN MONTANA: July 29 Hearing on Bid for Valuation
------------------------------------------------------
The U.S. Bankruptcy Court for the District of Montana will convene
a hearing on July 29, 2013, at 9 a.m., to consider a motion to
determine the value of the claim secured by a lien on property of
Southern Montana Electric Generation and Transmission Cooperative,
Inc.'s estate.
U.S. Bank National Association, as indenture trustee under the
Indenture of Mortgage, Security Agreement and Financing Statement
dated as of Feb. 26, 2010, has requested that the Court reject the
request filed by the Chapter 11 trustee seeking valuation of the
collateral. U.S. Bank also joined in the objection of The
Prudential Insurance Company of America, Universal Prudential
Arizona Reinsurance Company, Prudential Investment Management,
Inc. as successor-in-interest to Forethought Life Insurance
Company and Modern Woodmen of America to the Chapter 11 trustee's
motion for valuation.
Joshua I. Campbell, Esq., at Jardine, Stephenson, Blewett &
Weaver, P.C., represents the indenture trustee as counsel.
As reported by the Troubled Company Reporter on May 8, 2013,
Lee A. Freeman, the Chapter 11 trustee, asked the Court to
determine the value of the claim secured by a lien on property of
the Debtor's estate.
U.S. Bank, as Indenture Trustee, and certain holders consisting of
Prudential Insurance Company of America, Universal Prudential
Arizona Reinsurance Company, Prudential Investment Management as
successor in interest to Forethought Life Insurance Company, and
Modern Woodmen of America, filed a claim (Claim No. 69) allegedly
secured by collateral valued at $5,600,000. In support of the
value, U.S. Bank submitted expert reports.
About Southern Montana Electric
Based in Billings, Montana, Southern Montana Electric Generation
and Transmission Cooperative, Inc., was formed to serve five
other electric cooperatives. The city of Great Falls later joined
as the sixth member. Including the city, the co-op serves a
population of 122,000. In addition to Great Falls, the service
area includes suburbs of Billings, Montana.
Southern Montana filed for Chapter 11 bankruptcy (Bankr. D.
Mont. Case No. 11-62031) on Oct. 21, 2011. Southern Montana
estimated assets of $100 million to $500 million and estimated
debts of $100 million to $500 million. Timothy Gregori signed the
petition as general manager.
Malcolm H. Goodrich, Esq., at Goodrich Law Firm, P.C., in
Billings, Montana, serves as the Debtor's counsel.
After filing for reorganization in October, the co-op agreed to a
request for appointment of a Chapter 11 trustee. Lee A. Freeman
was appointed as the Chapter 11 trustee in December 2011. He is
represented by Joseph V. Womack, Esq., at Waller & Womack, and
John Cardinal Parks, Esq., Bart B. Burnett, Esq., Robert M.
Horowitz, Esq., and Kevin S. Neiman, Esq., at Horowitz & Burnett,
P.C.
Harold V. Dye, Esq., at Dye & Moe, P.L.L.P., in Missoula, Montana,
represents the Unsecured Creditors' Committee as counsel.
STRADELLA INVESTMENTS: Ch.11 Trustee May Tap Marshack as Counsel
----------------------------------------------------------------
Richard A. Marschack, the trustee appointed in the Chapter 11 case
of Stradella Investments, Inc., sought and obtained authority from
the U.S. Bankruptcy Court for the Central District of California,
Santa Ana Division, to hire his own law firm, Marshack Hays LLP as
his general counsel.
According to papers submitted in Court, the Chapter 11 Trustee at
this time needs counsel for:
(i) analyzing the Estate's rights and interest in a $25 million
note payable to the Debtor;
(ii) analyzing the collateral securing the Estate's interest in
the Note;
(iii) analyzing the Estate's interest in a 25 acre of commercial
real property;
(iv) analyzing the claims of major creditors of the Debtor
including creditors claiming security interests in assets
of the Estate;
(v) analyzing potential litigation claims held by the Estate;
(vi) assisting any special litigation counsel retained by the
Trustee; and
(vii) assisting the Trustee in matters concerning the
administration of the Estate.
The Chapter 11 Trustee requires assistance of counsel to analyze
these and other legal issues, identify real property assets of the
estate, investigate and pursue assets and legal claims of the
Estate, recover and effect turnover of liquid assets of the
Estate, advise the Trustee in his administration of the Estate,
and provide general legal counsel during the pendency of this
Chapter 11 proceeding including assisting in preparation of a
Chapter 11 plan to distribute the proceeds from the transaction.
These Marshack Hays professionals will be paid these hourly rates:
D. Edward Hays ehays@marshackhays.com $475
David M. Goodrich DGoodrich@marshackhays.com $390
Cynthia A. Connors cconners@marshackhays.com $395
Kristine A. Thagard kthagard@marshackhays.com $380
Judith E. Marshack jmarshack@marshackhays.com $325
Martina A. Slocomb mslocomb@marshackhays.com $325
Sarah C. Boone sboone@marshackhays.com $325
Chad V. Haes chaes@marshackhays.com $295
Pamela Kraus pkraus@marshackhays.com $210
Layla Bergini lbergini@marshackhays.com $175
Chanel Mendoza cmendoza@marshackhays.com $175
Cynthia Bastida cbastida@marshackhays.com $150
The Firm will also be compensated from assets of the estate, if
any, and will not be compensated absent the Estate's receipt or
recovery of such assets. The Firm has received no retainer for
the services to be performed in this case, and has agreed that no
retainer will be paid.
D. Edward Hays, a principal at Marshack Hays LLP, in Irvine,
California, 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
Chapter 11 Trustee and the Estate.
About Stradella Investments
San Juan Capistrano, California-based Stradella Investments, Inc.,
filed for Chapter 11 bankruptcy protection (Bankr. C.D. Cal.
Case No. 10-23193) on Sept. 19, 2010. Timothy J. Yoo, Esq., at
Levene Neale Bender Rankin & Brill LLP, assists the Debtor in its
restructuring effort. The Debtor disclosed $25 million in assets
and $121,000,671 in liabilities in its schedules.
The Debtor's primary assets is a $25 million promissory note in
its favor made out by RM Eagle, LLC, in connection with the
purchase of certain real property. RM Eagle defaulted on a
construction loan with respect to the development of the Property,
and the lender foreclosed on RM Eagle. An affiliate of Stark
Investments is currently the title holder of the Property. The
Note is secured by a deed of trust on the Property.
The Debtor filed a First Amended Chapter 11 Plan of Reorganization
on Feb. 13, 2013. Under the Plan, creditors are to be paid in
full over time from the proceeds of the Debtor's assets. General
unsecured creditors in Class 3 will be paid from any amounts
remaining from the proceeds of the Note after Secured Creditors in
Class 1 and Class 2 are paid. Class 4 Equity Interests in the
Debtor will retain their interests.
TRANSDIGM INC: Fitch Rates $500MM Subordinated Notes 'B-'
---------------------------------------------------------
Fitch has assigned TransDigm, Inc.'s (TDI) $500 million senior
subordinated notes due 2021 a final 'B-/RR5' rating with a
Negative Outlook. The final rating is the same as the expected
rating assigned on June 26 subject to final document review.
Proceeds of $1.4 billion incremental indebtedness from the
issuance of the notes and from drawing a $900 million incremental
term loan were used to pay a $22 per share one-time dividend and
for general corporate purposes. Approximately $5.5 billion of
outstanding debt is covered by Fitch's ratings.
Key Rating Drivers
The Negative Rating Outlook is driven by a significant increase in
leverage because of the one-time dividend, resulting in a
diminished ability to de-lever rapidly. This correspondingly
impacts TDG's financial flexibility to pursue large-scale debt-
funded acquisitions at the current ratings. Fitch believes TDG has
the capacity to make approximately $400 million of acquisitions
per annum beginning fiscal 2014 with internally generated cash;
however, a larger acquisition would likely require debt financing.
While Fitch expects TDG's projected metrics will still be
consistent with the 'B' Issuer Default Rating, the level of
support for this rating will be reduced by the new debt.
Fitch's ratings reflect the company's strong free cash flow (FCF;
cash from operations less capital expenditures and dividends),
good liquidity, and financial flexibility which includes a
favorable debt maturity schedule.
TDG benefits from high profit margins and low capital
expenditures, diversification of its portfolio of products which
support a variety of commercial and military platforms/programs, a
large percentage of sales from a relatively stable aftermarket
business, its role as a sole source provider for the majority of
its sales, and management's history of successful acquisitions and
subsequent integration. Fitch also notes that TDG has no material
pension liabilities and has no other post-employment benefit
(OPEB) obligations.
Fitch's concerns include the company's high leverage, its long-
term cash deployment strategy which focuses on acquisitions, and
weak collateral support for the secured bank facility in terms of
asset coverage. Additionally, Fitch is concerned with the risks to
core defense spending; however, this risk is mitigated by TDG's
relatively low exposure to the defense budget and by a highly
diversified and program-agnostic product portfolio.
Fitch notes that TDG is exposed to the cyclicality of the
aerospace industry, as it reported several quarters of organic
sales declines during fiscal 2009 and 2010 driven by lower demand
for aftermarket parts and by production cuts by commercial
original equipment manufacturers (OEMs). While market cyclicality
is somewhat mitigated by growth from acquisitions, high margins
and sales diversification to the defense sector, the expected
decline in defense spending coupled with a possible downturn may
result in lower free cash flow (FCF).
The Recovery Ratings and notching in the debt structure reflect
Fitch's recovery expectations under a scenario in which distressed
enterprise value is allocated to the various debt classes. The
expected recovery for bank-debt holders remains 'RR1', indicating
recovery of 91%-100%. The senior subordinated notes are 'RR5'
which reflects an expectation of recovery in the 11%-30% range.
At June 26, 2013, Fitch estimates TDG's leverage could increase to
approximately 6.6x following the completion of the debt offering,
up from approximately 5.2x as of March 30, 2013. The increased
leverage is in line with the company's historical leverage which
typically fluctuates between approximately 4.5x and 6.0x,
occasionally reaching higher than 7.0x. At the end of fiscal 2012,
TDG's leverage was approximately 4.6x, down from 5.6x at the end
of fiscal 2011. TDG's leverage is somewhat high for the rating;
however, it is mitigated by strong margins and positive FCF
generation. Over the next several years, Fitch projects TDG's
leverage to be at the higher end of the historical range of 4.5x
to 6.0x.
At March 30, 2013, TDG's liquidity consisted of $680 million in
cash and $303 million of availability under its revolver ($310
million less $6.7 million in letters of credit), partially offset
by $22 million in current amortization payments under the $2
billion term loan. TDG has no major maturities until 2017. Fitch
expects TDG to maintain a solid liquidity position in fiscal 2013
and 2014.
In the fiscal year ended Sept. 30, 2012, TDG generated
approximately $385 million FCF. Fitch expects TGD's FCF to be
negative in fiscal 2013 driven by special dividends of $660
million paid during the first quarter of fiscal 2013 and the
recently announced dividend of $22 per share or approximately $1.1
billion. Correspondingly, Fitch expects TDG's FCF to range from
negative $1.4 billion to negative $1.5 billion. Excluding special
dividends, TDG generates solid positive FCF, aided by typically
low capital spending and high margins. Capital expenditures tend
to be less than 2% of sales per year.
Excluding special dividends, Fitch expects TDG to generate more
than $350 million of FCF in fiscal 2013. Projected future cash
flows should be sufficient to fund day-to-day operations while
allowing the company the flexibility to pursue modest future
acquisitions.
In addition to special dividends, acquisitions are the main focus
of TDG's cash deployment strategy. In fiscal 2012, TDG made three
acquisitions totaling $868 million compared to $1.7 billion spent
on acquisitions in 2011. TDG completed two additional acquisitions
in the first half of fiscal 2013 totaling approximately $160
million. Fitch expects TDG will continue to focus its cash
deployment on acquisitions, or special dividends if the company
does not find suitable acquisition targets.
TDG is exposed to three business sectors: commercial airplane
original equipment (OE), and commercial aftermarket and defense
(both original equipment and aftermarket). TDG's sales growth
rates during the latest economic downturn were primarily driven by
the acquisitions and the stability of defense spending which
significantly moderated year-over-year organic sales declines in
commercial OE and aftermarket sales. Fitch considers the
conditions within the industry to be supportive of the rating.
Rating Sensitivities:
A negative rating action may be considered should the company make
a large debt-funded acquisition or additional special dividend
which will result in increased leverage, if the global economy
weakens, or defense spending cuts have a more significant impact
on the company's earnings and FCF than currently anticipated. A
positive rating action is not likely in the intermediate term, but
Fitch may consider a positive rating action if the company
maintains its leverage level within the range of 4.5x to 5.6x
along with its strong revenue growth and high cash generation.
Fitch currently rates TransDigm Group Inc.'s (NYSE: TDG) and its
indirect subsidiary TDI as follows:
TDG:
-- Long-term IDR 'B'.
TDI:
-- IDR 'B';
-- Senior secured revolving credit facility 'BB/RR1';
-- Senior secured term loan 'BB/RR1';
-- Senior subordinated notes 'B-/RR5'.
The Rating Outlook is Negative.
WOOTEN GROUP: Status Hearing Continued Until July 31
----------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
continued until July 31, 2013, at 10 a.m., the hearings to
consider: (i) status of Wooten Group, LLC's disclosure statement
and motion for authority to use cash collateral; and (ii) the
Debtor's objection to proofs of claim no. 3 and 4.
Beverly Hills, Calif.-based Wooten Group, LLC, filed a bare-
bones Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-31323)
in Los Angeles on June 19, 2012. Judge Thomas B. Donovan oversees
the case. M. Jonathan Hayes, Esq., represents the Debtor as
counsel. When it filed for bankruptcy, the Debtor estimated
assets of between $10 million and $50 million and debts of between
$1 million and $10 million. The petition was signed by Mark
Slotkin, managing member.
* McDonald Hopkins' Manju Gupta Named to Lawyers of Color Hot List
------------------------------------------------------------------
Lawyers of Color (LOC) recently named 100 early- to mid-career
minority attorneys under 40 from the Midwest Region to its
inaugural Hot List. McDonald Hopkins is very pleased to announce
that Manju Gupta has been named to this exceptional group.
Quarles & Brady's Chicago office is hosting a reception and photo
shoot for the honorees, who will also be profiled in Lawyers of
Color's inaugural Hot List Special Issue (July 2013).
Ms. Gupta concentrates her practice in the areas of complex
bankruptcy proceedings, debt restructuring, creditors' rights, and
specialized representation of commercial sureties in chapter 11
bankruptcies. She works in the firm's Business Restructuring
Services Department representing debtors, creditors, creditor
committees, liquidating trustees, and commercial sureties in
business reorganization matters.
The honorees were chosen through a two-pronged process. The
selection committee spent months reviewing nominations and
researching bar publications and legal blogs in order to identify
promising candidates. Nominations were accepted from mentors,
peers and colleagues. Editorial picks were made based on the
research of attorneys who had noteworthy accomplishments or were
active in legal pipeline initiatives.
Lawyers of Color, which was founded as On Being a Black Lawyer,
has been recognized by the American Bar Association, National
Black Law Students Association and the National Association of
Black Journalists. Founded in 2008 as a news and resource center,
the company has grown into a social media firm providing research,
career development and brand marketing opportunities to clients.
About McDonald Hopkins
McDonald Hopkins -- http://mcdonaldhopkins.com-- is a business
advisory and advocacy law firm with offices in Chicago, Cleveland,
Columbus, Detroit, Miami, and West Palm Beach. In January 2013,
McDonald Hopkins launched a new subsidiary based in Washington,
D.C., McDonald Hopkins Government Strategies LLC, led by former
Congressman Steven LaTourette. McDonald Hopkins Government
Strategies is not a law firm and does not provide legal services.
* BOOK REVIEW: Bankruptcy Crimes
--------------------------------
Author: Stephanie Wickouski
Publisher: Beard Books
Softcover: 395 Pages
List Price: $124.95
http://is.gd/LuspaE
Review by Gail Owens Hoelscher
Did you know that you could be executed for non-payment of debt
in England in the 1700s? Or that the nailing of an ear was the
sentence for perjury in bankruptcy cases in 1604? While ruling
out such archaic penalties, Stephanie Wickouski does believe "in
the need for criminal sanctions against bankruptcy fraud and for
consistent, effective enforcement of those sanctions." She
decries the harm done to individuals through fraud schemes and
laments the resulting erosion in public confidence in the
judicial system. This leading authoritative treatise on the
subject of bankruptcy fraud, first published in August 2000 and
updated annually with new material, will prove invaluable for
bankruptcy law practitioners, white collar criminal
practitioners, and prosecutors faced with criminal activity in
bankruptcy cases. Indeed, E. Lawrence Barcella, Jr. of Paul,
Hastings, Janofsky, and Walker, in Washington, DC, says, "If I
were a lawyer involved in a bankruptcy matter, whether civil or
criminal, and had only one reference work that I could rely
upon, it would be this book." And, Thomas J. Moloney with
Cleary, Gottlieb, Steen & Hamilton describes the book as "an
essential reference tool."
An estimated ten percent of bankruptcy cases involve some kind
of abuse or fraud. Since launching Operation Total Disclosure in
1992, the U.S. Department of Justice has endeavored to send the
message that bankruptcy fraud will not be tolerated. Bankruptcy
judges and trustees are required to report suspected bankruptcy
212 crimes to a U.S. attorney. The decision to prosecute is
based on the level of loss or injury, the existence of sufficient
evidence, and the clarity of the law. In some cases, civil
penalties for fraud are deemed sufficient to punish and deter.
Ms. Wickouski suggests that some lawyers might not recognize
criminal activity that the DOJ now targets for investigation.
She gives several examples, including filing for bankruptcy
using an incorrect Social Security number, and receiving
payments from a bankruptcy debtor that were not approved by the
bankruptcy court. In both of these real life examples, DOJ
investigations led to convictions and jail time.
Ms. Wickouski says that although new schemes in bankruptcy fraud
have come along, others have been around for centuries. She
takes the reader through the most common traditional schemes,
including skimming, the bustout, the bleedout, and looting, as
well as some new ones, including the bankruptcy mill.
The main substance of Bankruptcy Crimes is Ms. Wickouski's
detailed analysis of the U.S. Bankruptcy Criminal Code, chapter
9 of title 18, the Federal Criminal Code. She painstakingly
analyzes each provision, carefully defining terms and providing
clear and useful examples of actual cases. She ends with a good
chapter on ethics and professional responsibility, and provides
a comprehensive set of annexes.
Bankruptcy Crimes is never dry, and some of the cases will make
you nostalgic for the days of ear-nailing. This comprehensive,
well researched treatise is a particularly invaluable guide for
debtors' counsel in dealing with conflicts, attorney-client
relationships, asset planning, and an array of legal and ethical
issues that lawyers and bankruptcy fiduciaries often face in
advising clients in financially distressed situations.
Stephanie Wickouski is a partner in the New York office of Bryan
Cave LLP. Her practice is concentrated in business bankruptcy,
insolvency, and commercial litigation.
This book may be ordered by calling 888-563-4573 or through your
favorite Internet bookseller or through your local bookstore.
*********
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, Carmel Paderog, Meriam Fernandez,
Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl
Joy P. Olano, Ivy B. Magdadaro, Carlo Fernandez, Christopher G.
Patalinghug, and Peter A. Chapman, Editors.
Copyright 2013. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000 or Nina Novak at 202-241-8200.
*** End of Transmission ***